Margin Protection Program for Dairy and Dairy Product Donation Program, 51453-51470 [2014-20567]
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51453
Rules and Regulations
Federal Register
Vol. 79, No. 168
Friday, August 29, 2014
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1430
RIN 0560–AI23
Margin Protection Program for Dairy
and Dairy Product Donation Program
Commodity Credit Corporation
and Farm Service Agency, USDA.
ACTION: Final rule.
AGENCY:
This rule implements
regulations for the Margin Protection
Program for Dairy (MPP-Dairy) and the
Dairy Product Donation Program (DPDP)
as authorized in subtitle D of the
Agricultural Act of 2014 (the 2014 Farm
Bill). MPP-Dairy provides dairy
producers with risk management
coverage that will pay producers when
the difference between the price of milk
and the cost of feed (the margin) falls
below a certain level. MPP-Dairy
provides basic catastrophic level
coverage for an administrative fee, and
greater coverage for a premium in
addition to the administrative fee.
Amounts of coverage and premiums
vary based on producer selections. This
rule specifies the eligibility
requirements and payment formulas for
MPP-Dairy. Under the related DPDP,
which is a complimentary program
designed to support producer margins
by increasing the price of milk, the U.S.
Department of Agriculture (USDA) will
buy dairy products when the margin
falls below a certain level, and will
distribute those products to individuals
in low-income groups through public
and private non-profit organizations.
The Farm Service Agency (FSA) will
operate both programs using funds of
the Commodity Credit Corporation
(CCC). The USDA Food and Nutrition
Service (FNS) will assist in the
distribution of the dairy products under
DPDP.
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SUMMARY:
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Effective Date: This rule is
effective August 29, 2014.
Comment Date: We will consider
comments we receive by October 28,
2014.
ADDRESSES: We invite you to submit
comments specifically to address the
questions related to intergenerational
transfers in this document. In your
comment, please specify RIN 0560–AI18
and include the volume, date, and page
number of this issue of the Federal
Register. You may submit comments by
any of the following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
online instructions for submitting
comments; or
• Mail, Hand Delivery, or Courier
Danielle Cooke, Special Programs
Manager, Price Support Division, FSA,
USDA, STOP 0512, 1400 Independence
Ave. SW., Washington, DC, 20250–0512.
All written comments will be
available for inspection online at
www.regulations.gov and at the mail
address above during business hours
from 8 a.m. to 5 p.m., Monday through
Friday, except holidays. A copy of this
rule is available through the FSA home
page at https://www.fsa.usda.gov/.
FOR FURTHER INFORMATION CONTACT: For
MPP-Dairy: Danielle Cooke; telephone:
(202) 720–1919. For DPDP purchases:
Christine Gouger, telephone: (816) 926–
3379. For DPDP donations: Anne Fiala,
telephone: (703) 305–2662. Persons with
disabilities who require alternative
means for communication should
contact the USDA Target Center at (202)
720–2600.
SUPPLEMENTARY INFORMATION:
DATES:
MPP-Dairy—Overview
This final rule establishes the
regulations for the new MPP-Dairy as
specified in sections 1401–1410 of the
2014 Farm Bill (7 U.S.C. 9051–9060,
Pub. L. 113–79). MPP-Dairy provides a
risk management program for dairy
operations and is authorized through
December 31, 2018.
MPP-Dairy is a voluntary risk
management program that provides
payments when the margin between the
national average milk price and a
national average feed cost falls below a
specified ‘‘trigger’’ level. Eligible
producers may purchase coverage for
their dairy operations by paying an
administrative fee, and a premium as
applicable. The coverage is for a dairy
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operation; all producers in an operation
must agree to register the operation for
the program in order for that operation
to be eligible for MPP-Dairy coverage.
MPP-Dairy pays dairy operations when
the national margin falls below the
operation’s selected margin trigger for
one of the specified 2-month periods in
this rule. As part of the initial
registration process, dairy operations
must agree to carry MPP-Dairy coverage
through calendar year 2018, but they
can select a different level of coverage
during each annual enrollment period.
At the time of registration and annually
thereafter, the dairy operation must
make coverage level elections. For
example, if margins are consistently
above the trigger point or the dairy
operations decide they want only
limited coverage, the operation may
switch during the annual enrollment
from a coverage level with a higher
premium to the catastrophic coverage
level with a lower or no premium, but
they cannot drop coverage altogether,
except in cases where a producer is
retiring, dies, or the operation goes out
of business.
Eligible Operations for MPP-Dairy
Any dairy operation that produces
and commercially markets milk in the
United States may register for MPPDairy. As required by the 2014 Farm
Bill, to be an eligible dairy operation for
MPP-Dairy, each of the producers in an
eligible dairy operation must share in
the risk of production, and must make
contributions (including capital, land,
labor, equipment, or management) to the
operation commensurate with such
producer’s share of the proceeds.
Participating dairy operations can be
operated by more than one producer. A
single producer may be member of more
than one operation and each operation
may separately participate in MPPDairy.
Definition of a Dairy Operation
This rule specifies that any dairy
facility that was part of a single dairy
operation that was eligible for and
participated in the Milk Income Loss
Contract (MILC) Program administered
by FSA as of February 7, 2014 (date of
enactment of the Agricultural Act of
2014) is a ‘‘dairy operation’’ for the
purposes of MPP-Dairy. All other
operations must meet the requirements
specified in this rule to be a dairy
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operation for the purposes of MPP-Dairy
these include the criteria and
procedures established under the MILC
Program. Operations that are
determined to be ‘‘new operations’’
under this rule, will be subject to the
‘‘affiliation’’ test if the operation elects
to participate in MPP-Dairy separately.
For the purposes of this rule, a ‘‘new’’
operation is one that did not produce
and commercially market milk at least
12 full months as of February 7, 2014.
Under certain circumstances new
operations may participate in MPPDairy and existing operations can
restructure and still be eligible for MPPDairy. A dairy operation can be sold or
transferred and keep MPP-Dairy
eligibility. The main restriction on
eligibility for a new operation is that an
existing operation that restructures or
reconstitutes cannot result in an
increase in production history as a
whole.
Production History for MPP-Dairy
MPP-Dairy payments for a given dairy
operation are based on a coverage level
and percentage of coverage annually
elected by a participating dairy
operation for the operation’s production
history. Such production history for
existing operations with at least a year
of production history as of February 7,
2014, will be the highest of the
operation’s annual milk marketings in
any one of 2011, 2012, or 2013 calendar
years, subject to an annual upward
adjustment in subsequent years to
reflect any increase in the national
average milk production as specified in
this rule.
Eligible production history for new
operations will be determined by one of
two methods, at the election of the dairy
operation. The first option is to
extrapolate from actual production data
for the first calendar year with at least
one full month of production history,
adjusted using a national seasonality
index to calculate a yearly amount of
production. The national seasonality
index was created by FSA using
monthly milk production data for 2009
through 2013. Since milk production
naturally fluctuates in some regions
during different seasons of the year, the
index is needed to extrapolate a full
year production amount from partial
year production data. To develop the
index, the total milk production for the
5 years for each individual month was
divided by the total annual milk
production for those years to determine
the share of annual milk production
produced in each month. The resulting
figure is the seasonality index that is set
for the duration of MPP-Dairy.
Alternatively, new operations may
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choose a second option to determine
production history. Under this option,
annual production would be estimated
based on the herd size of the dairy
operation relative to the national
‘‘rolling herd average’’ production data
published by the Secretary.
As required by the 2014 Farm Bill, the
production history amount established
for an operation will never be reduced
because of changes in national milk
production, but may only be increased.
Once a dairy operation has enrolled in
MPP-Dairy and the production history is
established for that operation, USDA in
subsequent years will update the
production amount to reflect annual
changes in the national average milk
production. That adjustment factor will
be announced each year.
The production history is established
for a participating dairy operation, and
it is assigned to that operation, not to an
individual producer. If a participating
dairy operation, with an established
production history, sells or changes
ownership of the operation, the
established production history will stay
with that operation, and be assigned to
the new owner. For participating dairy
operations, with an established
production history, that relocate or
otherwise move their operation to
another location, the production history
will move to the new location. If the
new location has existing production
history, the production history may be
reconstituted that combines the
production history of the relocated
operation and the new location to the
new location and become available for
the next calendar year of coverage.
Section 1410 of the 2014 Farm Bill
specifies that USDA is required to
establish regulations that ‘‘prohibit a
dairy producer from reconstituting a
dairy operation for the purpose of the
dairy producer receiving margin
protection payments.’’ This rule
therefore prohibits an increase in
production history as a result of most
restructurings and reconstitutions. Only
in cases where a dairy producer
purchases a dairy operation with no
established production history can a
new history be established, subject to
the affiliation rule. For example, if a
father and son jointly operate a dairy
and the son decides to leave and
purchase a dairy operation that is
already participating in MPP-Dairy with
an established production history, the
son would get the production history
already established by the participating
dairy operation and would not be
considered a new dairy operation for the
purposes of MPP-Dairy. (No new
production history would be created; it
would only be transferred.) However, if
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the son purchased a dairy operation that
lacked any production history, then the
son may be considered a new dairy
operation for MPP-Dairy purposes and
could establish a new production
history for that operation, subject to the
affiliation rule.
Other Eligibility Requirements and
Limits
MPP-Dairy benefits are not subject to
payment limitations or average adjusted
gross income (AGI) limitations that
apply to most FSA and CCC programs.
However, these benefits are subject to
the conversation compliance
requirements provided for in 7 CFR part
12. Further, there is no set program
maximum number of pounds any dairy
operation can cover under the program.
MPP-Dairy’s coverage limitation for a
specific dairy operation is 90 percent of
the operation’s production history.
In general, all U.S. dairy producers
are eligible to participate in MPP-Dairy
through their eligible dairy operation;
however, producers cannot participate
in both MPP-Dairy and the Livestock
Gross Margin for Dairy (LGM-Dairy)
insurance program administered by the
USDA Risk Management Agency (RMA).
For 2014 and 2015, producers already
enrolled in LGM-Dairy may register for
MPP-Dairy, but in no case will they
receive benefits from both programs. If
an operation with LGM-Dairy coverage
registers for MPP-Dairy, coverage under
MPP-Dairy will not become effective
until after the target month of
marketings under LGM-Dairy has ended
or the dairy operation provides proof
that the LGM-Dairy policy has been
cancelled.
MPP-Dairy Coverage Levels
As part of the annual coverage
election process for MPP-Dairy, the
dairy operation is required to select the
level of coverage and pay an
administrative fee and, if applicable, a
premium based on the level of coverage
elected. In addition, once a participating
dairy operation registers for MPP-Dairy,
regardless if it fails to make a coverage
election, it must annually pay the
administrative fee through December 31,
2018. The level of coverage chosen by
a participating dairy operation requires
two selections. One is the margin trigger
(between $4 and $8 per hundredweight
(cwt), in 50 cent increments); the other
is the percentage of production history
that will be covered (from 25 percent to
90 percent, in 5 percent increments).
The operation can only select one
margin trigger level and one percentage
of production history; the operation
cannot ‘‘split’’ the operation’s coverage
and, for example, purchase $4 margin
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coverage on 25 percent of production
history and $8 coverage on 50 percent
of production history. (At the
catastrophic level coverage of $4, the
producer will be paid when the margin,
the difference between the price of milk
and the cost of feed, falls below $4.)
As specified in the 2014 Farm Bill,
operations may elect a $4 per cwt
margin trigger for the administrative fee
of $100 with no premium owed. This
rule defines this to be catastrophic level
coverage, in that it provides the lowest
level of margin protection offered under
MPP-Dairy. If $4 margin coverage is
selected, 90 percent of production
history will be covered, the maximum
amount of production coverage allowed
by the 2014 Farm Bill. Alternatively,
participating dairy operations may elect
a higher margin trigger, up to $8 per cwt
of milk (in 50 cent increments), for 25
percent to 90 percent of production (in
5 percent increments). Margin triggers
higher than $4 require payment of a
premium. At each margin trigger level,
corresponding rates are different with
respect to the first 4 million pounds
(40,000 cwt) of covered production
history and covered production history
above 4 million pounds. As specified in
the 2014 Farm Bill, the premiums for
the first 4 million pounds of eligible
covered production history will be
reduced by 25 percent for each of
calendar years 2014 and 2015.
The annual premium rates listed in
this regulation are specified in the 2014
Farm Bill. USDA has no discretion to set
different premium rates other than those
in the 2014 Farm Bill. The premium
will be determined based on the
producer’s election of each of the
margin trigger and percentage of
coverage. The schedule of premiums
below refers to these levels as Tier 1
(first 4 million pounds of production
history covered by the program) and
Tier 2 (covered production in excess of
4 million pounds).
For example, a dairy operation with a
production history of 6 million pounds
that elects a coverage level of $6 and a
50 percent coverage percentage will pay
a premium based on the premium rate
for covered production history for up to
4 million pounds because as a function
of the dairy operation election to cover
at the 50 percent rate, only 3 million
pounds of production history is being
covered by the program. (Note that
production history is in pounds, while
the premium schedule below is per cwt,
so we divide covered production by 100
to calculate the premium). Therefore, in
this example, the dairy operation pays
a premium for a calendar year of
coverage during 2016, in the amount of
$1,650 based on 6 million pounds
covered at a 50 percent coverage level,
yielding 3 million pounds of covered
production history. The 3 million
pounds of production history multiplied
by $0.055, the premium at the $6 margin
level for covered production up to 4
million pounds (50 percent of 6 million
is 3 million; 3 million divided by 100
is 30,000 cwt; 30,000 cwt x $0.055 per
cwt =$1,650). The premium schedule is
as follows; the 2014 Farm Bill specifies
the amounts:
Tier 1
Premium per
cwt in
2014 and 2015
(for the
covered 1
production
history that is
4 million
pounds or less) 2
Coverage level
(margin)
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
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None
$0.008
0.019
0.030
0.041
0.068
0.163
0.225
0.475
Tier 2
Premium per
cwt, all years
(for the part
of covered 1
production
history over 4
million pounds)
None
$0.020
0.040
0.100
0.155
0.290
0.830
1.060
1.360
1 The ‘‘covered production history’’ is the amount elected for MPP-Dairy coverage by the dairy operation; this will be 25 percent to 90 percent.
The catastrophic coverage level provided at the $4 margin is 90 percent.
Tier 1
Premium per
cwt in 2016,
2017 and 2018
(for the
covered 1
production
history that is
4 million
pounds or less)
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Coverage level
(margin)
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
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None
$0.010
0.025
0.040
0.055
0.090
0.217
0.300
0.475
Tier 2
Premium per
cwt, all years
(for the part
of covered 1
production
history over 4
million pounds)
None
$0.020
0.040
0.100
0.155
0.290
0.830
1.060
1.360
1 The ‘‘covered production history’’ is the amount elected for MPP-Dairy coverage by the dairy operation; this will be 25 percent to 90 percent.
The catastrophic coverage level provided at the $4 margin is 90 percent.
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The following is an example with
higher coverage levels and both tiers of
premium: If a dairy operation with an
established production history of 10
million pounds elects a coverage level
of $8 and a 75 percent coverage
percentage, 7.5 million pounds would
be considered covered production
history (10,000,000 × 0.75), and of that
7.5 million pounds, 4 million pounds
would be assessed at $0.475 rate from
the lower (Tier 1) premium schedule for
production at 4 million pounds or less
(4,000,000 × $0.475/100 = $19,000), and
the remaining 3.5 million pounds of
covered production history would be
assessed at the $1.360 rate from the
higher premium schedule for
production in excess of 4 million
pounds (3,500,000 × $1.360/100 =
$47,600). The dairy operation would
pay a total premium for a calendar year
of coverage in the amount of $66,600
($19,000 + $47,600) based on 7.5
million pounds of covered production
history that falls under each premium
schedule at the $8 coverage level.
For calendar years 2014 and 2015, the
premium per cwt for covered
production that falls under the first 4
million pound premium schedule will
be reduced by 25 percent, except at the
$8 coverage level, from the table shown
above. The premium reduction is
required by the 2014 Farm Bill. FSA
will provide premium calculators on the
FSA Web site, so that producers can
evaluate the costs of different coverage
options easily.
Registration Process
Registration of a dairy operation
under MPP-Dairy results in a multi-year
contract between CCC and the dairy
operation. As discussed above, dairy
operations agree to pay an
administrative fee to register and
annually thereafter through December
31, 2018. In addition, a participating
dairy operation is obligated to pay the
premium, if any, associated with its
annual coverage elections, through
calendar year 2018.
The $4 per cwt margin level coverage
is available for a $100 administrative
fee, without premium; higher levels of
coverage are available for a premium
plus the administrative fee. Operations
must pay at least half the premium for
the year (if applicable), plus the $100
administrative fee, at the time of the
election of coverage. Once the election
period has ended, a dairy operation’s
election of coverage is final and it can
be changed only for the next calendar
year of coverage during the next election
period.
The 2014 Farm Bill requires that
USDA offer more than one method by
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which a participating dairy operation
may pay the required premium in any
manner that maximizes participating
dairy operation payment flexibility and
program integrity. Unless otherwise
determined by the Deputy
Administrator, at the time of coverage
election, operations must pay either:
(1) The full premium plus the
administrative fee; or
(2) A minimum of 50 percent of the
total premium (if applicable) plus the
administrative fee, with the remaining
balance due no later than June 1 of the
applicable calendar year of coverage.
However, a premium calculated for
calendar year 2014 only (which
provides coverage through December of
2014) must be paid in full at the time
of coverage election. The coverage
election period for 2014 partial year
coverage and 2015 full year coverage
will both be during the fall of 2014. New
operations registered during a calendar
year starting in 2015 will be allowed to
pay a prorated premium for the first
year of participation.
If an operation fails to pay either the
required annual administrative fee or
premium owed on time, it remains
obligated for payment of such
administrative fee and entire premium,
but will lose coverage until the
premium is paid. If an operation does
not make an annual coverage level
election, it will still be liable for the
administrative fee for the following
year. It will automatically receive
coverage at the $4 coverage level at 90
percent, but only if the administrative
fee is paid. For dairy operations that
want to continue coverage levels
established in the prior calendar year,
the Deputy Administrator will establish
a procedure to allow such coverage
levels to continue that will include the
requirement of a timely payment of
administrative fees and any premiums,
if applicable.
How Margins Are Calculated To
Determine Payments
The 2014 Farm Bill specifies what
prices for milk and feed USDA is
required to use to calculate the ‘‘actual
dairy production margin.’’ The margin,
based on published USDA national data
for milk and feed prices, is used to
trigger payments under MPP-Dairy and
the authority to make purchases under
DPDP. The 2014 Farm Bill requires the
margin to be based on the average price
received, per cwt of milk, by dairy
operations for all milk sold to plants
and dealers in the United States. It also
requires calculation of a national
average feed cost, based on specific
sources for the monthly price of corn,
soybean meal, and alfalfa hay.
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Therefore, MPP-Dairy uses USDAreported monthly national average price
data for all classes of milk (the all-milk
price) and the cost of the three specified
feeds, which represent the bulk of
purchased feeds in dairy rations (corn,
soybean meal, and alfalfa hay) to
calculate the ‘‘actual dairy production
margin’’ by subtracting from the price
for a cwt of milk produced the cost of
an average feed ration used to produce
a cwt of milk. The 2014 Farm Bill
prescribes that USDA calculate the
actual dairy production margin in
consecutive 2-month periods.
If the actual dairy production margin
falls below the selected margin coverage
level of an operation for any such
consecutive 2-month period, that
operation will be eligible for a payment
under MPP-Dairy. For example, if, for a
particular consecutive 2-month period,
the actual dairy production margin is
$6, and the operation has chosen $4
coverage level, there will be no
payment, but if the operation had
chosen the $7.50 coverage level on 50
percent of production, it would have
been paid $1.50 times 50 percent of its
covered production history. A
recalculation would occur in each
subsequent 2-month period. MPP-Dairy
pays only on the basis of such 2-month
periods; in no case does the program
pay for a period of low margins shorter
than such 2-month periods.
USDA will calculate the actual dairy
production margin using the national
‘‘all-milk price’’ minus the national
‘‘average feed cost,’’ as those terms are
specified in the 2014 Farm Bill. If the
actual dairy production margin
calculation produces a negative number,
then the margin will be considered zero.
For example, if the cost of feed is higher
than the price of milk by $1 per cwt, the
margin will be considered to be zero.
The term ‘‘all-milk price’’ is defined in
the 2014 Farm Bill to mean the average
price received, per cwt of milk, by dairy
operations for all milk sold to plants
and dealers in the United States, as
determined by USDA. The term
‘‘average feed cost’’ is defined to mean
the average cost of feed used by a dairy
operation to produce a cwt of milk using
the sum of:
• 1.0728 times the price of corn per
bushel;
• 0.00735 times the price of soybean
meal per ton; and
• 0.0137 times the price of alfalfa hay
per ton.
The 2014 Farm Bill specifies which
USDA-published price series FSA is
required to use for such prices; FSA has
no discretion in what prices to use.
The 2014 Farm Bill requires the
margin to be calculated using specific
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consecutive 2-month pairs—January and
February, March and April, May and
June, July and August, September and
October, and November and December.
If a dairy operation has a premium
due at the time it becomes eligible for
a payment under MPP-Dairy, the
premium will be automatically
deducted from the payment. If the
premium is overdue (past June 1 of the
coverage year) however, an operation
will not be eligible for a payment,
because it will have lost coverage. In the
case of an operation with an overdue
premium, the operation will regain
coverage only after any overdue
premium is paid, in which case it would
be eligible for the next consecutive 2month period after such payment of
premium.
DPDP—Overview
In addition, this rule provides
regulations for DPDP, authorized by
section 1431 of the 2014 Farm Bill (7
U.S.C. 9071). DPDP shares certain goals
of MPP-Dairy, in that it is intended to
support dairy producer margins by
triggering the obligation to purchase
dairy products when the dairy
production margin fall below a certain
level. Under DPDP, USDA will purchase
dairy products to support dairy
producer margins and to provide such
products to individuals in low-income
groups through public and private nonprofit organizations. The 2014 Farm Bill
specifies that such purchases will be
made whenever the ‘‘actual dairy
production margin’’, calculated using a
formula prescribed in the 2014 Farm
Bill, is determined to be $4 or less per
cwt for 2 consecutive months.
The 2014 Farm Bill specifies that the
same margin calculation is used for both
MPP-Dairy and DPDP. The ‘‘actual dairy
production margin’’ is, as it is under
MPP-Dairy, the difference between the
‘‘all-milk price’’ (the average U.S. price
for producer milk sold to plants and
dealers as specified in section 1401 of
the 2014 Farm Bill (7 U.S.C. 9051)) and
the average feed cost determined using
the formula specified in sections 1401
and 1402 (7 U.S.C. 9052) of the 2014
Farm Bill. The feed cost formula is the
same as specified for MPP-Dairy, and
was discussed above in the MPP-Dairy
section of this document. Once
triggered, DPDP purchases end when—
• DPDP purchases have occurred for
3 consecutive months (regardless of the
actual dairy production margin at the
end of those 3 months),
• The actual dairy production margin
for the previous month goes above $4
per cwt, or
• The U.S. price for cheddar cheese
or nonfat dry milk (NDM) exceeds the
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world price by certain levels (5 percent
if the actual dairy production margin is
at or below $4 but above $3 or 7 percent,
if such margin is $3 or less).
DPDP is intended to time its
purchases to support dairy producers in
times of low margins, reinforcing and
supporting the dairy producer support
provided by MPP-Dairy. Reflecting that
relationship, the 2014 Farm Bill
specifies that DPDP is required to be
established no later than 120 days after
the Secretary certifies that MPP-Dairy is
operational. USDA has chosen to make
the two programs effective at the same
time. The Secretary determined that
additional time was not required to
implement DPDP as FSA and FNS will
be able to use existing expertise with
purchasing and distributing similar
products to the same recipients.
As specified in section 1431 of the
2014 Farm Bill, DPDP purchases will be
distributed for domestic consumption
by individuals in low-income groups
through public and private non-profit
organizations. Further, the DPDP
purchases cannot be stored by CCC.
DPDP purchases will be made in
package sizes suitable for immediate
household use, to facilitate direct
distribution to individuals through
participating public and private
nonprofit organizations. The 2014 Farm
Bill specifically prohibits re-sales of
DPDP-purchased products into the
commercial market.
The 2014 Farm Bill requires USDA
consultation with public and private
nonprofit organizations that feed lowincome groups, in order to determine
the types and quantities of dairy
products to be purchased and
distributed under DPDP. This will be
achieved through existing FNS food
program consultations.
Administration of DPDP
This rule implements DPDP as
specified in the 2014 Farm Bill. DPDP
purchases will be made using CCC
funds. The 2014 Farm Bill authorizes
DPDP through December 31, 2018. As
specified in this rule, FSA will operate
DPDP for CCC with assistance from
FNS.
Distribution of DPDP purchases will
be made to public and private non-profit
organizations eligible to participate in
FNS’ food distribution programs for
low-income individuals.
Purchase quantities may be limited to
meet the 2014 Farm Bill’s immediate
distribution requirement, taking into
account impacts on present demand in
order to limit potential short- and longterm market disruptions.
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51457
When will FSA make DPDP purchases?
The 2014 Farm Bill specifies that the
DPDP purchases are required to start
after any consecutive 2 month period
when margins are below $4, with a
maximum of 3 consecutive months of
purchases. If prices rise above the $4
margin level during a month of
purchases, DPDP purchases will
terminate at the end of that month, so
in that case it might operate for only 1
or 2 months. As specified in the 2014
Farm Bill, after 3 consecutive months of
purchases, the DPDP purchases are
required to cease (terminate) until there
have been at least 2 more consecutive
months of margins of $4 or less.
Because full data for a given month is
not available until the following month
(see example below) and the 2014 Farm
Bill requires that program activity be on
a monthly basis, this effectively means
that no purchases may be made for 3
months following the end of a purchase
period, even if margins remain below
the trigger level. This rolling ‘‘up to 3
months on, 3 months off’’ procedure for
DPDP purchases is consistent with the
2014 Farm Bill goal of having a longterm intermittent tool for addressing
low margins and providing nutrition
assistance. DPDP is intended to time its
purchases to support dairy producer
margins by reducing the supply of dairy
products. Given relatively inelastic
(constant) demand, such purchases
should drive the market price of dairy
products up, hopefully also driving
margins above the trigger level. In some
cases, prices and margins will rise
sufficiently to engender only a 1or 2month purchase period. In that case, the
3 month ‘‘off’’ requirement still applies,
as required by the 2014 Farm Bill.
Data for calculating the domestic
versus world price differential will not
be available immediately at the end of
a month, so DPDP purchases will not
commence or terminate until the full
month after all data for a month
becomes available. For example, and as
shown in the chart below if actual dairy
production margins in May and June fall
below the ‘‘trigger’’ level, the data for
June would be available in July, but not
in time to start making DPDP purchases
immediately on July 1. Therefore, the
DPDP purchases would start in August
based on May and June data. If July
data, which would be available in
August, showed that margins were still
below the trigger, DPDP purchases
would continue in September. If
margins rise above the trigger level in
July, the DPDP purchases would
terminate at the end of August, and the
next eligible month for calculations
would be September. If margins in
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September and October were below the
trigger level, with October data available
in November, the DPDP purchases
would start up again in December. But
if margins remained consistently below
the trigger level for the entire period in
this example, the DPDP purchases
would continue in September and
October, based on May, June, July, and
August data, and could not start up
again until February, based on
November data and December data,
which would become available in
January. The following chart shows an
example of the timing for the
determination of DPDP purchases.
DPDP PURCHASE DETERMINATION EXAMPLE
[Based on dairy production margins and 3-month maximum for purchases 1]
2 Consecutive
months
Calculate margin
for 2 consecutive
months 2
January and February.
February and
March.
March and April .....
March ...................
April and May ........
June 4 ...................
May and June .......
July ......................
June and July ........
August .................
July and August ....
September ...........
August and September.
September and October.
October and November.
November and December.
October ................
April .....................
May ......................
November ............
December ............
January ................
If both margins below $4 per cwt in
the 2 consecutive months
Dairy product purchases 3
April.
Dairy product purchases 3
May.
Dairy product purchases 3
June.
No purchases; terminated
consecutive months.
No purchases; terminated
consecutive months.
No purchases; terminated
consecutive months.
Dairy product purchases 3
October.
Dairy product purchases 3
November.
Dairy product purchases 3
December.
No purchases; terminated
consecutive months.
No purchases; terminated
consecutive months.
3-Month maximum consideration
If either margin above
$4 per cwt in the 2
consecutive months
begin in
1st month of purchases .....................
No purchases.
begin in
2nd consecutive month of purchases
No purchases.
begin in
3rd consecutive month of purchases
No purchases.
after 3
No purchases.
begin in
3-month maximum reached (1st
month off).
3-month maximum reached (2nd
month off).
3-month maximum reached (3rd
month off).
1st month of purchases .....................
begin in
2nd consecutive month of purchases
No purchases.
begin in
3rd consecutive month of purchases
No purchases.
3-month maximum
month off).
3-month maximum
month off).
after 3
after 3
after 3
after 3
No purchases.
No purchases.
No purchases.
reached
(1st
No purchases.
reached
(1st
No purchases.
wreier-aviles on DSK5TPTVN1PROD with RULES
1 This example assumes that purchases begin in January. In reality, DPDP can—depending on prices and margin triggers—begin on September 1, 2014, which is the start of MPP-Dairy.
2 The full month data for a given month is available at the end of the following month. For example, January data are not available until the
end of February.
2 Purchases cannot begin unless domestic cheddar cheese or nonfat dry milk prices are at certain differentials relative to world prices.
3 In the example, June is the 3rd month of consecutive purchases. June would not be calculated as a potential trigger month, but it is shown
on the chart to clearly show the concept of 3 months on and 3 months off for purchases. If purchases are taking place during a month, that
month cannot be used as a trigger month for a future purchase period.
The trigger level is a $4 margin per
cwt of milk, with an additional
requirement from the 2014 Farm Bill
that USDA’s authority for purchases
will end if the U.S. price and world
price differential for cheddar cheese or
nonfat dry milk exceeds certain
percentage levels, even when margins
remain at $4 or less. In other words,
FSA will stop making DPDP purchases,
even if the margins are at $4 or less, if
the U.S. price for certain dairy products
is significantly above world prices. As
required by the 2014 Farm Bill, FSA
will stop making DPDP purchases if the
margin is $4 or less but above $3 and
the U.S. price is more than 5 percent
above the world price or if the margin
is at or below $3, DPDP will not make
purchases if the price differential is
more than 7 percent.
If DPDP purchases were suspended
due to domestic prices being sufficiently
above world prices, margins would be
tracked for the next 2 months, and
purchases could begin after 3 months.
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For example, at the end of July, it would
be known if May and June margins were
at or below $4 per cwt. If margins for
both May and June were at $4 or less per
cwt, and the relation between domestic
and world prices did not preclude it, the
DPDP purchasing process would start
August 1. At the end of August, the July
margin could be calculated and if at $4
or less per cwt, DPDP purchases would
continue in September (the second
consecutive month ‘‘on’’). If the July
margin were above $4 per cwt, DPDP
purchase activity would cease August
31, and DPDP purchases could next be
made in December (after the required 3
months ‘‘off’’), if September and October
margins were at $4 or less per cwt. If
July and August margins were both at $4
or less per cwt, DPDP purchases would
continue in September and October and
end due to the 3-month maximum of
purchases. If November and December
margins were at $4 or less per cwt,
DPDP purchase activities could begin
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again in February (after the required 3
months ‘‘off’’).
DPDP will not stop or start making
purchases in the middle of a month
even if the margin or the world price
data has hit one of the ‘‘trigger’’
numbers mid-month.
U.S. Price Versus World Market Price
Differential Trigger
The calculations for the price
differential determination (which
require a comparison of U.S. prices and
world prices) as specified in this rule
allow FSA to consult with other
agencies of USDA that collect foreign
and domestic price data, such as the
Agricultural Marketing Service (AMS).
The 2014 Farm Bill specifies that USDA
is required to calculate the differential
between U.S. prices and world prices
for cheddar cheese and nonfat dry milk;
it does not specify what data FSA
should use for U.S. prices or world
prices. For world prices FSA expects
(although not specified in the
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regulations) to use the AMS Oceania
price series because of the quantity of
sales in that series. Alternatively, FSA
could use a multi-region weighted
average or some other method to make
the determinations, if those other
methods are more appropriate for
calculating a relevant world price. FSA
expects to base U.S. prices on the AMS
monthly prices for cheddar cheese and
nonfat dry milk, although FSA may use
a different data set, as needed.
FSA intends to post the price
calculation method and results, and
purchase determinations, on the FSA
Web site. If another method proves to be
more appropriate for providing
information to the public, it will replace
the planned on-line posting.
Product Determinations
The 2014 Farm Bill requires USDA
consultation with public and private
nonprofit organizations to determine the
types and quantities of products to
purchase through DPDP. This
requirement will be met by FNS’s
existing food program consultations
with groups involved in the distribution
of food to low-income people, including
food banks, State and local agencies,
and advocacy organizations. DPDP
purchases are expected to be made in
package sizes suitable for immediate
household use, to best accommodate the
immediate distribution requirement of
the 2014 Farm Bill, in a manner that is
cost effective to the U.S. taxpayer.
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Comments Requested on Cost Effective
Purchases
FSA is requesting comments on how
to best administer the dairy product
purchases for DPDP to ensure that dairy
prices are increased in the most cost
effective way. In your comments, please
suggest options and provide data to
show the cost effectiveness of the
suggestion as it relates to the goals of
DPDP.
Distribution and Use of DPDP
Purchases
The 2014 Farm Bill requires that
products purchased under DPDP will:
• Be distributed in a manner that
encourages their domestic consumption
by individuals in low-income groups;
• Be distributed using the services of
public and private nonprofit
organizations; and
• Not be resold back into commercial
markets by any organization that
receives them.
It is expected that all these
requirements will be addressed as
specified in the regulations for the
existing FNS programs through which
the products will be distributed. Public
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or private nonprofit organizations that
receive DPDP products may transfer
those products to other nonprofits only
if the transferee will likewise distribute
to domestic low-income recipients
without cost or waste, consistent with
existing FNS regulations. FNS
regulations in 7 CFR 250.13(d)(1)
provide that donated foods ‘‘be
distributed only to recipient agencies
and individual recipients eligible to
receive them’’ under applicable program
regulations. FNS regulations in 7 CFR
250.13(a)(1)(ii) provide that donated
foods ‘‘not be sold, exchanged or
otherwise disposed of without the
approval of the Department.’’ Any losses
of donated foods resulting from
improper distribution or use will be
subject to the requirements of 7 CFR
part 250 and the instruction and
guidance provided in FNS Instruction
410–1, Rev 2 ‘‘Claims for Losses of
Donated Foods and Related
Administrative Losses—Procedures for
the State Distributing Agency,’’ and in
FNS Instruction 420–1, ‘‘Managing
Agency Debts.’’
Start of DPDP
This rule specifies that DPDP is
effective the day this rule is published,
in the sense that it provides the
regulations and purchase authority
necessary to operate DPDP, but FSA will
not make DPDP purchases unless other
price and margin requirements are met.
Because MPP-Dairy and DPDP use the
same definition of actual dairy
production margin, which is defined in
the 2014 Farm Bill using existing USDA
reported data, FSA will have data on
actual dairy production margins the day
this rule is effective. Therefore, if
margins have been at $4 or less for the
2 months before the effective date of this
rule, and all other requirements are met
for eligible purchase months, including
the world price differential, DPDP can
begin making purchases the first full
month that DPDP is effective.
In preparation of starting to make
DPDP purchased, FSA will closely
monitor the margins and related
information to analyze the potential
need for starting DPDP purchases. If the
analysis shows that DPDP would be
expected to trigger, FSA will consult
with FNS, then FNS will determine the
types and quantities of products that
will be purchased, in consultation with
public or private nonprofit
organizations and State and local
agencies eligible to receive such
products. When the list of products and
other details, such as size of the
packaged products is identified, FSA
will analyze various factors, including
the expected result on the dairy market
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51459
of the various purchasing options to
determine the best combination and
quantity of dairy products to purchase
to meet the dual goals of the program:
(1) To support dairy producer margins
and (2) to provide dairy products to
individuals in low-income groups
through public and private non-profit
organizations. The process of
determining the exact combination of
dairy products to be purchased and the
quantity to purchase will continue
through the bid solicitation process to
ensure the dual goals of DPDP are
achieved at the least cost to taxpayers.
FSA will purchase the types and
quantities of products determined
through this process.
Structure of This Rule
This rule specifies the regulations for
MPP-Dairy in 7 CFR part 1430, subpart
A, replacing the regulations for the
Dairy Product Price Support Program,
which is no longer authorized. It
specifies the regulations for DPDP in
subpart C, replacing the regulations for
the 2004 Dairy Disaster Assistance
Payments Program, which is also no
longer authorized. As part of FSA’s
ongoing retrospective review efforts,
this rule also removes the regulations in
subpart D for the Market Loss
Assistance Program and subpart E for
the 2005 Dairy Disaster Assistance
Payment Program, both of which are
also no longer authorized.
Notice and Comment
In general, the Administrative
Procedure Act (5 U.S.C. 553) requires
that a notice of proposed rulemaking be
published in the Federal Register and
interested persons be given an
opportunity to participate in the
rulemaking through submission of
written data, views, or arguments with
or without opportunity for oral
presentation, except when the rule
involves a matter relating to public
property, loans, grants, benefits, or
contracts. Regulations to implement the
provisions of Title I of the 2014 Farm
Bill and the administration of Title I are
exempt from the notice and comment
provisions of 5 U.S.C. 553 and the
Paperwork Reduction Act (44 U.S.C.
chapter 35), as specified in section
1601(c)(2) of the 2014 Farm Bill.
Comments Requested on
Intergenerational Transfers and Family
Members Joining an Operation
The 2014 Farm Bill exempts CCC
from notice and comment rulemaking
under 5 U.S.C. 553 with respect to MPPDairy and DPDP; however, FSA would
like to invite comments with respect to
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the establishment of additional
production history under MPP-Dairy.
Section 1401(9) of the 2014 Farm Bill
and this rule define the term
‘‘production history’’ as the production
history determined for a dairy operation
when a participating dairy operation
first registers to participate in MPPDairy. Section 1405(a) provides, except
as provided in section 1405(b), the
production history of the dairy
operation is equal to the highest annual
milk marketings of the dairy operation
during any one of the 2011, 2012, or
2013 calendar years, with an adjustment
in subsequent years to reflect any
increase in national average milk
production. Section 1405(b) provides
that in the case of a participating dairy
operation that has been in operation for
less than a year, the dairy operation
elect one of two methods for the
Department to determine the production
history of the dairy operation:
• The volume of the actual milk
marketings extrapolated to a yearly
amount, or
• An estimate of actual milk
marketings based on the herd size
relative to the national rolling average
data.
The provisions in this regulation are
consistent with the 2014 Farm Bill.
The 2014 Farm Bill provisions
regarding MPP-Dairy and the rule do not
address the establishment of additional
production history for a participating
dairy operation in specific instances,
such as an inter-generational transfer or
when a family member joins a
participating dairy operation. Other
statutory provisions of MPP-Dairy do
suggest that Congress intended to
benefit smaller dairy operations, which
tend to be family owned and operated.
These provisions include the
establishment of lower premium rates
for insured annual production of less
than 4,000,000 pounds. This rule does
not take into account the size and
structure of the dairy operation in
determining whether the operation can
adjust its production history to assist
small, family dairy operations,
especially with intergenerational
transfers of the operation. FSA invites
interested parties to address whether the
regulation should be amended to
authorize the establishment of
additional production history, and if so,
whether limitations should be imposed
on any increases. Specifically, FSA
requests comments on the following
questions; please include any data that
supports your comments:
1. Does the provision in the rule
regarding transfers of production history
hinder intergenerational transfers of
dairy operations? If so, how?
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2. How would you suggest the rule be
amended to accommodate
intergenerational transfers or adult
children who want to join their parent’s
dairy operation and obtain additional
production history for the dairy
operation?
3. If additions to production history
based on intergenerational transfers or
adult children joining family dairies are
allowed, should there be a cap on the
overall amount of production history
that cannot be exceeded or a percentage
or quantity limitation on the amount by
which the production history could be
increased per participating dairy
operation under this provision? If so,
what amount?
Effective Date
The Administrative Procedure Act (5
U.S.C. 553) provides generally that
before rules are issued by Government
agencies, the rule is required to be
published in the Federal Register, and
the required publication of a substantive
rule is to be not less than 30 days before
its effective date. One of the exceptions
is when the agency finds good cause for
not delaying the effective date.
Subsection 1601(c)(2) of the 2014 Farm
Bill makes this final rule exempt from
notice and comment. Therefore, using
the administrative procedure provisions
in 5 U.S.C. 553, FSA finds that there is
good cause for making this rule effective
less than 30 days after publication in the
Federal Register. This rule allows FSA
to provide adequate notice to dairy
operations about the new MPP-Dairy so
they will be ready to begin enrollment
no later than September 1, 2014, as
required by section 1403 of the 2014
Farm Bill. Therefore, to begin providing
benefits to operations in a timely
fashion, the MPP-Dairy regulations in 7
CFR part 1430, subpart A are effective
when published in the Federal Register.
Section 1431 of the 2014 Farm Bill
requires that DPDP be operational no
later than 120 days after MPP-Dairy, but
as discussed above, USDA decided to
make DPDP effective at the same time as
MPP-Dairy, so as not to delay needed
assistance to dairy operations and low
income groups. A 30 day delay in the
effective date would unnecessarily
delay needed assistance to dairy
operations and individuals in low
income groups.
Executive Orders 12866 and 13563
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ and Executive
Order 13563, ‘‘Improving Regulation
and Regulatory Review,’’ direct agencies
to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
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regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). Executive Order 13563
emphasized the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility.
The Office of Management and Budget
(OMB) designated this rule as
economically significant under
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ and therefore,
OMB has reviewed this rule. This
regulatory action is being taken to
implement two programs required by
the 2014 Farm Bill. A summary of the
cost-benefit analysis of this rule is
provided below and the full cost benefit
analysis is available on regulations.gov.
Cost Benefit Analysis Summary
The current actual dairy production
margin is about $12, so neither DPDP
nor MPP-Dairy would have any cost in
the first month. If current milk prices
and cattle feed prices continue through
the end of 2018, the payments to dairy
producers from the government via
MPP-Dairy and DPDP will be zero. Any
program payments would be more than
offset by MPP-Dairy premiums and fees.
However, in the event of prolonged low
margins, programs outlays could exceed
$100 million per year.
If actual margins vary significantly
from mean projections used for the 2015
President’s Budget Midsession Review,
DPDP is expected to trigger twice during
the 2015 to 2018 period and total cost
is expected to be about $400 million
over the 4-year period, for an average
cost of $100 million per year. That is a
net cost to the government for both
MPP-Dairy and DPDP, meaning the
projected total payments to producers
and the cost of the dairy products
purchased minus the MPP-Dairy fees
and premiums paid to CCC. Nearly all
of the impacts estimated in this analysis
are transfers between entities within
society. For example, DPDP results in an
average annual cost to the government
of about $30 million for dairy product
purchases (cost side of the transfer),
which would be balanced by low
income individuals receiving $30
million worth of free dairy products
(benefit side of the transfer).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601–612), as amended by the
Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA),
generally requires an agency to prepare
a regulatory flexibility analysis of any
rule subject to the notice and comment
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rulemaking requirements under the
Administrative Procedure Act or any
other law, unless the agency certifies
that the rule will not have a significant
economic impact on a substantial
number of small entities. This rule is
not subject to the Regulatory Flexibility
Act because the 2014 Farm Bill exempts
CCC from notice and comment
rulemaking under 5 USC 553 with
respect to these programs and therefore,
CCC is not required by any law to
publish a proposed rule for public
comment for this rulemaking.
wreier-aviles on DSK5TPTVN1PROD with RULES
Environmental Review
The environmental impacts of this
final rule have been considered in a
manner consistent with the provisions
of the National Environmental Policy
Act (NEPA, 42 U.S.C. 4321–4347), the
regulations of the Council on
Environmental Quality (40 CFR parts
1500–1508), and the FSA regulations for
compliance with NEPA (7 CFR part
799). FSA has determined that the
provisions identified in this final rule
are administrative in nature, intended to
clarify the mandatory requirements of
the programs, as defined in the 2014
Farm Bill, and do not constitute a major
Federal action that would significantly
affect the quality of the human
environment, individually or
cumulatively. The few discretionary
features of the rules include establishing
deadlines, determinations of eligibility
and prices, and purchase procedures,
and have been selected largely based on
pre-existing USDA programs. While
these dairy programs are new, their
creation is mandated by the 2014 Farm
Bill, and are therefore not subject to
review under NEPA. The few
discretionary provisions left for FSA to
determine were all purely
administrative and would not alter any
environmental impacts resulting from
implementing the mandatory programs.
Therefore, as this rule presents
administrative clarifications only, FSA
will not prepare an environmental
assessment or environmental impact
statement for this regulatory action.
Executive Order 12372
Executive Order 12372,
‘‘Intergovernmental Review of Federal
Programs,’’ requires consultation with
State and local officials. The objectives
of the Executive Order are to foster an
intergovernmental partnership and a
strengthened Federalism, by relying on
State and local processes for State and
local government coordination and
review of proposed Federal Financial
assistance and direct Federal
development. For reasons specified in
the final rule related notice regarding 7
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Jkt 232001
CFR part 3015, subpart V (48 FR 29115,
June 24, 1983), the programs and
activities within this rule are excluded
from the scope of Executive Order
12372, which requires
intergovernmental consultation with
State and local officials.
Executive Order 12988
This rule has been reviewed under
Executive Order 12988, ‘‘Civil Justice
Reform.’’ This rule will not preempt
State or local laws, regulations, or
policies unless they represent an
irreconcilable conflict with this rule.
The rule will not have retroactive effect.
Before any judicial action may be
brought regarding the provisions of this
rule, the administrative appeal
provisions of 7 CFR parts 11 and 780 are
to be exhausted.
Executive Order 13132
This rule has been reviewed under
Executive Order 13132, ‘‘Federalism.’’
The policies contained in this rule do
not have any substantial direct effect on
States, on the relationship between the
Federal government and the States, or
on the distribution of power and
responsibilities among the various
levels of government, except as required
by law. Nor does this rule impose
substantial direct compliance costs on
State and local governments. Therefore,
consultation with the States is not
required.
Executive Order 13175
This rule has been reviewed in
accordance with the requirements of
Executive Order 13175, ‘‘Consultation
and Coordination with Indian Tribal
Governments.’’ Executive Order 13175
requires Federal agencies to consult and
coordinate with tribes on a governmentto-government basis on policies that
have tribal implications, including
regulations, legislative comments or
proposed legislation, and other policy
statements or actions that have
substantial direct effects on one or more
Indian tribes, on the relationship
between the Federal Government and
Indian tribes or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.
FSA has assessed the impact of this
rule on Indian tribes and determined
that this rule does not, to our
knowledge, have tribal implications that
require tribal consultation under
Executive Order 13175. If a Tribe
requests consultation, FSA will work
with the USDA Office of Tribal
Relations to ensure meaningful
consultation is provided where changes,
additions, and modifications identified
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in this rule are not expressly mandated
by the 2014 Farm Bill.
The Unfunded Mandates Reform Act of
1995
Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA, Pub. L.
104–4) requires Federal agencies to
assess the effects of their regulatory
actions on State, local, and Tribal
governments, or the private sector.
Agencies generally need to prepare a
written statement, including a cost
benefit analysis, for proposed and final
rules with Federal mandates that may
result in expenditures of $100 million or
more in any year for State, local, or
Tribal governments, in the aggregate, or
to the private sector. UMRA generally
requires agencies to consider
alternatives and adopt the more cost
effective or least burdensome alternative
that achieves the objectives of the rule.
This rule contains no Federal mandates,
as defined in Title II of UMRA, for State,
local, and Tribal governments or the
private sector. Therefore, this rule is not
subject to the requirements of sections
202 and 205 of UMRA.
Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA)
This rule is a major rule under the
Small Business Regulatory Enforcement
Fairness Act of 1996, (Pub. L. 104–121,
SBREFA). SBREFA normally requires
that an agency delay the effective date
of a major rule for 60 days from the date
of publication to allow for
Congressional review. Section 808 of
SBREFA allows an agency to make a
major regulation effective immediately
if the agency finds there is good cause
to do so. Section 1601(c)(3) of the 2014
Farm Bill provides that the authority in
section 808 of SBREFA be used in
implementing the changes required by
Title I of the 2014 Farm Bill, such as for
the changes being made by this rule.
Consistent with section 1601(c)(3) of the
2014 Farm Bill, FSA therefore finds that
it would be contrary to the public
interest to delay the effective date of this
rule, because it would delay
implementation MPP-Dairy as required
in the 2014 Farm Bill. The regulation
needs to be effective to provide
adequate time for producers to be ready
to begin the sign-up process in a timely
fashion to allow coverage to begin by
September 1, 2014. Therefore, the rule
is effective when published in the
Federal Register.
Federal Assistance Programs
The title and number of the Federal
Domestic Assistance Program found in
the Catalog of Federal Domestic
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Assistance to which this rule applies
are:
10.116—Margin Protection ProgramDairy
10.115—Dairy Product Donation
Program
Paperwork Reduction Act of 1995
The regulations in this rule are
exempt from the requirements of the
Paperwork Reduction Act (44 U.S.C.
Chapter 35), as specified in subsection
1601(c)(2)(B) of the 2014 Farm Bill,
which provides that these regulations be
promulgated and administered without
regard to the Paperwork Reduction Act.
1430.118 Misrepresentation and scheme or
device.
1430.119 Estates, trusts, and minors.
1430.120 Death, incompetency, or
disappearance.
1430.121 Maintenance and inspection of
records.
1430.122 Refunds; joint and several
liability.
1430.123 Violations of highly erodible and
wetland conservation provisions.
1430.124 Violations regarding controlled
substances.
Subpart A—Margin Protection Program
for Dairy Producers
§ 1430.100
Purpose.
FSA and CCC are committed to
complying with the E-Government Act,
to promote the use of the Internet and
other information technologies to
provide increased opportunities for
citizen access to Government
information and services, and for other
purposes.
The regulations in this subpart apply
for the Margin Protection Program for
Dairy (MPP-Dairy), which is authorized
by sections 1401 through 1410 of the
Agricultural Act of 2014 (Pub. L. 113–
79, 7 U.S.C. 9051–9060). MPP-Dairy is
intended to provide eligible dairy
producers risk protection against low
margins resulting from a combination of
low milk prices and high feed costs.
List of Subjects in 7 CFR Part 430
§ 1430.101
E-Government Act Compliance
Dairy products, Fraud, Penalties,
Price support programs, Reporting and
recordkeeping requirements.
For the reasons discussed above, the
regulations at 7 CFR part 1430 are
amended as follows:
PART 1430—DAIRY PRODUCTS
1. The authority for part 1430 is
revised to read as follows:
■
Authority: 7 U.S.C. 8773, 9051–9060, and
9071 and 15 U.S.C. 714b and 714c.
2. Revise 7 CFR part 1430, subpart A
to read as follows:
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■
Subpart A—Margin Protection Program for
Dairy Producers
Sec.
1430.100 Purpose.
1430.101 Administration.
1430.102 Definitions.
1430.103 Eligible dairy operations.
1430.104 Time and method of registration
and annual election.
1430.105 Establishment and transfer of
production history for a participating
dairy operation.
1430.106 Administrative fees.
1430.107 Buy-up coverage.
1430.108 Margin protection payments.
1430.109 Effect of failure to pay
administrative fees or premiums.
1430.110 Calculation of average feed cost
and actual dairy production margins.
1430.111 Relation to RMA’s LGM-Dairy
Program.
1430.112 Multi-year contract.
1430.113 Contract modifications.
1430.114 Reconstitutions.
1430.115 Offsets and withholdings.
1430.116 Assignments.
1430.117 Appeals.
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Administration.
(a) MPP-Dairy is administered under
the general supervision of the Executive
Vice President, CCC, or a designee, and
will be carried out by Farm Service
Agency (FSA) State and county
committees and employees.
(b) State and county committees and
their employees may not waive or
modify any requirement of this subpart.
(c) The State committee will take any
action required when not taken by the
county committee, require correction of
actions not in compliance, or require the
withholding of any action that is not in
compliance with this subpart.
(d) The Executive Vice President,
CCC, or a designee, may determine any
question arising under MPP-Dairy or
reverse or modify any decision of the
State or county committee.
(e) The Deputy Administrator, Farm
Programs, FSA, may waive or modify
MPP-Dairy requirements not statutorily
required when failure to meet such
requirements does not adversely affect
the operation of MPP-Dairy.
(f) A representative of CCC will
execute a contract for registration in
MPP-Dairy and related documents
under the terms and conditions
determined and announced by the
Deputy Administrator on behalf of CCC.
Any document not under such terms
and conditions, including any execution
before the date authorized by CCC, will
be null and void.
§ 1430.102
Definitions.
The definitions in this section are
applicable for the purposes of
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administering MPP-Dairy established by
this subpart.
Actual dairy production margin
means the difference between the allmilk price and the average feed cost, as
calculated under § 1430.110. If the
calculation would produce a negative
number the margin will be considered
to be zero.
Administrative county office means
the county office designated to make
determinations, handle official records,
and issue payments for the producer as
specified in 7 CFR part 718.
All-milk price means the national
average price received, per
hundredweight of milk, by dairy
operations for all milk sold to dairy
plants and milk dealers in the United
States, as determined by the Secretary.
AMS means the Agricultural
Marketing Service of the USDA.
Annual election period for MPP-Dairy
means the period, each calendar year,
established by the Deputy
Administrator, for a dairy operation to
register initially to participate in MPPDairy, pay associated administrative
fees, and applicable premiums, or, if
already registered as a participating
dairy operation, to make annual
coverage elections for an applicable
calendar year.
Average feed cost means the national
average cost of feed used by a dairy
operation to produce a hundredweight
of milk, as determined under
§ 1430.110(b).
Buy up coverage means margin
protection coverage for a margin
protection level above $4 per
hundredweight of milk.
Catastrophic level coverage means $4
per cwt margin protection coverage and
a coverage percentage of 90 percent,
with no premium assessed.
CCC means the Commodity Credit
Corporation of the U.S. Department of
Agriculture.
Commercially marketed means selling
whole milk to either the market to
which the dairy operation normally
delivers and receives monetary
compensation or other similar markets.
Consecutive 2-month period means a
2-month period consisting, respectively,
of the months of January and February;
March and April; May and June; July
and August; September and October; or
November and December.
Contract means the terms and
conditions to register for the MPP-Dairy
as executed on a form prescribed by
CCC and required to be completed by
the dairy operation and accepted by
CCC, including any contract
modifications made in an annual
election period before coverage for the
applicable calendar year commences.
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County committee means the FSA
county committee.
County office means the FSA office
responsible for administering FSA
programs for farms located in a specific
area in a State.
Covered production history is equal to
the production history of the operation
multiplied by the coverage percentage
selected by the participating dairy
operation.
Dairy operation means a dairy
operation as defined pursuant to the
criteria and procedures under the Milk
Income Loss Contract (MILC) Program
or any dairy facility that was part of a
single dairy operation that participated
in the MILC Program as of February 7,
2014. Operations that are determined to
be ‘‘new operations’’ under this subpart,
will be subject to the ‘‘affiliation’’ test
under § 1430.103(e) if the operation
elects to participate in MPP-Dairy
separately. A single dairy operation
operated by more than one dairy
producer will be treated as a single
dairy operation for purposes of
participating in MPP-Dairy and can only
submit one application. All dairy
operations under this part shall
commercially market milk produced
from cows as a single unit located in the
United States in which each dairy
producer:
(1) Has risk in the production of milk
in the dairy operation; and
(2) Makes contributions, including
land, labor, management, equipment, or
capital, to the dairy operation at least
commensurate to the producers’ share of
the operation.
Deputy Administrator means the
Deputy Administrator for Farm
Programs, or designee.
Farm Service Agency or FSA means
the Farm Service Agency of the USDA.
Hundredweight or cwt means 100
pounds.
Milk Income Loss Contract Program or
MILC means the program established
under section 1506 of the Food,
Conservation, and Energy Act of 2008 (7
U.S.C. 8773) and the regulations found
in subpart B of this part.
Milk marketing means a sale of milk
for which there is a verifiable
production record for milk
commercially marketed.
NASS means the National
Agricultural Statistics Service of the
USDA.
New operation means a dairy
operation that did not commercially
market milk at least 12 full months as
of February 7, 2014.
Participating dairy operation means a
dairy operation that registers to
participate in MPP-Dairy under this
part.
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Producer means any individual, group
of individuals, partnership, corporation,
estate, trust association, cooperative, or
other business enterprise or other legal
entity who is, or whose members are, a
citizen of, or legal resident alien in the
United States, and who directly or
indirectly, shares in the risk of
producing milk, makes contributions
including land, labor, management,
equipment, or capital to the dairy
operation at least commensurate to the
producers’ share of the operation, to the
dairy operation of the individual or
entity, as determined by the Deputy
Administrator.
Production history means the
production history determined for a
participating dairy operation when the
participating dairy operation registers in
MPP-Dairy.
RMA means the Risk Management
Agency of the USDA.
Secretary means the Secretary of
Agriculture.
United States means the 50 States of
the United States of America, the
District of Columbia, American Samoa,
Guam, the Commonwealth of the
Northern Mariana Islands, the
Commonwealth of Puerto Rico, the
Virgin Islands of the United States, and
any other territory or possession of the
United States.
USDA means the United States
Department of Agriculture.
Verifiable production records mean
evidence that is used to substantiate the
amount of production commercially
marketed and that can be verified by
CCC through an independent source.
§ 1430.103
Eligible dairy operations.
(a) The eligibility requirements for a
dairy operation to register in MPP-Dairy
and receive payments under this
subpart, are to:
(1) Produce milk from cows in the
United States that is marketed
commercially at the time of each annual
election in MPP-Dairy;
(2) Submit accurate and complete
information as required by the this
subpart;
(3) Provide proof of milk production
marketed commercially by all persons
in the dairy operation to establish
production history;
(4) Not participate in the Livestock
Gross Margin for Dairy (LGM-Dairy)
Program administered by the USDA
Risk Management Agency (RMA) under
the Federal Crop Insurance Act (7 U.S.C.
1501–1536), except to the extent
permitted by this subpart, provided that
under no circumstance may the
operation receive coverage for the same
period in MPP-Dairy for which
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51463
payments have been received or earned
under LGM-Dairy; and
(5) Pay required administrative fees
for participation in MPP-Dairy as
specified in this subpart and any
premiums, if applicable, as specified in
this subpart.
(b) A person or entity covered by
§ 1400.401 of this chapter (hereafter
‘‘foreign person’’) must meet the
eligibility requirements contained in
that section to receive payments under
this part. A dairy operation with
ineligible foreign persons as members
will have any payment reduced by the
proportional share of such members.
(c) Federal agencies and States,
including all agencies and political
subdivisions of a State, are not eligible
for payments under this subpart.
(d) As specified in § 1430.104, each
dairy operation is required to submit a
separate registration to be eligible for
MPP-Dairy coverage and payment. A
producer who owns more than one
eligible dairy operation may participate
separately for each dairy operation; each
eligible dairy operation must be
registered separately, subject to the
affiliation test for new operations.
(e) A new dairy operation will be
treated as an affiliated dairy operation
and not be treated as a separate dairy
operation under MPP-Dairy if producers
that collectively own more than 50
percent of the new dairy operation also
collectively own more than 50 percent
interest in another dairy operation
registered in MPP-Dairy.
§ 1430.104 Time and method of
registration and annual election.
(a) A dairy operation may register to
participate in MPP-Dairy by submitting
a contract prescribed by CCC. Dairy
operations may obtain a blank contract
in person, by mail, or by facsimile from
any county office. In addition, dairy
operations may download a copy of the
forms at https://www.sc.egov.usda.gov.
(b) Dairy operation shall submit
completed contracts and any other
supporting documentation during the
annual election period established by
the Deputy Administrator, to the
administrative county office serving the
dairy operation.
(1) A new dairy operation that has
been established after the most recent
election period is required to submit a
contract within the first 90 calendar
days from the date on of which the dairy
operation first commercially markets
milk and may elect coverage that begins
the next consecutive 2-month period
following the approval date of the
registration and coverage election; or
(2) A new dairy operation that does
not meet the 90 day requirement of
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paragraph (b)(1) of this section cannot
enroll until the next annual election
period for coverage for the following
calendar year.
(c) Registration requests and coverage
elections are to be submitted in time to
be received at FSA by the close of
business on the last day of the annual
election period established by the
Deputy Administrator.
(1) The applicable year of coverage for
contracts arising from accepted
registrations in the annual election
period will be the following calendar
year, except for 2014, where the election
and coverage year will be the same.
(2) Registration requests and coverage
elections submitted after the applicable
allowed time for submission will not be
considered.
(3) During an annual election period,
participating dairy operations may
change coverage elections for the
following calendar year.
(d) To receive margin protection
coverage, separate registrations are
required for each separately constituted
dairy operation. If a dairy producer
operates more than one separate and
distinct operation, the producer
registers each operation for each
operation to be eligible for coverage.
(e) A participating dairy operation
must elect, during the applicable annual
election period and by using the form
prescribed by CCC, the coverage level
threshold and coverage percentages for
that participating dairy operation for the
applicable calendar year.
(1) Once the initial completed
registration is submitted and approved
by CCC, it cannot be cancelled by the
participating dairy operation through
December 31, 2018; however, each
calendar year subsequent to the initial
registration of the participating dairy
operation, it may elect to change the
coverage level threshold and coverage
percentage, on a form prescribed by
CCC, during the election period for the
applicable subsequent calendar year.
For dairy operations that want to
continue coverage levels established in
the prior calendar year, the Deputy
Administrator will establish a procedure
to allow such coverage levels to
continue that will include the
requirement of a timely payment of
administrative fees and any premiums,
if applicable.
(2) If the operation fails to file an
update of its election during the annual
election period, the coverage level will
be reduced to the catastrophic level
coverage, but such coverage will only be
provided if the participating dairy
operation pays the annual
administrative fee for the relevant
calendar year.
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(3) All producers in the participating
dairy operation must agree to the
coverage level threshold and coverage
percentage elected by the dairy
operation.
(f) By registering to participate or
receive payment under MPP-Dairy,
producers in the participating dairy
operation certify to the accuracy and
truthfulness of the information in their
applications and supporting
documentation.
(1) All producers in a participating
dairy operation must sign and certify all
submissions made under MPP-Dairy
that relate to the level of coverage.
(2) All information provided is subject
to verification. FSA may require a dairy
operation to provide documentation to
support all verifiable records.
Furnishing the information is voluntary;
however, without it MPP-Dairy benefits
will not be approved. Providing a false
certification to the Federal Government
may be punishable by imprisonment,
fines, other penalties, or sanctions.
(g) At the time the completed contract
is submitted to FSA for the first year in
which the dairy operation is to
participate in MPP-Dairy, the dairy
operation must also submit a separate
form, as specified by CCC, to establish
the production history for the dairy
operation.
§ 1430.105 Establishment and transfer of
production history for a participating dairy
operation.
(a) A participating dairy operation
must provide all information required
by FSA to establish the production
history of the participating dairy
operation for purposes of participating
in MPP-Dairy. Except as provided in
paragraph (b) of this section relating to
new dairy operations, FSA will
establish the production history for a
dairy operation for margin protection as
the highest annual milk marketings of
the participating dairy operation during
any one of the 2011, 2012, or 2013
calendar years.
(1) All producers in the participating
dairy operation are required to provide
adequate proof of the dairy operation’s
quantity of milk commercially
marketed, to establish the production
history for the dairy operation.
(2) All information provided is subject
to verification, spot check and audit by
FSA. If the dairy operation does not
provide to the satisfaction of FSA
documentation requested to substantiate
the production history of the highest
annual milk marketings for the
participating dairy operation, then, the
registration will not be approved.
(b) A participating dairy operation
that did not produce and commercially
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market milk at least 12 full months as
of February 7, 2014, will be considered
a new dairy operation. To establish the
production history for such a new dairy
operation the new dairy operation is
required to elect one of the following
methods:
(1) The volume of the actual milk
marketings for the months the dairy
operation has been in operation,
extrapolated to a yearly amount based
on a national seasonally adjusted index,
as determined by the Deputy
Administrator, to account for
differences in milk production during
the year; or
(2) An estimate of the actual milk
marketings of the dairy operation based
on the herd size of the dairy operation
relative to the national rolling herd
average data published by the Secretary.
(c) If FSA determines that the new
enterprise was formed for the purpose of
circumventing MPP-Dairy provisions,
including, but not limited to,
reconstituting a dairy operation to
receive additional benefits, or
establishing new production history,
that enterprise will not be considered a
new dairy operation for the purpose of
establishing production history.
(d) Once the production history of a
participating dairy operation is
established under paragraphs (a) or (b)
of this section, the production history
will be adjusted upward by FSA only to
reflect any increase in the national
average milk production, as determined
by the Deputy Administrator.
(e) The production history may be
transferred from one dairy facility to
another:
(1) Producers of a dairy operation may
relocate the dairy operation to another
location and the production history of
the original operation may be
transferred to the new location and may
be added to production history at the
new location that has not been
transferred;
(2) Producers of a dairy operation may
transfer ownership of a dairy operation
with its associated production history,
but if the producers start a new
operation such new operation may only
be eligible for new production history if
the new operation is otherwise not
affiliated with participants in MPPDairy as described in § 1430.103(e); or
(3) Producers of more than one dairy
operation that separately participate in
MPP-Dairy may transfer the production
histories of these dairy operations into
a previously unregistered dairy
operation.
(f) If CCC waives the obligation, under
MPP-Dairy of a participating dairy
operation due to death or retirement of
the producer or of the permanent
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dissolution of the dairy operation or
under other circumstances as
determined by the Deputy
Administrator, FSA may reestablish the
production history provided that the
production history has not been
transferred.
§ 1430.106
Administrative fees.
(a) Dairy operations must pay an
initial administrative fee to FSA in the
amount of $100 to participate in MPPDairy at the time of initial registration
to participate. Each approved
participating dairy operation must also
pay a $100 administrative fee each year
through December 31, 2018. Annual
administrative fees are due and payable
to FSA through the administrative
county FSA office no later than the
close of business on the last day of the
annual election period established by
the Deputy Administrator for each
applicable calendar year of margin
protection coverage under MPP-Dairy.
The administrative fee paid is nonrefundable.
(b) The required annual
administrative fee is per dairy
operation. Therefore, multiple dairy
producers in a single unit participating
dairy operation are required to pay only
one annual administrative fee for the
participating dairy operation.
Conversely, in the case of a dairy
producer that operates more than one
dairy operation, each participating dairy
operation is required to pay a separate
administrative fee annually.
(c) Failure to pay the administrative
fee timely will result in loss of margin
protection coverage for the applicable
calendar year. The payment will still be
due, as provided in § 1430.109.
§ 1430.107
Buy-up coverage.
(a) For purposes of receiving MPPDairy coverage, a participating dairy
operation may annually elect during an
annual election period the following for
the succeeding calendar year:
51465
(1) A coverage level threshold for
margins that, per cwt, is equal to one of
the following: $4, $4.50, $5, $5.50, $6,
$6.50, $7, $7.50, or $8; and
(2) A percentage of coverage for the
production history from 25 percent to
90 percent, in 5-percent increments.
(b) In the absence of any such
election, the applicable coverage level
provided, with no premium due, is
catastrophic level coverage.
(c) A participating dairy operation
that elects margin protection coverage
above $4 is required to pay an annual
premium based on coverage level and
covered production history in addition
to the administrative fee. Tier 1 applies
to covered production history up to and
including 4 million pounds; Tier 2
applies to covered production history
above 4 million pounds.
(d) The premium per cwt of milk,
based on the elected percentage of
coverage of production history is
specified in the following tables.
TABLE 1 TO § 1430.107(D)
Tier 1
Premium per cwt
in 2014 and 2015
(for the covered 1
production history
that is 4 million
pounds or less) 2
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
None
$0.008
0.019
0.030
0.041
0.068
0.163
0.225
0.475
None
$0.020
0.040
0.100
0.155
0.290
0.830
1.060
1.360
Tier 1
Premium per cwt
after 2015
(for the covered 1
production history
that is 4 million
pounds or less)
Coverage level
(margin)
Tier 2
Premium per cwt,
all years
(for the part of
covered 1 production history over 4
million pounds)
Tier 2
Premium per cwt,
all years
(for the part of
covered 1 production history over 4
million pounds)
None
$0.010
0.025
0.040
0.055
0.090
0.217
0.300
0.475
None
$0.020
0.040
0.100
0.155
0.290
0.830
1.060
1.360
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
1 The
catastrophic coverage level provided at the $4 margin is 90 percent.
TABLE 2 TO § 1430.107(D)
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Coverage level
(margin)
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
1 The
catastrophic coverage level provided at the $4 margin is 90 percent.
(e) The annual premium due for a
participating dairy operation is
calculated by multiplying:
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(1) The covered production history;
and
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(2) The premium per cwt of milk
specified in paragraph (d) of this section
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for the coverage level elected by the
dairy operation.
(f) In the case of a new dairy operation
that first registers to participate in MPPDairy for a calendar year after the start
of the calendar year, the participating
dairy operation is required to pay a prorated premium for that calendar year
based on the portion of the calendar
year for which the participating dairy
operation is eligible, and for which it
purchases the coverage.
(g) The total annual premium for a
participating dairy operation calculated
as provided in paragraphs (d) and (e) of
this section for calendar year 2014, is
due in full at the time the contract is
submitted to FSA during the open
election period applicable for calendar
year 2014, as determined by the Deputy
Administrator. For subsequent calendar
years, a participating dairy operation is
required to pay the annual premium
calculated as specified in paragraphs (d)
and (e) of this section for the applicable
calendar year, unless otherwise
determined by the Deputy
Administrator, according to either of the
following options:
(1) In total at time of submission of
coverage election to FSA; or
(2) In installments, with a minimum
of 50 percent at the time of submission
of coverage election to FSA and the
remaining balance due no later than
June 1 of the applicable calendar year of
coverage.
(h) If a minimum of 50 percent of the
premium is not paid by the end of an
open election period for an applicable
calendar year of coverage, the
participating dairy operation will only
be covered at catastrophic level
coverage, except that the participating
dairy operation will have no coverage
whatsoever if the administrative fee for
the applicable calendar year of coverage
has not been timely paid.
(i) Annual premium balances due to
FSA from a participating dairy
operation for a calendar year of coverage
must be paid in full no later than June
1 of the applicable calendar year.
Premium balances due, but not in
arrears, prior to June 1 will be deducted
from any MPP-Dairy payment(s) made
to the participating dairy operation
during the applicable calendar year of
coverage.
(j) A participating dairy operation
with an unpaid premium balance after
June 1 for a calendar year of coverage
will lose eligibility for coverage as
provided in § 1430.109.
(k) The Deputy Administrator may
waive the obligation to pay the
premium, or refund the premium paid,
of a participating dairy operation for a
calendar year, in cases that include, but
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are not limited to, as determined by the
Deputy Administrator, death,
retirement, permanent dissolution of a
participating dairy operation, or other
circumstances determined by the
Deputy Administrator.
(l) MPP-Dairy administrative fees and
premiums are required to be paid by a
negotiable instrument satisfactory in
form to the Deputy Administrator and
made payable to FSA and either mailed
to or provided in person to the
administrative county office or other
location designated by FSA.
§ 1430.108
Margin protection payments.
(a) An MPP-Dairy payment will be
made to a participating dairy operation
for any consecutive 2-month period
when the average actual dairy
production margin for the consecutive
2-month period falls below the coverage
level threshold in effect for the
participating dairy operation.
(b) The MPP-Dairy payment to an
eligible participating dairy operation
relative to the qualifying 2-month
period will equal the product obtained
by multiplying:
(1) The amount by which the coverage
level in effect for the participating dairy
operation exceeds the average actual
dairy production margin for the
applicable 2-month period;
(2) The coverage percentage in effect
for the participating dairy operation;
and
(3) The production history of the
participating dairy operation, divided
by 6.
(c) For any coverage period, a
participating dairy operation can for all
of its production select only one
coverage level threshold between $4 and
$8 (in 50 cent increments) per
hundredweight under § 1430.107(a)(1);
and only one percentage for its
production history between 25 percent
and 90 percent (in 5 percent increments)
under § 1430.107(a)(2).
§ 1430.109 Effect of failure to pay
administrative fees or premiums.
(a) A participating dairy operation
that fails to pay a required
administrative fee or premium payment
due upon application to MPP-Dairy or
for a calendar year of coverage:
(1) Remains legally obligated to pay
such administrative fee or premium, as
applicable; and
(2) Upon such failure to pay when
due, loses coverage under MPP-Dairy
until such administrative fee or
premium is paid in full, and once paid,
coverage will begin with the next
consecutive 2-month period.
(b) CCC may take such actions as
necessary to collect unpaid
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administrative fees and premium
payments.
§ 1430.110 Calculation of average feed
cost and actual dairy production margins.
(a) Payments are made to a
participating dairy operation as
specified in this subpart only when, for
a consecutive 2-month period, the
calculated average actual dairy
production margin is below the
coverage level in effect for the
participating dairy operation. That
margin will be calculated on a national
basis and is the amount by which for the
relevant consecutive 2-month period,
the all milk price exceeds the average
feed cost for dairy producers. All
calculations will be made on a per cwt
basis. The average actual dairy
production margin calculation applies
to all participating dairy operations. The
calculations are not made on an
operation by operation basis or on their
marketings.
(b) For calculating the national
average feed cost that dairy operations
use to produce a cwt of milk, the
following three items will be added
together:
(1) The product determined by
multiplying 1.0728 by the price of corn
per bushel;
(2) The product determined by
multiplying 0.00735 by the price of
soybean meal per ton; and
(3) The product determined by
multiplying 0.0137 by the price of
alfalfa hay per ton.
(c) To make those feed calculations,
the Deputy Administrator on behalf of
CCC will use the following full month
data:
(1) For corn, the full month price
received by farmers during the month in
the United States as reported in the
monthly Agricultural Prices report by
USDA NASS;
(2) For soybean meal, the Central
Illinois soybean meal price delivered by
rail as reported in the USDA AMS
Market News-Monthly; and
(3) For alfalfa hay, the full month
price received during the month by
farmers in the United States for alfalfa
hay as reported in the monthly
Agricultural Prices report by USDA
NASS.
(d) The national average feed cost data
for corn, soybean meal, and alfalfa hay
used in the calculation of the national
average feed cost to determine the actual
dairy production margin for the relevant
period, will be the data reported in the
publication the following month. (For
example, preliminary May prices for
corn and soybean meal were reported in
the May Agricultural Prices publication
but full month May prices will be
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available in the June publication, and
those will be the prices used).
(e) The actual dairy production
margin for each consecutive 2-month
period, will be calculated by
subtracting:
(1) The average feed cost for that
consecutive 2-month period,
determined under paragraph (b) of this
section; from
(2) The all-milk price for that
consecutive 2-month period.
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§ 1430.111
Program.
Relation to RMA’s LGM-Dairy
(a) In general, a producer may
participate in either MPP-Dairy through
a dairy operation or the LGM-Dairy
program operated by RMA, but not both.
However, since MPP-Dairy is first being
made available after potential applicants
may have already applied for 2014 or
2015 coverage under LGM-Dairy, for the
annual election period for MPP-Dairy
established for the 2014 and 2015
calendar year coverage only, a producer
with coverage under LGM-Dairy that
wishes to participate through their dairy
operation in MPP-Dairy, is required to:
(1) Register the dairy operation to
participate in MPP-Dairy during the
annual election period established for
calendar year 2014 and 2015, as
established by the Deputy
Administrator;
(2) Agree not to extend or obtain new
LGM-Dairy coverage;
(3) Acknowledge in writing at the
time of registration that no MPP-Dairy
payment will be made to the dairy
operation for any month included in
any period for which any producer in
the dairy operation has LGM-Dairy
coverage; and
(4) Pay applicable administrative fees
in the same manner as other
participating dairy operations by paying
fees and premiums that may be prorated
by the Deputy Administrator to reflect
the limited period of coverage.
(b) Margin protection coverage under
MPP-Dairy will not become effective
until after the target month of
marketings under LGM-Dairy has ended
by natural expiration of the LGM-Dairy
agreement or by an RMA-allowed
cancellation. Any applicable premium
for the participating dairy operation will
be prorated based on the remaining
months of the applicable calendar year
of coverage following the month the
LGM-Dairy target month has ended.
(c) MPP-Dairy payment may only
trigger after the target month of
marketings under LGM-Dairy has ended.
(d) A participating dairy operation
will be required to provide proof, to the
satisfaction of FSA, of the cancellation
or expiration of the LGM-Dairy policy
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based on the final month of target
marketings under the LGM-Dairy policy.
§ 1430.112
Multi-year contract.
(a) Participating dairy operations
enrolled in MPP-Dairy are enrolled until
December 31, 2018. As such, a
participating dairy operation is
obligated to pay initial and annual
administrative fees and applicable
premiums each succeeding calendar
year following the date the contract is
first entered into through December 31,
2018.
(b) Failure to pay administrative fees
and premiums will result in the loss of
coverage, and the participating dairy
operation remains obligated to pay such
administrative fees and premiums as
provided in § 1430.108.
(c) If a participating dairy operation
goes out of business as described in
§ 1430.107(k) before December 31, 2018,
the contract will be terminated
immediately, except with respect to
payments accrued to the benefit of the
participating dairy operation under this
subpart before such termination.
§ 1430.113
Contract modifications.
(a) Producers in a participating dairy
operation must notify FSA immediately
of any changes that may affect their
participation in MPP-Dairy under this
subpart. Changes include, but are not
limited to death of a producer on the
contract, producer joining the operation,
producer exiting the operation,
relocation of the dairy operation,
transfer of shares by sale or other
transfer action, or dairy operation
reconstitutions as provided in
§ 1430.114.
(b) Payment of any outstanding
premium or administrative fee for a
participating dairy operation must be
paid in full before a transfer of shares by
sale or any other change in producers on
the contract originally submitted to FSA
may take effect. Otherwise, producer
changes will not be recognized until the
following annual election period, and
only if at that time all associated
premiums and administrative fees from
any previous calendar year of coverage
have been paid in full.
§ 1430.114
Reconstitutions.
(a) A participating dairy operation
under this subpart may reorganize or
restructure itself in such a way that the
constitution or makeup of its operation
is reconstituted in another organization
framework. However, any participating
dairy operation that reorganizes or
restructures after enrolling is subject to
a review by FSA to determine if the
operation was reorganized or
restructured for the sole purpose of
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51467
establishing an alternative production
history for a participating dairy
operation or was reorganized or
restructured to otherwise circumvent
any MPP-Dairy provision under this
subpart (including the tier system for
premiums) or otherwise to prevent the
accomplishment of the purpose of the
program.
(b) A participating dairy operation
that FSA determines has reorganized
solely to establish a new production
history or to circumvent the
determination of applicable fees or
premiums based on an established
production history determined under
this subpart will be considered to have
failed to meet MPP-Dairy requirements
and, in addition to other sanctions or
penalties that may apply, will not be
eligible for MPP-Dairy payments.
(c) Under no circumstance, except as
approved by the Deputy Administrator
or provided for in these regulations, will
the reconstitution or restructure of a
participating dairy operation change the
determined production history for the
operation. The Deputy Administrator
may, however, adjust the production
history of a participating dairy operation
if there is a calculation error or if
erroneous information has been
supplied by or on behalf of the
participating dairy operation.
§ 1430.115
Offsets and withholdings.
FSA may offset or withhold any
amount due FSA under this subpart
under the provisions of part 1403 of this
chapter or any successor regulations, or
any other authorities that may allow for
collection action of that sort.
§ 1430.116
Assignments.
Any producer may assign a payment
to be made under this subpart in
accordance with part 1404 of this
chapter or successor regulations as
designated by the Secretary or as
allowed by the Deputy Administrator in
writing.
§ 1430.117
Appeals.
Any producer who is dissatisfied with
a determination made pursuant to this
subpart may request reconsideration or
appeal of such determination under
parts 11 or 780 of this title.
§ 1430.118
or device.
Misrepresentation and scheme
(a) In addition to other penalties,
sanctions or remedies as may apply, all
or any part of a payment otherwise due
a person or legal entity on all
participating dairy operations in which
the person or legal entity has an interest
may be withheld or be required to be
refunded if the person or legal entity
fails to comply with the provisions of
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this subpart or adopts or participates in
adopting a scheme or device designed to
evade this subpart, or that has the effect
of evading this part. Such acts may
include, but are not limited to:
(1) Concealing information that affects
an registration or coverage election;
(2) Submitting false or erroneous
information; or
(3) Creating a business arrangement
using rental agreements or other
arrangements to conceal the interest of
a person or legal entity in a dairy
operation for the purpose of obtaining
MPP-Dairy payments the individual or
legal entity would otherwise not be
eligible to receive. Indicators of such
business arrangement include, but are
not limited to the following:
(i) No milk is produced and
commercially marketed by a
participating dairy operation;
(ii) The participating dairy operation
has no appreciable assets;
(iii) The only source of capital for the
dairy operation is the MPP-Dairy
payments; or
(iv) The represented dairy operation
exists mainly for the receipt of MPPDairy payments.
(b) If the Deputy Administrator
determines that a person or legal entity
has adopted a scheme or device to
evade, or that has the purpose of
evading, the provisions of this subpart,
such person or legal entity will be
ineligible to receive MPP-Dairy
payments in the year such scheme or
device was adopted and the succeeding
year.
(c) A person or legal entity that
perpetuates a fraud, commits fraud, or
participates in equally serious actions
for the benefit of the person or legal
entity, or the benefit of any other person
or legal entity, in violation of the
requirements of this subpart will be
subject to a 5-year denial of all program
benefits. Such other equally serious
actions may include, but are not limited
to:
(1) Knowingly engaging in, or aiding
in the creation of a fraudulent document
or statement;
(2) Failing to disclose material
information relevant to the
administration of the provisions of this
subpart, or
(3) Engaging in any other actions of a
person or legal entity determined by the
Deputy Administrator to be designed, or
intended to, circumvent the provisions
of this subpart.
(d) Program payments and benefits
will be denied on pro-rata basis:
(1) In accordance with the interest
held by the person or legal entity in any
other legal entity or joint operations;
and
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(2) To any person or legal entity that
is a cash rent tenant on land owned or
under control of a person or legal entity
for which a determination of this
section has been made.
§ 1430.119
Estates, trusts, and minors.
(a) MPP-Dairy documents executed by
producers legally authorized to
represent estates or trusts will be
accepted only if such producers furnish
evidence of the authority to execute
such documents.
(b) A minor who is otherwise eligible
for benefits under this subpart is also
required to:
(1) Establish that the right of majority
has been conferred on the minor by
court proceedings or by law;
(2) Show that a guardian has been
appointed to manage the minor’s
property and the applicable MPP-Dairy
documents are executed by the
guardian; or
(3) Furnish a bond under which the
surety guarantees any loss incurred for
which the minor would be liable had
the minor been an adult.
§ 1430.120 Death, incompetency, or
disappearance.
In the case of death, incompetency,
disappearance or dissolution of a
producer that is eligible to receive
benefits under this subpart, such
persons as are specified in part 707 of
this title may receive such benefits, as
determined appropriate by FSA.
§ 1430.121
records.
Maintenance and inspection of
(a) Participating dairy operations are
required to maintain accurate records
and accounts that will document that
they meet all eligibility requirements
specified in this subpart, as may be
requested by CCC or FSA. Such records
and accounts are required to be retained
for 3 years after the date of MPP-Dairy
payments to the participating dairy
operation. Destruction of the records 3
years after the date of payment will be
at the risk of the party undertaking the
destruction.
(b) A participating dairy operation is
required to allow authorized
representatives of CCC, the Secretary, or
the Comptroller General of the United
States to have access to the premises of
the dairy operation in order to inspect
the herd of cattle, examine, and make
copies of the books, records, and
accounts, and other written data as
specified in paragraph (a) of this
section.
(c) Any producer or dairy operation
that does not comply with the
provisions of paragraphs (a) or (b) of this
section, or that otherwise receives a
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payment for which it is not eligible, is
liable for that payment and is required
to repay it to FSA, with interest to run
from the date of disbursement.
§ 1430.122
liability.
Refunds; joint and several
(a) Any legal entity, including joint
operations, joint ventures and
partnerships, and any member of a legal
entity determined to have knowingly
participated in a scheme or device, or
other such equally serious actions to
evade, or that has the purpose of
evading the provisions of this part, will
be jointly and severally liable for any
amounts determined to be payable as
the result of the scheme or device, or
other such equally serious actions,
including amounts necessary to recover
the payments.
(b) Any person or legal entity that
cooperates in the enforcement of the
provisions of this part may be partially
or fully released from liability, as
determined by the Executive Vice
President, CCC.
(c) The provisions of this section will
be applicable in addition to any liability
that arises under a criminal or civil
statute, regulation, or provision of law.
§ 1430.123 Violations of highly erodible
and wetland conservation provisions.
The provisions of part 12 of this title
apply to this part.
§ 1430.124 Violations regarding controlled
substances.
The provisions of § 718.6 of this title
apply to this part.
■ 3. Revise 7 CFR part 1430, subpart C
to read as follows:
Subpart C—Dairy Product Donation
Program
Sec.
1430.300 Administration, purpose, and
funding.
1430.301 Definitions.
1430.302 Commencement and termination
of DPDP purchases.
1430.303 DPDP purchases.
1430.304 Distribution of DPDP purchased
products.
Subpart C—Dairy Product Donation
Program
§ 1430.300
funding.
Administration, purpose, and
(a) The regulations in this subpart
apply for the Dairy Product Donation
Program (DPDP). DPDP is authorized by
section 1431 of the Agricultural Act of
2014 (Pub. L. 113–79, 7 U.S.C. 9071).
(b) DPDP is designed to address low
dairy producer margins, through
periodic purchases of dairy products, as
specified in this subpart. Dairy products
purchased for DPDP will be used to
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provide nutritional assistance to
members of low-income groups.
(c) The purchase aspect of DPDP will
be operated for the Secretary of
Agriculture and for the Commodity
Credit Corporation by the Farm Service
Agency (FSA) under the direction of the
FSA’s Deputy Administrator for
Commodity Operations. Purchases are
subject to the terms and conditions in
FSA’s purchase announcements. The
distribution of products purchased
through DPDP will be operated for the
Secretary under the direction of the
Food and Nutrition Service.
§ 1430.301
Definitions.
For purposes of this subpart, the
following terms and acronyms apply:
2014 Farm Bill means the Agricultural
Act of 2014 (Pub. L. No. 113–79).
Actual dairy production margin is as
defined in subpart A of this part.
AMS means the Agricultural
Marketing Service of the USDA.
CCC means the Commodity Credit
Corporation.
Deputy Administrator means the Farm
Service Agency Deputy Administrator
for Commodity Operations.
Distribution means the provision of
products purchased through DPDP to
low-income groups through FNS food
distribution programs in accordance
with those program regulations and 7
CFR part 250.
DPDP means the Dairy Product
Donation Program.
FNS means the Food and Nutrition
Service of the USDA.
FSA means the Farm Service Agency
of the USDA.
FSA Administrator means
Administrator of the Farm Service
Agency, USDA.
Hundredweight or cwt means 100
pounds.
MPP-Dairy means the Margin
Protection Program for Dairy provided
for in subpart A of this part.
51469
NDM means non-fat dry milk.
Recipient agencies means agencies or
organizations that are eligible to receive
donated product for distribution under
this subpart.
USDA means the United States
Department of Agriculture.
§ 1430.302 Commencement and
termination of DPDP purchases.
(a) DPDP purchases commence only if
approved by the FSA Administrator
under the provisions of this subpart.
The FSA Administrator will approve
DPDP purchases only if the actual dairy
production margin has been $4 or less
per cwt for each of the preceding 2
months. The actual dairy production
margin will be calculated as specified in
§ 1430.110. The following chart shows
an example of the timing for the
determination of DPDP purchases.
DPDP PURCHASE DETERMINATION EXAMPLE BASED ON DAIRY PRODUCTION MARGINS AND 3-MONTH MAXIMUM FOR
PURCHASES 1
2 Consecutive
months
Calculate margin
for 2 consecutive
months 2
January and February.
February and
March.
March and April .....
March ...................
April and May ........
June 4 ...................
May and June .......
July ......................
June and July ........
August .................
July and August ....
September ...........
August and September.
September and October.
October and November.
November and December.
October ................
April .....................
May ......................
November ............
December ............
January ................
If both margins below $4 per cwt in
the 2 consecutive months
Dairy product purchases 3
April.
Dairy product purchases 3
May.
Dairy product purchases 3
June.
No purchases; terminated
consecutive months.
No purchases; terminated
consecutive months.
No purchases; terminated
consecutive months.
Dairy product purchases 3
October.
Dairy product purchases 3
November.
Dairy product purchases 3
December.
No purchases; terminated
consecutive months.
No purchases; terminated
consecutive months.
3-Month maximum consideration
If either margin above
$4 per cwt in the 2
consecutive months
begin in
1st month of purchases .....................
No purchases.
begin in
2nd consecutive month of purchases
No purchases.
begin in
3rd consecutive month of purchases
No purchases.
after 3
No purchases.
begin in
3-month maximum reached (1st
month off).
3-month maximum reached (2nd
month off).
3-month maximum reached (3rd
month off).
1st month of purchases .....................
begin in
2nd consecutive month of purchases
No purchases.
begin in
3rd consecutive month of purchases
No purchases.
3-month maximum
month off).
3-month maximum
month off).
after 3
after 3
after 3
after 3
No purchases.
No purchases.
No purchases.
reached
(1st
No purchases.
reached
(1st
No purchases
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1 This example assumes that purchases begin in January. In reality, DPDP can—depending on prices and margin triggers—begin on September 1, 2014, which is the start of MPP-Dairy.
2 The full month data for a given month is available at the end of the following month. For example, January data are not available until the
end of February.
2 Purchases cannot begin unless domestic cheddar cheese or nonfat dry milk prices are at certain differentials relative to world prices.
3 In the example, June is the 3rd month of consevutive purchases. June would not be calculated as a potential trigger month, but it is shown
on the chart to clearly show the concept of 3 months on and 3 months off for purchases. If purchases are taking place during a month, that
month cannot be used as a trigger month for a future purchase period.
(b) DPDP purchases terminate and are
not reinstated until the condition
specified in paragraph (a) of this section
is again met, whenever any one of the
following occurs:
(1) If purchases were made for the
preceding 3 months, even if the actual
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dairy production margin remains $4 or
less per cwt of milk.
(2) If the actual dairy production
margin has been greater than $4 per cwt
of milk for the immediately preceding
month.
(3) If the actual dairy production
margin has been $4 or less, but more
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Fmt 4700
Sfmt 4700
than $3, per cwt for the immediately
preceding month and during the same
month —
(i) The price in the United States for
cheddar cheese was more than 5 percent
above the world price, or
(ii) The price in the United States for
non-fat dry milk (NDM) was more than
E:\FR\FM\29AUR1.SGM
29AUR1
51470
Federal Register / Vol. 79, No. 168 / Friday, August 29, 2014 / Rules and Regulations
5 percent above the world price of skim
milk powder.
(4) If the actual dairy production
margin has been $3 or less per cwt of
milk for the immediately preceding
month and during the same month —
(i) The price in the United States for
cheddar cheese was more than 7 percent
above the world price; or
(ii) The price in the United States for
NDM was more than 7 percent above the
world price of skim milk powder.
(c) Purchases will terminate beginning
with the first day of any month that
does not qualify for DPDP purchases.
(d) For calculations under paragraphs
(b)(3) and (4) of this section, the FSA
Administrator may use data from a
single or multiple locales or markets,
including weighted averages, in
consultation with AMS or other USDA
agencies.
wreier-aviles on DSK5TPTVN1PROD with RULES
§ 1430.303
DPDP purchases.
(a) DPDP purchases will be made only
for those months that the FSA
Administrator has determined meet all
the requirements specified in
§ 1430.302. The purchases are subject to
DPDP requirements including price and
quantity restrictions specified in this
subpart.
(b) The Secretary has the authority to
determine purchase and distribution
methods for dairy product purchases
and distribution. Unless otherwise
determined by the Secretary, this
authority is delegated to the Deputy
Administrator in consultation with FNS.
(c) FSA and FNS will determine the
types and quantities of products that
will be purchased, in consultation with
public or private nonprofit
organizations and State and local
agencies eligible to receive such
products.
(d) The FSA Administrator will
determine the quantity of purchases to
be made for a qualifying month and will
consider the results of any consultations
in determining the quantity to be
purchased. In making the
determination, the FSA Administrator
will also take into account a number of
factors, including, but not limited to,
dairy product market conditions,
logistical considerations involved in the
efficient and immediate distribution of
the dairy products, the potential effect
on markets and margins, time
constraints of DPDP, and the cost
effectiveness of the purchases.
Approved quantities for a month will
not exceed the amount of product that
may be effectively distributed without
waste.
(e) Purchases may be approved for a
qualifying month to the extent that the
purchase by FSA can reasonably be
VerDate Mar<15>2010
15:18 Aug 28, 2014
Jkt 232001
expected to be completed in that
calendar month and the products
delivered to recipient agencies within
90 days.
(f) DPDP purchases cannot be stored
by or for CCC, and CCC cannot incur
storage costs on behalf of recipient
agencies for the dairy products.
(g) The purchase price of products
will be the prevailing market price for
like dairy products for private buyers as
determined by the Deputy
Administrator. That price may be, if
approved by the Deputy Administrator,
the price determined by the normal
procurement methods used to procure
foods for FNS domestic food assistance
programs, if the dairy products are
obtained that way.
§ 1430.304 Distribution of DPDP
purchased products.
(a) Purchased products will be
distributed to private and public
nonprofit organizations eligible to
receive donated foods for distribution to
low-income groups through FNS’ food
distribution programs as specified in
FNS program regulations and the
requirements in 7 CFR part 250.
(b) Public and private nonprofit
organizations receiving donated dairy
products under this section will be
responsible for the proper handling and
distribution of such products in
accordance with FNS program
regulations, 7 CFR part 250, and FNS
guidance and instructions.
(c) A private or nonprofit organization
agency receiving donated products
under this section which improperly
distributes or uses such product or
causes loss of or damage to such
product, will be subject to recovery of
losses or other corrective action in
accordance with FNS program
regulations, 7 CFR part 250.
Subparts D and E—[Removed]
■
4. Remove subparts D and E.
Signed on August 20, 2014.
Juan M. Garcia,
Administrator, Farm Service Agency, and
Executive Vice President, Commodity Credit
Corporation.
[FR Doc. 2014–20567 Filed 8–28–14; 8:45 am]
BILLING CODE 3410–05–P
PO 00000
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NUCLEAR REGULATORY
COMMISSION
10 CFR Parts 170 and 171
[NRC–2013–0276]
RIN 3150–AJ32
Revision of Fee Schedules; Fee
Recovery for Fiscal Year 2014;
Correction
Nuclear Regulatory
Commission.
ACTION: Final rule; correction.
AGENCY:
The U.S. Nuclear Regulatory
Commission (NRC) is correcting a final
rule that was published in the Federal
Register (FR) on June 30, 2014, and
amended the licensing, inspection, and
annual fees charged to the NRC’s
applicants and licensees. This action is
necessary to correct a typographical
error in the fee category description in
the Schedule of fees for materials
licenses and other regulatory services,
including inspections, and import and
export licenses. NRC is also correcting
a percentage shown for FY 2014 in
Table VII, Effort Factors for Fuel
Facilities.
SUMMARY:
This correction is effective
August 29, 2014.
ADDRESSES: Please refer to Docket ID
NRC–2013–0276 when contacting the
NRC about the availability of
information regarding this document.
You may obtain publicly-available
information related to this document
using any of the following methods:
• Federal Rulemaking Web site: Go to
https://www.regulations.gov and search
for Docket ID NRC–2013–0276. Address
questions about NRC dockets to Carol
Gallagher; telephone: 301–287–3422;
email: Carol.Gallagher@nrc.gov. For
technical questions, contact the
individual listed in the FOR FURTHER
INFORMATION CONTACT section of this
document.
• NRC’s Agencywide Documents
Access and Management System
(ADAMS): You may obtain publicly
available documents online in the
ADAMS Public Documents collection at
https://www.nrc.gov/reading-rm/
adams.html. To begin the search, select
‘‘ADAMS Public Documents’’ and then
select ‘‘Begin Web-based ADAMS
Search.’’ For problems with ADAMS,
please contact the NRC’s Public
Document Room (PDR) reference staff at
1–800–397–4209, 301–415–4737, or by
email to pdr.resource@nrc.gov. The
ADAMS accession number for each
document referenced in this document
(if that document is available in
DATES:
E:\FR\FM\29AUR1.SGM
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]]>Agencies
[Federal Register Volume 79, Number 168 (Friday, August 29, 2014)]
[Rules and Regulations]
[Pages 51453-51470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-20567]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 79, No. 168 / Friday, August 29, 2014 / Rules
and Regulations
[[Page 51453]]
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1430
RIN 0560-AI23
Margin Protection Program for Dairy and Dairy Product Donation
Program
AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule implements regulations for the Margin Protection
Program for Dairy (MPP-Dairy) and the Dairy Product Donation Program
(DPDP) as authorized in subtitle D of the Agricultural Act of 2014 (the
2014 Farm Bill). MPP-Dairy provides dairy producers with risk
management coverage that will pay producers when the difference between
the price of milk and the cost of feed (the margin) falls below a
certain level. MPP-Dairy provides basic catastrophic level coverage for
an administrative fee, and greater coverage for a premium in addition
to the administrative fee. Amounts of coverage and premiums vary based
on producer selections. This rule specifies the eligibility
requirements and payment formulas for MPP-Dairy. Under the related
DPDP, which is a complimentary program designed to support producer
margins by increasing the price of milk, the U.S. Department of
Agriculture (USDA) will buy dairy products when the margin falls below
a certain level, and will distribute those products to individuals in
low-income groups through public and private non-profit organizations.
The Farm Service Agency (FSA) will operate both programs using funds of
the Commodity Credit Corporation (CCC). The USDA Food and Nutrition
Service (FNS) will assist in the distribution of the dairy products
under DPDP.
DATES: Effective Date: This rule is effective August 29, 2014.
Comment Date: We will consider comments we receive by October 28,
2014.
ADDRESSES: We invite you to submit comments specifically to address the
questions related to intergenerational transfers in this document. In
your comment, please specify RIN 0560-AI18 and include the volume,
date, and page number of this issue of the Federal Register. You may
submit comments by any of the following methods:
Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting
comments; or
Mail, Hand Delivery, or Courier Danielle Cooke, Special
Programs Manager, Price Support Division, FSA, USDA, STOP 0512, 1400
Independence Ave. SW., Washington, DC, 20250-0512.
All written comments will be available for inspection online at
www.regulations.gov and at the mail address above during business hours
from 8 a.m. to 5 p.m., Monday through Friday, except holidays. A copy
of this rule is available through the FSA home page at https://www.fsa.usda.gov/.
FOR FURTHER INFORMATION CONTACT: For MPP-Dairy: Danielle Cooke;
telephone: (202) 720-1919. For DPDP purchases: Christine Gouger,
telephone: (816) 926-3379. For DPDP donations: Anne Fiala, telephone:
(703) 305-2662. Persons with disabilities who require alternative means
for communication should contact the USDA Target Center at (202) 720-
2600.
SUPPLEMENTARY INFORMATION:
MPP-Dairy--Overview
This final rule establishes the regulations for the new MPP-Dairy
as specified in sections 1401-1410 of the 2014 Farm Bill (7 U.S.C.
9051-9060, Pub. L. 113-79). MPP-Dairy provides a risk management
program for dairy operations and is authorized through December 31,
2018.
MPP-Dairy is a voluntary risk management program that provides
payments when the margin between the national average milk price and a
national average feed cost falls below a specified ``trigger'' level.
Eligible producers may purchase coverage for their dairy operations by
paying an administrative fee, and a premium as applicable. The coverage
is for a dairy operation; all producers in an operation must agree to
register the operation for the program in order for that operation to
be eligible for MPP-Dairy coverage. MPP-Dairy pays dairy operations
when the national margin falls below the operation's selected margin
trigger for one of the specified 2-month periods in this rule. As part
of the initial registration process, dairy operations must agree to
carry MPP-Dairy coverage through calendar year 2018, but they can
select a different level of coverage during each annual enrollment
period. At the time of registration and annually thereafter, the dairy
operation must make coverage level elections. For example, if margins
are consistently above the trigger point or the dairy operations decide
they want only limited coverage, the operation may switch during the
annual enrollment from a coverage level with a higher premium to the
catastrophic coverage level with a lower or no premium, but they cannot
drop coverage altogether, except in cases where a producer is retiring,
dies, or the operation goes out of business.
Eligible Operations for MPP-Dairy
Any dairy operation that produces and commercially markets milk in
the United States may register for MPP-Dairy. As required by the 2014
Farm Bill, to be an eligible dairy operation for MPP-Dairy, each of the
producers in an eligible dairy operation must share in the risk of
production, and must make contributions (including capital, land,
labor, equipment, or management) to the operation commensurate with
such producer's share of the proceeds. Participating dairy operations
can be operated by more than one producer. A single producer may be
member of more than one operation and each operation may separately
participate in MPP-Dairy.
Definition of a Dairy Operation
This rule specifies that any dairy facility that was part of a
single dairy operation that was eligible for and participated in the
Milk Income Loss Contract (MILC) Program administered by FSA as of
February 7, 2014 (date of enactment of the Agricultural Act of 2014) is
a ``dairy operation'' for the purposes of MPP-Dairy. All other
operations must meet the requirements specified in this rule to be a
dairy
[[Page 51454]]
operation for the purposes of MPP-Dairy these include the criteria and
procedures established under the MILC Program. Operations that are
determined to be ``new operations'' under this rule, will be subject to
the ``affiliation'' test if the operation elects to participate in MPP-
Dairy separately.
For the purposes of this rule, a ``new'' operation is one that did
not produce and commercially market milk at least 12 full months as of
February 7, 2014. Under certain circumstances new operations may
participate in MPP-Dairy and existing operations can restructure and
still be eligible for MPP-Dairy. A dairy operation can be sold or
transferred and keep MPP-Dairy eligibility. The main restriction on
eligibility for a new operation is that an existing operation that
restructures or reconstitutes cannot result in an increase in
production history as a whole.
Production History for MPP-Dairy
MPP-Dairy payments for a given dairy operation are based on a
coverage level and percentage of coverage annually elected by a
participating dairy operation for the operation's production history.
Such production history for existing operations with at least a year of
production history as of February 7, 2014, will be the highest of the
operation's annual milk marketings in any one of 2011, 2012, or 2013
calendar years, subject to an annual upward adjustment in subsequent
years to reflect any increase in the national average milk production
as specified in this rule.
Eligible production history for new operations will be determined
by one of two methods, at the election of the dairy operation. The
first option is to extrapolate from actual production data for the
first calendar year with at least one full month of production history,
adjusted using a national seasonality index to calculate a yearly
amount of production. The national seasonality index was created by FSA
using monthly milk production data for 2009 through 2013. Since milk
production naturally fluctuates in some regions during different
seasons of the year, the index is needed to extrapolate a full year
production amount from partial year production data. To develop the
index, the total milk production for the 5 years for each individual
month was divided by the total annual milk production for those years
to determine the share of annual milk production produced in each
month. The resulting figure is the seasonality index that is set for
the duration of MPP-Dairy. Alternatively, new operations may choose a
second option to determine production history. Under this option,
annual production would be estimated based on the herd size of the
dairy operation relative to the national ``rolling herd average''
production data published by the Secretary.
As required by the 2014 Farm Bill, the production history amount
established for an operation will never be reduced because of changes
in national milk production, but may only be increased. Once a dairy
operation has enrolled in MPP-Dairy and the production history is
established for that operation, USDA in subsequent years will update
the production amount to reflect annual changes in the national average
milk production. That adjustment factor will be announced each year.
The production history is established for a participating dairy
operation, and it is assigned to that operation, not to an individual
producer. If a participating dairy operation, with an established
production history, sells or changes ownership of the operation, the
established production history will stay with that operation, and be
assigned to the new owner. For participating dairy operations, with an
established production history, that relocate or otherwise move their
operation to another location, the production history will move to the
new location. If the new location has existing production history, the
production history may be reconstituted that combines the production
history of the relocated operation and the new location to the new
location and become available for the next calendar year of coverage.
Section 1410 of the 2014 Farm Bill specifies that USDA is required
to establish regulations that ``prohibit a dairy producer from
reconstituting a dairy operation for the purpose of the dairy producer
receiving margin protection payments.'' This rule therefore prohibits
an increase in production history as a result of most restructurings
and reconstitutions. Only in cases where a dairy producer purchases a
dairy operation with no established production history can a new
history be established, subject to the affiliation rule. For example,
if a father and son jointly operate a dairy and the son decides to
leave and purchase a dairy operation that is already participating in
MPP-Dairy with an established production history, the son would get the
production history already established by the participating dairy
operation and would not be considered a new dairy operation for the
purposes of MPP-Dairy. (No new production history would be created; it
would only be transferred.) However, if the son purchased a dairy
operation that lacked any production history, then the son may be
considered a new dairy operation for MPP-Dairy purposes and could
establish a new production history for that operation, subject to the
affiliation rule.
Other Eligibility Requirements and Limits
MPP-Dairy benefits are not subject to payment limitations or
average adjusted gross income (AGI) limitations that apply to most FSA
and CCC programs. However, these benefits are subject to the
conversation compliance requirements provided for in 7 CFR part 12.
Further, there is no set program maximum number of pounds any dairy
operation can cover under the program. MPP-Dairy's coverage limitation
for a specific dairy operation is 90 percent of the operation's
production history.
In general, all U.S. dairy producers are eligible to participate in
MPP-Dairy through their eligible dairy operation; however, producers
cannot participate in both MPP-Dairy and the Livestock Gross Margin for
Dairy (LGM-Dairy) insurance program administered by the USDA Risk
Management Agency (RMA). For 2014 and 2015, producers already enrolled
in LGM-Dairy may register for MPP-Dairy, but in no case will they
receive benefits from both programs. If an operation with LGM-Dairy
coverage registers for MPP-Dairy, coverage under MPP-Dairy will not
become effective until after the target month of marketings under LGM-
Dairy has ended or the dairy operation provides proof that the LGM-
Dairy policy has been cancelled.
MPP-Dairy Coverage Levels
As part of the annual coverage election process for MPP-Dairy, the
dairy operation is required to select the level of coverage and pay an
administrative fee and, if applicable, a premium based on the level of
coverage elected. In addition, once a participating dairy operation
registers for MPP-Dairy, regardless if it fails to make a coverage
election, it must annually pay the administrative fee through December
31, 2018. The level of coverage chosen by a participating dairy
operation requires two selections. One is the margin trigger (between
$4 and $8 per hundredweight (cwt), in 50 cent increments); the other is
the percentage of production history that will be covered (from 25
percent to 90 percent, in 5 percent increments). The operation can only
select one margin trigger level and one percentage of production
history; the operation cannot ``split'' the operation's coverage and,
for example, purchase $4 margin
[[Page 51455]]
coverage on 25 percent of production history and $8 coverage on 50
percent of production history. (At the catastrophic level coverage of
$4, the producer will be paid when the margin, the difference between
the price of milk and the cost of feed, falls below $4.)
As specified in the 2014 Farm Bill, operations may elect a $4 per
cwt margin trigger for the administrative fee of $100 with no premium
owed. This rule defines this to be catastrophic level coverage, in that
it provides the lowest level of margin protection offered under MPP-
Dairy. If $4 margin coverage is selected, 90 percent of production
history will be covered, the maximum amount of production coverage
allowed by the 2014 Farm Bill. Alternatively, participating dairy
operations may elect a higher margin trigger, up to $8 per cwt of milk
(in 50 cent increments), for 25 percent to 90 percent of production (in
5 percent increments). Margin triggers higher than $4 require payment
of a premium. At each margin trigger level, corresponding rates are
different with respect to the first 4 million pounds (40,000 cwt) of
covered production history and covered production history above 4
million pounds. As specified in the 2014 Farm Bill, the premiums for
the first 4 million pounds of eligible covered production history will
be reduced by 25 percent for each of calendar years 2014 and 2015.
The annual premium rates listed in this regulation are specified in
the 2014 Farm Bill. USDA has no discretion to set different premium
rates other than those in the 2014 Farm Bill. The premium will be
determined based on the producer's election of each of the margin
trigger and percentage of coverage. The schedule of premiums below
refers to these levels as Tier 1 (first 4 million pounds of production
history covered by the program) and Tier 2 (covered production in
excess of 4 million pounds).
For example, a dairy operation with a production history of 6
million pounds that elects a coverage level of $6 and a 50 percent
coverage percentage will pay a premium based on the premium rate for
covered production history for up to 4 million pounds because as a
function of the dairy operation election to cover at the 50 percent
rate, only 3 million pounds of production history is being covered by
the program. (Note that production history is in pounds, while the
premium schedule below is per cwt, so we divide covered production by
100 to calculate the premium). Therefore, in this example, the dairy
operation pays a premium for a calendar year of coverage during 2016,
in the amount of $1,650 based on 6 million pounds covered at a 50
percent coverage level, yielding 3 million pounds of covered production
history. The 3 million pounds of production history multiplied by
$0.055, the premium at the $6 margin level for covered production up to
4 million pounds (50 percent of 6 million is 3 million; 3 million
divided by 100 is 30,000 cwt; 30,000 cwt x $0.055 per cwt =$1,650). The
premium schedule is as follows; the 2014 Farm Bill specifies the
amounts:
------------------------------------------------------------------------
Tier 1 Premium
per cwt in 2014 Tier 2 Premium
and 2015 (for per cwt, all
the covered \1\ years (for the
Coverage level (margin) production part of covered
history that is \1\ production
4 million pounds history over 4
or less) \2\ million pounds)
------------------------------------------------------------------------
$4.00............................. None None
$4.50............................. $0.008 $0.020
$5.00............................. 0.019 0.040
$5.50............................. 0.030 0.100
$6.00............................. 0.041 0.155
$6.50............................. 0.068 0.290
$7.00............................. 0.163 0.830
$7.50............................. 0.225 1.060
$8.00............................. 0.475 1.360
------------------------------------------------------------------------
\1\ The ``covered production history'' is the amount elected for MPP-
Dairy coverage by the dairy operation; this will be 25 percent to 90
percent. The catastrophic coverage level provided at the $4 margin is
90 percent.
------------------------------------------------------------------------
Tier 1 Premium
per cwt in 2016, Tier 2 Premium
2017 and 2018 per cwt, all
(for the covered years (for the
Coverage level (margin) \1\ production part of covered
history that is \1\ production
4 million pounds history over 4
or less) million pounds)
------------------------------------------------------------------------
$4.00............................. None None
$4.50............................. $0.010 $0.020
$5.00............................. 0.025 0.040
$5.50............................. 0.040 0.100
$6.00............................. 0.055 0.155
$6.50............................. 0.090 0.290
$7.00............................. 0.217 0.830
$7.50............................. 0.300 1.060
$8.00............................. 0.475 1.360
------------------------------------------------------------------------
\1\ The ``covered production history'' is the amount elected for MPP-
Dairy coverage by the dairy operation; this will be 25 percent to 90
percent. The catastrophic coverage level provided at the $4 margin is
90 percent.
[[Page 51456]]
The following is an example with higher coverage levels and both
tiers of premium: If a dairy operation with an established production
history of 10 million pounds elects a coverage level of $8 and a 75
percent coverage percentage, 7.5 million pounds would be considered
covered production history (10,000,000 x 0.75), and of that 7.5 million
pounds, 4 million pounds would be assessed at $0.475 rate from the
lower (Tier 1) premium schedule for production at 4 million pounds or
less (4,000,000 x $0.475/100 = $19,000), and the remaining 3.5 million
pounds of covered production history would be assessed at the $1.360
rate from the higher premium schedule for production in excess of 4
million pounds (3,500,000 x $1.360/100 = $47,600). The dairy operation
would pay a total premium for a calendar year of coverage in the amount
of $66,600 ($19,000 + $47,600) based on 7.5 million pounds of covered
production history that falls under each premium schedule at the $8
coverage level.
For calendar years 2014 and 2015, the premium per cwt for covered
production that falls under the first 4 million pound premium schedule
will be reduced by 25 percent, except at the $8 coverage level, from
the table shown above. The premium reduction is required by the 2014
Farm Bill. FSA will provide premium calculators on the FSA Web site, so
that producers can evaluate the costs of different coverage options
easily.
Registration Process
Registration of a dairy operation under MPP-Dairy results in a
multi-year contract between CCC and the dairy operation. As discussed
above, dairy operations agree to pay an administrative fee to register
and annually thereafter through December 31, 2018. In addition, a
participating dairy operation is obligated to pay the premium, if any,
associated with its annual coverage elections, through calendar year
2018.
The $4 per cwt margin level coverage is available for a $100
administrative fee, without premium; higher levels of coverage are
available for a premium plus the administrative fee. Operations must
pay at least half the premium for the year (if applicable), plus the
$100 administrative fee, at the time of the election of coverage. Once
the election period has ended, a dairy operation's election of coverage
is final and it can be changed only for the next calendar year of
coverage during the next election period.
The 2014 Farm Bill requires that USDA offer more than one method by
which a participating dairy operation may pay the required premium in
any manner that maximizes participating dairy operation payment
flexibility and program integrity. Unless otherwise determined by the
Deputy Administrator, at the time of coverage election, operations must
pay either:
(1) The full premium plus the administrative fee; or
(2) A minimum of 50 percent of the total premium (if applicable)
plus the administrative fee, with the remaining balance due no later
than June 1 of the applicable calendar year of coverage.
However, a premium calculated for calendar year 2014 only (which
provides coverage through December of 2014) must be paid in full at the
time of coverage election. The coverage election period for 2014
partial year coverage and 2015 full year coverage will both be during
the fall of 2014. New operations registered during a calendar year
starting in 2015 will be allowed to pay a prorated premium for the
first year of participation.
If an operation fails to pay either the required annual
administrative fee or premium owed on time, it remains obligated for
payment of such administrative fee and entire premium, but will lose
coverage until the premium is paid. If an operation does not make an
annual coverage level election, it will still be liable for the
administrative fee for the following year. It will automatically
receive coverage at the $4 coverage level at 90 percent, but only if
the administrative fee is paid. For dairy operations that want to
continue coverage levels established in the prior calendar year, the
Deputy Administrator will establish a procedure to allow such coverage
levels to continue that will include the requirement of a timely
payment of administrative fees and any premiums, if applicable.
How Margins Are Calculated To Determine Payments
The 2014 Farm Bill specifies what prices for milk and feed USDA is
required to use to calculate the ``actual dairy production margin.''
The margin, based on published USDA national data for milk and feed
prices, is used to trigger payments under MPP-Dairy and the authority
to make purchases under DPDP. The 2014 Farm Bill requires the margin to
be based on the average price received, per cwt of milk, by dairy
operations for all milk sold to plants and dealers in the United
States. It also requires calculation of a national average feed cost,
based on specific sources for the monthly price of corn, soybean meal,
and alfalfa hay. Therefore, MPP-Dairy uses USDA-reported monthly
national average price data for all classes of milk (the all-milk
price) and the cost of the three specified feeds, which represent the
bulk of purchased feeds in dairy rations (corn, soybean meal, and
alfalfa hay) to calculate the ``actual dairy production margin'' by
subtracting from the price for a cwt of milk produced the cost of an
average feed ration used to produce a cwt of milk. The 2014 Farm Bill
prescribes that USDA calculate the actual dairy production margin in
consecutive 2-month periods.
If the actual dairy production margin falls below the selected
margin coverage level of an operation for any such consecutive 2-month
period, that operation will be eligible for a payment under MPP-Dairy.
For example, if, for a particular consecutive 2-month period, the
actual dairy production margin is $6, and the operation has chosen $4
coverage level, there will be no payment, but if the operation had
chosen the $7.50 coverage level on 50 percent of production, it would
have been paid $1.50 times 50 percent of its covered production
history. A recalculation would occur in each subsequent 2-month period.
MPP-Dairy pays only on the basis of such 2-month periods; in no case
does the program pay for a period of low margins shorter than such 2-
month periods.
USDA will calculate the actual dairy production margin using the
national ``all-milk price'' minus the national ``average feed cost,''
as those terms are specified in the 2014 Farm Bill. If the actual dairy
production margin calculation produces a negative number, then the
margin will be considered zero. For example, if the cost of feed is
higher than the price of milk by $1 per cwt, the margin will be
considered to be zero. The term ``all-milk price'' is defined in the
2014 Farm Bill to mean the average price received, per cwt of milk, by
dairy operations for all milk sold to plants and dealers in the United
States, as determined by USDA. The term ``average feed cost'' is
defined to mean the average cost of feed used by a dairy operation to
produce a cwt of milk using the sum of:
1.0728 times the price of corn per bushel;
0.00735 times the price of soybean meal per ton; and
0.0137 times the price of alfalfa hay per ton.
The 2014 Farm Bill specifies which USDA-published price series FSA
is required to use for such prices; FSA has no discretion in what
prices to use.
The 2014 Farm Bill requires the margin to be calculated using
specific
[[Page 51457]]
consecutive 2-month pairs--January and February, March and April, May
and June, July and August, September and October, and November and
December.
If a dairy operation has a premium due at the time it becomes
eligible for a payment under MPP-Dairy, the premium will be
automatically deducted from the payment. If the premium is overdue
(past June 1 of the coverage year) however, an operation will not be
eligible for a payment, because it will have lost coverage. In the case
of an operation with an overdue premium, the operation will regain
coverage only after any overdue premium is paid, in which case it would
be eligible for the next consecutive 2-month period after such payment
of premium.
DPDP--Overview
In addition, this rule provides regulations for DPDP, authorized by
section 1431 of the 2014 Farm Bill (7 U.S.C. 9071). DPDP shares certain
goals of MPP-Dairy, in that it is intended to support dairy producer
margins by triggering the obligation to purchase dairy products when
the dairy production margin fall below a certain level. Under DPDP,
USDA will purchase dairy products to support dairy producer margins and
to provide such products to individuals in low-income groups through
public and private non-profit organizations. The 2014 Farm Bill
specifies that such purchases will be made whenever the ``actual dairy
production margin'', calculated using a formula prescribed in the 2014
Farm Bill, is determined to be $4 or less per cwt for 2 consecutive
months.
The 2014 Farm Bill specifies that the same margin calculation is
used for both MPP-Dairy and DPDP. The ``actual dairy production
margin'' is, as it is under MPP-Dairy, the difference between the
``all-milk price'' (the average U.S. price for producer milk sold to
plants and dealers as specified in section 1401 of the 2014 Farm Bill
(7 U.S.C. 9051)) and the average feed cost determined using the formula
specified in sections 1401 and 1402 (7 U.S.C. 9052) of the 2014 Farm
Bill. The feed cost formula is the same as specified for MPP-Dairy, and
was discussed above in the MPP-Dairy section of this document. Once
triggered, DPDP purchases end when--
DPDP purchases have occurred for 3 consecutive months
(regardless of the actual dairy production margin at the end of those 3
months),
The actual dairy production margin for the previous month
goes above $4 per cwt, or
The U.S. price for cheddar cheese or nonfat dry milk (NDM)
exceeds the world price by certain levels (5 percent if the actual
dairy production margin is at or below $4 but above $3 or 7 percent, if
such margin is $3 or less).
DPDP is intended to time its purchases to support dairy producers
in times of low margins, reinforcing and supporting the dairy producer
support provided by MPP-Dairy. Reflecting that relationship, the 2014
Farm Bill specifies that DPDP is required to be established no later
than 120 days after the Secretary certifies that MPP-Dairy is
operational. USDA has chosen to make the two programs effective at the
same time. The Secretary determined that additional time was not
required to implement DPDP as FSA and FNS will be able to use existing
expertise with purchasing and distributing similar products to the same
recipients.
As specified in section 1431 of the 2014 Farm Bill, DPDP purchases
will be distributed for domestic consumption by individuals in low-
income groups through public and private non-profit organizations.
Further, the DPDP purchases cannot be stored by CCC. DPDP purchases
will be made in package sizes suitable for immediate household use, to
facilitate direct distribution to individuals through participating
public and private nonprofit organizations. The 2014 Farm Bill
specifically prohibits re-sales of DPDP-purchased products into the
commercial market.
The 2014 Farm Bill requires USDA consultation with public and
private nonprofit organizations that feed low-income groups, in order
to determine the types and quantities of dairy products to be purchased
and distributed under DPDP. This will be achieved through existing FNS
food program consultations.
Administration of DPDP
This rule implements DPDP as specified in the 2014 Farm Bill. DPDP
purchases will be made using CCC funds. The 2014 Farm Bill authorizes
DPDP through December 31, 2018. As specified in this rule, FSA will
operate DPDP for CCC with assistance from FNS.
Distribution of DPDP purchases will be made to public and private
non-profit organizations eligible to participate in FNS' food
distribution programs for low-income individuals.
Purchase quantities may be limited to meet the 2014 Farm Bill's
immediate distribution requirement, taking into account impacts on
present demand in order to limit potential short- and long-term market
disruptions.
When will FSA make DPDP purchases?
The 2014 Farm Bill specifies that the DPDP purchases are required
to start after any consecutive 2 month period when margins are below
$4, with a maximum of 3 consecutive months of purchases. If prices rise
above the $4 margin level during a month of purchases, DPDP purchases
will terminate at the end of that month, so in that case it might
operate for only 1 or 2 months. As specified in the 2014 Farm Bill,
after 3 consecutive months of purchases, the DPDP purchases are
required to cease (terminate) until there have been at least 2 more
consecutive months of margins of $4 or less.
Because full data for a given month is not available until the
following month (see example below) and the 2014 Farm Bill requires
that program activity be on a monthly basis, this effectively means
that no purchases may be made for 3 months following the end of a
purchase period, even if margins remain below the trigger level. This
rolling ``up to 3 months on, 3 months off'' procedure for DPDP
purchases is consistent with the 2014 Farm Bill goal of having a long-
term intermittent tool for addressing low margins and providing
nutrition assistance. DPDP is intended to time its purchases to support
dairy producer margins by reducing the supply of dairy products. Given
relatively inelastic (constant) demand, such purchases should drive the
market price of dairy products up, hopefully also driving margins above
the trigger level. In some cases, prices and margins will rise
sufficiently to engender only a 1or 2-month purchase period. In that
case, the 3 month ``off'' requirement still applies, as required by the
2014 Farm Bill.
Data for calculating the domestic versus world price differential
will not be available immediately at the end of a month, so DPDP
purchases will not commence or terminate until the full month after all
data for a month becomes available. For example, and as shown in the
chart below if actual dairy production margins in May and June fall
below the ``trigger'' level, the data for June would be available in
July, but not in time to start making DPDP purchases immediately on
July 1. Therefore, the DPDP purchases would start in August based on
May and June data. If July data, which would be available in August,
showed that margins were still below the trigger, DPDP purchases would
continue in September. If margins rise above the trigger level in July,
the DPDP purchases would terminate at the end of August, and the next
eligible month for calculations would be September. If margins in
[[Page 51458]]
September and October were below the trigger level, with October data
available in November, the DPDP purchases would start up again in
December. But if margins remained consistently below the trigger level
for the entire period in this example, the DPDP purchases would
continue in September and October, based on May, June, July, and August
data, and could not start up again until February, based on November
data and December data, which would become available in January. The
following chart shows an example of the timing for the determination of
DPDP purchases.
DPDP Purchase Determination Example
[Based on dairy production margins and 3-month maximum for purchases \1\]
--------------------------------------------------------------------------------------------------------------------------------------------------------
If both margins below $4
2 Consecutive months Calculate margin for 2 per cwt in the 2 3-Month maximum If either margin above $4 per cwt
consecutive months \2\ consecutive months consideration in the 2 consecutive months
--------------------------------------------------------------------------------------------------------------------------------------------------------
January and February............... March................. Dairy product purchases \3\ 1st month of purchases..... No purchases.
begin in April.
February and March................. April................. Dairy product purchases \3\ 2nd consecutive month of No purchases.
begin in May. purchases.
March and April.................... May................... Dairy product purchases \3\ 3rd consecutive month of No purchases.
begin in June. purchases.
April and May...................... June \4\.............. No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (1st month off).
May and June....................... July.................. No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (2nd month off).
June and July...................... August................ No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (3rd month off).
July and August.................... September............. Dairy product purchases \3\ 1st month of purchases..... No purchases.
begin in October.
August and September............... October............... Dairy product purchases \3\ 2nd consecutive month of No purchases.
begin in November. purchases.
September and October.............. November.............. Dairy product purchases \3\ 3rd consecutive month of No purchases.
begin in December. purchases.
October and November............... December.............. No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (1st month off).
November and December.............. January............... No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (1st month off).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This example assumes that purchases begin in January. In reality, DPDP can--depending on prices and margin triggers--begin on September 1, 2014,
which is the start of MPP-Dairy.
\2\ The full month data for a given month is available at the end of the following month. For example, January data are not available until the end of
February.
\2\ Purchases cannot begin unless domestic cheddar cheese or nonfat dry milk prices are at certain differentials relative to world prices.
\3\ In the example, June is the 3rd month of consecutive purchases. June would not be calculated as a potential trigger month, but it is shown on the
chart to clearly show the concept of 3 months on and 3 months off for purchases. If purchases are taking place during a month, that month cannot be
used as a trigger month for a future purchase period.
The trigger level is a $4 margin per cwt of milk, with an
additional requirement from the 2014 Farm Bill that USDA's authority
for purchases will end if the U.S. price and world price differential
for cheddar cheese or nonfat dry milk exceeds certain percentage
levels, even when margins remain at $4 or less. In other words, FSA
will stop making DPDP purchases, even if the margins are at $4 or less,
if the U.S. price for certain dairy products is significantly above
world prices. As required by the 2014 Farm Bill, FSA will stop making
DPDP purchases if the margin is $4 or less but above $3 and the U.S.
price is more than 5 percent above the world price or if the margin is
at or below $3, DPDP will not make purchases if the price differential
is more than 7 percent.
If DPDP purchases were suspended due to domestic prices being
sufficiently above world prices, margins would be tracked for the next
2 months, and purchases could begin after 3 months. For example, at the
end of July, it would be known if May and June margins were at or below
$4 per cwt. If margins for both May and June were at $4 or less per
cwt, and the relation between domestic and world prices did not
preclude it, the DPDP purchasing process would start August 1. At the
end of August, the July margin could be calculated and if at $4 or less
per cwt, DPDP purchases would continue in September (the second
consecutive month ``on''). If the July margin were above $4 per cwt,
DPDP purchase activity would cease August 31, and DPDP purchases could
next be made in December (after the required 3 months ``off''), if
September and October margins were at $4 or less per cwt. If July and
August margins were both at $4 or less per cwt, DPDP purchases would
continue in September and October and end due to the 3-month maximum of
purchases. If November and December margins were at $4 or less per cwt,
DPDP purchase activities could begin again in February (after the
required 3 months ``off'').
DPDP will not stop or start making purchases in the middle of a
month even if the margin or the world price data has hit one of the
``trigger'' numbers mid-month.
U.S. Price Versus World Market Price Differential Trigger
The calculations for the price differential determination (which
require a comparison of U.S. prices and world prices) as specified in
this rule allow FSA to consult with other agencies of USDA that collect
foreign and domestic price data, such as the Agricultural Marketing
Service (AMS). The 2014 Farm Bill specifies that USDA is required to
calculate the differential between U.S. prices and world prices for
cheddar cheese and nonfat dry milk; it does not specify what data FSA
should use for U.S. prices or world prices. For world prices FSA
expects (although not specified in the
[[Page 51459]]
regulations) to use the AMS Oceania price series because of the
quantity of sales in that series. Alternatively, FSA could use a multi-
region weighted average or some other method to make the
determinations, if those other methods are more appropriate for
calculating a relevant world price. FSA expects to base U.S. prices on
the AMS monthly prices for cheddar cheese and nonfat dry milk, although
FSA may use a different data set, as needed.
FSA intends to post the price calculation method and results, and
purchase determinations, on the FSA Web site. If another method proves
to be more appropriate for providing information to the public, it will
replace the planned on-line posting.
Product Determinations
The 2014 Farm Bill requires USDA consultation with public and
private nonprofit organizations to determine the types and quantities
of products to purchase through DPDP. This requirement will be met by
FNS's existing food program consultations with groups involved in the
distribution of food to low-income people, including food banks, State
and local agencies, and advocacy organizations. DPDP purchases are
expected to be made in package sizes suitable for immediate household
use, to best accommodate the immediate distribution requirement of the
2014 Farm Bill, in a manner that is cost effective to the U.S.
taxpayer.
Comments Requested on Cost Effective Purchases
FSA is requesting comments on how to best administer the dairy
product purchases for DPDP to ensure that dairy prices are increased in
the most cost effective way. In your comments, please suggest options
and provide data to show the cost effectiveness of the suggestion as it
relates to the goals of DPDP.
Distribution and Use of DPDP Purchases
The 2014 Farm Bill requires that products purchased under DPDP
will:
Be distributed in a manner that encourages their domestic
consumption by individuals in low-income groups;
Be distributed using the services of public and private
nonprofit organizations; and
Not be resold back into commercial markets by any
organization that receives them.
It is expected that all these requirements will be addressed as
specified in the regulations for the existing FNS programs through
which the products will be distributed. Public or private nonprofit
organizations that receive DPDP products may transfer those products to
other nonprofits only if the transferee will likewise distribute to
domestic low-income recipients without cost or waste, consistent with
existing FNS regulations. FNS regulations in 7 CFR 250.13(d)(1) provide
that donated foods ``be distributed only to recipient agencies and
individual recipients eligible to receive them'' under applicable
program regulations. FNS regulations in 7 CFR 250.13(a)(1)(ii) provide
that donated foods ``not be sold, exchanged or otherwise disposed of
without the approval of the Department.'' Any losses of donated foods
resulting from improper distribution or use will be subject to the
requirements of 7 CFR part 250 and the instruction and guidance
provided in FNS Instruction 410-1, Rev 2 ``Claims for Losses of Donated
Foods and Related Administrative Losses--Procedures for the State
Distributing Agency,'' and in FNS Instruction 420-1, ``Managing Agency
Debts.''
Start of DPDP
This rule specifies that DPDP is effective the day this rule is
published, in the sense that it provides the regulations and purchase
authority necessary to operate DPDP, but FSA will not make DPDP
purchases unless other price and margin requirements are met.
Because MPP-Dairy and DPDP use the same definition of actual dairy
production margin, which is defined in the 2014 Farm Bill using
existing USDA reported data, FSA will have data on actual dairy
production margins the day this rule is effective. Therefore, if
margins have been at $4 or less for the 2 months before the effective
date of this rule, and all other requirements are met for eligible
purchase months, including the world price differential, DPDP can begin
making purchases the first full month that DPDP is effective.
In preparation of starting to make DPDP purchased, FSA will closely
monitor the margins and related information to analyze the potential
need for starting DPDP purchases. If the analysis shows that DPDP would
be expected to trigger, FSA will consult with FNS, then FNS will
determine the types and quantities of products that will be purchased,
in consultation with public or private nonprofit organizations and
State and local agencies eligible to receive such products. When the
list of products and other details, such as size of the packaged
products is identified, FSA will analyze various factors, including the
expected result on the dairy market of the various purchasing options
to determine the best combination and quantity of dairy products to
purchase to meet the dual goals of the program: (1) To support dairy
producer margins and (2) to provide dairy products to individuals in
low-income groups through public and private non-profit organizations.
The process of determining the exact combination of dairy products to
be purchased and the quantity to purchase will continue through the bid
solicitation process to ensure the dual goals of DPDP are achieved at
the least cost to taxpayers. FSA will purchase the types and quantities
of products determined through this process.
Structure of This Rule
This rule specifies the regulations for MPP-Dairy in 7 CFR part
1430, subpart A, replacing the regulations for the Dairy Product Price
Support Program, which is no longer authorized. It specifies the
regulations for DPDP in subpart C, replacing the regulations for the
2004 Dairy Disaster Assistance Payments Program, which is also no
longer authorized. As part of FSA's ongoing retrospective review
efforts, this rule also removes the regulations in subpart D for the
Market Loss Assistance Program and subpart E for the 2005 Dairy
Disaster Assistance Payment Program, both of which are also no longer
authorized.
Notice and Comment
In general, the Administrative Procedure Act (5 U.S.C. 553)
requires that a notice of proposed rulemaking be published in the
Federal Register and interested persons be given an opportunity to
participate in the rulemaking through submission of written data,
views, or arguments with or without opportunity for oral presentation,
except when the rule involves a matter relating to public property,
loans, grants, benefits, or contracts. Regulations to implement the
provisions of Title I of the 2014 Farm Bill and the administration of
Title I are exempt from the notice and comment provisions of 5 U.S.C.
553 and the Paperwork Reduction Act (44 U.S.C. chapter 35), as
specified in section 1601(c)(2) of the 2014 Farm Bill.
Comments Requested on Intergenerational Transfers and Family Members
Joining an Operation
The 2014 Farm Bill exempts CCC from notice and comment rulemaking
under 5 U.S.C. 553 with respect to MPP-Dairy and DPDP; however, FSA
would like to invite comments with respect to
[[Page 51460]]
the establishment of additional production history under MPP-Dairy.
Section 1401(9) of the 2014 Farm Bill and this rule define the term
``production history'' as the production history determined for a dairy
operation when a participating dairy operation first registers to
participate in MPP-Dairy. Section 1405(a) provides, except as provided
in section 1405(b), the production history of the dairy operation is
equal to the highest annual milk marketings of the dairy operation
during any one of the 2011, 2012, or 2013 calendar years, with an
adjustment in subsequent years to reflect any increase in national
average milk production. Section 1405(b) provides that in the case of a
participating dairy operation that has been in operation for less than
a year, the dairy operation elect one of two methods for the Department
to determine the production history of the dairy operation:
The volume of the actual milk marketings extrapolated to a
yearly amount, or
An estimate of actual milk marketings based on the herd
size relative to the national rolling average data.
The provisions in this regulation are consistent with the 2014 Farm
Bill.
The 2014 Farm Bill provisions regarding MPP-Dairy and the rule do
not address the establishment of additional production history for a
participating dairy operation in specific instances, such as an inter-
generational transfer or when a family member joins a participating
dairy operation. Other statutory provisions of MPP-Dairy do suggest
that Congress intended to benefit smaller dairy operations, which tend
to be family owned and operated. These provisions include the
establishment of lower premium rates for insured annual production of
less than 4,000,000 pounds. This rule does not take into account the
size and structure of the dairy operation in determining whether the
operation can adjust its production history to assist small, family
dairy operations, especially with intergenerational transfers of the
operation. FSA invites interested parties to address whether the
regulation should be amended to authorize the establishment of
additional production history, and if so, whether limitations should be
imposed on any increases. Specifically, FSA requests comments on the
following questions; please include any data that supports your
comments:
1. Does the provision in the rule regarding transfers of production
history hinder intergenerational transfers of dairy operations? If so,
how?
2. How would you suggest the rule be amended to accommodate
intergenerational transfers or adult children who want to join their
parent's dairy operation and obtain additional production history for
the dairy operation?
3. If additions to production history based on intergenerational
transfers or adult children joining family dairies are allowed, should
there be a cap on the overall amount of production history that cannot
be exceeded or a percentage or quantity limitation on the amount by
which the production history could be increased per participating dairy
operation under this provision? If so, what amount?
Effective Date
The Administrative Procedure Act (5 U.S.C. 553) provides generally
that before rules are issued by Government agencies, the rule is
required to be published in the Federal Register, and the required
publication of a substantive rule is to be not less than 30 days before
its effective date. One of the exceptions is when the agency finds good
cause for not delaying the effective date. Subsection 1601(c)(2) of the
2014 Farm Bill makes this final rule exempt from notice and comment.
Therefore, using the administrative procedure provisions in 5 U.S.C.
553, FSA finds that there is good cause for making this rule effective
less than 30 days after publication in the Federal Register. This rule
allows FSA to provide adequate notice to dairy operations about the new
MPP-Dairy so they will be ready to begin enrollment no later than
September 1, 2014, as required by section 1403 of the 2014 Farm Bill.
Therefore, to begin providing benefits to operations in a timely
fashion, the MPP-Dairy regulations in 7 CFR part 1430, subpart A are
effective when published in the Federal Register.
Section 1431 of the 2014 Farm Bill requires that DPDP be
operational no later than 120 days after MPP-Dairy, but as discussed
above, USDA decided to make DPDP effective at the same time as MPP-
Dairy, so as not to delay needed assistance to dairy operations and low
income groups. A 30 day delay in the effective date would unnecessarily
delay needed assistance to dairy operations and individuals in low
income groups.
Executive Orders 12866 and 13563
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility.
The Office of Management and Budget (OMB) designated this rule as
economically significant under Executive Order 12866, ``Regulatory
Planning and Review,'' and therefore, OMB has reviewed this rule. This
regulatory action is being taken to implement two programs required by
the 2014 Farm Bill. A summary of the cost-benefit analysis of this rule
is provided below and the full cost benefit analysis is available on
regulations.gov.
Cost Benefit Analysis Summary
The current actual dairy production margin is about $12, so neither
DPDP nor MPP-Dairy would have any cost in the first month. If current
milk prices and cattle feed prices continue through the end of 2018,
the payments to dairy producers from the government via MPP-Dairy and
DPDP will be zero. Any program payments would be more than offset by
MPP-Dairy premiums and fees. However, in the event of prolonged low
margins, programs outlays could exceed $100 million per year.
If actual margins vary significantly from mean projections used for
the 2015 President's Budget Midsession Review, DPDP is expected to
trigger twice during the 2015 to 2018 period and total cost is expected
to be about $400 million over the 4-year period, for an average cost of
$100 million per year. That is a net cost to the government for both
MPP-Dairy and DPDP, meaning the projected total payments to producers
and the cost of the dairy products purchased minus the MPP-Dairy fees
and premiums paid to CCC. Nearly all of the impacts estimated in this
analysis are transfers between entities within society. For example,
DPDP results in an average annual cost to the government of about $30
million for dairy product purchases (cost side of the transfer), which
would be balanced by low income individuals receiving $30 million worth
of free dairy products (benefit side of the transfer).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA), generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to the notice and comment
[[Page 51461]]
rulemaking requirements under the Administrative Procedure Act or any
other law, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This rule is not subject to the Regulatory Flexibility Act because the
2014 Farm Bill exempts CCC from notice and comment rulemaking under 5
USC 553 with respect to these programs and therefore, CCC is not
required by any law to publish a proposed rule for public comment for
this rulemaking.
Environmental Review
The environmental impacts of this final rule have been considered
in a manner consistent with the provisions of the National
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations
of the Council on Environmental Quality (40 CFR parts 1500-1508), and
the FSA regulations for compliance with NEPA (7 CFR part 799). FSA has
determined that the provisions identified in this final rule are
administrative in nature, intended to clarify the mandatory
requirements of the programs, as defined in the 2014 Farm Bill, and do
not constitute a major Federal action that would significantly affect
the quality of the human environment, individually or cumulatively. The
few discretionary features of the rules include establishing deadlines,
determinations of eligibility and prices, and purchase procedures, and
have been selected largely based on pre-existing USDA programs. While
these dairy programs are new, their creation is mandated by the 2014
Farm Bill, and are therefore not subject to review under NEPA. The few
discretionary provisions left for FSA to determine were all purely
administrative and would not alter any environmental impacts resulting
from implementing the mandatory programs. Therefore, as this rule
presents administrative clarifications only, FSA will not prepare an
environmental assessment or environmental impact statement for this
regulatory action.
Executive Order 12372
Executive Order 12372, ``Intergovernmental Review of Federal
Programs,'' requires consultation with State and local officials. The
objectives of the Executive Order are to foster an intergovernmental
partnership and a strengthened Federalism, by relying on State and
local processes for State and local government coordination and review
of proposed Federal Financial assistance and direct Federal
development. For reasons specified in the final rule related notice
regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the
programs and activities within this rule are excluded from the scope of
Executive Order 12372, which requires intergovernmental consultation
with State and local officials.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, ``Civil
Justice Reform.'' This rule will not preempt State or local laws,
regulations, or policies unless they represent an irreconcilable
conflict with this rule. The rule will not have retroactive effect.
Before any judicial action may be brought regarding the provisions of
this rule, the administrative appeal provisions of 7 CFR parts 11 and
780 are to be exhausted.
Executive Order 13132
This rule has been reviewed under Executive Order 13132,
``Federalism.'' The policies contained in this rule do not have any
substantial direct effect on States, on the relationship between the
Federal government and the States, or on the distribution of power and
responsibilities among the various levels of government, except as
required by law. Nor does this rule impose substantial direct
compliance costs on State and local governments. Therefore,
consultation with the States is not required.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with tribes on a government-to-government
basis on policies that have tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian tribes, on the relationship between the Federal Government
and Indian tribes or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
FSA has assessed the impact of this rule on Indian tribes and
determined that this rule does not, to our knowledge, have tribal
implications that require tribal consultation under Executive Order
13175. If a Tribe requests consultation, FSA will work with the USDA
Office of Tribal Relations to ensure meaningful consultation is
provided where changes, additions, and modifications identified in this
rule are not expressly mandated by the 2014 Farm Bill.
The Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions on State, local, and Tribal governments, or the
private sector. Agencies generally need to prepare a written statement,
including a cost benefit analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more in any year for State, local, or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no Federal mandates, as defined in Title II of UMRA, for
State, local, and Tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)
This rule is a major rule under the Small Business Regulatory
Enforcement Fairness Act of 1996, (Pub. L. 104-121, SBREFA). SBREFA
normally requires that an agency delay the effective date of a major
rule for 60 days from the date of publication to allow for
Congressional review. Section 808 of SBREFA allows an agency to make a
major regulation effective immediately if the agency finds there is
good cause to do so. Section 1601(c)(3) of the 2014 Farm Bill provides
that the authority in section 808 of SBREFA be used in implementing the
changes required by Title I of the 2014 Farm Bill, such as for the
changes being made by this rule. Consistent with section 1601(c)(3) of
the 2014 Farm Bill, FSA therefore finds that it would be contrary to
the public interest to delay the effective date of this rule, because
it would delay implementation MPP-Dairy as required in the 2014 Farm
Bill. The regulation needs to be effective to provide adequate time for
producers to be ready to begin the sign-up process in a timely fashion
to allow coverage to begin by September 1, 2014. Therefore, the rule is
effective when published in the Federal Register.
Federal Assistance Programs
The title and number of the Federal Domestic Assistance Program
found in the Catalog of Federal Domestic
[[Page 51462]]
Assistance to which this rule applies are:
10.116--Margin Protection Program-Dairy
10.115--Dairy Product Donation Program
Paperwork Reduction Act of 1995
The regulations in this rule are exempt from the requirements of
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in
subsection 1601(c)(2)(B) of the 2014 Farm Bill, which provides that
these regulations be promulgated and administered without regard to the
Paperwork Reduction Act.
E-Government Act Compliance
FSA and CCC are committed to complying with the E-Government Act,
to promote the use of the Internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
List of Subjects in 7 CFR Part 430
Dairy products, Fraud, Penalties, Price support programs, Reporting
and recordkeeping requirements.
For the reasons discussed above, the regulations at 7 CFR part 1430
are amended as follows:
PART 1430--DAIRY PRODUCTS
0
1. The authority for part 1430 is revised to read as follows:
Authority: 7 U.S.C. 8773, 9051-9060, and 9071 and 15 U.S.C. 714b
and 714c.
0
2. Revise 7 CFR part 1430, subpart A to read as follows:
Subpart A--Margin Protection Program for Dairy Producers
Sec.
1430.100 Purpose.
1430.101 Administration.
1430.102 Definitions.
1430.103 Eligible dairy operations.
1430.104 Time and method of registration and annual election.
1430.105 Establishment and transfer of production history for a
participating dairy operation.
1430.106 Administrative fees.
1430.107 Buy-up coverage.
1430.108 Margin protection payments.
1430.109 Effect of failure to pay administrative fees or premiums.
1430.110 Calculation of average feed cost and actual dairy
production margins.
1430.111 Relation to RMA's LGM-Dairy Program.
1430.112 Multi-year contract.
1430.113 Contract modifications.
1430.114 Reconstitutions.
1430.115 Offsets and withholdings.
1430.116 Assignments.
1430.117 Appeals.
1430.118 Misrepresentation and scheme or device.
1430.119 Estates, trusts, and minors.
1430.120 Death, incompetency, or disappearance.
1430.121 Maintenance and inspection of records.
1430.122 Refunds; joint and several liability.
1430.123 Violations of highly erodible and wetland conservation
provisions.
1430.124 Violations regarding controlled substances.
Subpart A--Margin Protection Program for Dairy Producers
Sec. 1430.100 Purpose.
The regulations in this subpart apply for the Margin Protection
Program for Dairy (MPP-Dairy), which is authorized by sections 1401
through 1410 of the Agricultural Act of 2014 (Pub. L. 113-79, 7 U.S.C.
9051-9060). MPP-Dairy is intended to provide eligible dairy producers
risk protection against low margins resulting from a combination of low
milk prices and high feed costs.
Sec. 1430.101 Administration.
(a) MPP-Dairy is administered under the general supervision of the
Executive Vice President, CCC, or a designee, and will be carried out
by Farm Service Agency (FSA) State and county committees and employees.
(b) State and county committees and their employees may not waive
or modify any requirement of this subpart.
(c) The State committee will take any action required when not
taken by the county committee, require correction of actions not in
compliance, or require the withholding of any action that is not in
compliance with this subpart.
(d) The Executive Vice President, CCC, or a designee, may determine
any question arising under MPP-Dairy or reverse or modify any decision
of the State or county committee.
(e) The Deputy Administrator, Farm Programs, FSA, may waive or
modify MPP-Dairy requirements not statutorily required when failure to
meet such requirements does not adversely affect the operation of MPP-
Dairy.
(f) A representative of CCC will execute a contract for
registration in MPP-Dairy and related documents under the terms and
conditions determined and announced by the Deputy Administrator on
behalf of CCC. Any document not under such terms and conditions,
including any execution before the date authorized by CCC, will be null
and void.
Sec. 1430.102 Definitions.
The definitions in this section are applicable for the purposes of
administering MPP-Dairy established by this subpart.
Actual dairy production margin means the difference between the
all-milk price and the average feed cost, as calculated under Sec.
1430.110. If the calculation would produce a negative number the margin
will be considered to be zero.
Administrative county office means the county office designated to
make determinations, handle official records, and issue payments for
the producer as specified in 7 CFR part 718.
All-milk price means the national average price received, per
hundredweight of milk, by dairy operations for all milk sold to dairy
plants and milk dealers in the United States, as determined by the
Secretary.
AMS means the Agricultural Marketing Service of the USDA.
Annual election period for MPP-Dairy means the period, each
calendar year, established by the Deputy Administrator, for a dairy
operation to register initially to participate in MPP-Dairy, pay
associated administrative fees, and applicable premiums, or, if already
registered as a participating dairy operation, to make annual coverage
elections for an applicable calendar year.
Average feed cost means the national average cost of feed used by a
dairy operation to produce a hundredweight of milk, as determined under
Sec. 1430.110(b).
Buy up coverage means margin protection coverage for a margin
protection level above $4 per hundredweight of milk.
Catastrophic level coverage means $4 per cwt margin protection
coverage and a coverage percentage of 90 percent, with no premium
assessed.
CCC means the Commodity Credit Corporation of the U.S. Department
of Agriculture.
Commercially marketed means selling whole milk to either the market
to which the dairy operation normally delivers and receives monetary
compensation or other similar markets.
Consecutive 2-month period means a 2-month period consisting,
respectively, of the months of January and February; March and April;
May and June; July and August; September and October; or November and
December.
Contract means the terms and conditions to register for the MPP-
Dairy as executed on a form prescribed by CCC and required to be
completed by the dairy operation and accepted by CCC, including any
contract modifications made in an annual election period before
coverage for the applicable calendar year commences.
[[Page 51463]]
County committee means the FSA county committee.
County office means the FSA office responsible for administering
FSA programs for farms located in a specific area in a State.
Covered production history is equal to the production history of
the operation multiplied by the coverage percentage selected by the
participating dairy operation.
Dairy operation means a dairy operation as defined pursuant to the
criteria and procedures under the Milk Income Loss Contract (MILC)
Program or any dairy facility that was part of a single dairy operation
that participated in the MILC Program as of February 7, 2014.
Operations that are determined to be ``new operations'' under this
subpart, will be subject to the ``affiliation'' test under Sec.
1430.103(e) if the operation elects to participate in MPP-Dairy
separately. A single dairy operation operated by more than one dairy
producer will be treated as a single dairy operation for purposes of
participating in MPP-Dairy and can only submit one application. All
dairy operations under this part shall commercially market milk
produced from cows as a single unit located in the United States in
which each dairy producer:
(1) Has risk in the production of milk in the dairy operation; and
(2) Makes contributions, including land, labor, management,
equipment, or capital, to the dairy operation at least commensurate to
the producers' share of the operation.
Deputy Administrator means the Deputy Administrator for Farm
Programs, or designee.
Farm Service Agency or FSA means the Farm Service Agency of the
USDA.
Hundredweight or cwt means 100 pounds.
Milk Income Loss Contract Program or MILC means the program
established under section 1506 of the Food, Conservation, and Energy
Act of 2008 (7 U.S.C. 8773) and the regulations found in subpart B of
this part.
Milk marketing means a sale of milk for which there is a verifiable
production record for milk commercially marketed.
NASS means the National Agricultural Statistics Service of the
USDA.
New operation means a dairy operation that did not commercially
market milk at least 12 full months as of February 7, 2014.
Participating dairy operation means a dairy operation that
registers to participate in MPP-Dairy under this part.
Producer means any individual, group of individuals, partnership,
corporation, estate, trust association, cooperative, or other business
enterprise or other legal entity who is, or whose members are, a
citizen of, or legal resident alien in the United States, and who
directly or indirectly, shares in the risk of producing milk, makes
contributions including land, labor, management, equipment, or capital
to the dairy operation at least commensurate to the producers' share of
the operation, to the dairy operation of the individual or entity, as
determined by the Deputy Administrator.
Production history means the production history determined for a
participating dairy operation when the participating dairy operation
registers in MPP-Dairy.
RMA means the Risk Management Agency of the USDA.
Secretary means the Secretary of Agriculture.
United States means the 50 States of the United States of America,
the District of Columbia, American Samoa, Guam, the Commonwealth of the
Northern Mariana Islands, the Commonwealth of Puerto Rico, the Virgin
Islands of the United States, and any other territory or possession of
the United States.
USDA means the United States Department of Agriculture.
Verifiable production records mean evidence that is used to
substantiate the amount of production commercially marketed and that
can be verified by CCC through an independent source.
Sec. 1430.103 Eligible dairy operations.
(a) The eligibility requirements for a dairy operation to register
in MPP-Dairy and receive payments under this subpart, are to:
(1) Produce milk from cows in the United States that is marketed
commercially at the time of each annual election in MPP-Dairy;
(2) Submit accurate and complete information as required by the
this subpart;
(3) Provide proof of milk production marketed commercially by all
persons in the dairy operation to establish production history;
(4) Not participate in the Livestock Gross Margin for Dairy (LGM-
Dairy) Program administered by the USDA Risk Management Agency (RMA)
under the Federal Crop Insurance Act (7 U.S.C. 1501-1536), except to
the extent permitted by this subpart, provided that under no
circumstance may the operation receive coverage for the same period in
MPP-Dairy for which payments have been received or earned under LGM-
Dairy; and
(5) Pay required administrative fees for participation in MPP-Dairy
as specified in this subpart and any premiums, if applicable, as
specified in this subpart.
(b) A person or entity covered by Sec. 1400.401 of this chapter
(hereafter ``foreign person'') must meet the eligibility requirements
contained in that section to receive payments under this part. A dairy
operation with ineligible foreign persons as members will have any
payment reduced by the proportional share of such members.
(c) Federal agencies and States, including all agencies and
political subdivisions of a State, are not eligible for payments under
this subpart.
(d) As specified in Sec. 1430.104, each dairy operation is
required to submit a separate registration to be eligible for MPP-Dairy
coverage and payment. A producer who owns more than one eligible dairy
operation may participate separately for each dairy operation; each
eligible dairy operation must be registered separately, subject to the
affiliation test for new operations.
(e) A new dairy operation will be treated as an affiliated dairy
operation and not be treated as a separate dairy operation under MPP-
Dairy if producers that collectively own more than 50 percent of the
new dairy operation also collectively own more than 50 percent interest
in another dairy operation registered in MPP-Dairy.
Sec. 1430.104 Time and method of registration and annual election.
(a) A dairy operation may register to participate in MPP-Dairy by
submitting a contract prescribed by CCC. Dairy operations may obtain a
blank contract in person, by mail, or by facsimile from any county
office. In addition, dairy operations may download a copy of the forms
at https://www.sc.egov.usda.gov.
(b) Dairy operation shall submit completed contracts and any other
supporting documentation during the annual election period established
by the Deputy Administrator, to the administrative county office
serving the dairy operation.
(1) A new dairy operation that has been established after the most
recent election period is required to submit a contract within the
first 90 calendar days from the date on of which the dairy operation
first commercially markets milk and may elect coverage that begins the
next consecutive 2-month period following the approval date of the
registration and coverage election; or
(2) A new dairy operation that does not meet the 90 day requirement
of
[[Page 51464]]
paragraph (b)(1) of this section cannot enroll until the next annual
election period for coverage for the following calendar year.
(c) Registration requests and coverage elections are to be
submitted in time to be received at FSA by the close of business on the
last day of the annual election period established by the Deputy
Administrator.
(1) The applicable year of coverage for contracts arising from
accepted registrations in the annual election period will be the
following calendar year, except for 2014, where the election and
coverage year will be the same.
(2) Registration requests and coverage elections submitted after
the applicable allowed time for submission will not be considered.
(3) During an annual election period, participating dairy
operations may change coverage elections for the following calendar
year.
(d) To receive margin protection coverage, separate registrations
are required for each separately constituted dairy operation. If a
dairy producer operates more than one separate and distinct operation,
the producer registers each operation for each operation to be eligible
for coverage.
(e) A participating dairy operation must elect, during the
applicable annual election period and by using the form prescribed by
CCC, the coverage level threshold and coverage percentages for that
participating dairy operation for the applicable calendar year.
(1) Once the initial completed registration is submitted and
approved by CCC, it cannot be cancelled by the participating dairy
operation through December 31, 2018; however, each calendar year
subsequent to the initial registration of the participating dairy
operation, it may elect to change the coverage level threshold and
coverage percentage, on a form prescribed by CCC, during the election
period for the applicable subsequent calendar year. For dairy
operations that want to continue coverage levels established in the
prior calendar year, the Deputy Administrator will establish a
procedure to allow such coverage levels to continue that will include
the requirement of a timely payment of administrative fees and any
premiums, if applicable.
(2) If the operation fails to file an update of its election during
the annual election period, the coverage level will be reduced to the
catastrophic level coverage, but such coverage will only be provided if
the participating dairy operation pays the annual administrative fee
for the relevant calendar year.
(3) All producers in the participating dairy operation must agree
to the coverage level threshold and coverage percentage elected by the
dairy operation.
(f) By registering to participate or receive payment under MPP-
Dairy, producers in the participating dairy operation certify to the
accuracy and truthfulness of the information in their applications and
supporting documentation.
(1) All producers in a participating dairy operation must sign and
certify all submissions made under MPP-Dairy that relate to the level
of coverage.
(2) All information provided is subject to verification. FSA may
require a dairy operation to provide documentation to support all
verifiable records. Furnishing the information is voluntary; however,
without it MPP-Dairy benefits will not be approved. Providing a false
certification to the Federal Government may be punishable by
imprisonment, fines, other penalties, or sanctions.
(g) At the time the completed contract is submitted to FSA for the
first year in which the dairy operation is to participate in MPP-Dairy,
the dairy operation must also submit a separate form, as specified by
CCC, to establish the production history for the dairy operation.
Sec. 1430.105 Establishment and transfer of production history for a
participating dairy operation.
(a) A participating dairy operation must provide all information
required by FSA to establish the production history of the
participating dairy operation for purposes of participating in MPP-
Dairy. Except as provided in paragraph (b) of this section relating to
new dairy operations, FSA will establish the production history for a
dairy operation for margin protection as the highest annual milk
marketings of the participating dairy operation during any one of the
2011, 2012, or 2013 calendar years.
(1) All producers in the participating dairy operation are required
to provide adequate proof of the dairy operation's quantity of milk
commercially marketed, to establish the production history for the
dairy operation.
(2) All information provided is subject to verification, spot check
and audit by FSA. If the dairy operation does not provide to the
satisfaction of FSA documentation requested to substantiate the
production history of the highest annual milk marketings for the
participating dairy operation, then, the registration will not be
approved.
(b) A participating dairy operation that did not produce and
commercially market milk at least 12 full months as of February 7,
2014, will be considered a new dairy operation. To establish the
production history for such a new dairy operation the new dairy
operation is required to elect one of the following methods:
(1) The volume of the actual milk marketings for the months the
dairy operation has been in operation, extrapolated to a yearly amount
based on a national seasonally adjusted index, as determined by the
Deputy Administrator, to account for differences in milk production
during the year; or
(2) An estimate of the actual milk marketings of the dairy
operation based on the herd size of the dairy operation relative to the
national rolling herd average data published by the Secretary.
(c) If FSA determines that the new enterprise was formed for the
purpose of circumventing MPP-Dairy provisions, including, but not
limited to, reconstituting a dairy operation to receive additional
benefits, or establishing new production history, that enterprise will
not be considered a new dairy operation for the purpose of establishing
production history.
(d) Once the production history of a participating dairy operation
is established under paragraphs (a) or (b) of this section, the
production history will be adjusted upward by FSA only to reflect any
increase in the national average milk production, as determined by the
Deputy Administrator.
(e) The production history may be transferred from one dairy
facility to another:
(1) Producers of a dairy operation may relocate the dairy operation
to another location and the production history of the original
operation may be transferred to the new location and may be added to
production history at the new location that has not been transferred;
(2) Producers of a dairy operation may transfer ownership of a
dairy operation with its associated production history, but if the
producers start a new operation such new operation may only be eligible
for new production history if the new operation is otherwise not
affiliated with participants in MPP-Dairy as described in Sec.
1430.103(e); or
(3) Producers of more than one dairy operation that separately
participate in MPP-Dairy may transfer the production histories of these
dairy operations into a previously unregistered dairy operation.
(f) If CCC waives the obligation, under MPP-Dairy of a
participating dairy operation due to death or retirement of the
producer or of the permanent
[[Page 51465]]
dissolution of the dairy operation or under other circumstances as
determined by the Deputy Administrator, FSA may reestablish the
production history provided that the production history has not been
transferred.
Sec. 1430.106 Administrative fees.
(a) Dairy operations must pay an initial administrative fee to FSA
in the amount of $100 to participate in MPP-Dairy at the time of
initial registration to participate. Each approved participating dairy
operation must also pay a $100 administrative fee each year through
December 31, 2018. Annual administrative fees are due and payable to
FSA through the administrative county FSA office no later than the
close of business on the last day of the annual election period
established by the Deputy Administrator for each applicable calendar
year of margin protection coverage under MPP-Dairy. The administrative
fee paid is non-refundable.
(b) The required annual administrative fee is per dairy operation.
Therefore, multiple dairy producers in a single unit participating
dairy operation are required to pay only one annual administrative fee
for the participating dairy operation. Conversely, in the case of a
dairy producer that operates more than one dairy operation, each
participating dairy operation is required to pay a separate
administrative fee annually.
(c) Failure to pay the administrative fee timely will result in
loss of margin protection coverage for the applicable calendar year.
The payment will still be due, as provided in Sec. 1430.109.
Sec. 1430.107 Buy-up coverage.
(a) For purposes of receiving MPP-Dairy coverage, a participating
dairy operation may annually elect during an annual election period the
following for the succeeding calendar year:
(1) A coverage level threshold for margins that, per cwt, is equal
to one of the following: $4, $4.50, $5, $5.50, $6, $6.50, $7, $7.50, or
$8; and
(2) A percentage of coverage for the production history from 25
percent to 90 percent, in 5-percent increments.
(b) In the absence of any such election, the applicable coverage
level provided, with no premium due, is catastrophic level coverage.
(c) A participating dairy operation that elects margin protection
coverage above $4 is required to pay an annual premium based on
coverage level and covered production history in addition to the
administrative fee. Tier 1 applies to covered production history up to
and including 4 million pounds; Tier 2 applies to covered production
history above 4 million pounds.
(d) The premium per cwt of milk, based on the elected percentage of
coverage of production history is specified in the following tables.
Table 1 to Sec. 1430.107(d)
------------------------------------------------------------------------
Tier 1 Premium
per cwt in 2014 Tier 2 Premium
and 2015 (for the per cwt, all
covered \1\ years (for the
Coverage level (margin) production part of covered
history that is 4 \1\ production
million pounds or history over 4
less) \2\ million pounds)
------------------------------------------------------------------------
$4.00............................. None None
$4.50............................. $0.008 $0.020
$5.00............................. 0.019 0.040
$5.50............................. 0.030 0.100
$6.00............................. 0.041 0.155
$6.50............................. 0.068 0.290
$7.00............................. 0.163 0.830
$7.50............................. 0.225 1.060
$8.00............................. 0.475 1.360
------------------------------------------------------------------------
\1\ The catastrophic coverage level provided at the $4 margin is 90
percent.
Table 2 to Sec. 1430.107(d)
------------------------------------------------------------------------
Tier 1 Premium
per cwt after Tier 2 Premium
2015 (for the per cwt, all
covered \1\ years (for the
Coverage level (margin) production part of covered
history that is 4 \1\ production
million pounds or history over 4
less) million pounds)
------------------------------------------------------------------------
$4.00............................. None None
$4.50............................. $0.010 $0.020
$5.00............................. 0.025 0.040
$5.50............................. 0.040 0.100
$6.00............................. 0.055 0.155
$6.50............................. 0.090 0.290
$7.00............................. 0.217 0.830
$7.50............................. 0.300 1.060
$8.00............................. 0.475 1.360
------------------------------------------------------------------------
\1\ The catastrophic coverage level provided at the $4 margin is 90
percent.
(e) The annual premium due for a participating dairy operation is
calculated by multiplying:
(1) The covered production history; and
(2) The premium per cwt of milk specified in paragraph (d) of this
section
[[Page 51466]]
for the coverage level elected by the dairy operation.
(f) In the case of a new dairy operation that first registers to
participate in MPP-Dairy for a calendar year after the start of the
calendar year, the participating dairy operation is required to pay a
pro-rated premium for that calendar year based on the portion of the
calendar year for which the participating dairy operation is eligible,
and for which it purchases the coverage.
(g) The total annual premium for a participating dairy operation
calculated as provided in paragraphs (d) and (e) of this section for
calendar year 2014, is due in full at the time the contract is
submitted to FSA during the open election period applicable for
calendar year 2014, as determined by the Deputy Administrator. For
subsequent calendar years, a participating dairy operation is required
to pay the annual premium calculated as specified in paragraphs (d) and
(e) of this section for the applicable calendar year, unless otherwise
determined by the Deputy Administrator, according to either of the
following options:
(1) In total at time of submission of coverage election to FSA; or
(2) In installments, with a minimum of 50 percent at the time of
submission of coverage election to FSA and the remaining balance due no
later than June 1 of the applicable calendar year of coverage.
(h) If a minimum of 50 percent of the premium is not paid by the
end of an open election period for an applicable calendar year of
coverage, the participating dairy operation will only be covered at
catastrophic level coverage, except that the participating dairy
operation will have no coverage whatsoever if the administrative fee
for the applicable calendar year of coverage has not been timely paid.
(i) Annual premium balances due to FSA from a participating dairy
operation for a calendar year of coverage must be paid in full no later
than June 1 of the applicable calendar year. Premium balances due, but
not in arrears, prior to June 1 will be deducted from any MPP-Dairy
payment(s) made to the participating dairy operation during the
applicable calendar year of coverage.
(j) A participating dairy operation with an unpaid premium balance
after June 1 for a calendar year of coverage will lose eligibility for
coverage as provided in Sec. 1430.109.
(k) The Deputy Administrator may waive the obligation to pay the
premium, or refund the premium paid, of a participating dairy operation
for a calendar year, in cases that include, but are not limited to, as
determined by the Deputy Administrator, death, retirement, permanent
dissolution of a participating dairy operation, or other circumstances
determined by the Deputy Administrator.
(l) MPP-Dairy administrative fees and premiums are required to be
paid by a negotiable instrument satisfactory in form to the Deputy
Administrator and made payable to FSA and either mailed to or provided
in person to the administrative county office or other location
designated by FSA.
Sec. 1430.108 Margin protection payments.
(a) An MPP-Dairy payment will be made to a participating dairy
operation for any consecutive 2-month period when the average actual
dairy production margin for the consecutive 2-month period falls below
the coverage level threshold in effect for the participating dairy
operation.
(b) The MPP-Dairy payment to an eligible participating dairy
operation relative to the qualifying 2-month period will equal the
product obtained by multiplying:
(1) The amount by which the coverage level in effect for the
participating dairy operation exceeds the average actual dairy
production margin for the applicable 2-month period;
(2) The coverage percentage in effect for the participating dairy
operation; and
(3) The production history of the participating dairy operation,
divided by 6.
(c) For any coverage period, a participating dairy operation can
for all of its production select only one coverage level threshold
between $4 and $8 (in 50 cent increments) per hundredweight under Sec.
1430.107(a)(1); and only one percentage for its production history
between 25 percent and 90 percent (in 5 percent increments) under Sec.
1430.107(a)(2).
Sec. 1430.109 Effect of failure to pay administrative fees or
premiums.
(a) A participating dairy operation that fails to pay a required
administrative fee or premium payment due upon application to MPP-Dairy
or for a calendar year of coverage:
(1) Remains legally obligated to pay such administrative fee or
premium, as applicable; and
(2) Upon such failure to pay when due, loses coverage under MPP-
Dairy until such administrative fee or premium is paid in full, and
once paid, coverage will begin with the next consecutive 2-month
period.
(b) CCC may take such actions as necessary to collect unpaid
administrative fees and premium payments.
Sec. 1430.110 Calculation of average feed cost and actual dairy
production margins.
(a) Payments are made to a participating dairy operation as
specified in this subpart only when, for a consecutive 2-month period,
the calculated average actual dairy production margin is below the
coverage level in effect for the participating dairy operation. That
margin will be calculated on a national basis and is the amount by
which for the relevant consecutive 2-month period, the all milk price
exceeds the average feed cost for dairy producers. All calculations
will be made on a per cwt basis. The average actual dairy production
margin calculation applies to all participating dairy operations. The
calculations are not made on an operation by operation basis or on
their marketings.
(b) For calculating the national average feed cost that dairy
operations use to produce a cwt of milk, the following three items will
be added together:
(1) The product determined by multiplying 1.0728 by the price of
corn per bushel;
(2) The product determined by multiplying 0.00735 by the price of
soybean meal per ton; and
(3) The product determined by multiplying 0.0137 by the price of
alfalfa hay per ton.
(c) To make those feed calculations, the Deputy Administrator on
behalf of CCC will use the following full month data:
(1) For corn, the full month price received by farmers during the
month in the United States as reported in the monthly Agricultural
Prices report by USDA NASS;
(2) For soybean meal, the Central Illinois soybean meal price
delivered by rail as reported in the USDA AMS Market News-Monthly; and
(3) For alfalfa hay, the full month price received during the month
by farmers in the United States for alfalfa hay as reported in the
monthly Agricultural Prices report by USDA NASS.
(d) The national average feed cost data for corn, soybean meal, and
alfalfa hay used in the calculation of the national average feed cost
to determine the actual dairy production margin for the relevant
period, will be the data reported in the publication the following
month. (For example, preliminary May prices for corn and soybean meal
were reported in the May Agricultural Prices publication but full month
May prices will be
[[Page 51467]]
available in the June publication, and those will be the prices used).
(e) The actual dairy production margin for each consecutive 2-month
period, will be calculated by subtracting:
(1) The average feed cost for that consecutive 2-month period,
determined under paragraph (b) of this section; from
(2) The all-milk price for that consecutive 2-month period.
Sec. 1430.111 Relation to RMA's LGM-Dairy Program.
(a) In general, a producer may participate in either MPP-Dairy
through a dairy operation or the LGM-Dairy program operated by RMA, but
not both. However, since MPP-Dairy is first being made available after
potential applicants may have already applied for 2014 or 2015 coverage
under LGM-Dairy, for the annual election period for MPP-Dairy
established for the 2014 and 2015 calendar year coverage only, a
producer with coverage under LGM-Dairy that wishes to participate
through their dairy operation in MPP-Dairy, is required to:
(1) Register the dairy operation to participate in MPP-Dairy during
the annual election period established for calendar year 2014 and 2015,
as established by the Deputy Administrator;
(2) Agree not to extend or obtain new LGM-Dairy coverage;
(3) Acknowledge in writing at the time of registration that no MPP-
Dairy payment will be made to the dairy operation for any month
included in any period for which any producer in the dairy operation
has LGM-Dairy coverage; and
(4) Pay applicable administrative fees in the same manner as other
participating dairy operations by paying fees and premiums that may be
prorated by the Deputy Administrator to reflect the limited period of
coverage.
(b) Margin protection coverage under MPP-Dairy will not become
effective until after the target month of marketings under LGM-Dairy
has ended by natural expiration of the LGM-Dairy agreement or by an
RMA-allowed cancellation. Any applicable premium for the participating
dairy operation will be prorated based on the remaining months of the
applicable calendar year of coverage following the month the LGM-Dairy
target month has ended.
(c) MPP-Dairy payment may only trigger after the target month of
marketings under LGM-Dairy has ended.
(d) A participating dairy operation will be required to provide
proof, to the satisfaction of FSA, of the cancellation or expiration of
the LGM-Dairy policy based on the final month of target marketings
under the LGM-Dairy policy.
Sec. 1430.112 Multi-year contract.
(a) Participating dairy operations enrolled in MPP-Dairy are
enrolled until December 31, 2018. As such, a participating dairy
operation is obligated to pay initial and annual administrative fees
and applicable premiums each succeeding calendar year following the
date the contract is first entered into through December 31, 2018.
(b) Failure to pay administrative fees and premiums will result in
the loss of coverage, and the participating dairy operation remains
obligated to pay such administrative fees and premiums as provided in
Sec. 1430.108.
(c) If a participating dairy operation goes out of business as
described in Sec. 1430.107(k) before December 31, 2018, the contract
will be terminated immediately, except with respect to payments accrued
to the benefit of the participating dairy operation under this subpart
before such termination.
Sec. 1430.113 Contract modifications.
(a) Producers in a participating dairy operation must notify FSA
immediately of any changes that may affect their participation in MPP-
Dairy under this subpart. Changes include, but are not limited to death
of a producer on the contract, producer joining the operation, producer
exiting the operation, relocation of the dairy operation, transfer of
shares by sale or other transfer action, or dairy operation
reconstitutions as provided in Sec. 1430.114.
(b) Payment of any outstanding premium or administrative fee for a
participating dairy operation must be paid in full before a transfer of
shares by sale or any other change in producers on the contract
originally submitted to FSA may take effect. Otherwise, producer
changes will not be recognized until the following annual election
period, and only if at that time all associated premiums and
administrative fees from any previous calendar year of coverage have
been paid in full.
Sec. 1430.114 Reconstitutions.
(a) A participating dairy operation under this subpart may
reorganize or restructure itself in such a way that the constitution or
makeup of its operation is reconstituted in another organization
framework. However, any participating dairy operation that reorganizes
or restructures after enrolling is subject to a review by FSA to
determine if the operation was reorganized or restructured for the sole
purpose of establishing an alternative production history for a
participating dairy operation or was reorganized or restructured to
otherwise circumvent any MPP-Dairy provision under this subpart
(including the tier system for premiums) or otherwise to prevent the
accomplishment of the purpose of the program.
(b) A participating dairy operation that FSA determines has
reorganized solely to establish a new production history or to
circumvent the determination of applicable fees or premiums based on an
established production history determined under this subpart will be
considered to have failed to meet MPP-Dairy requirements and, in
addition to other sanctions or penalties that may apply, will not be
eligible for MPP-Dairy payments.
(c) Under no circumstance, except as approved by the Deputy
Administrator or provided for in these regulations, will the
reconstitution or restructure of a participating dairy operation change
the determined production history for the operation. The Deputy
Administrator may, however, adjust the production history of a
participating dairy operation if there is a calculation error or if
erroneous information has been supplied by or on behalf of the
participating dairy operation.
Sec. 1430.115 Offsets and withholdings.
FSA may offset or withhold any amount due FSA under this subpart
under the provisions of part 1403 of this chapter or any successor
regulations, or any other authorities that may allow for collection
action of that sort.
Sec. 1430.116 Assignments.
Any producer may assign a payment to be made under this subpart in
accordance with part 1404 of this chapter or successor regulations as
designated by the Secretary or as allowed by the Deputy Administrator
in writing.
Sec. 1430.117 Appeals.
Any producer who is dissatisfied with a determination made pursuant
to this subpart may request reconsideration or appeal of such
determination under parts 11 or 780 of this title.
Sec. 1430.118 Misrepresentation and scheme or device.
(a) In addition to other penalties, sanctions or remedies as may
apply, all or any part of a payment otherwise due a person or legal
entity on all participating dairy operations in which the person or
legal entity has an interest may be withheld or be required to be
refunded if the person or legal entity fails to comply with the
provisions of
[[Page 51468]]
this subpart or adopts or participates in adopting a scheme or device
designed to evade this subpart, or that has the effect of evading this
part. Such acts may include, but are not limited to:
(1) Concealing information that affects an registration or coverage
election;
(2) Submitting false or erroneous information; or
(3) Creating a business arrangement using rental agreements or
other arrangements to conceal the interest of a person or legal entity
in a dairy operation for the purpose of obtaining MPP-Dairy payments
the individual or legal entity would otherwise not be eligible to
receive. Indicators of such business arrangement include, but are not
limited to the following:
(i) No milk is produced and commercially marketed by a
participating dairy operation;
(ii) The participating dairy operation has no appreciable assets;
(iii) The only source of capital for the dairy operation is the
MPP-Dairy payments; or
(iv) The represented dairy operation exists mainly for the receipt
of MPP-Dairy payments.
(b) If the Deputy Administrator determines that a person or legal
entity has adopted a scheme or device to evade, or that has the purpose
of evading, the provisions of this subpart, such person or legal entity
will be ineligible to receive MPP-Dairy payments in the year such
scheme or device was adopted and the succeeding year.
(c) A person or legal entity that perpetuates a fraud, commits
fraud, or participates in equally serious actions for the benefit of
the person or legal entity, or the benefit of any other person or legal
entity, in violation of the requirements of this subpart will be
subject to a 5-year denial of all program benefits. Such other equally
serious actions may include, but are not limited to:
(1) Knowingly engaging in, or aiding in the creation of a
fraudulent document or statement;
(2) Failing to disclose material information relevant to the
administration of the provisions of this subpart, or
(3) Engaging in any other actions of a person or legal entity
determined by the Deputy Administrator to be designed, or intended to,
circumvent the provisions of this subpart.
(d) Program payments and benefits will be denied on pro-rata basis:
(1) In accordance with the interest held by the person or legal
entity in any other legal entity or joint operations; and
(2) To any person or legal entity that is a cash rent tenant on
land owned or under control of a person or legal entity for which a
determination of this section has been made.
Sec. 1430.119 Estates, trusts, and minors.
(a) MPP-Dairy documents executed by producers legally authorized to
represent estates or trusts will be accepted only if such producers
furnish evidence of the authority to execute such documents.
(b) A minor who is otherwise eligible for benefits under this
subpart is also required to:
(1) Establish that the right of majority has been conferred on the
minor by court proceedings or by law;
(2) Show that a guardian has been appointed to manage the minor's
property and the applicable MPP-Dairy documents are executed by the
guardian; or
(3) Furnish a bond under which the surety guarantees any loss
incurred for which the minor would be liable had the minor been an
adult.
Sec. 1430.120 Death, incompetency, or disappearance.
In the case of death, incompetency, disappearance or dissolution of
a producer that is eligible to receive benefits under this subpart,
such persons as are specified in part 707 of this title may receive
such benefits, as determined appropriate by FSA.
Sec. 1430.121 Maintenance and inspection of records.
(a) Participating dairy operations are required to maintain
accurate records and accounts that will document that they meet all
eligibility requirements specified in this subpart, as may be requested
by CCC or FSA. Such records and accounts are required to be retained
for 3 years after the date of MPP-Dairy payments to the participating
dairy operation. Destruction of the records 3 years after the date of
payment will be at the risk of the party undertaking the destruction.
(b) A participating dairy operation is required to allow authorized
representatives of CCC, the Secretary, or the Comptroller General of
the United States to have access to the premises of the dairy operation
in order to inspect the herd of cattle, examine, and make copies of the
books, records, and accounts, and other written data as specified in
paragraph (a) of this section.
(c) Any producer or dairy operation that does not comply with the
provisions of paragraphs (a) or (b) of this section, or that otherwise
receives a payment for which it is not eligible, is liable for that
payment and is required to repay it to FSA, with interest to run from
the date of disbursement.
Sec. 1430.122 Refunds; joint and several liability.
(a) Any legal entity, including joint operations, joint ventures
and partnerships, and any member of a legal entity determined to have
knowingly participated in a scheme or device, or other such equally
serious actions to evade, or that has the purpose of evading the
provisions of this part, will be jointly and severally liable for any
amounts determined to be payable as the result of the scheme or device,
or other such equally serious actions, including amounts necessary to
recover the payments.
(b) Any person or legal entity that cooperates in the enforcement
of the provisions of this part may be partially or fully released from
liability, as determined by the Executive Vice President, CCC.
(c) The provisions of this section will be applicable in addition
to any liability that arises under a criminal or civil statute,
regulation, or provision of law.
Sec. 1430.123 Violations of highly erodible and wetland conservation
provisions.
The provisions of part 12 of this title apply to this part.
Sec. 1430.124 Violations regarding controlled substances.
The provisions of Sec. 718.6 of this title apply to this part.
0
3. Revise 7 CFR part 1430, subpart C to read as follows:
Subpart C--Dairy Product Donation Program
Sec.
1430.300 Administration, purpose, and funding.
1430.301 Definitions.
1430.302 Commencement and termination of DPDP purchases.
1430.303 DPDP purchases.
1430.304 Distribution of DPDP purchased products.
Subpart C--Dairy Product Donation Program
Sec. 1430.300 Administration, purpose, and funding.
(a) The regulations in this subpart apply for the Dairy Product
Donation Program (DPDP). DPDP is authorized by section 1431 of the
Agricultural Act of 2014 (Pub. L. 113-79, 7 U.S.C. 9071).
(b) DPDP is designed to address low dairy producer margins, through
periodic purchases of dairy products, as specified in this subpart.
Dairy products purchased for DPDP will be used to
[[Page 51469]]
provide nutritional assistance to members of low-income groups.
(c) The purchase aspect of DPDP will be operated for the Secretary
of Agriculture and for the Commodity Credit Corporation by the Farm
Service Agency (FSA) under the direction of the FSA's Deputy
Administrator for Commodity Operations. Purchases are subject to the
terms and conditions in FSA's purchase announcements. The distribution
of products purchased through DPDP will be operated for the Secretary
under the direction of the Food and Nutrition Service.
Sec. 1430.301 Definitions.
For purposes of this subpart, the following terms and acronyms
apply:
2014 Farm Bill means the Agricultural Act of 2014 (Pub. L. No. 113-
79).
Actual dairy production margin is as defined in subpart A of this
part.
AMS means the Agricultural Marketing Service of the USDA.
CCC means the Commodity Credit Corporation.
Deputy Administrator means the Farm Service Agency Deputy
Administrator for Commodity Operations.
Distribution means the provision of products purchased through DPDP
to low-income groups through FNS food distribution programs in
accordance with those program regulations and 7 CFR part 250.
DPDP means the Dairy Product Donation Program.
FNS means the Food and Nutrition Service of the USDA.
FSA means the Farm Service Agency of the USDA.
FSA Administrator means Administrator of the Farm Service Agency,
USDA.
Hundredweight or cwt means 100 pounds.
MPP-Dairy means the Margin Protection Program for Dairy provided
for in subpart A of this part.
NDM means non-fat dry milk.
Recipient agencies means agencies or organizations that are
eligible to receive donated product for distribution under this
subpart.
USDA means the United States Department of Agriculture.
Sec. 1430.302 Commencement and termination of DPDP purchases.
(a) DPDP purchases commence only if approved by the FSA
Administrator under the provisions of this subpart. The FSA
Administrator will approve DPDP purchases only if the actual dairy
production margin has been $4 or less per cwt for each of the preceding
2 months. The actual dairy production margin will be calculated as
specified in Sec. 1430.110. The following chart shows an example of
the timing for the determination of DPDP purchases.
DPDP Purchase Determination Example Based on Dairy Production Margins and 3-Month Maximum for Purchases \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
If both margins below $4
2 Consecutive months Calculate margin for 2 per cwt in the 2 3-Month maximum If either margin above $4 per cwt
consecutive months \2\ consecutive months consideration in the 2 consecutive months
--------------------------------------------------------------------------------------------------------------------------------------------------------
January and February............... March................. Dairy product purchases \3\ 1st month of purchases..... No purchases.
begin in April.
February and March................. April................. Dairy product purchases \3\ 2nd consecutive month of No purchases.
begin in May. purchases.
March and April.................... May................... Dairy product purchases \3\ 3rd consecutive month of No purchases.
begin in June. purchases.
April and May...................... June \4\.............. No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (1st month off).
May and June....................... July.................. No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (2nd month off).
June and July...................... August................ No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (3rd month off).
July and August.................... September............. Dairy product purchases \3\ 1st month of purchases..... No purchases.
begin in October.
August and September............... October............... Dairy product purchases \3\ 2nd consecutive month of No purchases.
begin in November. purchases.
September and October.............. November.............. Dairy product purchases \3\ 3rd consecutive month of No purchases.
begin in December. purchases.
October and November............... December.............. No purchases; terminated 3-month maximum reached No purchases.
after 3 consecutive months. (1st month off).
November and December.............. January............... No purchases; terminated 3-month maximum reached No purchases
after 3 consecutive months. (1st month off).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This example assumes that purchases begin in January. In reality, DPDP can--depending on prices and margin triggers--begin on September 1, 2014,
which is the start of MPP-Dairy.
\2\ The full month data for a given month is available at the end of the following month. For example, January data are not available until the end of
February.
\2\ Purchases cannot begin unless domestic cheddar cheese or nonfat dry milk prices are at certain differentials relative to world prices.
\3\ In the example, June is the 3rd month of consevutive purchases. June would not be calculated as a potential trigger month, but it is shown on the
chart to clearly show the concept of 3 months on and 3 months off for purchases. If purchases are taking place during a month, that month cannot be
used as a trigger month for a future purchase period.
(b) DPDP purchases terminate and are not reinstated until the
condition specified in paragraph (a) of this section is again met,
whenever any one of the following occurs:
(1) If purchases were made for the preceding 3 months, even if the
actual dairy production margin remains $4 or less per cwt of milk.
(2) If the actual dairy production margin has been greater than $4
per cwt of milk for the immediately preceding month.
(3) If the actual dairy production margin has been $4 or less, but
more than $3, per cwt for the immediately preceding month and during
the same month --
(i) The price in the United States for cheddar cheese was more than
5 percent above the world price, or
(ii) The price in the United States for non-fat dry milk (NDM) was
more than
[[Page 51470]]
5 percent above the world price of skim milk powder.
(4) If the actual dairy production margin has been $3 or less per
cwt of milk for the immediately preceding month and during the same
month --
(i) The price in the United States for cheddar cheese was more than
7 percent above the world price; or
(ii) The price in the United States for NDM was more than 7 percent
above the world price of skim milk powder.
(c) Purchases will terminate beginning with the first day of any
month that does not qualify for DPDP purchases.
(d) For calculations under paragraphs (b)(3) and (4) of this
section, the FSA Administrator may use data from a single or multiple
locales or markets, including weighted averages, in consultation with
AMS or other USDA agencies.
Sec. 1430.303 DPDP purchases.
(a) DPDP purchases will be made only for those months that the FSA
Administrator has determined meet all the requirements specified in
Sec. 1430.302. The purchases are subject to DPDP requirements
including price and quantity restrictions specified in this subpart.
(b) The Secretary has the authority to determine purchase and
distribution methods for dairy product purchases and distribution.
Unless otherwise determined by the Secretary, this authority is
delegated to the Deputy Administrator in consultation with FNS.
(c) FSA and FNS will determine the types and quantities of products
that will be purchased, in consultation with public or private
nonprofit organizations and State and local agencies eligible to
receive such products.
(d) The FSA Administrator will determine the quantity of purchases
to be made for a qualifying month and will consider the results of any
consultations in determining the quantity to be purchased. In making
the determination, the FSA Administrator will also take into account a
number of factors, including, but not limited to, dairy product market
conditions, logistical considerations involved in the efficient and
immediate distribution of the dairy products, the potential effect on
markets and margins, time constraints of DPDP, and the cost
effectiveness of the purchases. Approved quantities for a month will
not exceed the amount of product that may be effectively distributed
without waste.
(e) Purchases may be approved for a qualifying month to the extent
that the purchase by FSA can reasonably be expected to be completed in
that calendar month and the products delivered to recipient agencies
within 90 days.
(f) DPDP purchases cannot be stored by or for CCC, and CCC cannot
incur storage costs on behalf of recipient agencies for the dairy
products.
(g) The purchase price of products will be the prevailing market
price for like dairy products for private buyers as determined by the
Deputy Administrator. That price may be, if approved by the Deputy
Administrator, the price determined by the normal procurement methods
used to procure foods for FNS domestic food assistance programs, if the
dairy products are obtained that way.
Sec. 1430.304 Distribution of DPDP purchased products.
(a) Purchased products will be distributed to private and public
nonprofit organizations eligible to receive donated foods for
distribution to low-income groups through FNS' food distribution
programs as specified in FNS program regulations and the requirements
in 7 CFR part 250.
(b) Public and private nonprofit organizations receiving donated
dairy products under this section will be responsible for the proper
handling and distribution of such products in accordance with FNS
program regulations, 7 CFR part 250, and FNS guidance and instructions.
(c) A private or nonprofit organization agency receiving donated
products under this section which improperly distributes or uses such
product or causes loss of or damage to such product, will be subject to
recovery of losses or other corrective action in accordance with FNS
program regulations, 7 CFR part 250.
Subparts D and E--[Removed]
0
4. Remove subparts D and E.
Signed on August 20, 2014.
Juan M. Garcia,
Administrator, Farm Service Agency, and Executive Vice President,
Commodity Credit Corporation.
[FR Doc. 2014-20567 Filed 8-28-14; 8:45 am]
BILLING CODE 3410-05-P
