Reauthorization of Dairy Forward Pricing Program, 6961-6962 [2019-03600]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 84, Number 41 (Friday, March 1, 2019)]
[Rules and Regulations]
[Pages 6961-6962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03600]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1145

[Doc. No. AMS-DA-18-0097]


Reauthorization of Dairy Forward Pricing Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule reauthorizes the Dairy Forward Pricing Program 
(DFPP) in accordance with the Agriculture Improvement Act of 2018 (2018 
Farm Bill). Establishing new contracts under the DFPP has been 
prohibited since the expiration of the program on September 30, 2018. 
The 2018 Farm Bill reauthorized the program to allow handlers to enter 
into new contracts until September 30, 2023. Any forward contract 
entered prior to the September 30, 2023, deadline is subject to a 
September 30, 2026, expiration date.

DATES: Effective Date: March 4, 2019.

FOR FURTHER INFORMATION CONTACT: Roger Cryan, Director, Economics 
Division, USDA/AMS/Dairy Programs, Stop 0229--Room 2753-S, 1400 
Independence Avenue SW, Washington, DC 20250-0231; telephone: (202) 
720-7091; or, email: roger.cryan@usda.gov.

SUPPLEMENTARY INFORMATION: The Food, Conservation, and Energy Act of 
2008 (2008 Farm Bill) \1\ initially established the DFPP.\2\ The DFPP 
allows milk handlers, under the Agricultural Marketing Agreement Act of 
1937, (AMAA) \3\ to pay producers or cooperative associations of 
producers a negotiated price for producer milk, rather than the Federal 
order minimum blend price for non-fluid classes of milk (Classes II, 
III, and IV under the Federal Milk Marketing Order (FMMO) system). The 
DFPP does not allow for forward contracting of fluid or Class I milk.
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    \1\ Public Law 110-234.
    \2\ 73 FR 64868.
    \3\ 7 U.S.C. 601-614.
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    Following the initial expiration of the DFPP which prevented the 
establishment of new contracts after September 30, 2012, the ``American 
Taxpayer Relief Act of 2012,'' (ATRA) \4\ revised the program to allow 
handlers to enter into new contracts until September 30, 2013. The 
``Agricultural Act of 2014'' (2014 Farm Bill) \5\ then extended the 
program to allow new contracts until September 30, 2018. Establishing 
new contracts under the DFPP has been prohibited since the expiration 
of the program on September 30, 2018. Any forward contract established 
prior to the September 30, 2018, deadline is subject to a September 30, 
2021, expiration date.
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    \4\ Public Law 112-240.
    \5\ Public Law 113-79.
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    Participation in the DFPP is voluntary for dairy farmers, dairy 
farmer cooperatives, and handlers. Handlers may not require producer 
participation in a forward pricing program as a condition for accepting 
milk. USDA, including Market Administrator personnel, does not 
determine the terms of forward contracts or enforce negotiated prices. 
This regulation also does not affect contractual arrangements between a 
cooperative association and its members.
    Under the DFPP, regulated handlers must still account to the FMMO 
pool for the classified use value of their milk. Regulated handlers 
claiming exemption from the Federal order minimum pricing provisions 
must submit to the Market Administrator a copy of each forward 
contract. The contract must contain a disclosure statement--either as 
part of the contract itself or as a supplement--to ensure producers 
understand the nature of the program as well as the basis on which they 
will be paid for their milk. Contracts that do not contain a disclosure 
statement are deemed invalid and returned to the handler. For the first 
month the program is effective, contracts must be signed on or after 
the day the program becomes effective, and the contract must be 
received by the Market Administrator by the 15th day of that month. For 
example, if the program becomes effective on February 15, contracts for 
March milk must be signed between February 15 and February 28, and 
copies must be received by the Market Administrator by March 15.
    Handlers with forward contracts remain subject to all other milk 
marketing order provisions. Payments specified under a forward contract 
must be made on or before the same date as the federal order payments 
they replace. Required payment dates are specified in Sec.  1145.2(e) 
of the regulations.
    This final rule reauthorizes producers and cooperative associations 
of producers to enter into forward price contracts under the DFPP 
through September 30, 2023. All terms of the new forward contracts must 
expire prior to September 30, 2026. All other provisions and 
requirements of the program as provided for in the final rule \6\ 
published October 31, 2008, are still in effect. This document also 
provides notice that reauthorization of the DFPP applies to the milk 
regulated by the recently established California FMMO in addition to 
the other ten FMMOs.\7\
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    \6\ 73 FR 64868.
    \7\ See addition of 7 CFR 1051.73 in Sec.  1145.2(a).
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Executive Orders 12866 and 13771

    This rule has been determined to be not significant for purposes of 
Executive Order 12866, and therefore has not been reviewed by the 
Office of Management and Budget (OMB). In addition, because this rule 
does not meet the definition of a significant regulatory action, it 
does not trigger the requirements contained in Executive Order 13771. 
See OMB's Memorandum titled ``Interim Guidance Implementing Section 2 
of the Executive Order of January 30, 2017, titled `Reducing Regulation 
and Controlling Regulatory Costs' '' (February 2, 2017).

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have a retroactive effect. The 
adopted amendments do not preempt any state or local laws, regulations, 
or policies, unless they present an irreconcilable conflict with this 
rule. There are no administrative procedures which must be exhausted 
prior to judicial challenge to the provisions of this rule.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities and has certified that 
this rule will not have a significant economic impact on a substantial 
number of small entities.
    For the purpose of the Regulatory Flexibility Act, a dairy farm is 
considered a small business if it has an annual gross revenue of less 
than $750,000, and a dairy products manufacturer is a small business if 
it has fewer than 500 employees.
    Based on AMS data, the milk of 33,481 dairy farmers was pooled on 
the Federal milk marketing order system. Of the total, 32,958 dairy 
farmers, or 98 percent, were considered small businesses. During the 
same month, 301 handler plants were regulated by or reported their milk 
receipts to be pooled

[[Page 6962]]

and priced on a Federal milk marketing order. Of the total, 
approximately 163 handler plants, or 54 percent, were considered small 
businesses.
    Producer and handlers use the DFPP as a risk management tool. Under 
the DFPP, producers and handlers can ``lock-in'' prices, thereby 
minimizing risks associated with price volatility that are particularly 
difficult for small businesses to mitigate. Therefore, reauthorization 
of this program will not have a significant economic impact on a 
substantial number of small entities.
    AMS is 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.
    Section 1601(c)(2)(B) of the 2014 Farm Bill provides that the 
administration of the DFPP shall be made without regard to the 
Paperwork Reduction Act (PRA), 44 U.S.C. Chapter 35. Section 1701 of 
the 2018 Farm Bill \8\ extends that Congressional direction to the 
current reauthorization of the DFPP. Thus, any information collection 
conducted for the DFPP is not subject to the PRA.
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    \8\ Public Law 115-334.
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Final Action

    In accordance with the 2018 Farm Bill, this final rule extends the 
DFPP to all Federal milk marketing orders. New contracts under the 
Program may be entered into until September 30, 2023. Any forward 
contract entered into up to and until the September 30, 2023, deadline 
is subject to a September 30, 2026, expiration date.
    Section 1601(c)(2)(A) of the 2014 Farm Bill provides that the 
promulgation of the regulations to implement the reauthorization of the 
DFPP shall be made without regard to the notice and comment 
requirements of the Administrative Procedure Act, 5 U.S.C. 553. Section 
1701 of the 2018 Farm Bill extends that Congressional direction to the 
current reauthorization of the DFPP. AMS, therefore, is issuing this 
final rule without prior notice or public comment.
    Additionally, this final rule will be effective on March 4, 2019. 
As explained above, the DFPP is a voluntary program and AMS will not 
take action until forward contracts are received from handlers who are 
choosing to participate in this program. By making this rule effective 
one day after publication in the Federal Register, handlers will have 
the maximum amount of time to begin the contracting process with 
producers. Thus, it is unnecessary and contrary to the public interest 
to delay the effective date of the final rule further.

List of Subjects in 7 CFR Part 1145

    Contract, Forward contract, Forward pricing, Milk.

    For the reasons set forth in the preamble, title 7, chapter X, part 
1145, of the Code of Federal Regulations is amended as follows:

PART 1145--DAIRY FORWARD PRICING PROGRAM

0
1. The authority citation for 7 CFR part 1145 continues to read as 
follows: 7 U.S.C. 8772.

0
2. Amend Sec.  1145.2 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1145.2   Program.

    (a) Any handler defined in 7 CFR 1000.9 may enter into forward 
contracts with producers or cooperative associations of producers for 
the handler's eligible volume of milk. Milk under forward contract in 
compliance with the provisions of this part will be exempt from the 
minimum payment provisions that would apply to such milk pursuant to 7 
CFR 1001.73, 1005.73, 1006.73, 1007.73, 1030.73, 1032.73, 1033.73, 
1051.73, 1124.73, 1126.73 and 1131.73 for the period of time covered by 
the contract.
    (b) No forward price contract may be entered into under the program 
after September 30, 2023, and no forward contract entered into under 
the program may extend beyond September 30, 2026.
* * * * *

    Dated: February 25, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-03600 Filed 2-28-19; 8:45 am]
 BILLING CODE 3410-02-P