Milk in the Northeast and Other Marketing Areas; Final Decision on Proposed Amendments to Marketing Agreements and Orders, 95466-95587 [2024-27228]
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Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1000, 1001, 1005, 1006,
1007, 1030, 1032, 1033, 1051, 1124,
1126, 1131, and 1170
[Doc. No. AMS–DA–23–0031]
Milk in the Northeast and Other
Marketing Areas; Final Decision on
Proposed Amendments to Marketing
Agreements and Orders
Agricultural Marketing Service,
USDA.
ACTION: Proposed rule; final decision.
AGENCY:
This proposed rule is the
Secretary’s final decision in this
proceeding and recommends
amendments to the pricing provisions in
the 11 Federal Milk Marketing Orders
(FMMOs). AMS will determine if
producers approve of the proposed
amended orders, as required by
regulation.
DATES: The representative period for
ascertaining producer approval is
January 2024.
ADDRESSES: To review the hearing
record, please see https://
www.ams.usda.gov/rules-regulations/
moa/dairy/hearings/national-fmmopricing-hearing. Webinars with
information on the proposed
amendments and the referendum
process are also available on the hearing
website.
FOR FURTHER INFORMATION CONTACT: Erin
Taylor, USDA/AMS/Dairy Program,
Order Formulation and Enforcement
Branch, STOP 0231–Room 2530, 1400
Independence Avenue SW, Washington,
DC 20250–0231; telephone: (202) 720–
4392; email address: Erin.Taylor@
usda.gov.
SUPPLEMENTARY INFORMATION: This
proposed rule, in accordance with 7
CFR 900.13a, is the Secretary’s final
decision in this proceeding and
proposes the issuance of marketing
orders as defined in 7 CFR 900.2(j).
AMS continues to find that amendments
to five milk pricing categories would
provide more orderly marketing in the
11 FMMOs. The final decision reflects
changes to the make allowances and, to
a very limited extent, the Class I
differentials included in the
recommended decision. This final
decision recommends amendments to:
1. Milk Composition Factors. Update
the factors to 3.3 percent true protein, 6
percent other solids, and 9.3 percent
nonfat solids.
2. Surveyed Commodity Products.
Remove 500-pound barrel cheddar
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SUMMARY:
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cheese prices from the Dairy Products
Mandatory Reporting Program (DPMRP)
survey and rely solely on the 40-pound
block cheddar cheese price to determine
the monthly average cheese price used
in the formulas.
3. Class III and Class IV Formula
Factors. Update the manufacturing
allowances to: Cheese: $0.2519; Butter:
$0.2272; Nonfat Dry Milk (NFDM):
$0.2393; and Dry Whey: $0.2668. This
decision also proposes updating the
butterfat recovery factor to 91 percent.
4. Base Class I Skim Milk Price.
Update the formula as follows: the base
Class I skim milk price would be the
higher-of the advanced Class III or Class
IV skim milk prices for the month. In
addition, adopt a Class I extended shelf
life (ESL) adjustment equating to a Class
I price for all ESL products equal to the
average-of mover, plus a 24-month
rolling average adjuster with a 12-month
lag.
5. Class I and Class II differentials.
Keep the $1.60 base differential and
adopt modified location specific Class I
differential values.
The Agricultural Marketing Service
(AMS) will determine if producers
approve of each proposed amended
order, as required by regulation. If at
least two-thirds of the producers or twothirds of the milk represented in the
vote approve of an amended order, AMS
will issue a final rule implementing the
changes. If an order is not approved as
amended, AMS will initiate steps to
terminate the order.
In conjunction with this final
decision, the AMS conducted a
Regulatory Economic Impact Analysis to
determine the potential impact of
amending FMMO pricing formulas on
producer revenue and marketwide pool
values. AMS used a static analysis
incorporating actual data reported from
January 2019 to December 2023 to
determine the estimated price impacts
of the package of amendments included
in this final decision. The full text of the
Regulatory Economic Impact Analysis
may be accessed at https://
www.regulations.gov or https://
www.ams.usda.gov/rules-regulations/
moa/dairy/hearings/national-fmmopricing-hearing.
Prior Documents in This Proceeding
Notice of Hearing: Published July 24,
2023 (88 FR 47396).
Notice of Reconvened Hearing:
Published November 6, 2023 (88 FR
76143).
Notice of Reconvened Hearing:
Published December 29, 2023 (88 FR
90134).
Recommended Decision: Published
July 15, 2024 (89 FR 57580).
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This administrative action is governed
by sections 556 and 557 of title 5 of the
United States Code and, therefore, is
excluded from the requirements of
Executive Orders 12866, 13563, and
13175.
The amendments to the regulations
proposed herein have been reviewed
under Executive Order 12988, Civil
Justice Reform. They are not intended to
have a retroactive effect. If adopted, the
proposed amendments would not
preempt any state or local laws,
regulations, or policies, unless they
present an irreconcilable conflict with
this rule.
The Agricultural Marketing
Agreement Act of 1937 (AMAA), as
amended (7 U.S.C. 601–674), provides
that administrative proceedings must be
exhausted before parties may file suit in
court. Under section 608c(15)(A) of the
AMAA, any handler subject to an order
may request modification or exemption
from such order by filing a petition with
the USDA stating that the order, any
provision of the order, or any obligation
imposed in connection with the order is
not in accordance with the law. A
handler is afforded the opportunity for
a hearing on the petition. After a
hearing, USDA would rule on the
petition. The AMAA provides that the
district court of the United States in any
district in which the handler is an
inhabitant, or has its principal place of
business, has jurisdiction in equity to
review USDA’s ruling on the petition,
provided a bill in equity is filed not
later than 20 days after the date of the
entry of the ruling.
Civil Rights Impact Analysis
AMS has reviewed this rulemaking in
accordance with USDA Departmental
Regulation 4300–004, Civil Rights
Impact Analysis, to identify any major
civil rights impacts the rule might have
on FMMO participants on the basis of
race, color, national origin, disability,
sex, gender identity, political beliefs,
age, marital, family/parental status,
religion, sexual orientation, reprisal, or
because of an individuals’ income is
derived from any public assistance
program. Based on the review and
analysis of the rule and all available
data, issuance of this proposed rule is
not likely to negatively impact low and
moderate-income populations, minority
populations, women, Tribes or persons
with disabilities, by virtue of their age,
race, color, national origin, sex,
disability, or marital or familial status.
No major civil rights impact is likely to
result from this proposed rule.
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Regulatory Flexibility Act and
Paperwork Reduction Act
In accordance with the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601 et
seq.), the AMS has considered the
economic impact of this action on small
entities. Accordingly, AMS has
prepared this initial regulatory
flexibility analysis. The purpose of the
RFA is to fit regulatory actions to the
scale of businesses subject to such
actions so that small businesses will not
be unduly or disproportionately
burdened. Marketing orders and
amendments thereto are unique in that
they are normally brought about through
group action of essentially small entities
NAICS code
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311511
311512
311513
311514
To determine which dairy farms are
‘‘small businesses,’’ the $3.75 million
per year income limit was used to
establish an annual milk marketing
threshold of 18.3 million pounds.
Although this threshold does not factor
in additional monies that may be
received by dairy producers, it should
be an accurate standard for most
‘‘small’’ dairy farmers. Based on the U.S.
2023 average yield per cow and 2023
NASS average All-Milk price, a dairy
farm with approximately 780 cows or
fewer would meet the definition of a
small business. In 2022, the most recent
year with statistics available, there were
24,470 dairy farms with milk sales, of
which approximately 19,576 had milk
regulated on an FMMO for at least one
month of the year. Based on the 2022
Census of Agriculture, Milk Cow Herd
Size by Inventory and Sales, an
estimated 89 percent of operations with
milk sales are likely to be small
businesses.
To determine a handler’s size, if the
plant is part of a larger company
operating multiple plants that
collectively exceed the 750-employee
limit for creamery butter manufacturing;
the 1,000-employee limit for dry,
condensed, and evaporated dairy
product manufacturing; the 1,150employee limit for fluid milk
manufacturing; or the 1,250-employee
limit for cheese manufacturing; the
plant was considered a large business
even if the local plant does not exceed
the 750, 1,000, 1,150, or 1,250-employee
limit, respectively.
In 2022, the following number of
plants were regulated for at least one
month of the year in each FMMO: 66
plants on the Northeast, 19 plants on the
Appalachian, 9 plants on the Florida, 20
plants on the Southeast, 58 plants on
the Upper Midwest, 32 plants on the
Central, 43 plants on the Mideast, 24
plants on California, 17 plants on the
Pacific Northwest, 26 plants on the
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for their own benefit. A small dairy farm
as defined by the Small Business
Administration (SBA) (13 CFR 121.201)
(NAICS Code 112120) is one that has an
annual gross revenue of $3.75 million or
less, and a small dairy products
manufacturer is one that has no more
than the number of employees listed in
the chart below:
Size standards in
number of employees
NAICS U.S. industry title
...................................................................
...................................................................
...................................................................
...................................................................
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Fluid Milk Manufacturing .................................................................
Creamery Butter Manufacturing ......................................................
Cheese Manufacturing ....................................................................
Dry, Condensed, and Evaporated Dairy Product Manufacturing ...
1,150
750
1,250
1,000
nonfat dry milk, and dry whey. The
formulas use USDA-surveyed average
wholesale prices to calculate milk
component prices (butterfat, protein,
nonfat solids, and other solids) that are
converted to Class III and IV milk
prices. The protein value in cheese is a
component of the Class III price.
Currently, the prices of commodity
How FMMO Pricing Provisions Currently cheddar cheese packaged in 40-lb blocks
(‘‘blocks’’) and 500-lb barrels (‘‘barrels’’)
Operate
are collected weekly by AMS through
The proposed amendments in this
the DPMRP survey. A monthly average
decision cover five milk pricing subject
of those prices is used to represent
areas: Milk Composition Factors,
commodity cheese in the Class III price
Surveyed Commodity Products, Class III formula. The butterfat value in
and Class IV Formula Factors, base
commodity salted butter is the driver of
Class I skim milk price (Class I mover),
the butterfat price used in all classified
and Class I and II Differentials. This
prices. The proposed amendments
decision proposes to amend provisions
would eliminate 500-lb barrels from the
in all five pricing subject areas. The
DPMRP survey and rely solely on the
amendments are intended to update
monthly average survey price for 40-lb
formulas and factors in response to
cheddar blocks. The amendment is
industry changes over time, many of
intended to provide for more orderly
which have not been updated since the
marketing through a survey of only one
provisions were adopted on January 1,
product.
2000, to ensure USDA is carrying out
Class III and IV Formulas Factors.
the purposes of the AMAA.
Make allowances are a factor in the
Milk Composition Factors. FMMO
FMMO pricing formulas representing
milk prices are based on three primary
the cost of converting raw milk into the
components—protein, other solids, and
four manufactured dairy products
nonfat solids. Skim milk composition
surveyed by USDA (butter, cheese,
factors in the current price formulas
nonfat dry milk, and dry whey). Make
codified in the FMMO regulations were
adopted in 2000: 3.1 percent protein, 5.9 allowances were last updated in 2008
following a rulemaking proceeding in
percent other solids, and 9 percent
2007. The proposed amendments would
nonfat solids. The proposed
update the make allowances in the
amendments would increase milk
FMMO Class III and IV formulas to the
composition factors to 3.3 percent
protein, 6.0 percent other solids, and 9.3 following: $0.2519 for cheese; $0.2272
for butter; $0.2393 for NFDM; and
percent nonfat solids. Actual
$0.2668 for dry whey. The proposed
component tests of skim milk have
amendments would also update the
increased since 2000, with more
butterfat recovery factor in the Class III
significant increases beginning in 2016.
formula to 91 percent. The amendments
The amendments are intended to more
are intended to update the formula
accurately represent component levels
factors to be more representative of
in milk produced.
current costs and butterfat recovery
Surveyed Commodity Products. Milk
observed in dairy product
prices under FMMOs are related to
manufacturing.
wholesale prices for butter, cheese,
Southwest, and 8 plants on Arizona.
According to the 2022 Census of
Agriculture, approximately 86 percent
of fluid milk manufacturing plants,
approximately 96 percent of cheese
plants, approximately 82 percent of dry
products plants, and approximately 78
percent of butter plants met the SBA
definition of small businesses.
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Class I mover. The Class I mover is
the base price for the skim milk portion
of raw milk used in the production of
Class I products. Agriculture
Improvement Act of 2018 (2018 Farm
Bill) amended the Class I skim milk
price mover from the ‘‘higher of’’ Class
III or Class IV skim prices to a simple
average of the two classes plus $0.74,
referred to as the ‘‘average of’’ mover.
The proposed amendments would
return the base Class I skim milk price
calculation to the higher-of Class III or
Class IV skim prices. The proposed
amendments would also adopt a rolling
monthly Class I ESL adjustment
equating to a Class I price for all ESL
products equal to the average-of the
Class III and Class IV advance prices,
plus a 24-month rolling average
adjuster, with a 12-month lag. The
monthly Class I ESL adjustment would
be calculated as the average of the
differences between the higher-of and
the average-of calculations for the prior
13 to 36 months. The amendments are
intended to provide for more orderly
marketing by returning to the higher-of
mover; while the Class I ESL adjustment
would provide better price equity for
ESL products whose marketing
characteristics are distinct from other
Class I products.
Class I and II Differentials. FMMO
Class I prices are calculated as the
average of the advanced Class III and
Class IV prices, plus $0.74, plus a
location-specific differential referred to
as a Class I differential. As the value of
milk varies by location, Class I
differentials have been determined for
every county in the continental U.S.
Current Class I differential levels were
implemented January 1, 2000, with
updates to the differentials in the three
southeastern orders taking effect May 1,
2008. The proposed amendments would
retain the $1.60 base differential and
adopt modified location-specific Class I
differential values. The amendments are
intended to recognize the evolution of
the dairy industry since 2000 and the
increased cost of servicing the Class I
market given current transportation
costs and plant and producer locations.
This decision continues to find these
amendments are necessary. The
evidentiary record reflected testimony
from a broad range of stakeholder views
that updates are necessary in all five
pricing subject areas to reflect current
market conditions.
Impact on Small Businesses
An economic analysis has been
performed on impacts the proposed
amendments will have on industry
participants, including producers and
handlers. It can be found on the AMS
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website at https://www.ams.usda.gov/
rules-regulations/moa/dairy/hearings/
national-fmmo-pricing-hearing. The
proposed amendments would be
applied identically to all proprietary
and cooperative handlers regulated by
FMMOs, regardless of their size. The
proposed amendments would
implement prices that more accurately
reflect current market conditions,
providing for more orderly marketing
for both small and large producers and
handlers.
AMS considered alternatives to each
of the proposed amendments. Over 49
days of hearing, dozens of witnesses
from 9 industry stakeholder groups
presented testimony and evidence on 21
proposals in the 5 pricing subject areas.
AMS considered all evidence and
testimony, including alternative
proposals presented, in making its
recommendations.
A review of reporting requirements
was completed under the Paperwork
Reduction Act of 1995 (44 U.S.C.
chapter 35). It was determined that
these proposed amendments would
have no impact on reporting,
recordkeeping, or other compliance
requirements because they would
remain identical to the current
requirements. No new forms are
proposed, and no additional reporting
requirements would be necessary.
This proposed rule does not require
additional information collection that
requires clearance by the Office of
Management and Budget (OMB) beyond
currently approved information
collection. The primary sources of data
used to complete the forms are routinely
used in most business transactions.
Forms require only a minimal amount of
information which can be supplied
without data processing equipment or a
trained statistical staff. Thus, since the
information is already provided, no new
information collection requirements are
needed, and the current information
collection and reporting burden is
relatively small. Requiring the same
reports for all handlers does not
significantly disadvantage any handler
that is smaller than the industry
average.
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.
No other burdens are expected to fall
on the dairy industry as a result of this
rulemaking. This rulemaking does not
duplicate, overlap, or conflict with any
existing Federal rules.
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Preliminary Statement
A public hearing was held upon
proposed amendments to the marketing
agreements and orders regulating the
handling of milk in all 11 Federal milk
marketing areas. The hearing was held
pursuant to the provisions of the
AMAA, as amended (7 U.S.C. 601–674),
and the applicable rules of practice and
procedure governing the formulation of
marketing agreements and marketing
orders (7 CFR part 900).
The proposed amendments set forth
below are based on the record of a
public hearing held in Carmel, IN, from
August 23–October 11, 2023, November
27–December 8, 2023, January 16–19,
2024, and January 29–31, 2024,
pursuant to a notice of hearing
published July 24, 2023 (88 FR 47396),
a notice of reconvened hearing
published November 6, 2023 (88 FR
76143), and a second notice of
reconvened hearing, published
December 29, 2023 (88 FR 90134).
The hearing was held to receive
evidence on 21 proposals submitted by
dairy farmers, handlers, and other
interested parties. A total of 165
witnesses testified over the course of the
49-day hearing. Witnesses provided an
overview of the complexity of the U.S.
dairy industry and submitted 511
exhibits containing supporting data,
analyses, and historical information.
The material issues, related to FMMO
pricing formulas, presented on the
record of hearing are as follows:
1. Milk Composition Factors
2. Surveyed Commodity Products
3. Class III and Class IV Formula Factors
4. Base Class I Skim Milk Price
5. Class I and Class II differentials
Summary of Testimony
Milk Composition
Two proposals seeking to amend the
milk composition standards are being
considered in this rulemaking. Proposal
1, submitted by the National Milk
Producers Federation (NMPF) seeks to
increase the skim component factors,
with a 12-month implementation lag.
The proposed standards are as follows:
increase the nonfat solids assumption
from 9.0 to 9.41 per hundredweight
(cwt) of Class IV skim milk; increase the
protein assumption from 3.1 to 3.39 per
cwt of Class III skim milk; and increase
the other solids assumption from 5.9 to
6.02 per cwt of Class III skim milk.
Proposal 1 also contains an updating
methodology that would automatically
update the standards no more than once
every three years once the nonfat solids
component for the prior three years
changes by at least .07 percentage
points.
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Proposal 2, submitted on behalf of
National All-Jersey (NAJ), is identical to
Proposal 1, except for the automatic
update methodology. The proposal
would update the standards annually
using the previous year’s weighted
averages, with a 12-month
implementation lag.
A witness from NMPF, a trade
association representing dairy farmerowned cooperative marketing
associations throughout the United
States, testified in support of updating
the skim milk price milk component
factors, as contained in Proposal 1. The
witness explained how the U.S. dairy
industry has undergone dynamic
structural change since 2000, while
FMMO product price formulas have
generally remained static. The witness
stated dairy farmers have responded to
component pricing by significantly
increasing the butterfat, protein, and
other solid levels in their milking herds.
According to the USDA’s National
Agricultural Statistics Service (NASS),
said the witness, average butterfat tests
have increased 10.9 percent from 2000
to 2022, and USDA’s Economic
Research Service (ERS) reported average
skim milk solids content of U.S. milk
production increased 0.31 percent
during the same period. The witness
said average protein, other solids, and
nonfat solids (NFS) in milk pooled on
FMMOs in 2022 were 3.39 percent, 6.02
percent, and 9.41 percent, respectively.
The NMPF witness asserted the static
component levels contained in the
formulas result in underpayments to
producers in all FMMOs for the value of
their Class I skim milk. Therefore,
NMPF proposes to increase the milk
composition factors in skim milk to
2022 levels. The NMPF witness
analyzed 2013–2022 FMMO product
prices and concluded adoption of
Proposal 1 would have increased the
Class III skim price by $0.80 per cwt and
the Class IV skim milk price by $0.41
per cwt. An increase from the 2022based skim milk component factors by
the proposed 0.07 percentage point
threshold level, the witness added,
would have increased the Class III and
Class IV prices by $0.14 and $0.07 per
cwt, respectively.
Another NMPF witness testified the
announced FMMO Class III and Class IV
skim milk values do not reflect the
current component levels of producer
milk, resulting in announced prices
being lower than actual market values.
The witness said this leads to a
misalignment of fluid and
manufacturing milk, possibly leading to
disorderly marketing conditions. This
occurs because the Class I Mover skim
milk price is calculated based on skim
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milk component levels based on 2000
levels, narrowing the difference between
Class I prices and manufacturing milk
prices (Classes III and IV) and resulting
in more instances of price inversions
and depooling.
Several NMPF dairy farmer witnesses
testified in support of Proposal 1. The
witnesses stated improved genetics and
feed quality have caused component
levels in the milk they market to
increase. The witnesses stated
component levels in the pricing
formulas should be updated to reflect
the additional protein produced.
An NMPF witness testified regarding
their work as a business consultant with
dairy farmers. The witness said dairy
farming costs have been consistently
increasing due to higher feed prices,
overall inflation, interest rate increases,
and rising costs associated with labor
and environmental regulations. The
witness estimated the average margin
per cwt of milk produced over the past
decade was less than $1, or
approximately 4 to 7 percent of the
average milk price. The witness opined
that financially sustainable margins are
necessary to avoid further consolidation
in the industry.
An NMPF dairy farmer witness
testified that monthly pay price
volatility has increased since 2000.
According to the witness, in 2000 their
pay price varied $0.52, from a high of
$12.95 to a low of $12.43. In the 12
months prior to August 2023, the
witness said the variance was $7.46,
ranging from $22.50 to $15.04, while
costs continued to rise, including the
price of corn and soybean meal more
than doubling. The witness said that
during the same 12-month period their
milk output rose over 10,000 pounds.
The witness attributed improvements in
cow comfort, genetics, and feed quality
to the increases in milk output and
component levels but opined low
component standards were depressing
producer price differentials (PPDs) and
discouraging milk from supplying the
Class I market.
NMPF, in their post-hearing brief,
offered additional support for Proposal
1. The brief credited significant
advances related to animal genetics,
farm management, and cow nutrition as
contributing to rising skim milk
component levels. NMPF reiterated
hearing testimony regarding the static
component levels in the formulas
leading to a narrowing of the difference
between Class I and manufacturing milk
prices resulting in more price
inversions, larger volumes of depooled
milk, and resulting in disorderly
marketing. NMPF stated higher skim
milk component levels have value in the
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competitive manufacturing dairy
market, which is the basis for
determining Class I values. NMPF stated
that increasing the skim milk
components in the formulas to reflect
current levels would recognize the
current average value of producer milk
used for manufacturing dairy products
and result in a Class I price that
properly reflects base milk values.
Additionally, NMPF argued delayed
implementation of updated component
level factors is necessary because of
dairy farmers’ use of risk management
programs. Such a delay would allow for
the completion of most transactions
placed prior to announcement of the
change.
A Dairy Farmers of America, Inc.
(DFA) witness, appearing on behalf of
NMPF, testified the failure to delay an
update in skim component standards
would cause financial harm to dairy
farmers, milk plants, end users, and
others who entered into riskmanagement transactions. DFA is a
dairy farmer cooperative and owns and
operates 14 manufacturing plants which
produce liquid whey, Italian cheese,
skim milk powder, whole milk powder,
American-style cheese, condensed milk,
cream, nonfat dry milk, milk protein
concentrate (MPC), sweetened
condensed milk, and dry whey. The
witness testified that failure to delay
implementation would affect the basis,
or the profit margin for milk being
hedged. The witness testified that 35 to
45 percent of the U.S. milk supply was
hedged by dairy farmers and there is a
growing demand for risk management
services among larger-sized dairies.
A witness representing the American
Farm Bureau Federation (AFBF), a
farmer advocacy organization with
approximately 6 million members
throughout the U.S., testified in support
of Proposal 1. The witness estimated
that raising the skim component
standards would increase the Class I
price by an average of $0.70 per cwt,
based on 2022 data. Consequently,
raising the skim component standards
would help bring the Class I, III, and IV
prices in alignment, reduce the
frequency of negative PPDs, and reduce
the incentives for depooling, which the
witness said undermines orderly
marketing. The witness stated that
raising the value of the skim milk in the
manufacturing classes for the skim and
butterfat markets would reduce the
incentive of manufacturing plants in the
multiple component pricing (MCP)
orders to pool milk, which would lower
the producer’s price and discourage
milk from entering a milk deficit region.
The witness testified that updating
component standards would address
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some price misalignment issues and is
preferred to prevent handlers from
depooling.
AFBF offered support in their posthearing brief stating Proposal 1 would
more accurately define the market value
of skim milk pooled on FMMOs. The
brief asserted the resulting increase in
Class I prices would reduce the
incidences of price misalignment with
Class III and IV prices, reduce the size
and frequency of negative PPDs, and
reduce depooling incentives. AFBF
supported periodic adjustments to
component levels, as contained in
Proposal 1, to account for the
continuing increases in the component
levels but specified these levels should
only be changed in the positive
direction. In AFBF’s opinion, more
frequent updates, as contained in
Proposal 2, would be disruptive.
A witness representing NAJ, an
organization representing the interests
of Jersey cattle breeders, testified in
support of Proposal 2, which proposes
the same milk composition levels as
Proposal 1, with automatic annual
updates. The witness said many factors
have contributed to increased
component levels, including improved
genomics, increased use of genderselected semen, and volume-based
programs such as base/excess programs.
The witness testified an annual update
would provide improved accuracy
because of the recently accelerated pace
of component increases and would have
better alignment with pricing between
butterfat/skim and multiple component
pricing FMMOs. Additionally, the
witness stated a 1-year lag on
implementing these updates would
allow for greater risk management
which is becoming increasingly more
important to producers and processors.
NAJ’s post-hearing brief reiterated
their support for Proposal 2, arguing
record evidence shows protein and
other solids levels in producer milk
have progressively and significantly
increased since FMMO reform in the
late 1990s. NAJ stated the trend of
higher solids components in skim milk
was expected to continue due to
economic signals to producers from
component values and improved
production techniques. NAJ argued
amendments of standard skim milk
composition factors is necessary to help
avoid periods of price inversions,
depooling, undervaluing Class I milk,
milk supply inefficiency, and
disincentives to supply milk for Class I
use. NAJ stated a change to the skim
milk component levels should be
announced at least 11 months in
advance of implementation due to risk
management practices used by
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producers and processors. NAJ argued
annual updates better serve risk
management practices because it would
lead to smaller incremental changes and
less adverse impact on risk management
contracts with more than 12-months
open interest at the time component
changes are announced.
A witness representing Edge Dairy
Farmer Cooperative (Edge), a
Wisconsin-based dairy milk test
verification cooperative, testified in
support of Proposals 1 and 2. The
witness supported increasing the
implementation lag to 15.5 months to
support longer contract hedging. The
witness was of the opinion the standard
butterfat test also should be updated
from 3.5 percent to 4.06 percent, the
2022 average butterfat for all markets
combined as published by the USDA’s
AMS. According to the witness, this
would more accurately reflect current
butterfat levels and better align the
butterfat to protein ratio used in the
formula, ensuring more effective risk
management tools, as farmers’ ability to
manage their gross pay price risk would
improve.
Edge, in their post-hearing brief,
reiterated hearing testimony that failure
to adjust the butterfat level when
updating skim component levels would
cause disorderly milk marketing, as it
undermines effective risk-management
tools for dairy farmers. Edge argued that
without the corresponding change,
producers hedging milk revenue using
risk management products based on
Class III milk or Class IV milk prices,
will tend to be under protected against
the decline in butterfat prices. Edge
added that changing the butterfat level
would not affect handler obligations to
the producer settlement fund, PPDs, or
uniform producer prices.
A witness representing the
International Dairy Foods Association
(IDFA) testified in opposition to
Proposals 1 and 2, stating that updating
the component standards would
increase the Class I skim price by $0.60
per cwt, a value that cannot be
recovered in the marketplace. IDFA is a
trade organization representing
manufacturers of milk, cheese, ice
cream, yogurt, cultured products, and
dairy ingredients. The IDFA witness
testified consumers choose finished
Class I products based on desired fat
level, freshness, and price, not higher
nonfat solids levels. The witness
estimated that updating component
levels in the formulas would result in
manufacturing handlers in butterfat/
skim FMMOs paying an additional
$0.40 to $0.80 per cwt, even though the
component levels of milk delivered to
those plants was less than those
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proposed. The witness cited National
Dairy Herd Information Association
(DHI) data showing 2020 to 2022
average skim protein levels in butterfat/
skim FMMOs below the levels
contained in Proposals 1 and 2. The
witness attributed the lower observed
component levels to the fact that
producer payments in these orders are
made on the basis of the fat and skim
content of their milk, leaving no
financial incentive to produce higher
component milk.
A witness from Saputo Cheese USA
(Saputo), appearing on behalf of IDFA,
also testified in opposition of Proposals
1 and 2. Saputo is a dairy processor and
manufacturer operating 29 plants
throughout the U.S. The witness said
Saputo operates three plants located in
the skim/fat orders, and in 2022 the
average NFS level of milk received at
those plants was 9.1070 percent, which
is less than what is proposed in
Proposals 1 and 2. The witness
explained Saputo purchases skim solids
to add to its skim milk in order to
ensure the Class II products it
manufactures contain the skim solids
necessary to meet standard of identity
requirements for those products.
Updating the component levels in the
formula would only result in Saputo
paying for skim solids not received, but
it would not lower the amount of skim
solids Saputo must purchase, explained
the witness.
A post-hearing brief submitted by
IDFA reiterated its opposition to
Proposals 1 and 2, arguing that
increased component levels have no
financial benefit or economic value to
Class I handlers who would be the
primary entities impacted by adoption
of these proposals. IDFA stated the
current FMMO system of pricing Class
I milk on a skim/fat basis versus Classes
II, III, and IV milk on a component basis
does not create disorderly marketing.
The Milk Innovation Group (MIG) is
a group of fluid milk processors and
producers that market value added dairy
based products. MIG’s members include
Anderson Erickson Dairy (AE), Aurora
Organic Dairy (Aurora), Crystal
Creamery, Danone North America
(Danone), fairlife, HP Hood LLC (HP
Hood), Organic Valley/CROPP
Cooperative (Organic Valley), Shamrock
Foods Company (Shamrock), Shehadey
Family Foods LLC (Shehadey), and
Turner Dairy Farms (Turner Dairy).
Crystal Creamery is a California fluid
milk processor producing Class I, II, and
IV conventional and organic milk
products. Danone is a food and beverage
company operating seven plants in the
U.S. Fairlife is a fluid milk processor of
ultra-filtered lactose free milk, and other
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high protein products. Organic Valley is
a dairy farmer-owned organic
cooperative producing more than 30
percent of the organic milk sold in the
U.S.
Seven witnesses representing MIG,
including witnesses from HP Hood,
Shehadey, Saputo, Shamrock, AE,
Turner Dairy, and Aurora, testified in
opposition to Proposals 1 and 2. HP
Hood is a fluid milk processor operating
five ESL plants and four hightemperature, short-time (HTST) plants
in the Northeast and California.
Shehadey operates four manufacturing
plants in California, Nevada, and
Oregon, producing Class I and Class II
products. Shamrock is a fluid milk
processor of HTST and ESL products
with processing facilities in Arizona and
Virginia, and a 20,000-head dairy farm
located in Arizona. AE is an Iowa fluid
milk processor producing both Class I
and II products. Aurora is a vertically
integrated organic milk supplier with
four organic dairy farms located in
Colorado and Texas. Turner Dairy is a
small fluid milk processor with full or
partial ownership of two fluid milk
plants, as well as a standalone Class II
plant, all located in western
Pennsylvania.
Six witnesses testified their plants
regularly receive milk with components
below the proposed levels. One witness
offered that component levels received
ranged from 3.09 to 3.63 percent
protein, 5.83 to 6.10 percent other
solids, and 8.92 to 9.65 percent NFS.
MIG members testified that increasing
the component levels in the formulas
would increase their raw milk costs,
requiring them to pay for milk
components not received. One witness
stated that adoption of Proposals 1 and
2 would increase costs between $0.60
and $0.75 per cwt. All MIG witnesses
claimed that fluid milk processors, even
if they did receive higher component
milk, are unable to convert those higher
components into additional market
revenue as Class I products are sold on
a volume, not component basis.
Another MIG witness testified on a
survey conducted of MIG members plus
two additional large grocery retailers
who own their own fluid milk
processing plants. According to the
witness, using component data from 32
out of the 36 plants surveyed, these
plants frequently received milk with
components below the proposed levels.
As data was confidential, no specific
data was provided. The witness also
noted the data showed component
levels changed due to seasonality and
geographics, demonstrating inconsistent
levels received by plants. The witness
testified the adoption of Proposals 1 or
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2 would raise Class I prices and make
it more challenging for these plants to
recover costs. Should USDA decide to
change the standard component levels
in the pricing formulas, the witness
testified component minimums should
be used instead of averages because
FMMOs are meant to provide minimum
prices.
A post-hearing brief filed on behalf of
MIG argued it would be disorderly for
Class I fluid milk processors, the only
mandatory participant of FMMOs, to be
forced to pay for component levels
regardless of what is actually received.
MIG opined consumers do not value
additional skim component levels in
fluid milk products, therefore Class I
processors are unable to recoup
additional revenue out of the market.
MIG was of the opinion no record
evidence was provided at the hearing
that the current skim component
formula factors are causing disorderly
marketing and added that although they
oppose Proposals 1 and 2, if any part of
these proposals are adopted there
should be a 12-month implementation
delay.
A witness representing the CME
Group (CME) testified to explain various
dairy risk management tools offered
through the exchange, including futures
and options contracts. The witness
explained the CME is a derivatives
marketplace offering a range of futures
exchanges to meet private risk
management needs. The witness
explained a futures contract is a legally
binding agreement to buy or sell a
standardized asset on a specific date or
during a specific month. An option on
a futures contract is the right, but not
the obligation, to buy or sell the
underlying futures contract at a
predetermined price on or before a
given date in the future. The witness
stated 97.43 percent of contracts in the
futures and options market are for 12month periods, and in a previous
change to futures contracts there was an
18-month lag on implementation to be
beyond open interest. The witness
testified that Dairy Revenue Protection
(DRP) is one of many programs that rely
on CME markets and advocated USDA
to consider futures and options markets
when establishing implementation
plans.
In its post-hearing brief, CME
reiterated its neutrality on all proposals
under consideration. They stated any
change modifying the current Class III
and Class IV formulas would be
considered a material change affecting
current contracts. CME stressed the
importance of sufficient and transparent
notice of any changes.
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A post-hearing brief was submitted on
behalf of Select Milk Producers (Select),
a dairy-farmer owned cooperative which
owns and operates eight processing
plants in Texas, New Mexico, and
Michigan, manufacturing ESL fluid milk
products and a variety of cheese, butter,
and NFDM products. Select offered
support for Proposal 1 and took
exception to the assertion there is no
value in higher protein levels in Class
I products, as it is belied by the success
of specialty fluid milk products such as
fairlife, and the higher milk solids
required for California fluid milk.
Although Select supported adoption of
Proposal 1, they do not support a delay
in implementation, nor the annual
update as contained in Proposal 2.
Lamers Dairy Inc. (Lamers), a
Wisconsin based HTST fluid milk
processor, submitted a post-hearing
brief in opposition to Proposals 1 and 2.
Lamers stated component levels can
vary both regionally and from farm to
farm. Lamers opined that USDA is
statutorily required to conduct a study
of component levels before any change
could be made and argued adoption of
Proposals 1 and 2 should not be
considered.
New Dairy OPCO LLC (New Dairy), a
fluid milk processor operating four fully
regulated distributing plants (three of
which are located in the southeastern
U.S.), submitted a post-hearing brief in
opposition to Proposals 1 and 2. New
Dairy offered support for arguments
made by IDFA and MIG that fluid milk
processors would be unable to recoup
the additional cost of components
should Proposals 1 or 2 be adopted.
They purport that charging fluid milk
processors for components not actually
received would be disorderly. New
Dairy said raising component levels in
the formulas would harm its
southeastern plants as they pay on a
skim/fat basis which provides no
incentive to producer to increase
components to match the national
average.
In its post-hearing brief, NMPF
opposed the annual updating feature
contained in Proposal 2. NMPF stated
that by limiting changes to the standard
component levels to a periodic basis
and relying on 3-year weighted average,
Proposal 1 is more likely to produce
accurate component values and avoid
disruption from more frequent changes.
Surveyed Commodity Products
This rulemaking proceeding considers
four proposals, and a modified proposal
submitted during the hearing, that
would add or remove a variety of
products in the DPMRP survey, which
are then reported in the National Dairy
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Product Sales Report (NDPSR) and used
to establish FMMO classified prices.
The proposals are as follows:
Proposal 3, submitted by NMPF, seeks
to eliminate the Cheddar cheese barrel
price from the cheese price formula.
Proposal 4, submitted by AFBF, seeks
to add Cheddar cheese 640-pound block
price series to the cheese price formula.
Proposal 5, submitted by AFBF, seeks
to add unsalted butter to the butterfat
and cheese price formulas.
Proposal 6, submitted by the
California Dairy Campaign (CDC), seeks
to add a price series for mozzarella to
the cheese price formula.
Edge offered a proposal modification
during the hearing to adopt different
weighting methodology which would
reweigh 40-pound blocks and 500pound barrels in the DPMRP survey by
all U.S. cheddar block and barrel
production volumes.
NMPF witnesses from Foremost
Farms USA (Foremost), Ellsworth
Cooperative Creamery (Ellsworth), Land
O’Lakes (LOL), and DFA testified in
support of Proposal 3. Foremost is a
cooperative with 850 members located
in Wisconsin, Michigan, Iowa,
Minnesota, Indiana, Ohio, and Illinois,
and operating eight manufacturing
plants producing cheese and butter.
Ellsworth is a Wisconsin-based cheese
manufacturer producing a significant
volume of barrel cheese and a variety of
specialized cheeses and cheese curds
from 250 dairy-farmer members. LOL is
a dairy farmer-owned cooperative with
more than 1,000 dairy farmer members,
primarily producing butter and cheese.
The witnesses explained the current
cheese price formula includes both
block and barrel cheese in the
computation. They asserted the cheese
price formula provides for orderly
marketing if the difference, known as
the ‘‘spread,’’ in the respective market
prices of blocks and barrels remains
close to the assumed $0.03 per pound
cost difference, which occurred from
2000 to 2016. However, since 2017 the
spread between the block and barrel
prices has been volatile. One witness
stated the weighted average spread
published in the weekly NDPSR during
January 2017 through July 2023 was
$0.120 per pound, with a much wider
and more volatile range per pound. The
LOL witness opined that the DPMRP
survey could continue to include and
publish prices of 500-pound barrel
cheese without necessitating its
inclusion in the Class III protein price
calculation.
An NMPF witness testified the CME
block cheddar price is used as a pricing
index for most cheese produced in the
U.S., including cheddar, 40-pound
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block, 640-pound block, mozzarella,
other American-type cheese, and other
cheese including cream cheese, and
Hispanic cheese. They estimated 90
percent of natural cheese produced in
the U.S. is sold using the CME 40-pound
block cheddar price as a pricing index.
The witness estimated the CME barrel
cheese price is used to price only about
9 percent of total domestically produced
natural cheeses, including barrels
themselves. They said DPMRP survey
volumes of barrel cheese between 2013
and 2022 ranged from 44 to 52 percent,
resulting in an overrepresentation of
500-pound barrels compared to the
actual volume of cheese that is priced
off of barrels. The witness testified that
since 2017, the significantly wider and
increasingly volatile block-barrel spread
has caused instability in the cheese
market. Consequently, the witness said,
dairy farmer revenue has been reduced
as the over representation of 500-pound
barrels lowered the Class III price. The
Foremost witness estimated the
undervaluation represented $2 billion
since 2017, claiming the value would
have been greater if not for the large
volume of Class III milk not pooled in
2020 and 2021.
The NMPF witness testified
eliminating 500-pound barrel prices
from the Class III price would create
more orderly marketing in FMMOs by
reducing the financial uncertainty for
dairy producers and manufacturers and
ensuring the cheese price in the protein
component formula represents the
single commodity cheddar cheese
product. The witness described how
barrel cheese manufacturers are harmed
when they must account to the pool at
an FMMO cheese price higher than the
revenue generated from barrel cheese
product. The witness said eliminating
the 500-pound barrels would have
increased the Class III price by $0.41 per
cwt, using average product prices for
2017 to 2022.
An NMPF witness testified that
removing 500-pound barrels had been
addressed in prior rulemakings but
denied by USDA in the rulemaking.
However, current market conditions
have significantly changed,
necessitating a re-evaluation. The
witness attributed the increased
volatility in the block-barrel price
spread since 2017 to a variety of factors,
including increased 500-pound barrel
production capacity that may be due to
increasing values of its white whey byproduct.
NMPF witnesses testified eliminating
500-pound barrel cheese from the
protein component price (PCP) formula
would still provide adequate volume of
cheddar cheese for price discovery
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purposes as 40-pound block cheese
surveyed represents approximately 16
percent of total U.S. natural cheddar
cheese production. The witness also
said this methodology change would
bring the cheese price into conformity
with the price for butter, NFDM, and
dry whey, which utilize only one
surveyed product for price discovery
purposes.
The witness testifying on behalf of
Ellsworth stated 40-pound blocks and
500-pound barrels are not
interchangeable products. The witness
said while 40-pound block cheddar has
many markets and uses, 500-pound
barrel cheddar is used for processed
cheese, a market driven by few
processors and purchasers. As a result,
the witness said, surveying barrel
cheese prices skews the FMMO cheese
price towards a smaller market that is
not representative of the rest of the
cheese market. The witness estimated
the volatility in the block-barrel spread
since 2017 cost Ellsworth producers
$0.84 per cwt. The witness said barrel
cheese manufacturers would adjust to
the elimination of barrel prices from the
survey and eventually transition to
prices based on the 40-pound block
cheese price.
Witnesses representing IDFA, Leprino
Foods Company (Leprino), and
Associated Milk Producers, Inc. (AMPI)
testified in opposition to Proposal 3.
Leprino operates nine plants in the U.S.,
manufacturing mozzarella cheese, whey
products, and NFDM. AMPI owns and
operates eight manufacturing plants
processing cheese, butter and powdered
dairy products from member farms in
Wisconsin, Minnesota, Iowa, Nebraska,
South Dakota, and North Dakota.
The witnesses said sales of both block
and barrel cheddar cheese are robust
and each play a significant role in
setting the market value of cheddar
cheese. They argued eliminating 500pound barrels would reduce by more
than half the cheese market price
contained in the survey and would
result in a distorted picture of the total
commodity cheddar market. The
witness said opposition to removing
barrels was not related to the presumed
effect on the Class III price as the
NDPSR weighted average cheese price
(reflecting block and barrel cheese) was
higher than the 40-pound block price in
9 of 14 years from 2009 to 2022. One
witness opined additional cheddar
block plant capacity is coming on-line
in the next couple of years, increasing
40-pound block volumes, and would
reduce the block-barrel spread to
historical levels under normal supplydemand behavior.
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The IDFA witness speculated cheddar
barrel manufacturers may opt not to
pool milk if the barrel price is no longer
surveyed because they would be unable
to garner sufficient market revenue in
order to account to the pool and the
Class III price.
Two Leprino witnesses testified
eliminating 500-pound barrels from the
Class III price formula removes the
product most closely capturing the
supply and demand balance. They
opined that removing 500-pound barrels
would both shrink the survey volume
and likely result in greater cheddar
block production to clear the market.
The witnesses testified this would add
volatility to the block market, cause
unnecessary stress to the U.S.
marketplace, and make U.S. cheese less
attractive to global buyers.
The Leprino witnesses said dropping
500-pound barrels from the survey
would create a presumption within the
Class III formula that all cheese,
including barrels, would then be priced
off blocks. The witnesses asserted
barrels and blocks have different supply
and demand functions and eliminating
barrels from the Class III formula would
force barrels to be priced off blocks,
adding dysfunction to the barrel market.
The witnesses argued barrels are the
market-clearing cheese, and instead 40pound blocks should be eliminated from
the price formula to be more consistent
with the minimum pricing provisions.
In its post-hearing brief, NMPF
reiterated testimony regarding price
differences between 40-pound blocks
and 500-pound barrels becoming more
volatile since 2017. Historically, NMPF
wrote, using both block and barrel
prices in the Class III pricing formula
increased the volume of cheddar cheese
reported in the NDPSR. However, the
increased price spread has caused
instability in the cheese market,
reducing revenue for dairy farmers as
the barrel price is a disproportionately
large share of the cheese price compared
to its volume sold. NMPF estimated 90
percent of the natural cheese produced
in the U.S. is priced using the CME 40pound block price, while the remaining
is priced off the CME barrel cheese
price. As a result, NMPF wrote, the
Class III milk price has been
undervalued and lowered producer
revenue.
Leprino submitted a post-hearing brief
reiterating the important balancing
function barrels provide and opined
removing them would push 40-pound
blocks into the balancing role and
would increase price volatility for
cheddar blocks.
Select submitted a post-hearing brief
in support of Proposal 3, arguing 500-
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pound barrels no longer represent the
commodity cheddar market and 40pound blocks are an appropriate
commodity to establish the protein
price. According to Select’s brief,
current formulas dramatically
overweight the barrel price relative to
the market’s actual barrel use.
The AFBF submitted a post-hearing
brief in support of Proposal 3 reiterating
hearing testimony that barrels represent
roughly 50 percent of the NDPSR
volume but are used to set prices for
only 10 percent of U.S. cheese. The
AFBF stressed use of barrels in the
cheddar cheese price formula creates a
price not representative of the value of
90 percent of cheddar cheese produced.
In their post-hearing brief, IDFA
opposed Proposal 3, arguing its
adoption would make 500-pound barrel
production uneconomical. This, they
explained, would result in barrelmakers going out of business or
switching to block production, which
would destabilize the block market.
IDFA wrote that 40-pound blocks and
500-pound barrels serve materially
different functions in the market and the
failure to include both in the survey
would distort the commodity cheddar
cheese market.
NAJ submitted a post-hearing brief in
opposition to Proposal 3. NAJ cited
hearing evidence showing the market
price of block and barrel cheese has
diverged significantly since 2017, with
barrel cheese priced about $0.11 per
pound less than block cheese from
2017–2022. NAJ stated blocks and
barrels have different uses, different
buyer markets, and limited
substitutability. With an expected
increase in block production in the
coming years, NAJ wrote, there may be
many months in which barrels are more
per pound and should remain part of
the cheese price formula.
A witness representing the AFBF
testified in support of adding 640-pound
cheddar blocks to the Class III formula,
as contained in Proposal 4. The witness
said adding 640-pound blocks would
expand the volume of cheese surveyed
and better reflect U.S. block and barrel
production volumes. The witness was of
the opinion there has been a
pronounced production shift from 40pound blocks to 640-pound blocks and
adding 640-pound blocks would
provide more survey volume to avoid
future rulemaking to address the
dwindling 40-pound block survey
volume. The witness testified that 40pound and 640-pound blocks are largely
interchangeable in price, use, and
storage, and therefore it is appropriate
those prices be reflected in the Class III
price.
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A witness representing IDFA testified
in opposition to Proposal 4. The witness
said the DPMRP cheese survey
encompassed more than 1.34 billion
pounds of sales in 2022, divided almost
evenly between 40-pound blocks and
500-pound barrels. The witness testified
the data set is sufficient to determine
prices in the market and, since 640pound blocks typically trade off the 40pound block price, its addition would
provide little additional price discovery
information. The witness opined that
only a small percentage of the 640pound block market would meet survey
specifications because of the nature of
how the product is manufactured and
sold.
The two Leprino witnesses argued it
would be inappropriate to add 640pound blocks as the market is largely
make-to-order and the lack of
equipment to handle 640-pound blocks
limits sales to a narrow group of buyers.
The witnesses noted the 640-pound
block market is balanced through the
cutting down of 640-pound blocks into
40-pound blocks, so the 40-pound block
cheddar market is already reflected in
its pricing.
A witness representing Glanbia PLC
(Glanbia), testified in opposition to
Proposal 4. Glanbia owns four dairy
plants in Idaho and partially owns two
joint venture plants in New Mexico and
Michigan, processing 34 million pounds
of milk daily into barrel cheese, block
cheese, whey protein concentrates,
proprietary protein blends, and lactose.
The witness testified Glanbia plants
manufacture 40-pound and 640-poundblocks, both priced off the CME 40pound block price and opined that
adding 640-pound blocks would not add
new information to the survey.
A witness representing the Wisconsin
Cheese Makers Association (WCMA),
whose 81 members include cheese
manufacturers making 40-pound blocks,
640-pound blocks, and 500-pound
barrels, testified in opposition to
Proposal 4. The witness testified the
industry uses the 40-pound block price
to price 640-pound blocks, and since 40pounds blocks are already used in the
protein formula, adding 640-pound
blocks would add no new price
information.
A DFA witness representing NMPF,
testifying in opposition to Proposal 4,
said the 40-pound block volume
provides an adequate data set and the
sole inclusion of 40-pound blocks is
sufficient for cheese price discovery,
making adoption of Proposal 4
unnecessary. The witness stated the
daily CME cash block cheese market is
widely recognized by market
participants as heavily influencing the
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price of cheese. The witness concluded
that because annual CME block cheese
traded volumes are not as large as
NDPSR block survey volumes, the
volume of 40-pound blocks reported in
the NDPSR is more than adequate to
determine the FMMO cheese price. The
witness testified that incorporating 640pound blocks into the NDPSR data set
could promote the same disorderly
market conditions currently observed
with the inclusion of 500-pound barrels.
The AFBF reiterated their support of
Proposal 4 in their post-hearing brief.
The AFBF indicated 640-pound blocks
are priced identically, or nearly
identically, to 40-pound blocks, and are
a standardized commodity cheddar
cheese product. Including the 640pound blocks in the NDPSR survey,
they argued, would help make the
survey more robust.
Select, in their post-hearing brief,
expressed support for Proposal 4
agreeing with proponents that its
inclusion would increase DPMRP
survey volume. Select mentioned that,
with new cheese processing capacity
starting in upcoming years in
Minnesota, New Mexico, Michigan, and
Texas, 640-pound blocks would become
a larger proportion of the commodity
cheddar market, and it would be
prudent to incorporate their prices and
volume in the survey.
IDFA reiterated opposition to
Proposal 4 in its post-hearing brief.
IDFA highlighted evidence describing
how 640-pound blocks are typically
made to customer order as there is only
a small number of cheese buyers who
are able to purchase and process them.
Since manufacturers of 640-pound
blocks often balance the 640-pound
block market by cutting them down to
40-pound blocks, IDFA said no new
price information would be gained from
including 640-pound blocks in the
survey.
WCMA also expressed opposition to
Proposal 4 in their post-hearing brief
and wrote that because 640-pound
blocks do not have a unique price
discovery mechanism, they would add
no new price information to the
formulas.
A witness representing the AFBF
testified in support of Proposal 5,
seeking to add unsalted butter to the
DPMRP butter survey. The witness said
because of the growing volume of
unsalted butter production and use in
the U.S., the DPMRP salted-only butter
price collection increasingly
underrepresents the value of U.S. butter.
According to the witness, the amount of
butter captured by the NDPSR as a
percentage of total butter production has
been declining, from 16 percent in 1999
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to 9.4 percent in 2022. The witness
expected this trend to continue without
the addition of unsalted butter.
Citing USDA voluntarily graded
salted and unsalted butter volumes, the
AFBF witness said one reason for
declining butter survey volumes is the
increase in U.S. unsalted butter
production. The AFBF witness testified
the exclusion of unsalted butter is
unnecessarily restrictive for the
purposes of the DPMRP survey. The
witness cited U.S. butter export data
showing 2,000 metric tons exported in
2000, to over 65,000 metric tons in
2022, estimating almost all the exports
were unsalted. The witness said
incorporating unsalted butter prices into
the FMMO butterfat formula would
make the survey more representative of
the evolving butter market, allow for
better market transparency, and provide
for more orderly marketing of butter and
milk. The witness claimed salted and
unsalted butter are production
substitutes, as the same production line
can be used for both without substantial
interruption. The witness clarified
Proposal 5 is not intended to change the
current 80 percent butterfat reporting
standard for butter, and therefore
exported unsalted butter at 82 percent
butterfat would continue to be
excluded.
A witness representing CDC
expressed support for Proposal 5,
without additional testimony. The CDC
represents dairy farmers throughout
California and is a state chapter of the
National Farmers Union.
A witness representing IDFA testified
in opposition to Proposal 5. The witness
testified there is no uniform
specification for unsalted butter, so it is
impossible to derive a uniform price for
purposes of an FMMO pricing formula.
The witness explained unsalted butter
does not store as well compared to
salted butter, rendering unsalted butter
less capable of providing useful uniform
price information. The witness also
testified unsalted butter tends to be
priced off the CME Grade AA salted
butter price, and therefore does not
bring any new pricing information. As
substantial quantities of unsalted butter
are exported through premium-assisted
sales, which would not be included in
the DPMRP survey, emphasizing
unsalted butter should not be relied on
for determining the market price of
butter. Moreover, the witness
considered the current volume of salted
butter reported in the DPMRP to be a
robust quantity of butter sales.
A witness representing the Dairy
Institute of California (DIC) testified in
opposition to Proposal 5. The DIC is a
trade association, representing fluid
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milk and dairy product processing
plants in California. The witness
asserted most unsalted butter is 82
percent butterfat and exported and
should be considered substantively
different from domestically consumed
butter which contains 80 percent
butterfat. The witness referenced a lack
of clarity on how subsidies on exported
butter would be handled in the product
price reporting as another reason for
their opposition.
A California Dairies, Inc. (CDI)
witness, representing NMPF, testified in
opposition to Proposal 5. CDI is a
California dairy farmer-owned
cooperative with 258 members
producing and marketing 41 percent of
California’s total milk production and
operating six butter and milk powder
manufacturing facilities in the state. The
witness disagreed with the assertion
that salted butter at 80 percent butterfat
no longer represents an adequate survey
volume. The witness testified CDI
manufactures both types of butter, and
unlike salted butter, unsalted butter is
manufactured exclusively for customer
order. The witness argued sales of the
two types of butter are not
interchangeable. The witness stressed
the addition of salt allows salted butter
to be stored for long periods, making it
a market clearing product, whereas the
nature of unsalted butter requires it to
be sold and consumed in a significantly
shorter period of time. The witness was
of the opinion introducing unsalted
butter into the survey may result in
volatility in the relationship between
salted and unsalted butter similar to the
current volatile relationship between
40-pound block and 500-pound cheddar
barrels. The witness said it was
preferable to have one product generate
the singular commodity reference price
for purposes of calculating the
minimum FMMO prices.
In post-hearing briefs, the AFBF
offered additional support for Proposal
5, stating the growing volume of
unsalted butter production and use in
the U.S. markets results in a salted-only
butter price collection in the NDPSR
survey which increasingly
underrepresents the value of U.S. butter.
The AFBF argued the declining trend in
butter survey volume as a percent of
actual production would continue, as
butter survey volume has fallen from 16
percent of total production in the 1999
to 9.4 percent in 2022.
Select expressed opposition to
Proposal 5 in its post-hearing brief.
Select argued that despite the growth of
unsalted butter products, it should not
be included in the survey because it
lacks a uniform specification, is
typically produced for special orders,
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has no active commodity market, is
often made with 82 percent butterfat
versus 80 percent, and is viewed as a
higher-value product.
IDFA’s post-hearing brief reiterated
their opposition to Proposal 5 stating
the Grade AA salted butter survey
volume is robust and the product is
traded on the CME. IDFA wrote that a
majority of unsalted butter is exported
through government or private assisted
sales, such as Dairy Export Incentive
Program or Cooperatives Working
Together, which would disqualify such
sales from being reported. IDFA also
stated unsalted butter does not store as
well as salted butter, making it more
likely to be made to order to a particular
buyer’s specifications.
A witness representing the CDC
testified in support of adding mozzarella
prices to the FMMO cheese price, as
contained in Proposal 6. The witness
was of the opinion that adding
mozzarella would make the FMMO
Class III price more reflective of all U.S.
cheese production. The witness asserted
that because the volume of mozzarella
production significantly exceeds
cheddar production it should be
reflected in the FMMO cheese price to
improve price transparency and
increase dairy farmer revenue. The CDC
witness also stated mozzarella
production is the largest category of
cheese produced today and deserves a
standard specification determined by
the volume of mozzarella produced
today.
The CDC witness proposed adding
mozzarella to the FMMO protein price
based on the Van Slyke cheese yield
formula, a formula for predicting
cheddar cheese yields from milk on the
basis of its fat and casein content. The
witness submitted numerous USDA
Specifications of Mozzarella Cheese for
the Department to consider when
determining an acceptable moisture and
fat content of mozzarella cheese to be
surveyed. The specification detailed
requirements for six variations of
mozzarella types in four forms (loaf,
sliced, shredded, or diced). The witness
testified that 5 to 6-pound loaves of
mozzarella would be representative of a
wholesale commodity mozzarella
product and reasonable for inclusion in
the survey.
A California dairy farmer testified in
support of Proposal 6. The witness said
including mozzarella in the survey
would create a Class III price that more
accurately reflects the value of the
current cheese market. The witness
attributed the ongoing decline in the
number of California dairy farms to
negative margins and price volatility
and stressed the urgency in capturing
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the additional value of mozzarella. A
Wisconsin dairy farmer also supported
inclusion of mozzarella for similar
reasons.
A witness representing IDFA testified
in opposition to Proposal 6. The witness
described the difficulty in selecting
appropriate mozzarella product
specifications, yield assumptions, and
manufacturing costs to include in the
formulas whose factors currently reflect
only cheddar production. The witness
also testified the commercial mozzarella
cheese market contains wide product
variability, including varying fat and
moisture parameters demanded by
mozzarella customers. The witness
testified that unlike bulk cheddar
products, mozzarella is not a marketclearing product, is often sold to meet
the customer specifications, is not
traded on the CME, and is not storable
for extended periods.
Witnesses from Leprino and Glanbia
testified in opposition to Proposal 6,
asserting the proposal lacked critical
details making it difficult to interpret
and evaluate. The witnesses explained
the equipment, production, and yield
difference between mozzarella and
commodity cheddar. The witnesses said
Proposal 6 does not define the type of
mozzarella to be surveyed or how USDA
should address the diversity of
mozzarella cheese types and packages.
The witnesses stated significant
volumes of mozzarella are manufactured
into value-added forms, whether as
shred, string, or smaller retail or
foodservice loaves by the primary
manufacturer. The witnesses also noted
most mozzarella is not market-clearing
and is stored in refrigerated form with
limited shelf life reducing its role as a
market clearing product. The witnesses
added that the volume of mozzarella
production sold by the primary
manufacturer in bulk format is
comparatively small, in contrast to
cheddar, in which most shredding,
processing into consumer packaging,
and conversion to other forms is
performed by different companies rather
than the original manufacturer. The
witnesses opined cheddar remains the
most appropriate Class III cheese
product.
Leprino reiterated their opposition to
Proposal 6 in their post-hearing brief.
Leprino argued mozzarella cheese is a
grouping or collection of similar
products with diverse specifications,
and that the assumption mozzarella
production volume represents a single
defined bulk product is incorrect.
Leprino further stated mozzarella has
different manufacturing processes,
costs, and product yields. Therefore, if
mozzarella was added to the Class III
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pricing formula, the formula would
become substantially more complicated
with little incremental benefit.
A Foremost witness, testifying on
behalf of NMPF, testified in opposition
to Proposal 6, urging USDA to only
utilize one commodity price series to
represent each of the four dairy prices:
cheese, butter, NFDM, and dry whey, to
ensure orderly marketing. The witness
noted the many mozzarella composition
types, and purported deriving a 40pound block cheddar equivalent price
would be difficult. The witness added
mozzarella manufacturing costs are
different and no data exists to determine
how those costs should be reflected in
the cheese make allowance. The witness
said including mozzarella pricing into
the protein price calculation would not
enhance price discovery as mozzarella
prices already move with the 40-pound
cheddar market. Other NMPF witnesses
testified to the appropriateness of
limiting the cheese price to one survey
product, cheddar. Witnesses
representing the AFBF and WCMA
opposed the inclusion of mozzarella due
to the lack of standard format that could
be surveyed.
Select’s post-hearing brief opposed
Proposal 6 because no workable
framework for incorporating mozzarella
into the price formula was provided on
the record.
IDFA’s post-hearing brief reiterated
their opposition of Proposal 6 as
mozzarella lacks uniformity in
compositional specifications and yields
and is not traded on the CME. IDFA
wrote the U.S. Food and Drug
Administration (FDA) Standards of
Identity provide four different variants
of mozzarella cheese, with a wide
variety of fat and moisture levels. IDFA
also stated that while proponents
advocated use of the Van Slyke formula
to determine yields, the record lacked
evidence as to how the formula should
be revised to incorporate mozzarella
cheese.
WCMA opposed Proposal 6 in their
post-hearing brief. WCMA members
argued that there is no FDA Standard of
Identity for mozzarella and are
concerned over the vast variety of forms
and functionality of each mozzarella
manufacturer.
A witness testifying on behalf of the
CME offered information regarding its
dairy futures and options markets which
utilize FMMO prices. The witness did
not appear in support or in opposition
to any proposal under consideration.
The witness testified that the CME dairy
product portfolio, which began in 1996,
includes Class III and Class IV milk
futures and options, cash-settled cheese,
40-pound block cheese, cash-settled
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butter, NFDM, and dry whey. The
witness said the relationship between
Class III and Class IV milk futures can
serve as a mechanism to manage both
input and output costs and provide the
dairy trading community with an
opportunity to provide liquidity to the
market while managing risk. The
witness testified any changes to FMMO
formulas, or underlying DPMRP survey
methodology could result in a material
change to the valuation of the contracts.
A post-hearing brief filed by CME
reiterated its hearing testimony and
stressed that the Department consider
the impact to futures and options
markets when determining the
implementation timeframe for any
FMMO price formula changes.
A witness representing Edge offered
the modified proposal that would
reweight 40-pound blocks and 500pound barrels by U.S. production
volumes, not DPMRP survey volumes.
The witness said this alternative
weighting methodology would reduce
the weight of barrel cheese as most
cheddar cheese is manufactured into
blocks. The witness explained that since
a significant volume of block cheddar
cheese does not qualify for inclusion in
the NDPSR, barrels have a weight
disproportionate to their true market
share of the cheddar market. The
witness was of the opinion the protein
price should primarily reflect the block
cheddar cheese market as it is estimated
70 to 75 percent of all cheddar cheese
is produced into 40-pound or 640pound blocks.
The Edge witness predicted that the
block-barrel spread could invert in 2025
due to the growth of block cheese
production. The witness expects cheese
manufacturers who can make either
blocks or barrels will react to profitable
opportunities, thus reducing the spread
between block and barrel prices by
altering their production schedules. The
witness argued that, given the
anticipated trends over the next 3 to 5
years, it would be more prudent to
reduce the weight of barrels today and
revisit the topic of removing barrels in
5 years.
Edge reiterated their support for the
weighting methodology in its posthearing brief, as an alternative to
eliminating barrel cheese or adding 640pound blocks to the survey. Edge
explained that, in practice, the
Department would survey all barrel
cheese production volume on an annual
basis, including forward contracted
cheese volumes, to determine the
percentage of barrel cheese produced in
relation to the NASS total U.S. cheddar
cheese production estimates. Edge
proposed the percentage be rounded to
the nearest 5 percent, and the inverse
would be assumed to represent block
production. This calculated weight
would be announced by September 15
and be applicable for the following
calendar year. Survey prices would then
be weighted by these percentages to
determine weighted average cheese
prices.
IDFA, in their post-hearing brief,
opposed Edge’s modified proposal,
arguing that it ignores market clearing,
minimum pricing principles. IDFA
opposed the idea of Class III prices
being predominantly determined
through a 40-pound block cheddar
price.
A post-hearing brief submitted by
NMPF opposed Proposals 4, 5, 6, and
Edge’s modified proposal on the
grounds the proposals perpetuate the
problem Proposal 3 seeks to fix, which
is to have only one product surveyed to
determine a wholesale commodity
price.
Class III and Class IV Formula Factors
a. Make Allowances
Proponents submitted three proposals
to amend the make allowances in the
Class III and IV formulas. Proposal 7,
submitted by NMPF, seeks to update
make allowances to the following:
cheese, $0.2400; dry whey, $0.2300;
NFDM, $0.2100; butter, $0.0210. WCMA
and IDFA submitted Proposal 8 and
identical Proposal 9, respectively, to
update make allowances as described in
the below table. The proposals contain
a four-year implementation schedule
with 50 percent of the increase
implemented in year 1 and the
remaining 50 percent implemented
evenly across the following 3 years.
IDFA/WCMA PROPOSED MAKE ALLOWANCES
Product
Year 1
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Cheese .............................................................................................................
Dry Whey .........................................................................................................
NFDM ...............................................................................................................
Butter ...............................................................................................................
A former University of Wisconsin
economics professor testified regarding
separate manufacturing cost surveys
they conducted on behalf of USDA and
IDFA in 2021 and 2023, respectively.
Each survey collected data submitted
voluntarily from plants producing
commodity cheddar cheese, dry whey,
butter, and NFDM. The witness
previously conducted similar surveys
used by the Department in determining
make allowance levels. The witness did
not testify in support or opposition to
any manufacturing allowance proposals
under consideration.
The witness explained that only
plants manufacturing commodity
products meeting DPMRP product
specifications were eligible to
participate. As plant participation was
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$0.2422
0.2582
0.2198
0.2251
voluntary, the sample of plants and
respective volumes varied by product
and between surveys, with increasing
cost variation between plants over time.
The witness noted more observed cost
variation across plants can occur due to
newer automation technology employed
in some plants, varying utility costs over
time, and economies of scale achieved
by some plants who negotiate input
costs. The witness explained that dairybased raw product costs, such as raw
milk or purchased cream, are excluded,
while costs of non-dairy ingredients
needed to transform the raw milk into
a manufactured product, such as salt
and enzymes, are collected and
included in the survey results.
According to the witness, costs, such as
labor and utility, through the product-
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Year 2
$0.2561
0.2778
0.2370
0.2428
Year 3
$0.2701
0.2976
0.2544
0.2607
Year 4
$0.2840
0.3172
0.2716
0.2785
packaging stage are incorporated, but
post-packaging costs, such as long-term
storage or distribution and sales costs,
are not. The witness explained an
economic depreciation factor, not
consistent with taxable depreciation, is
incorporated to cover consumed capital,
and the asset’s return on investment is
included to capture opportunity costs.
The witness explained two different
methodologies used for allocating costs
in multi-product plants that could not
be associated with a specific product
(unallocated costs). The witness said the
2021 survey utilized a degree-oftransformation factor to allocate costs
based on degree of transformation raw
milk must undergo to be manufactured
into the wholesale product.
Transformation factors were assigned
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subjectively, based on knowledge of
manufacturing processes. As a result,
the witness said, unallocated costs were
weighted towards heavily transformed
products, such as NFDM, while
products undergoing less
transformation, for example, butter,
were assigned a lower portion of the
unallocated costs. Due to questions from
the industry regarding this
methodology, the witness said the 2023
survey reverted to allocating costs on a
solids basis, a methodology more
familiar to industry stakeholders. The
witness said the 2021 survey showed
more variation of costs when compared
to current make allowance levels,
ranging from an 18 percent decrease in
butter costs to a 75 percent increase in
NFDM costs. The 2023 survey results
revealed a more consistent cost change
when compared to current FMMO
levels, ranging from a 65 percent
increase in NFDM costs to a 72 percent
increase in butter costs.
The witness attributed much of the
survey result differences to the plant
samples. For NFDM, the 2021 survey
had 27 participating plants, whereas the
2023 survey had 15, with larger average
volume per plant, according to the
witness. For cheese, the 2023 survey
included 18 plants compared to 10 in
the 2021 survey. Further, the witness
elaborated that the cheese plants
surveyed were much larger on average
and represented a significant proportion
of the NDPSR volume when compared
to the 2021 survey.
The witness testified the data on
butter highlighted the importance of
sample composition. Both surveys
sampled a similar numbers of butter
plants, 13 in 2023 and 12 in 2021, and
represented roughly the same total
volume. However, the witness stated the
2023 survey had more variation in
production volumes whereas in the
2021 survey, butter plants were more
similarly sized. Finally, the witness
testified the dry whey surveys had
similar numbers of participating plants,
9 in 2023 and 8 in 2021, but the
surveyed volume in the 2023 survey
was nearly 50 percent more than that
contained in the 2021 survey.
NMPF offered Proposal 7 as one
option for amending FMMO make
allowance levels. Eleven NMPF
witnesses representing the
manufacturing interests of cooperatives
testified in support of Proposal 7. The
witnesses testified the current FMMO
make allowances do not resemble
manufacturing costs currently
experienced in their plants. The
witnesses provided detailed testimony
on the impact of inadequate make
allowances, which consisted of similar
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themes. First, they opined inadequate
make allowances cause the FMMOs to
overvalue raw milk. Consequently, the
witnesses said many cooperatives have
reblended cooperative revenues to
members as a way of recouping
manufacturing costs not covered by
current FMMO make allowances.
Second, the witnesses said insufficient
make allowances disincentivize plant
investment, whether it be in current or
potential new plants.
The NMPF witnesses testified the
industry lacks consensus on reliable
data to determine make allowances due
to inconsistencies in cost allocation and
reporting across operations. The
witnesses were of the opinion the
available manufacturing cost surveys are
not comprehensive or reliable enough to
justify large make allowance increases.
The witnesses all stressed increasing
make allowances to levels above actual
costs could cause untenable financial
harm to producers, putting many out of
business and jeopardizing the milk
supply. One NMPF witness described
how an informal manufacturing cost
survey of some NMPF members was
used in the development of Proposal 7.
A CDI witness testified regarding the
impact insufficient make allowances
have had on their member farms and six
butter and milk powder manufacturing
facilities. According to the CDI witness,
the NFDM and butter make allowances
in Proposal 7 are transformations of the
2021 survey results, using the combined
costs and yields of the two products. An
LOL witness testified inadequate make
allowances have led to disorderly
market conditions, including lack of
investment in manufacturing plants to
process and balance milk supplies and
inequitable producer pay prices
between producers of different
cooperatives and between cooperative
and nonmember producers.
A witness from Agri-Mark, a dairy
farmer-owned cooperative with over 550
members, 3 cheese manufacturing
plants and 1 butter-powder plant in the
Northeast, said current make allowances
overvalue producer milk and make it
difficult for cooperatives with
manufacturing facilities to remain
profitable and pay the FMMO blend
price. Consequently, the witness said,
cooperatives must re-blend proceeds to
recoup manufacturing costs, resulting in
producer pay prices often less than
FMMO blend prices.
A Foremost witness attributed higher
operating costs seen in their plants to
inflation since 2008, adding that in the
last 2 years, they have experienced
particularly acute price increases in all
categories. A witness representing
FarmFirst Dairy Cooperative
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(FarmFirst), a cooperative operating in
the Upper Midwest with 2,600 dairy
farmer members, testified negotiated
over-order premiums have diminished
by 24 percent since 2020 due to their
processor’s compressed margins, partly
a result of inadequate make allowance
levels. In addition to reducing
premiums, the FarmFirst witness
attested the current make allowances
overvalue producer milk and have
contributed to an oversupply of milk in
the Upper Midwest, resulting in milk
dumping, negative PPDs, depooling, and
milk selling at below Class III prices.
A Northwest Dairy Association (NDA)
witness testified in support of Proposal
7. NDA is a dairy farmer-owned
cooperative located in the Pacific
Northwest with approximately 295
members, whose subsidiary (Darigold)
operates 5 fluid milk bottling plants and
7 manufacturing plants making butter,
cheese, dry whey, and dry milk
products. The witness testified
Darigold’s manufacturing costs
increased 80 percent between 2008 and
2022. The witness said inadequate or
delayed investment in manufacturing
plant capacity increases transportation
costs, which are borne by producers,
since milk must be shipped farther
distances to find an available
manufacturing market. A witness
representing Maryland and Virginia
Milk Producers Cooperative, Inc.
(MDVA), a dairy farmer-owned
cooperative located in the Mid-Atlantic
that operates three pool distributing
plants and two pool supply plants
manufacturing bulk butter and NFDM,
testified costs had increased compared
to 2008 levels, with NFDM conversion
costs increasing 64 percent over the
period. According to the MDVA
witness, Proposal 7 would reduce, but
not eliminate, the manufacturing losses
incurred in balancing their milk supply.
A witness representing Lone Star Milk
Producers (Lone Star), a dairy-farmer
owned cooperative marketing milk on
the Appalachian, Southeast, Central,
and Southwest FMMOs, testified that
manufacturing costs at their butter and
NFDM plant have risen since
commencing operation in 2017. A
witness representing Ellsworth testified
to the increasing costs of production at
their cheese and dry whey operation.
Lastly, a DFA witness testified in
support of Proposal 7 and provided
dairy farm cost of production data,
arguing this data should be considered
when determining make allowances.
A dairy economist from the
University of Missouri, appearing on
behalf of NMPF, testified on the
estimated economic impact of Proposal
7. Using an econometric model, the
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witness estimated the proposed make
allowances would lead to a $0.30
decline in the All-Milk Price and a 200million-pound milk production decline
in the first year of implementation, with
a further milk production decline of 400
million pounds in the second year. In
the long run, the witness forecasted the
decline in the All-Milk Price would
moderate to $0.04 as markets adjusted to
lowered milk production.
A dairy farm accountant, testifying on
behalf of NMPF, presented various
statistics related to their dairy farmer
clientele. The witness testified average
total income from their clients’
operations was $5.50 per cwt in 2022,
with a break-even milk price of $19.78
per cwt. According to the witness, the
average net income from 2006 to 2023
was $1.23 per cwt, on an average milk
production of 995,115 cwt, yielding an
average net income of approximately
$1.2 million. The witness later stated
that a 3,300-milking cow herd would
require an investment of approximately
$40 million.
An economist from Cornell
University, on behalf of NMPF, testified
on the topics of dairy farm profitability,
cost of production measures, and farm
data from the Cornell Dairy Farm
Business Summary, Michigan State
University, and the University of
Wisconsin. The witness warned that
setting make allowances ‘‘too high’’
would lead to unwarranted investments
in processing facilities while setting
make allowances ‘‘too low’’ would lead
to insufficient plant investments and
cooperative deductions on member milk
checks.
Numerous dairy farmers testified in
support of Proposal 7, recognizing the
need for increased make allowances
despite what they acknowledge would
be a decrease in FMMO producer prices.
These witnesses testified to recent
decreased farm margins due to a
declining All-Milk Price, falling net pay
prices, higher feed costs, and increasing
production costs, leading to near
negative operating incomes. While make
allowance increases would hasten this
trend, the witnesses said, Proposal 7
accounts for these factors, balancing
producer and processor needs. Multiple
witnesses expressed doubt in the
available manufacturing cost survey
data due to its voluntary and unaudited
nature, as well as observations of cheese
manufacturing profitability and
continued investment.
Dairy farmer witnesses testified that
inadequate make allowances have
disadvantaged dairy farmer-members of
cooperatives who own manufacturing
plants compared to dairy farmermembers of cooperatives who own no
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plants. Several dairy farmer witnesses
said that the prevalence of market
adjustment deductions from their
member milk check signifies negative
returns on the cooperatives
manufacturing assets due to inadequate
make allowances. Another dairy farmer
testified processing costs for AgriMark’s four manufacturing plants
producing cheese, butter, NFDM, and
whey have increased by an average of 20
percent since 2008, and insufficient
make allowances have resulted in
deductions to member milk checks to
cover processing costs. According to the
Agri-Mark witness, this has led to
disorderly market conditions, which
impair plant investment and
disadvantage cooperative members. A
CDI dairy farmer witness testified to the
financial difficulties of operating CDI’s
balancing plants given current make
allowance levels.
A witness from the Milk Producers
Council (MPC), an organization
representing California dairy farms,
testified Proposal 7’s proposed make
allowances balance producer and
processor needs. The witness said the
cost survey information entered into
evidence is of limited value due to its
voluntary, unaudited nature and the
lack of transparency in cost allocation
for multi-product plants. The witness
argued differences between the All-Milk
Price and the Mailbox Price indicate a
need for increased make allowances and
a guideline to the resulting impact on
producer pay prices, currently estimated
at $0.75 per cwt.
In its post-hearing brief, NMPF
reiterated its arguments for adopting the
make allowance levels contained in
Proposal 7, writing it is the only option
accounting for an increased cost in
manufacturing while protecting
producer pay prices. NMPF stated there
has never been a make allowance
adjustment greater than $0.35 per cwt,
and the changes contained in Proposal
7 would decrease farmer milk prices by
approximately $0.50 per cwt.
NMPF presented in its brief the
aggregated costs cooperatives with
manufacturing capacity shared on the
record, emphasizing the increases across
cost categories since make allowances
were last updated. While the need to
update make allowances to reflect
higher costs is necessary, NMPF stated,
the data on the record is not sufficiently
comprehensive, verifiable, or
unambiguous to determine make
allowances above those offered in
Proposal 7. In its post-hearing brief,
Agri-Mark reiterated support for
Proposal 7 as the most balanced
approach to updating make allowances,
despite acknowledging the proposed
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levels are not sufficient to cover all
manufacturing costs.
Opponents to Proposal 7, primarily
representatives for IDFA or WCMA,
echoed similar concerns from
cooperative manufacturers regarding
inadequate make allowances, claiming
the inability to recover manufacturing
costs on wholesale commodity products
has led to a lack of investment in
manufacturing capacity. These
witnesses testified on the importance of
make allowances fully covering
manufacturing costs, rather than a
portion of costs as proposed in Proposal
7. Witnesses testified that continued
capital investment in plant yield and
efficiency gains have not fully
countered the effects of insufficient
make allowances as costs have
continued to increase. Without make
allowances accurately reflecting costs,
the witness said, manufacturers receive
inaccurate financial signals, which
impact investments, capital distribution,
and FMMO pooling decisions.
Additionally, they argued the
competitive advantage gained by
manufacturing plants not regulated by
an FMMO leads to more investments
into operations unaffiliated with the
FMMO system. Only make allowance
increases that reasonably cover
commodity product manufacturing
costs, according to these witnesses, can
counteract these effects.
In its post-hearing brief, IDFA
reiterated opposition for Proposal 7,
writing that the proposed make
allowance levels are inadequate and not
grounded in observed data. IDFA
stressed that make allowances are
defined as covering the entire cost of
converting raw milk to a given dairy
product, not a portion. In its brief, IDFA
pointed to NMPF’s recognition that
Proposal 7’s make allowances do not
fully cover actual costs but instead
represent a balance dairy farmers can
withstand. IDFA objected to the
consideration of farm production costs
when determining make allowance
levels. IDFA reiterated FMMOs are not
a price support or income support
program, and the prices must reflect the
market price of end-dairy products.
IDFA explained manufacturers cannot
raise the prices of commodity dairy
products to offset higher manufacturing
costs because the wholesale prices are
captured in the NDPSR and would raise
the reference price by the same amount.
In its post-hearing brief, AMPI reiterated
opposition for Proposal 7 as failing to
reflect 2022 manufacturing costs. AMPI
argued that USDA should not delay
increasing make allowances on the
possibility that legislation will give
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USDA the authority to conduct a
mandatory audited survey.
A witness from DIC testified in
support of Proposals 8 and 9. The
witness testified that setting minimum
prices too high incentivizes excess milk
production, while a low minimum price
through higher make allowances allows
for over-order premiums to set a
competitive market price. The witness
argued Class III and IV prices should
allow manufacturing plants to clear the
market and operate profitably.
The DIC witness entered data
concerning its 2022 California dairy
manufacturing cost forecast (2022 CA
Forecast). The witness testified the 2022
CA Forecast used a combination of
2003–2016 California Department of
Food and Agriculture (CDFA) data, state
and national indices, and market
developments to measure how changes
in labor, utility, and other costs
historically moved the actual CDFA cost
data. The model then used that
information to forecast Californiaspecific 2017–2022 manufacturing costs,
according to the witness. According to
the witness, while the model forecasts
costs, the range of actual costs around
those forecasts could be relatively wide
given the relatively few observations (14
years) used to estimate the model. For
example, the expert witness elaborated,
CDFA only collected dry whey costs
until 2006, when they surveyed fewer
than three dry whey plants, which is
why the CA analysis did not forecast
dry whey costs. The DIC witness opined
the best approach to determine
manufacturing allowance levels is using
observed cost data but offered the 2022
CA Forecast as another methodology for
use with the other cost surveys and
testimony presented.
An IDFA witness testified in support
of Proposals 8 and 9, stating make
allowances should be updated to reflect
increased costs in manufacturing dairy
products. While end-product-prices
change monthly to reflect the current
market, the witness said, make
allowances are fixed at 2006 cost levels,
forcing dairy manufacturers to lose
money or stop production. The witness
stressed the need for relief from the
current inadequate make allowances
that do not reflect rising industry costs,
adding losses are not sustainable for
plants or dairy farmers who depend on
these manufacturing outlets for their
milk. The witness explained IDFA’s
proposed make allowances are simple
averages of the 2023 survey and 2022
CA Forecast plus a $0.0015 marketing
cost.
The IDFA and WCMA witnesses
asserted accurate make allowances need
to be adopted quickly as current make
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allowances are based on 2005/2006 cost
data. The IDFA witness clarified their
staggered implementation proposal,
which would implement proposed year
1 levels shortly after the final decision
is published. According to both IDFA
and WCMA witnesses, the staggered
implementation is designed to recognize
the impact significant make allowance
increases would have on producer
prices. However, if there is any delay in
implementing changes, both witnesses
stressed the staggered implementation
approach should be abandoned and the
proposed year 4 levels should be
implemented.
The WCMA witness stated the use of
audited California manufacturing cost
data in the 2022 CA Forecast should
alleviate any data validity concerns;
further, the 2023 survey methodology
follows precedent used to determine the
current make allowance levels. The
witness noted the risk of using a simple
average of the 2022 CA Forecast and the
2023 survey to determine proposed
make allowances is the potential of the
result being skewed towards California
costs, since California plants are
represented in both surveys.
A dairy farmer witness, who is a
member of AMPI, testified on behalf of
IDFA and expressed support of
Proposals 8 and 9. The witness testified
that AMPI, who participated in the 2023
survey, experienced cheese
manufacturing costs close to the study
average despite plant sizes that were
smaller than the survey average plant
size. According to the witness, their
manufacturing costs of bulk cheese
products are 47 percent higher and
general plant expenses are up 62
percent in 2022, compared to 2008.
Several dairy manufacturer witnesses
representing Hilmar Cheese Company
(Hilmar), Glanbia, Saputo, and Leprino
testified in support of Proposals 8 and
9. Hilmar is a cheese and whey
manufacturer with processing locations
in California and Texas. According to
these witnesses, dairy processing costs
have increased, particularly of late
because of inflation, noting Hilmar’s
natural gas costs were 45.1 percent
above the 20-year average. The Saputo
witness echoed testimony on increasing
costs, citing the St. Louis Federal
Reserve data series for labor, energy,
packaging, and maintenance costs. The
witness said these costs, comprising 20
percent of the total cost to manufacture
a finished cheese product, rose 60
percent, on average since 2006.
According to the Saputo witness, its
manufacturing costs align with the 2021
and 2023 survey results. The Hilmar
witness testified their manufacturing
cost increases correlate with the results
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of the 2022 CA Forecast. The Leprino
witness stated the 2021 survey and 2023
survey had robust participation, and the
2022 CA Forecast, which used CDFA
audited mandatory data, leveraged a
widely accepted statistical modeling
approach. All four witnesses stressed
the urgency of updating make
allowances. The manufacturer witnesses
generally agreed that inaccurate make
allowances distort pricing signals for
farmers, processors, and ultimately
consumers.
Witnesses representing Nasonville
Dairy and Cedar Grove Cheese, two
proprietary specialty and commodity
cheese manufacturer members of
WCMA, testified to rising
manufacturing costs by outlining costs
in a similar manner to the 2021 and
2023 surveys. According to the
witnesses, their costs have risen $0.3226
and $0.77 per pound, respectively, far
beyond the fully implemented Proposal
8 levels. The witnesses testified that
insufficient make allowances negatively
impact cheese processing investments
and increase the production of highercost specialty products unable to play
the same balancing or foodservice roles
as commodity products. They added
current make allowance levels impair
the ability of proprietary manufacturers
to participate in the FMMO pool and
deprives producers the benefits of
having their milk pooled.
In their post-hearing briefs, WCMA
and IDFA reiterated their support for
Proposals 8 and 9. IDFA wrote that
USDA has consistently set make
allowances to reflect the most recent
and reliable actual cost data, using
multiple surveys, as in Proposals 8 and
9. Further, IDFA stressed in its brief, the
2023 survey is the most robust of all of
the author’s previous surveys used to set
make allowances. IDFA refuted the
notion the 2022 CA Forecast is
inappropriate to use for determining
make allowances, explaining the
underlying data is robust audited
California manufacturing data and the
econometric techniques are widely
accepted. IDFA contended that the 2022
CA Forecast and 2023 survey averages
are lower than the cooperative
manufacturing costs shared on the
record. Even if inflation has subsided
since 2022, IDFA added in its brief,
there would have to be deflation to
arrive below pre-2022 levels.
IDFA clarified in its brief the
proposed schedule for phasing in make
allowance changes, which is designed to
accommodate farmers. When addressing
implementation timing, IDFA refuted
the CME’s points about incorporating
risk management in the timing of
implementation, arguing that CME’s
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interests do not necessarily align with
those of the broader dairy industry
because of the fee revenue they
generate.
In its brief, IDFA emphasized the
destabilizing effect of current make
allowances on processors and farmers.
IDFA shared charts from the hearing,
showing how the Mailbox Price is in
close proximity to FMMO blend price,
which it says indicates FMMO prices
are too high. IDFA refuted NMPF’s
argument that Proposals 8 and 9 will
result in a $1.42 per cwt decrease in the
All-Milk Price because FMMO prices
are minimum prices and don’t reflect
premiums received. Further, IDFA
wrote in its brief that dairy farmers
whose cooperatives own processing
facilities are receiving depressed prices
when make allowances are too low.
IDFA said the best method to update
make allowances is through a
mandatory and audited USDA survey;
however, USDA does not currently have
the authority and IDFA estimates it
would take approximately five years
before new make allowances could be
adopted once the authority was granted.
IDFA reiterated arguments that make
allowances under-representing actual
costs harm both dairy farmers and
manufacturers.
In its post-hearing brief, AMPI
reiterated support for the make
allowance levels in Proposals 8 and 9,
contending they accurately reflect the
changes in costs. AMPI added it
supports immediate implementation,
rather than the phased 4-year approach.
AMPI wrote the 2023 survey had the
largest product volumes of any previous
surveys and highlighted other
manufacturing cooperative testimony
describing increased manufacturing
costs. AMPI opined continued high
manufacturing costs and farm bill
delays have made make allowance
updates more urgent.
Leprino’s post-hearing brief reiterated
its support of Proposals 8 and 9,
emphasizing the importance of
implementing make allowance changes
immediately. Leprino stressed 2023 cost
levels have continued to climb and
offered its own updated cost increases,
compared to 2022: 11 percent for labor,
17 percent for property insurance, and
9 percent for liability insurance.
A witness representing the AFBF
testified in opposition to Proposals 8
and 9, opining the 2021 and 2023
survey data may be biased due to its
unaudited nature and the known
potential to be used for rulemaking,
stating the incentive to overestimate
reported costs for commodity goods
disqualifies this voluntary data. The
witness testified only the 2016 CDFA
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survey results can be verified as
accurate enough to be used for
determining make allowances.
According to the witness, the relatively
complicated 2022 CA Forecast model
using a small number of observations
(14 years) to forecast 2022 costs (6 years
out from the actual data) could be
overfitted to the 2000–2016 data and
unreliable to predict future costs.
Numerous dairy farmer witnesses
testified in opposition to Proposals 8
and 9, focusing on the negative effect
significant make allowance increases
would have on producer pay prices. A
DFA farmer witness from New Mexico
testified the make allowance increases
contained in Proposals 8 and 9 would
result in negative operating income over
the next 10 years, making continued
operation of their farm unsustainable.
The witness said any make allowance
increases would severely and
disproportionally impact producers in
the southwest due to the share of milk
going into manufacturing products. A
LOL dairy farmer testified significant
increases in make allowances would be
difficult for farms in California to
absorb, where water scarcity has led to
high forage costs. According to the
witness, large make allowance increases
would put adequate milk supply at risk,
all the while guaranteeing profit for
commodity manufacturers and leading
to over production of manufactured
dairy products.
Two dairy farmer witnesses, a
member of the CDC and a small
Maryland dairy farmer, testified against
increases in make allowances due to the
impact on producer pay prices and lack
of accounting for dairy farm production
costs. According to the witnesses, while
processors can pass on costs to
customers up the supply chain,
producer margins are too thin to sustain
substantial price decreases from
increased make allowances. The
witnesses testified that further declines
to producer margins will cause more
producer exits and disruption to the
milk supply. According to a dairy
farmer witness representing Edge, any
change in make allowances should
require a 15.5-month delay, be
restrained by the impact on producer
pay prices, and cover only the most
efficient plants.
In its post-hearing brief, NMPF
reiterated its arguments in opposition to
Proposals 8 and 9. NMPF argued that
these proposed changes would decrease
dairy farmer milk prices by
approximately $1.45 per cwt, further
narrowing producer margins and
causing disorderly marketing.
NMPF cited ongoing plant investment
as an indication current make
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allowances are not too low as portrayed
by proprietary manufacturers. NMPF
emphasized proprietary manufacturers
are not required to be regulated and,
thus, can choose not to participate in
the FMMO and avoid paying minimum
prices they contend are too high because
of inadequate make allowance levels.
NMPF opined about the lack of
evidence to merit raising make
allowances to levels contained in
Proposals 8 and 9.
In its brief, NMPF refuted the studies
used as a basis for Proposals 8 and 9.
NMPF cited hearing testimony regarding
the insufficiency of some plant sample
sizes in the 2023 survey. Further, NMPF
argued the 2023 survey does not capture
how manufacturing costs are skewed by
plants that serve a balancing role. NMPF
stated if make allowances are set too
high, balancing plants would be
incentivized to run at maximum
capacity, rather than running at less
than full capacity to provide critical
balancing services to the market. NMPF
voiced concerns with the 2022 CA
Forecast, noting the proposed make
allowances in Proposals 8 and 9 are
duplicative since the 2023 survey
included California data. Further, NMPF
opined that the 2022 CA Forecast is of
little utility as it did not account for
basic changes to the California dairy
manufacturing sector since 2016, such
as plant openings and closings and
productivity improvements.
In its post-hearing brief, Select also
opposed Proposals 8 and 9, on the basis
of the 2022 CA Forecast being
inappropriate to use in determining
make allowances. Select echoed NMPF’s
argument that use of the forecast would
be duplicative of California data.
Further, Select argued indexing does not
account for improvements to plant
efficiencies and the Department has not
previously used indexing to determine
make allowances.
In its brief, the AFBF opposed any
increase to make allowances, instead
advocating they only be increased once
a mandatory, audited cost survey was
administered by the Department. The
AFBF opined that both the 2021 and
2023 surveys were biased because there
was a clear intention the surveys would
be used in a rulemaking proceeding.
The AFBF opposed the use of indexing
to set make allowances, as was done in
the 2022 CA Forecast, because it fails to
recognize productivity improvements
over time. The AFBF echoed other brief
arguments that continued processor
investment is evidence that make
allowances are not too low.
The Midwest Dairy Coalition (MDC),
an alliance of six dairy farmer-owned
cooperatives operating in the Midwest,
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filed a post-hearing brief stating make
allowance updates are long overdue, but
took the position the Department should
be granted legislative authority to
conduct a mandatory and audited cost
survey. MDC did not offer support or
opposition to any make allowance
related proposals. In its post-hearing
brief, Edge also did not support or
oppose any make allowance related
proposals but cautioned against setting
make allowances too high. Until there is
a mandatory and audited USDAadministered survey, Edge stated, the
Department should err on the side of
caution to not subsidize commodity
manufacturing.
In its post-hearing brief, Select offered
an alternative methodology for
determining the make allowance levels
using what Select argued was the most
reliable record data. Select suggested
taking the average of the 2021 survey
and 2023 survey, subtracting the current
make allowance level, and taking half
that difference to add to current make
allowance levels. As a result, Select
proposed the following: cheddar cheese,
$0.2281; butter, $0.2004; NFDM,
$0.2260; and dry whey, $0.2498.
In its post-hearing brief, CME noted
any make allowance changes would be
considered material changes, and USDA
should consider an implementation
timeframe that mitigates risks to those
involved in futures and options trading.
b. Yield Factors
Submitted by Select, Proposal 10
seeks to amend the cheese price formula
by increasing the butterfat recovery rate
in the cheese yield, from 90 to 93
percent. A Select witness testified in
support of Proposal 10 and clarified a
butterfat recovery rate of 93 percent
would also necessitate an increase in
the butterfat yield factor in the protein
price formula from 1.572 to 1.624.
According to the witness, these changes
would result in a modest increase in the
Class III price, estimated at $0.04 per
cwt. The witness stressed USDA should
not be guided by price impacts but
rather by achieving formulas to better
reflect manufacturing realities and the
actual value of raw milk. Select
reiterated support for this proposal in its
post-hearing brief.
An independent expert witness,
retained by Select, testified
advancements in vat technology,
coagulants, and curd handling have
enabled manufacturers to achieve
recovery rates higher than the currently
assumed 90 percent. The witness
described how modern, horizontal vats
attain butterfat recoveries far exceeding
both open and enclosed horizontal vats,
and how most commodity cheddar
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manufacturers use advancements in
coagulants and curd handling to attain
greater than 93 percent butterfat
recovery. Additionally, the witness said,
whey cream can be reintroduced into
the cheesemaking vat to increase cheese
yield and revenue, ultimately increasing
butterfat recovery.
In its post-hearing brief, the AFBF
wrote in support of Proposal 10 to
increase the butterfat recovery factor.
The AFBF pointed to evidence on the
record of increasing plant efficiencies,
justifying updating the butterfat
recovery factor to the level in Proposal
10.
Six witnesses, representing Glanbia,
Leprino, IDFA, CDI, DIC, and MPC,
testified in opposition to Proposal 10.
The Glanbia witness described a broad
range of industry fat recovery based on
plant age and processing techniques,
and acknowledged many modern plants,
including Glanbia plants, can achieve
93 percent cheddar fat recovery. The
witness testified Proposal 10 is being
offered to enhance prices while ignoring
other parts of the formula that overvalue
milk. The witness contended lost solids
within the manufacturing plant and the
discounted price of whey cream, should
they be considered, outweigh the effects
of Proposal 10 on milk prices. The
Leprino witness testified any changes to
the yield factor should only occur after
a comprehensive review of all yield
assumptions. The witness agreed 93
percent butterfat retention is achievable
in some plants but does not believe it
is possible across the entire industry.
The IDFA witness contended Proposal
10 takes a piecemeal approach to
changes in the yield formula and
selectively focuses on dairy farmer
revenue enhancements only. The
witness opined whey cream is
overvalued in the current formula, as
butterfat not going into cheese is
currently valued as Grade AA butter
despite regulation that whey cream
cannot be used in Grade AA butter.
According to the witness, whey cream is
discounted 20 percent or more
compared to fresh cream. In addition,
the witness claimed, in-plant milkfat
losses are not recognized in the current
formula, something that should be
considered when evaluating yield factor
changes. The witness testified any
decreases in the Class III prices that
result from accurately accounting for
both processing losses and whey cream
values would more than offset the
increases in Class III prices proposed by
Select.
A witness from the Center for Dairy
Research (CDR), appearing on behalf of
IDFA, testified to observing
improvements in butterfat retentions
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over the past 40 years, mostly due to
improved vat design and technology.
The CDR, with a dairy plant on the
University of Wisconsin-Madison
campus, supports the U.S. dairy
industry with expertise in cheese, dairy
ingredients, cultured products, dairy
beverages, quality/safety, and dairy
processing. The witness noted a range of
butterfat losses at the cutting stage
including 9 to 10 percent fat loss in
open vats, 7 percent fat loss in Double
O vats, 6 percent fat loss in horizontal
vats, and 5 percent fat loss in modern
vats. While large modern plants are
installing newer, more efficient vats, the
witness claimed, old, less efficient vats
are not leaving production, and are
being repurposed and installed in
medium and small plants throughout
the country. The witness noted there is
still a large variety of vats being using
in the industry and stressed the latest
vat design does not ensure optimal
butterfat retention, as the experience of
the cheesemaker and product handling
practices could also lower butterfat
recovery.
Based on current observations and
work within the industry, the CDR
witness provided best estimates for fat
recoveries in cheddar cheesemaking as
91 to 93 percent retention in well-run
factories with modern vats, 90 to 92
percent retention in well-run factories
with vertical Double O vats, and 88 to
91 percent retention in factories with
open vats. The witness said, based on
their experience, 91 percent could be
considered the industry average
butterfat recovery for cheddar cheese
plants.
A CDI witness, appearing on behalf of
NMPF, testified to the lack of yield data
available to support the proposed
recovery rate contained in Proposal 10.
The witness supported a tempered
update to the cheese make allowance
that does not include an update to the
yield factor. A witness representing DIC
testified the current 90 percent butterfat
recovery rate is reasonable because,
despite some newer, more efficient
plants achieving higher fat recovery,
older plants may not be able to achieve
the higher rates. The DIC witness stated
fat recovery data is lacking across the
industry and further asserted the current
90 percent butterfat recovery should be
retained. The witness representing MPC
testified the current formula should
remain in place until the industry
tackles the mechanics of the Class III
formula, and the big issue is how
butterfat not being retained in the
cheesemaking process is valued.
A witness representing AMPI
provided testimony supporting the
improvement seen in butterfat recovery
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due to new vat technology. According to
the witness, AMPI installed
cheesemaking equipment that facilitates
the recovery of fat; however, they did
not provide specific data.
Submitted by Select, Proposal 11
seeks to eliminate farm-to-plant
shrinkage from the yield factors in the
FMMO Class III and IV price formulas.
A witness appearing on behalf of Select
testified USDA’s decision to include
shrinkage in the formula was premised
on the concept that such losses were not
in the handler’s control and are
unavoidable and common. The Select
witness opined that producers,
cooperatives, and handlers do have the
ability to address and stem losses in the
transportation of milk from the farm to
the plant. The witness said, historically,
as the number of farms on a milk route
increased, the probability for
discrepancies between farm weights and
plant weights also increased, as each
stop offered potential for spillage, loss
within piping, and errors in
measurement. The witness shared
statistics on the increasing size of U.S.
dairy farms, stating that in 2016, threequarters of all U.S. milk production
came from farms that could fill a full
tanker, whereas in 2000, less than half
of U.S. production came from farms
filling a full tanker. The witness
estimated 80 percent of the current milk
volume in the U.S. comes from farms
able to fill full tankers on every-otherday pickup schedules. Consequently,
the witness said, the occurrence of
shrinkage is decreasing. As an example,
the witness explained, Select’s members
are large enough to ship full tanker
loads of milk, meaning Select does not
experience the same risks of milk loss
which occur on multi-stop routes.
Other than milk losses occurring with
hoses, the Select witness was unaware
of any inherent, unavoidable, farm-toplant losses that could occur within the
pick-up process. The witness said even
farms without the ability to fill a tanker
can adopt farm scales, flow
measurement, and other technologies to
minimize imprecision and inaccuracy.
The witness testified the cost of
implementing these improvements
would be offset by the anticipated price
impacts of adopting Proposal 11, which
the witness estimated to be $0.07 per
cwt.
A second Select witness presented an
analysis of Select plant data from
August 2022 to July 2023, representing
171,240 milk shipments and a total of
9.8 billion pounds. The witness stated
approximately half of their customers
do not report plant weights back to
Select. For those plants who do report,
the witness said reported plant weights
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exceeded farm weights about half of the
time. The witness stated non-shrink
factors, such as scale calibration or
weather, typically cause the large
discrepancy between farm and plant
weights. The witness concluded that for
the subset of loads where differences
occurred between farm and plant
weights, the net variance across all
loads was less than 0.1 percent.
A witness testifying on behalf of
Continental Dairy Facilities (CDF) and
Continental Dairy Facilities Southwest
(CDF SW), two wholly owned
subsidiary plants of Select in Michigan
and Texas, manufacturing NFDM,
butter, and buttermilk powder,
presented farm-to-plant loss data to
support Proposal 11. The witness
analyzed farm-to-plant losses in milk
deliveries to the two CDF facilities from
August 2022 through July 2023,
comprised of both single and multi-farm
pickups. The witness stated that in total,
plant weights averaged 0.15 percent
lower than farm weights for CDF and
0.10 percent lower for CDF SW. The
discrepancies ranged from a negative
0.32 percent (plant weights were 0.32
percent lower than farm weights) to 0.67
percent (plants weights were 0.67
percent lower than farm weights). Since
many of the non-Select shipments to
CDF are multi-farm pickups, the witness
said management for farm-to-plant
shrink is not unique to Select or larger
farms, generally. The witness described
improperly calibrated scales, input or
transposition errors by milk haulers,
changes in equipment or personnel
when weighing loads, or snow settled
on scales or tanks when weighing, as
reasons for weight discrepancies. The
witness testified these variances are not
inherent and can be addressed. Select
reiterated its arguments supporting
Proposal 11 in its post-hearing brief.
The AFBF expressed support for
Proposal 11 in its post-hearing brief.
The AFBF contended that data on farmto-plant shrinkage contained in
evidence is similar to what was used to
determine the original farm-to-plant
shrinkage factor. The AFBF argued that
this issue does not merit a formal data
collection, but a one-time adjustment to
reflect that farm-to-plant shrinkage is
much less significant than it used to be.
Five witnesses representing IDFA,
Leprino, CDI, DIC, and MPC testified in
opposition to Proposal 11. The
witnesses asserted Select’s minimal
farm-to-plant shrinkage is not the reality
for much of the dairy industry, noting
the lack of industry-wide data on farmto-plant shrinkage and the differing
nature of measuring components at the
farm, rather than at the plant, are
reasons Proposal 11 should not be
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adopted. The witnesses further testified
FMMO yield factors should not be based
on one company’s experience,
especially one, they argued, that was an
industry leader in this area.
The Leprino witness testified that
while Select has been able to limit their
own farm-to-plant loss through
increasing herd sizes and improvements
in milk weighing and sampling, this is
not a representation of the nationwide
dairy industry. Additionally, the
witness argued that the scientific
characteristic of milk fat clinging to the
walls of stainless steel has not changed;
as such, volume and fat loss still occur,
even at the most innovative plants. The
IDFA witness claimed less than 10
percent of all farms produce enough
milk to fill entire tanker loads, so it is
reasonable to conclude the losses
experienced when the formulas were
adopted are still happening today.
According to the witness, failure to
account for the diversity of farm size
may further incentivize manufacturers
to prefer larger farms over smaller farms.
Submitted by Select, Proposal 12
recommends amending the nonfat solids
price formula by increasing the NFDM
yield factor from 0.99 to 1.03. A Select
witness, testifying in support of
Proposal 12, said it would correct the
NFS yield factor by including the value
of milk solids utilized in buttermilk
powder, as they said producers are not
currently paid accurately from a price
calculated on NFDM prices alone.
According to the witness, a proper yield
factor for NFDM should account for all
milk solids, including the milk solids
remaining in cream after separation and
used in butter or buttermilk. The
witness stressed the initial NFS formula,
correctly adopted in 2000, included
buttermilk powder.
A witness for CDF and CDF SW
testified on price alignment and
processing differences between NFDM
and buttermilk powder. The witness
stated sales and regional prices observed
at the two plants for buttermilk powder
and low-heat NFDM are closely aligned,
as well as consistent with prices
reported by AMS’ Dairy Market News
(DMN) from January 2023 through June
2023. Further, according to the witness,
the process of drying buttermilk utilizes
the same equipment as that of drying
skim milk but requires a thorough
cleaning of equipment when changing
product lines, higher temperature, and
additional drying time due to
buttermilk’s higher butterfat content.
The witness said this leads to increased
utility costs of approximately $0.02. The
witness testified the NFS yield factor
should consider all powder products,
including buttermilk powder whose
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yield is lower than NFDM. Select
reiterated its arguments in support of
Proposal 12 in its post-hearing brief.
In its post-hearing brief, the AFBF
expressed support for Proposal 12 as it
believes it reflects the long-term market
shift toward valuing buttermilk near the
NFDM price. The AFBF stated that a
formal extensive data collection is not
necessary for this proposal to be
adopted because there is a clear record
of buttermilk values.
Two witnesses, representing Leprino
and IDFA, testified in opposition to
Proposal 12. The witnesses testified
Proposal 12 is based upon a theoretical
yield approach which assumes a perfect
system with no in-plant component
losses in the conversion of NFS to
NFDM. The witness said in-plant losses
exist even in the most modern and
efficient manufacturing facilities and
should be recognized in the price
formulas. The witnesses gave an
example of the portion of NFS
remaining in cream after separation,
which cannot be processed into NFDM.
The Leprino witness argued the FMMO
system is predicated on the notion
processors should pay for milk based on
the revenue they can derive from selling
products manufactured from that milk.
The witness said milk routinely lost in
processing does not end up in finished
products, which should continue to be
accounted for in the formulas. The IDFA
witness testified product yields should
incorporate manufacturing losses, and
overestimating the quantity of NFDM
manufactured from NFS by accounting
for buttermilk powder would overvalue
the market-clearing of NFDM and
contribute to disorderly marketing.
A witness from CDI testified on behalf
of NMPF in opposition to Proposal 12.
The witness testified CDI supports
evaluating all factors in the Class III and
IV formulas, and yield factors should
only be updated once industry-wide
data on product yields are available.
The witness stated the NFS price
formula is based on NFDM and the yield
factor correctly reflects the yield of
NFDM only, without an adjustment for
buttermilk powder. The witness said
Proposal 12 would adjust the NFDM
yield factor to represent a composite
yield for multiple products which differ
in terms of component composition,
uses, cost of manufacture, and market
prices. While acknowledging buttermilk
powder’s processing costs are likely
higher than NFDM’s, the CDI witness
testified there was not enough data to
quantify the difference in processing
costs; further, data presented from DMN
and by Select witnesses are not
sufficient to determine the alignment of
prices between buttermilk powder and
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NFDM. The witness clarified that buyers
of butterfat and NFS must account for
all solids utilized at the minimum
component prices, regardless of whether
the solids are used in the surveyed
products of butter and NFDM or in other
Class IV products such as buttermilk
powder.
A witness from the DIC testified in
opposition to Proposal 12. According to
the witness, while NFDM yields are
likely higher than the current yield
factor of 0.99, not all NFS in producer
milk end up in NFDM, with some NFS
from cream remaining in buttermilk.
The DIC witness claimed the lower
yield factor is to compensate for
generally lower buttermilk powder
prices compared to NFDM but
acknowledged DMN data suggested a
buttermilk powder price discount
relative to NFDM narrowing in recent
years. A witness from MPC testified in
opposition to Proposal 12, stating they
were opposed largely due to a lack of
adequate data.
In their post-hearing briefs, IDFA and
NMPF opposed Proposals 10, 11, and
12. IDFA argued the three proposals are
not representative of industry-wide
experience, but rather on what is
possible given modern technology and
equipment. NMPF echoed IDFA’s
opposition in its brief, citing insufficient
data to justify the proposed changes.
IDFA specifically objected to Proposal
11, stating it would place an unfair
burden on small farms that cannot fill
a tanker and, thus, continue to
experience shrinkage. Proposal 11 was
also opposed by WCMA in its posthearing brief. Lastly, IDFA contended
Proposal 12 should be rejected because
it overvalues buttermilk powder.
Base Class I Skim Milk Price
Six proposals to amend the base Class
I skim milk price were considered in
this proceeding. Proposal 13, submitted
by NMPF, seeks to return the base Class
I skim milk price to the higher-of the
Class III or Class IV advanced skim milk
price, referred to as the ‘‘higher-of’’
mover. Proposal 14, submitted by IDFA,
would use an average of the advanced
Class III and Class IV skim milk prices,
plus an adjuster that resets every
January. The adjuster would be the
higher of either: (1) $0.74; or (2) the 24month average difference between the
higher-of and the average-of the
advanced Class III and Class IV skim
milk pricing factors. The 24-month
calculation would run from August of
the three years prior to July of the
previous year. Proposal 15, submitted
by MIG, would amend the current
average-of mover from a $0.74 adjuster
to a monthly rolling average adjuster
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calculated as the difference between the
higher-of and the average-of, for 24
months, with a 12-month lag.
Proposal 16, referred to as ‘‘Class III
plus,’’ submitted by Edge, would start
with the announced Class III price and
incorporate a 36-month rolling adjuster
averaging the monthly differences
between the higher-of the advanced
Class III or advanced Class IV skim milk
prices, and the Class III skim milk price.
The proposal would eliminate advanced
prices. Proposal 17, also submitted by
Edge, would return to the higher-of
mover but would use announced rather
than advanced prices. Proposal 18,
submitted by the AFBF, would return to
the higher-of mover and would
eliminate the advanced pricing of Class
I skim milk, Class I butterfat and Class
II skim milk.
An NMPF witness testified in support
of Proposal 13. The witness reviewed
the 2000 Federal Order Reform (Order
Reform) rulemaking and summarized
the higher-of methodology as accurately
reflecting the value of the different milk
use categories and ensuring shifts in
demand for any one manufactured
product does not lower Class I prices.
The witness said the Department
determined during Order Reform that
the higher-of mover addresses
disorderly marketing by reducing
volatility in milk prices, reducing class
price inversions and depooling, and
assisting Class I handlers in competing
for a milk supply.
The NMPF witness testified the 2019
change to the average-of was designed to
facilitate price risk management
strategies for fluid milk processors,
which, the witness stated, is not an
objective of FMMOs. The witness said
the intent of the change was to be
roughly revenue neutral, while allowing
handlers to better manage volatility in
monthly Class I skim milk prices using
Class III and Class IV milk futures and
options contracts. The witness claimed
the 2019 change has not functioned as
intended or anticipated by NMPF, has
exacerbated disorderly marketing
conditions, has not been revenue
neutral, and will continue to have
deleterious effects on the dairy industry.
The witness described the asymmetrical
risk to producers which was not
anticipated when the mover change
occurred. The witness explained the
higher-of exceeds the average-of
calculation whenever the Class III and
IV advanced skim milk pricing factors
differ by more than $1.48 per cwt,
regardless of which factor is higher. The
witness noted the reverse is true when
the advanced skim pricing factors differ
by less than $1.48 per cwt.
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A witness from Southeast Milk, Inc.
(SMI), an NMPF cooperative member
with 114 dairy farmer members,
testified that when the two advanced
skim milk pricing factors are equal, the
maximum amount by which the
average-of can exceed the higher-of
Class I mover is $0.74 per cwt, but there
is no limit by which the average-of can
fall below the higher-of Class I mover.
The NMPF witness testified that in 2020
and 2022, there were instances when
the average-of mover fell below what the
higher-of mover would have been, in
which the difference was at times
significant. The witnesses testified the
maximum divergence recorded between
the current average-of mover and the
higher-of mover was a $5.19 lower
average-of mover in December 2020,
when Classes II, III, and IV skim prices
differed by approximately $11 per cwt.
In comparison, the witness said, the
maximum gain during that time was
capped at $0.74. The SMI witness said
because the upside is capped, but the
downside is not, it is difficult to ever
return to revenue neutrality under the
average-of mover.
The SMI witness testified the averageof mover has lowered dairy farmer
revenue compared to what they would
have received under the higher-of
mover, with estimated cumulative
market losses totaling $998.3 million
from May 2019 through August 2023.
The witness said that for the same
period, the average-of mover decreased
revenue to the southeastern FMMO
producers by more than $192 million.
The NMPF witness reviewed data
during periods of relative price stability,
revealing the average-of mover
generated modest gains over the higherof mover. However, in periods of price
volatility, there were substantial
revenue losses in months when the
average-of mover was less than the
calculated higher-of mover, which
resulted in significant cumulative losses
to producers over time.
The NMPF witness claimed the
change to the average-of mover
increased disorderly marketing by
reducing Class I prices relative to the
other classes and creating greater
incentives for handlers to depool milk.
The witness said that in 2020, the
enhanced demand for cheese relative to
the demand for butter and NFDM
widened the spread between Classes III
and IV well beyond $1.48, substantially
lowering Class I prices compared to
what they would have been under the
higher-of mover. The SMI witness
testified that between May 2019 and
June 2023, the Class III skim value
exceeded the Class IV skim value by
over $1.48 per cwt in 16 months, and
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the Class IV skim value exceed Class III
skim value by $1.48 or more per cwt in
11 months. In 2023, according to the
SMI witness, the average-of continued
to be lower than the higher-of in some
months, which had a more significant
impact to dairy farmers because it
occurred during a time of extremely low
dairy farm margins. The witness said
they expect to see more volatility and
larger spreads between Class III and
Class IV prices in the future because of
anticipated higher butterfat prices
which will lower the Class III skim
value.
The NMPF witness testified that
adoption of the average-of mover
created class price inversions and
resulted in significant volumes of
depooled Class III milk during the
second half of 2020. Class price
inversions occurred again in 2022 and
2023, said the witness, resulting in price
volatility and substantial depooling of
Class IV milk. The witness opined a
wide variety of market conditions have
proven capable of generating market
volatility, driving a wedge between
Class III and IV skim milk prices, and
resulting in an average-of mover of more
than $1 per cwt below what the higherof mover calculation would have been.
The NMPF witness said the averageof mover has not resulted in increased
risk management activity at a value to
handlers anywhere near the losses
experienced by dairy farmers.
Numerous witnesses testified their fluid
milk customers have shown very little
interest in hedging milk since the
average-of mover was implemented.
NMPF witnesses testified other Class
I mover proposals under consideration
in this proceeding use the higher-of
mover calculation as the benchmark for
determining adequate Class I skim milk
price revenue. They testified those
proposals provide producers revenue in
an after-the-fact-manner that fails to
maintain the maximum monthly
separation between advanced Class I
prices and the manufacturing class
prices, a goal expressed by the
Department when it recommended the
higher-of mover during Order Reform.
The SMI witness testified that because
of the change to the average-of mover,
the southeastern FMMOs experienced
disproportionately large reductions in
blend prices due to the higher Class I
utilization in the region, making it
harder to attract supplemental milk the
region requires to meet fluid demand.
The witness noted that using an
average-of mover to establish a Class I
skim price makes it more difficult for
Class I handlers to procure milk from
plants with higher-value manufactured
products because the price difference is
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not large enough to draw milk away
from manufacturing. The witness
opined a Class I skim mover should
provide for orderly marketing by
ensuring an adequate supply of raw
milk for fluid plants, producer price
equity including prompt and uniform
payments to farmers and cooperatives,
and stability for dairy farms. The
witness argued the current average-of
mover makes it more difficult for
FMMOs to achieve those purposes.
An NMPF consultant witness testified
the higher-of mover is necessary to
transmit market signals in real time. The
witness said a higher Class I milk price
relative to other class prices sends
market signals to move milk from
surplus to deficit regions to ensure
adequate fluid milk supplies.
Additionally, the witness continued,
disorderly marketing caused by
prolonged depooling occurs when the
Class I price is lower than Class II, III,
or IV prices. The witness asserted
prolonged periods of depooling create
market disorder. Since the change in
2019, claimed the witness, the Class I
mover has facilitated persistent longterm periods of depooling because there
is no guarantee Class I prices will
exceed the other class prices over time.
In contrast, the witness asserted that
under the higher-of mover, if Class III
and IV advance skim prices increased,
the Class I price would remain higher
and depooling would moderate.
The NMPF witness presented data to
demonstrate the objective of adopting
the average-of mover, to allow for
greater risk management, has not been
accomplished, and prolonged periods of
depooling have made it difficult for
producers to hedge their farm margins.
The witness stated that when milk is not
pooled, producer hedging losses cannot
be offset by gains on milk checks
because revenue from the higher valued
manufacturing milk is not shared with
the marketwide pool. The witness
asserted risk-management performance
is relatively similar under the higher-of
and average-of movers, entering data
they believed showed how Class III
futures contracts would similarly
mitigate risk. The witness contended
other proposals do not adequately
replicate the higher-of price in future
periods; nor do they share equally
among dairy producers and others,
necessitating periodic recalibration.
Rather than recognize the average-of
limitations, the witness said, other
proposals seek to align the average-of
and higher-of performance. The witness
testified an average-of mover with an
adjuster causes past market conditions
to influence current prices, sending
pricing misinformation to the market
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and causing disorderly marketing. The
witness concluded that without
immediate market signals from the
advanced Class III and IV milk prices,
any of the average-of or Class III plus
movers would struggle to replicate the
higher-of mover performance.
An NMPF witness representing
Prairie Farms testified producer revenue
has been significantly reduced, without
recovery, since the change to the
average-of mover. Prairie Farms is an
Illinois based farmer-owned milk
cooperative with over 600 dairy farmer
members operating fluid milk
processing and manufacturing facilities
that produce a variety of fluid and
manufactured dairy products. Increased
depooling in the last few years because
of the average-of mover has resulted in
increased price volatility, the witness
said. The witness testified that with the
average-of mover either Class III or Class
IV milk is not pooled, depending on
which class is higher, because the
manufacturer is able to keep the
additional market revenue instead of
sharing it among pooled producers.
The Prairie Farms witness testified
dairy producers want a pricing system
that gives real-time market signals,
which is accomplished with the higherof mover. The witness testified Prairie
Farms supported the change to the
average-of mover believing it would
facilitate their customers’ ability to
hedge Class I milk. However, Class I
processors have generally not increased
their use of hedging, said the witness,
while dairy producers have taken on
additional risk by giving up a higher
Class I price. The witness stated one
reason they believe their customers do
not utilize hedging is because of fear of
incurring a price disadvantage
compared to their competitor. The
witness added that of the Prairie Farms
dairy farmer members engaged in risk
management, there has been a decrease
in the use of forward contracting since
the implementation of the average-of
mover because of negative PPDs, as they
create a negative basis dairy producers
are unable to account for in their risk
management decisions. The witness
presented data showing negative PPDs
have become larger and more frequent
under the average-of mover, which has
increased the volume of depooled milk
and significantly reduced revenue to
farmers.
Another NMPF witness representing
Upstate Niagara Cooperative (Upstate
Niagara) testified the average-of mover
has not operated as intended, has
negatively impacted producer revenue,
and has exacerbated disorderly
conditions. Upstate Niagara is a dairy
farmer-owned cooperative marketing the
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milk of approximately 250 members and
operating eight fluid processing and
manufacturing plants in New York and
Pennsylvania. According to the witness,
under the average-of mover, producers
pooled on FMMOs with higher Class I
utilization were most severely impacted
due to the depressed Class I milk prices
and no ability to benefit from the higher
priced manufacturing milk. Similar to
other witnesses, the Upstate Niagara
witness described the asymmetric price
risk of the average-of mover.
From interactions with fluid milk
customers, the Upstate Niagara witness
said there is widespread acceptance of
prices based on FMMO monthly price
announcements by their conventional
customers. The witness said
conventional customers have been less
interested in pursuing a fixed price if
there was any chance it could result in
a competitive disadvantage in any given
month. The witness recognized there
may be some processors or end users in
specialized Class I product channels
that may utilize hedging but contended
it is a relatively small portion of total
Class I sales.
A University of Missouri professor
testifying on behalf of NMPF presented
results of an analysis conducted to
evaluate the impact of adopting
Proposal 13. The witness testified,
under the higher-of mover, Class I prices
would increase every year between
$0.32 and $0.50 per cwt; the Class II
price would be between $0.08 and $0.12
per cwt less annually; the Class III price
would be between $0.06 and $0.13 per
cwt less annually; the Class IV price
would be between $0.08 and $0.12 per
cwt less annually; and the all-milk price
would be between $0.01 or $0.02 per
cwt higher annually, except for a more
significant increase of $0.06 per cwt in
the first year. The witness said the
model forecasted the effect on the allmilk price to moderate over time as
production expands.
Twenty dairy farmers testified in
support of Proposal 13. Many dairy
farmers testified blend prices have been
lower and their milk prices have been
reduced since the average-of mover was
implemented. They said only when
Class III and Class IV prices are within
a narrow range of each other is the
average-of mover equal to or
outperforming the higher-of mover. The
witnesses said their experience supports
NMPF’s assertion that farmers’ milk
prices have been reduced by $950
million, and the reduction is not just a
COVID-era anomaly. Dairy farmer
witnesses said the losses demonstrate
the goal of revenue neutrality with the
change to the average-of has not been
achieved. One witness asserted that in
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29 of the 52 months since the averageof was adopted, Class I prices averaged
$1.30 per cwt less than what the price
would have been under the higher-of
mover. In comparison, said the witness,
in the remaining 23 of the 52 months
the average-of returned a price only
$0.42 higher per cwt. The witnesses
testified to near-universal support by
dairy farmers for a return to either the
higher-of or, under the average-of, a
mechanism to be equal to the higher-of
over a period of time, such as 24
months.
Several dairy farmers urged a return
to the higher-of mover, claiming a need
for financial relief as dramatic shifts in
milk markets since implementation of
the average-of mover have caused
significant financial losses to dairy
farmers. Dairy farmers reiterated the
average-of mover change affects 100
percent of pooled producer milk while
it is unlikely fluid milk processors are
covering 100 percent of their products
with risk management tools. A dairy
farmer testified they were assured the
change to the average-of would be net
neutral or net positive, but it has not
been. Many dairy farmer witnesses
described losses to dairy farmers under
the average-of compared to what the
Class I mover would have been under
the higher-of and testified to receiving
lower blend prices. The dairy farmers
were concerned about receiving a
delayed value of milk from a Class I
mover with a rolling average
methodology because they believe they
cannot afford to wait months or years
for the added revenue. They testified
restoring the higher-of mover through
adoption of Proposal 13 would help to
reduce the volatility in monthly milk
prices, bringing more stability and
predictability to farmer income.
Dairy farmers of all sizes testified to
relying on risk-management tools, such
as Dairy Margin Coverage (DMC), Dairy
Revenue Protection (DRP), and CME
futures and options markets because it
is difficult to manage their farms
through periods of significant price
volatility. Dairy farmers’ testimonies
described a range of contract periods,
anywhere from 3–18 months, depending
on the individual farmers’ riskmanagement strategy and risk tolerance.
In its post-hearing brief, NMPF
reiterated hearing testimony arguing the
average-of mover does not meet the
standards set forth in Order Reform, and
the change has not been revenue neutral
as originally assumed. NMPF restated
that under the average-of mover, price
inversions, volatility, and depooling
have increased, and Class I prices have
been less effective at incenting milk to
fluid processors relative to
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manufacturing. NMPF reiterated the
asymmetrical risk borne by dairy
farmers with the average-of mover and
the frequency of which the difference
between Class III and IV prices
exceeded $1.48 per cwt, effectuating
that risk.
NMPF reiterated the average-of mover
failed to send appropriate market
signals to participants because the fixed
adjuster could not maintain the
maximum monthly separation between
the advanced Class I and the
manufacturing class prices. NMPF wrote
this increased the likelihood
manufacturing classes would have a
higher value than milk used in Class I
and resulted in increased volumes of
depooled milk. Under the higher-of
mover on the other hand, NMPF argued,
when a particular manufacturing class
price is rising, the Class I price also rises
and tends to maintain Class I as the
highest priced class. To dampen the
effect volatility in the manufacturing
classes has on Class I, the highest priced
manufacturing class should provide the
foundation for ensuring the Class I price
remains above the manufacturing
classes almost every month, reducing
the incentive to depool, which is
disorderly.
The demand for Class I hedging is not
clear, NMPF asserted in its brief, and no
evidence was presented to suggest more
than a small minority of the overall
fluid market utilizes hedging, especially
beyond ESL handlers. NMPF argued in
its brief that while facilitating risk
management for fluid processors may
have merit, it is not an objective of
FMMOs. In regulating processors, the
AMAA only considers price uniformity
to processors, NMPF asserted. Finally,
NMPF restated in its brief the
widespread support of producers for a
return to the higher-of mover.
The Dairy Cooperative Marketing
Association, Inc. (DCMA), a CapperVolstead Marketing Agency in Common
with nine cooperative members in the
southeastern U.S., submitted a posthearing brief in support of Proposal 13.
In its brief, DCMA argued the change to
the average-of mover has not been
revenue neutral to dairy farmers, nor
provided benefits to the industry as
originally intended. According to
DCMA, the hearing record demonstrates
that little Class I hedging occurs,
especially on HTST milk, and includes
no evidence that the use of hedging is
more prevalent now than prior to the
change. DCMA stated most testimony
demonstrated HTST milk is sold based
on FMMO announced prices each
month plus a fixed margin. Because
revenue on packaged milk sales flows
back to the processor in step with the
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monthly changes in the FMMO
announced prices, there is no price risk
to the Class I processor under this
system, according to DCMA. In its brief,
DCMA described the pronounced losses
in the southeastern region as a result of
the change to the average-of mover.
The MDC submitted a post-hearing
brief in support of Proposal 13,
expressing the importance of making the
changes as part of the FMMO reform
process underway. MDC conveyed in its
brief the importance of ensuring all
reforms are considered in concert since
all changes have ripple effects
throughout the entire system and across
all classes of milk.
In its post-hearing brief in support of
Proposal 13, Select reiterated the
proposal would support the priorities
expressed by the Department in Order
Reform, the rationales of which remain
true today. Select cited billions of
dollars lost to producers, an increase in
depooling, and a lack of Class I handlers
hedging their milk costs as reasons the
average-of has failed.
In both witness testimony and briefs,
IDFA and MIG strongly opposed a
return to a higher-of mover. A majority
of their opposition was contained in
supporting testimony and evidence for
Proposals 14 and 15, as detailed below.
A witness representing IDFA testified
in support of Proposal 14. The witness
said the goal of Proposal 14 is to keep
producer Class I revenue consistent
with what would be experienced under
the previous higher-of mover, while
allowing for effective and affordable
Class I risk- management strategies.
The IDFA witness claimed that in the
long-run, the proposed Class I mover
would never fall below what the Class
I skim milk price would have been
under the higher-of mover. According to
the witness, Proposal 14 would have
paid more than the higher-of mover in
13 of the past 21 years. The witness
asserted dairy farmers are ‘‘made
whole’’ as compared to the higher-of
mover over time through the annual
adjuster calculation. The witness
presented data from 2003 through 2019
showing Proposal 14 would have
yielded a Class I price $0.08 greater than
the higher-of mover. For 2004 through
2023, the witness said Proposal 14
would have yielded a Class I price $0.05
higher, due to the $0.74 floor.
The IDFA witness entered data and
analysis to show the volume of milk not
pooled would be slightly less under
Proposal 14 than Proposal 13, and the
Class I price would be lower than Class
III or Class IV prices in nearly the same
number of months under both
proposals. The IDFA witness presented
an analysis showing Proposal 14 would
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have reduced price volatility with the
only exception of very high cheese
prices in 2020. According to the
witness, volatility equates to greater
price risk, which increases hedging
costs, and ultimately higher consumer
prices.
The IDFA witness countered claims
the higher-of mover sends important
price signals to dairy farmers through
the Class I price, instead claiming the
blend price sends more important price
signals because it is the price farmers
receive. The witness alleged there is
little difference between signals sent by
the blend price under Proposals 13 and
14, arguing that from 2012 to 2022,
Proposal 13 would average 31.9 percent
of the Class I value in the blend price
while Proposal 14 would average 31.8
percent. As the impact on the blend
prices is very similar, over time there is
little difference in price signals between
the proposals, the witness said.
Regarding the delay incorporated by
the rolling adjuster and farmers possibly
not receiving the make-up payments,
the IDFA witness noted farmers go out
of business for many reasons, and some
may go into the business or expand and
benefit from higher payments. The
witness said this issue is no different
than handlers going out of business
before the make allowances are raised.
The IDFA witness testified hedging is
a critical tool for the subset of
innovation and value-added milk
manufacturers to remain competitive
with alternative beverages. In the few
growing segments of the milk market,
especially ESL and higher value-added
products, retailers are demanding
processors provide long-term fixed price
contracts, rather than contracts with
fluctuating monthly prices, the witness
said. Since processors cannot enter into
a fixed purchase price for raw milk with
their milk suppliers, hedging allows
processors to take on the risk of entering
into a fixed sales price for its finished
products and cover the risk of raw milk
prices rising during the contract period,
the witness testified.
The IDFA witness noted several ESL
processors formed and quickly
implemented risk management plans in
anticipation of the change to the
average-of mover. The witness noted
ESL processors are interested in hedging
because of the longer product shelf-life.
According to the witness, a risk
management plan allows a processor to
level out what could otherwise be very
different costs of milk products that
could have been produced at
significantly different times but are
being sold to the customer at the same
point in time. The witness noted more
hedging of HTST products is done by
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end users, such as foodservice
customers, not processors. The witness
testified that while risk management is
not a stated objective of the AMAA, a
stable price, promotion, and growth of
the sale of milk are, and the ability to
use risk management tools results in
stable prices and increased sales.
The witness testified IDFA would
support a rolling average longer or
shorter than 24 months, but the 12month implementation lag is essential
to allow for hedging. The witness
testified Proposal 14 calculates the
adjuster from August through July
because long term Class I sales contracts
between processors and retailers are
often negotiated and entered into during
the final months of the calendar year. To
allow for effective hedging for those
contracts, Class I processors would need
to know at the time of the contract
negotiations what the adjuster would be
for the next calendar year. The witness
supported Proposal 15 as an acceptable
alternative to Proposal 14.
A dairy processor witness
representing Schreiber Foods
(Schreiber) testified in support of
Proposal 14 or 15. Schreiber is a fluid
milk processor primarily manufacturing
Class II and Class III products, with
approximately 5 percent of their
products sold as ESL Class I products.
The witness testified that over the past
20 years risk management has become a
necessary tool for companies with
exposure to dairy market volatility. The
witness said that only since the change
to the average-of mover in 2019 have
milk processors had a viable way to
manage risk. The witness testified that,
in response to requests from foodservice
and retail customers to manage Class I
costs, Schreiber has offered Class I
forward contracts since 2019. Prior to
2019, the witness said creating an
effective hedge for Class I milk was
challenging as it was unknown whether
Class III or Class IV would be the mover.
The witness stressed the change to the
average-of allows purchasers to use a
combination of Class III and Class IV
hedge positions, which gives everyone
in the supply chain the ability to control
their market risk in a way that was not
previously possible under the higher-of.
According to the witness, Schreiber
hedges price risk for its ESL production
through a combination of Class III and
IV futures and swaps, and Class I swaps,
which typically go out 12 to 18 months.
Under Proposal 14, the witness
explained, market participants will
know the fixed adjuster in advance of
the calendar year in order to conduct
their hedging analyses for the coming
year. If the Class I mover were to revert
to the higher-of, the witness testified
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they would have to either find a
different way to hedge or cease offering
forward contracts on their ESL products.
A witness representing Nestlé USA
(Nestlé) testified in support of Proposal
14. Nestlé is a fluid milk processor
operating one plant regulated by the
FMMO system. The witness testified
that Nestlé procures milk from
cooperatives using contract agreements
and offers its customers an annual fixed
price contract for their primary Class I
product, an ESL product. The witness
stressed the importance of hedging to
manage risk and compete in the market
against nondairy beverages. The witness
stated Nestlé did not use hedging for
Class I under the higher-of mover
because not knowing which class price
would be higher caused uncertainty.
The witness testified Nestlé currently
hedges all its Class I milk purchases
using Classes III and IV futures
contracts, and while they have an 18month outlook they typically hedge
Class I milk 6 months out. If USDA
returns to the higher-of mover, the
witness testified, Nestlé would not be
able to continue hedging its Class I milk.
The witness testified price volatility has
specific impacts on ESL products, as it
is challenging for retailers to set
different prices due to monthly milk
price fluctuations for two identical
products sold at the same time but
produced in different months.
A witness representing Lamers
testified in support of Proposals 14 and
15 stating those proposals would help
smooth out the volatility in the pricing
of Class III and Class IV.
In its post-hearing brief, IDFA
reiterated the importance of hedging to
processors for managing price risk and
volatility and claimed effective hedging
could only be achieved with an averageof mover. IDFA noted that when price
uncertainty does not allow fluid milk
processors to manage risk 6 to 12
months out, they risk losing shelf space
to plant-based and other alternative
beverage products that can offer fixed
prices. IDFA argued that the choice for
a fluid milk processor, especially with
respect to ESL products, higher valueadded products, and foodservice, is
increasingly between offering stable
pricing and long-term contracts
demanded by customers or losing shelf
space to competing beverages. Pricing
stability and long-term contracting are
facilitated by hedging, according to
IDFA. IDFA stressed the growing need
for Class I hedging because of increased
volatility between the manufacturing
classes.
In response to criticism of Proposal
14, IDFA wrote the average-of mover
does not create price inversions or lead
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to milk not being pooled, arguing
depooling occurs because of the price
relationships between classes, and is
caused by negative PPDs and pooling
requirements. IDFA also wrote that the
average-of mover does not increase price
volatility, unlike a higher-of mover
which routinely and unpredictably
switches between Class III and Class IV.
Finally, IDFA asserted the value of Class
I products is not necessarily related to
the value of Class III or IV products,
thus, the higher-of does not better reflect
the value of milk than the average-of
mover.
NAJ submitted a post-hearing brief in
support of Proposal 14, arguing it better
protects long-term producer milk
revenue, provides less Class I price
volatility, and preserves equitable riskmanagement opportunities for Class I
handlers who are required to participate
in the FMMO system. NAJ noted the
perception a return to the higher-of
mover would produce higher producer
Class I revenues is based on highly
divergent Class III and IV price movers
and an expectation this will continue in
the future. However, NAJ argued in its
brief this price divergence analysis does
not account for composition factor
amendments nor potential Class I
differential amendments. With revised
composition factors, NAJ asserted, a
restored manufacturing to Class I price
spread would mitigate price inversion
and depooling.
A MIG witness testified in support of
Proposal 15 seeking to amend the
average-of mover from a $0.74 adjuster
to a rolling 24-month adjuster with a 12month lag. The witness claimed the
movers contained in Proposals 14 and
15 provide similar base Class I skim
milk prices and have similar effects on
producer prices. The witness explained
in certain years Proposal 15 would
return more money to farmers than the
higher-of, and even if farmers do not
experience the benefits of a high
manufacturing price immediately, they
will over time through the lagged
adjuster. The witness presented data
comparing the monthly average base
Class I skim milk price calculated under
the current mover, the higher-of mover,
and Proposal 15 from 2003 to 2022 to
show Proposal 15 would be revenue
neutral in the long run.
The MIG witness testified Proposal 15
preserves risk-management
opportunities for both producers and
Class I processors, which is part of
orderly marketing. The ability to hedge
Class I milk became effective in 2019,
followed by the pandemic and
regulatory uncertainty as to whether the
average-of would remain, and time,
resources, and lack of knowledge
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slowed the adoption of Class I riskmanagement strategies, the witness
testified.
Five MIG member witnesses
representing fairlife, HP Hood, Turner
Dairy, Shehadey, and Crystal Creamery
testified on the importance of hedging
Class I milk. The fairlife and HP Hood
witnesses said they primarily process
ESL products, which they hedge using
CME Class III and IV component and
commodity futures. The HP Hood
witness stated they do not hedge HTST
milk because it is primarily sold
through direct store delivery where the
standard business practice is monthly
pricing. However, ESL products are
distributed primarily through grocery
warehouses and buyers expect 60 to 90
days’ notice for any price changes, the
witness said. The HP Hood witness
stated the ability to hedge has not
changed their ESL pricing strategy but
has allowed for fewer price increases. In
earlier testimony a witness representing
Shamrock, also a MIG member, said
they manufacture both HTST and ESL
products and hedge milk used in their
ESL products.
A processor witness representing
Shehadey testified contracts with
retailers such as grocery stores use a
fixed formula that changes monthly,
quarterly, or semi-annually, and are
based on FMMO prices. The witness
testified Shehadey has only HTST Class
I milk products and they do not use any
form of risk-management tools to hedge
their risk. The Turner Dairy and Crystal
Creamery witnesses said their
companies primarily process HTST
Class I milk products which they
currently do not hedge. Both witnesses
expressed value in hedging HTST milk
sold to foodservice, as foodservice
customers prefer to know prices months
to years in advance. The fairlife and HP
Hood witnesses testified hedging under
the higher-of mover was difficult due to
price volatility and uncertainty, but the
average-of mover allows them to offset
the risk. The witnesses also testified it
takes time to develop a robust hedging
program. The HP Hood witness stated
Class I hedging is primarily used by
more sophisticated operators, but as
Class I hedging becomes more accepted,
the market should become more liquid,
and more processors will likely use this
risk-management tool. The fairlife
witness said fairlife typically hedges its
ESL Class I products, mainly 0 to 6
months out, but contracts could extend
up to 12 months.
A MIG witness explained that the
adoption of Proposal 15 would allow for
less price volatility throughout the
market and support industry growth by
stabilizing the cost of milk for retailers
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and consumers. Hedging, the witness
said, is important to offering customers
and consumers a more stable price,
which could stem the declines in fluid
milk as fluid milk competes with many
beverages in the market. The fairlife
witness testified that price certainty
translates to price stability for both the
retailer and the consumer. The HP Hood
witness testified the goal of hedging is
not to make a higher return, but instead
to act as price risk insurance by
removing some input price volatility
and increasing margin certainty for endproduct sales. The Turner Dairy witness
testified the average-of mover results in
more price stability which is beneficial
to the Class I market. The witness said
under the higher-of formula, the Class I
price went up with every spike in
butter, cheese, or powder markets, even
though short-term changes in those
product prices have no direct effect on
the actual Class I market. The witness
argued the price spikes necessitated
raising prices to cover cost, without a
market-based explanation to provide to
customers.
The MIG and fairlife witnesses
testified in support of the 12-month
lagged adjuster contained in Proposal
15, stating it is critical to allow Class I
processors to mitigate risk and hedge
successfully. Knowing the adjuster 12
months in advance allows companies
who hedge to reduce or eliminate basis
risk, the witness said, while the 24month rolling adjuster updates and
provides dynamic market signals. The
witnesses said Proposal 15 would
stabilize prices by moving gradually and
make fluid milk products a more
reliable and steady purchase for
customers. Proposal 15 has no floor or
ceiling, as the witness testified MIG
members believe floors and ceilings can
create price distortions. The witnesses
testified a lookback of less than 24
months would create more volatility,
while a longer lookback does not
transfer market signals well over time.
The fairlife witness testified the 12month lag is necessary to be able to buy
futures 12 months out. The 24-month
rolling average adjuster allows the
system to recognize the difference
between Class III and Class IV prices
and what the higher-of mover would
have been, the witness said, allowing
the industry to know definitively what
the premium structure is going to look
like associated with the adjuster 12
months into the future.
In its post-hearing brief in support of
Proposal 15, MIG argued USDA should
first assess whether the current averageof formula has resulted in disorderly
marketing. MIG wrote the current
average-of mover ensures the market has
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sufficient milk for both fluid and
manufacturing uses and there is not
disorderly competition for fluid market
access. MIG argued a return to the
higher-of under Proposal 13 would not
provide higher returns to farmers,
estimating a minimal impact of a $0.01
to $0.02 per cwt increase in the long
term. However, MIG argued in its brief,
the return to the higher-of mover would
have significant negative impacts on the
Class I market and the entire dairy
industry. There is no asymmetrical risk
inherent in Proposal 15, MIG argued in
its brief, unlike the present average-of
mover formula.
According to MIG, the use of risk
management developed primarily after
the average-of formula was adopted and
is likely to grow in the future. MIG
stated Class I processors do currently
use risk-management tools to hedge ESL
products, as this sector has historically
utilized more fixed pricing, meaning
hedging can be more easily adopted.
MIG stated many HTST customers, such
as grocery stores, have become
accustomed to the monthly fluctuations
of pass-through pricing, but HTST
customers, such as school lunch
programs or USDA feeding programs,
would benefit from the increased price
certainty that comes with an average-of
calculated mover. The industry has not
yet had time to widely adopt risk
management, MIG reiterated in its brief,
and regulatory uncertainty due to this
proceeding has caused processors to
hesitate further use of risk-management
tools.
MIG noted in its brief that even
though the AMAA does not specifically
provide for hedging, a Class I formula
that supports hedging helps serve the
enumerated purpose of the AMAA of
avoiding unreasonable price
fluctuations and reducing milk price
volatility. When Class I processors can
better manage risk, they can offer more
stable prices to customers and
consumers, MIG argued in its brief.
In its brief, MIG reiterated hearing
testimony that use of an average-of
mover best ensures an orderly market,
and sufficient supply of milk for fluid
use, including the most accurate pricing
signals for dairy farmers in a longer, and
more appropriate, time. MIG took
exception to arguments that the Class I
price be used to address price
inversions and depooling. Using a
California pool example, MIG argued
that record evidence shows the
Department would have to increase the
Class I price an impractical amount to
incentivize both manufacturing classes
to remain pooled. MIG reiterated many
factors cause depooling and negative
PPDs, and neither the Class I price nor
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use of an average-of mover drive those
results. Rather, according to MIG, the
main drivers of depooling in the months
reviewed in testimony were the Class
III/IV spread and advanced pricing.
In its brief, MIG argued a return to the
higher-of mover will not help Class I
handlers in competing for milk supply
as a higher pool obligation detracts from
the incentive to service Class I plants.
MIG reiterated hearing testimony that
the current marketplace is sufficiently
served using an average-of formula.
Lamers submitted a post-hearing brief
in support of retaining an average-of
mover. Lamers argued that because of
the small percentage of Class IV use in
the market, Class IV prices should not
be a main driver for setting the Class I
price, as an average-of mover is more
representative of the entire
manufacturing market. Lamers preferred
the lower of the Class III and IV prices
should be used when setting the mover
as they believe the higher-of artificially
raises Class I prices to consumers.
NMPF presented numerous witnesses
who testified in opposition to the
continuation of the average-of mover,
embedded in the summary of their
testimony and post-hearing brief
presented above. An SMI witness
opposed a modified average-of mover,
testifying it would result in revenue
losses to dairy farmers because the Class
I price is paid back to dairy farmers over
time and would not compensate dairy
farmers that have exited the business.
Select expressed opposition to
Proposals 14, 15, and 16 in its posthearing brief. Select wrote that the
higher-of more accurately reflects the
value of milk in manufacturing classes,
better manages shifts in demand for any
one manufactured product, helps reduce
milk price volatility, better addresses
class price inversions and depooling,
and makes it more difficult to draw milk
away from Class I uses for
manufacturing. Select noted most Class
I handlers have not engaged in milk
hedging under the average-of mover,
and the average-of mover creates and
exacerbates opportunistic depooling
when Class III and IV prices diverge
significantly. Select opined the averageof mover results in market disorder
which they believe would continue
until the higher-of mover is restored.
In its post-hearing brief, the AFBF
opposed Proposals 14 and 15, arguing
they do not address the key issue of
class price misalignment. The AFBF
believes handlers of all sizes can find
alternative methods of managing risk
under a higher-of mover.
A witness representing Edge testified
in support of Proposals 16 and 17. The
witness advocated for the adoption of
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Proposal 16, referred to as a Class III
plus proposal, because the Class III
price is typically higher than the Class
IV milk price. In times of rapidly
declining dairy prices brought on by a
decrease in demand, the witness said,
government recovery efforts typically
prioritize more perishable products,
usually Class III. The witness said this
would result in higher Class III prices in
relation to Class IV, and consequently a
base Class I skim price under Proposal
16 approximately equal to the higher-of
mover. According to the witness, in
situations where the Class IV skim milk
price is higher than the Class III skim
milk price, any lost revenue would be
redistributed to producers over the next
three years through the adjuster and
would better support dairy farmers
during years of lower profitability. The
witness testified risk management under
Proposal 16 is easy to implement and
less expensive due to high liquidity of
Class III milk futures, creating more
predictable prices and making fluid
milk products competitive with plantbased beverages. The witness testified
Edge would support a monthly rolling
adjuster in place of an annual adjuster.
The Edge witness testified that as
Class I utilization rates continue to fall,
advanced pricing would continue to
cause disorderly marketing conditions
such as opportunistic depooling. The
witness said advanced prices are
antiquated and anti-competitive and
their elimination would encourage fluid
plants to use risk management. The
Edge witness entered data showing the
contribution of various factors to
negative PPDs. The witness testified that
while the change to the average-of
mover tended to make PPDs more
negative, advanced prices and the
spread between Class III and IV
influenced pooling decisions, not the
adoption of the average-of mover. The
witness testified that if the Class I price
was announced at the same time as the
Class III and Class IV prices, it would
prevent a for-profit Class I trading
relationship between Class III and Class
IV, and the CME group would be more
likely to create a Class I futures contract.
The witness expressed a strong
preference for Proposal 16, which they
argue balances producer, processor, and
consumer needs and supports risk
management which they said was
critical for the success of the nation’s
dairy farmers, particularly fluid sector
innovators.
The Edge witness also testified in
support of Proposal 17, returning to the
higher-of mover without advanced
pricing. The witness said the proposal
would allow the Class I futures price to
be equal to the greater of the Class III
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futures price and the Class IV futures
price. Risk management players would
have minimal risk in providing liquidity
to Class I hedgers by spreading their
position between Class I and the higherof Class III or IV futures. The witness
testified dairy producers may prefer the
higher-of mover without advanced
pricing, such as Proposal 17, as it
provides real-time maximum income for
Class I milk, whereas Proposal 16 is
more of a compromise.
The Edge witness stated that since
2010, total fluid milk sales have been
steadily declining, adding more
instability and difficulties hedging
under the higher-of mover. The witness
entered data showing how much more
risk and costs were involved to hedge
under the higher-of mover than the
average-of mover. The witness
concluded a person hedging with
futures contracts under the higher-of
mover would have significant
difficulties, but hedging under the
average-of mover meets effectiveness
standards required for hedge
accounting.
Nine dairy farmer witnesses, located
in Wisconsin, Minnesota, Iowa, and
South Dakota, testified in support of
Proposals 16 and 17. The dairy farmers
opined Proposals 16 and 17 would
decrease the frequency of negative PPDs
and depooling and enhance their ability
to manage price risk through hedging
and other risk-management programs.
One witness said using only the Class III
skim price to set the Class I skim price
is the best option because Class III milk
futures carry more liquidity than Class
IV and better represent Class I prices.
The witnesses testified Proposal 16
would help keep prices steady,
benefitting both plants and customers.
In its post-hearing brief, Edge objected
to what it believes are goals of some
proponents to maximize FMMO Class I
handler obligations in order for the
additional revenue to be used to offset
the negative producer impact of
increasing make allowances. Edge
argued the Department should consider
the following factors in its decision:
there have not been any significant
shortages in the supply of beverage milk
to retail stores; Congress’ reason for
changing to the average-of mover to
facilitate risk management by fluid milk
processors which fluid milk processors
testified is still relevant; advanced
pricing is outdated and no longer
necessary to facilitate supply chain
coordination but instead facilitates
opportunistic depooling; a mover
resulting in the highest fluid milk price
when the Class IV price substantially
exceeds Class III is not in the best
interest of consumers; and a mover
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resulting in the highest fluid milk price
when the Class IV price substantially
exceeds Class III is not in the best
interest of all dairy farmers. Edge argued
dairy farmers located where Class I
utilization is low may be worse off
under a higher-of mover than an
average-of or Class III-based pricing as
proposed by Edge.
Edge reiterated Proposal 16 would
facilitate risk management by fluid milk
manufacturers and large commercial
buyers, eliminate outdated advanced
pricing and reduce the incidence and
magnitude of opportunistic depooling,
and best serve both producer and
consumer interests.
A witness representing the AFBF
testified in support of Proposal 18. The
witness said the AFBF believes orderly
pooling is the key to orderly marketing,
and this is best accomplished by the
proper alignment of the four class
prices. The witness claimed advanced
Class I pricing leads to increased Class
III component values, a common factor
contributing to negative PPDs. The
witness said advanced prices reflect
market conditions that are 25 to 40 days
older than final prices, which are
announced after the close of the month.
When a market rally occurs between the
announcement of advanced and final
prices, the witness said it leads to low
or negative PPDs and creates incentives
for handlers to depool milk. The witness
stated depooling results in elevated
component prices not being shared with
the pool, further depressing the PPD and
undermining the FMMO principle of
uniform producer prices. The witness
testified advanced pricing may also
cause price inversions when
manufacturing prices are rising rapidly,
making it difficult for Class I handlers
to attract adequate milk supplies. The
witness entered data showing the effects
of advanced pricing on class price
alignment from May 2019 to May 2023
under the current average-of, and under
Proposals 13, 17, and 18. The witness
said this data showed many months
under the current average-of mover and
Proposal 13 in which the manufacturing
class prices exceeded the Class I price,
testifying this created disorderly
marketing conditions. On the other
hand, according to the witness, the data
showed elimination of advanced pricing
under Proposals 17 and 18 resulted in
more consistent alignment of class
prices.
The AFBF witness testified the
frequency of published commodity data
allows handlers to estimate price
changes regardless of when prices are
announced, and as more products are
available on the CME or other
exchanges, processors and
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manufacturers will have information
needed to hedge and manage risk. The
witness opined that the elimination of
advanced pricing would allow for the
introduction of Class III and IV spread
options, providing an additional way to
hedge Class I milk when both are used
in combination. Three dairy farmers
testified in support of Proposal 18,
stating the proposal would reduce the
incentive to depool brought on by low
and negative PPDs.
The AFBF witness also testified that
while they support the elimination of
advanced pricing, they oppose Proposal
16 because it would delink Class I
prices from Class IV prices, which they
anticipate being higher than Class III in
the future due to better export markets.
The witness said tying the Class I price
to only the Class III price could operate
more like a ‘‘lower-of’’ formula. The
witness stated the AFBF supports
Proposal 17 because it is identical to
Proposal 18 if combined with Proposal
13.
In its post-hearing brief, the AFBF
reiterated its support for a return to the
higher-of mover, which it argued would
support class price alignment and
substantially decrease negative PPDs
and depooling.
The AFBF reiterated its hearing
testimony that volatility has and
continues to increase, contributing to
price inversions and rapidly changing
markets, resulting in competitive
inequalities among dairy farmers. The
AFBF said the CME has indicated a
willingness to provide contracts catering
to industry demand, and the fact that
the industry is used to advanced pricing
should not be a driving reason for its
retention. The AFBF argued disorderly
marketing conditions are present when
producers do not receive uniform prices
because of frequent depooling, and its
proposals lead to the realignment of
class prices, which encourage consistent
pooling and uniform pricing.
An SMI witness, appearing on behalf
of NMPF, testified in opposition to
elimination of advanced pricing as
contained in Proposals 16, 17, and 18.
The witness said 90 percent of packaged
fluid milk is highly perishable HTST
milk which is processed, packaged,
distributed, and sold in a relatively
short period. The witness said these
marketing characteristics require the
price of the product to be known at the
time of purchase, which advanced
pricing of Class I milk provides.
According to the witness, most HTST
packaged fluid milk is priced monthly
by fluid processors to their customers
based on monthly FMMO Class I prices.
This is materially different from cheese
and butter products, the witness said,
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the prices of which are typically based
on CME daily cash prices. According to
the witness, advanced pricing enables
retailers to set store milk prices at the
beginning of a month, allowing the fluid
processor to know the price the plant
would receive for the packaged fluid
milk prior to the raw milk being
processed, packaged, and sold.
The SMI witness also testified that if
advanced pricing was eliminated,
retailers would not know their fluid
milk costs until the end of the month
when FMMO Class I prices are
announced. This would mean most
fluid milk purchased by retailers would
be sold during the month without
knowing its minimum regulated price
which, the witness said, from a retailer’s
perspective is not orderly marketing.
The witness claimed that if there were
significant month-to-month increases in
the Class I price, retailers could seek
price relief from the processor, and
ultimately, cooperative suppliers,
opening the potential for fluid milk
processors in the same marketing area to
have inequitable raw milk costs and
non-uniform payments to producers. In
its post-hearing brief, NMPF reiterated
its opposition to the elimination of
advanced pricing.
A witness representing IDFA opposed
Proposals 16, 17 and 18. The witness
objected to the elimination of advanced
pricing as it would result in Class I
handlers pricing milk products to their
customer before knowing the minimum
regulated milk price and impact a
handler’s ability to hedge. In its posthearing brief, IDFA supported the
feature of Proposal 16 that would create
a predictable Class I price that could be
hedged based off a hedged Class III price
plus a known adjuster. However, IDFA
maintained its opposition to the
elimination of advanced pricing,
arguing it is essential for non-hedging
Class I handlers to know their milk cost
before the start of the month. It is also
an important part of planning for fluid
milk retail customers to market milk,
IDFA stated. IDFA noted in its brief that
traditional fluid milk retail customers
are not yet using hedging sufficiently to
permit a regulatory change eliminating
advanced pricing. IDFA reiterated their
total opposition to Proposals 17 and 18
in that they would return to a higher-of
mover and, according to the brief,
eliminate any practical ability to hedge.
A MIG witness testified in opposition
to eliminating advanced pricing. The
witness said the industry is not yet
using hedging sufficiently to permit this
regulatory change, as advanced pricing
remains critical for the dominant share
of the fluid market as retailers expect to
know the price in advance. The witness
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also opposed Proposal 16, which would
price Class I milk solely off the Class III
price. The witness said the proposal
would delink the fluid milk supply and
demand from Class IV which MIG
believes is critical for balancing. The
witness opposed Proposals 17 and 18 as
they limit risk-management
opportunities for Class I processors. In
its post-hearing brief, MIG reiterated its
opposition to any proposal (Proposals
16, 17, and 18) seeking to eliminate
advanced pricing, which MIG claimed is
critical to Class I processors. MIG
further argued that eliminating
advanced pricing would negatively
impact those market segments. With
respect to Proposal 16, MIG expressed
concern with pricing Class I milk solely
off Class III prices as it would be a
significant departure from the current
practice and completely divorce fluid
milk supply and demand from the Class
IV market. According to MIG, the record
contains testimony from cooperatives
that Class IV remains the ultimate
balancing utilization.
In testimony and in its post-hearing
brief, MIG opposed a return to the
higher-of mover under Proposals 13, 17,
and 18 as it would severely limit riskmanagement opportunities. MIG argued
in its brief that a return to the higherof is unnecessary and not supported by
the facts as the industry has
acknowledged the higher-of does not
work. Dairy farmers’ concerns are not
about the average-of, MIG asserted, but
rather the fixed $0.74 addition. USDA
should support moving the industry
forward, not revert to an outdated policy
because it is familiar, MIG stated.
MIG argued NMPF introduced no
evidence the average-of mover hinders a
sufficient supply of milk for fluid uses.
Rather, MIG wrote, a return to the
higher-of mover would result in
disorderly marketing as larger spreads
between Classes III and IV would lead
to higher prices under the higher-of
mover and raise the uniform price,
incentivizing the lower-priced
manufacturing milk to remain pooled.
In that situation, MIG argued, FMMOs
should not be raising the uniform price
paid out to the lower-priced
manufacturing class, thus, encouraging
it to remain pooled. This compensation,
argued MIG, overvalues the lowerpriced manufacturing milk in the
marketplace and incentivizes milk to
move to the lower manufacturing class
instead of to a higher performing class.
According to MIG, the average-of mover
would better move milk between the
manufacturing classes as the market
needs. MIG argued the FMMOs are
designed to ensure processors have
sufficient milk supplies for fluid use,
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but FMMOs should not be drawing milk
away from Class III or IV when a
manufacturing use would be the highest
and best value for the milk. According
to MIG, Class I does not need more milk,
and FMMOs should not be disrupting
the market to pull milk for fluid
utilization. MIG argued in its brief that
revenue neutrality is not a valid policy
consideration without evidence to
establish revenue neutrality is necessary
to ensure a sufficient supply of fluid
milk.
A witness representing Lamers
testified in opposition to the elimination
of advanced pricing in Proposals 16, 17,
and 18. The witness stated Class I
handlers need to know prices in
advance so they can set wholesale
pricing with their retail customers.
In its post-hearing brief, Select
opposed the elimination of advanced
pricing set forth in Proposals 17 and 18,
arguing that testimony at the hearing
made clear that the majority of
producers prefer using the higher-of,
and the majority of handlers prefer to
maintain advanced pricing which Select
believes is in the best interest of
stability in the Class I market.
Class I and Class II Differentials
Numerous witnesses appeared on
behalf of NMPF testifying in support of
increasing the Class I differentials as
provided for in Proposal 19. Witness
testimony centered around the themes
of increased hauling costs, changes in
milk supply and demand locations,
changes in supply patterns resulting in
longer hauls, and insufficient over-order
premiums to cover the full cost of
servicing the Class I market. The
witnesses said the outdated
assumptions embedded in the current
Class I differentials threaten the
willingness of milk suppliers to serve
the Class I market.
An NMPF witness argued current
differentials are antiquated, since, other
than the three southeast FMMOs, they
have not been updated in almost 25
years. In that time, they said, fuel costs
and hauling distances have increased
due to changes in supply and demand
locations. The witness stressed overorder premiums should not be
considered an effective substitute for
FMMO prices because they are very
difficult to obtain and maintain at levels
adequate to cover the cost of servicing
the Class I market. The witness argued
inadequate Class I differentials
contribute to price inversions and
incentives to depool, which further
jeopardize the availability of milk to
meet Class I demand.
The NMPF witness described the
methodology used to arrive at the
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proposed differential levels. According
to the witness, NMPF requested an
update of the U.S. Dairy Sector
Simulator Model (USDSS) which was
used during Order Reform as a basis for
the differential levels adopted on
January 1, 2000.
The USDSS model owners testified on
the methodology, the updated data and
parameters, and explained the results.
They explained the USDSS model
evaluates the geographic value of milk
at fluid milk processing plants across
the U.S. by finding the lowest cost
solution of assembling milk at farms and
delivering it to plants. They said the
model accounts for approximately 90
percent of the U.S. dairy processing and
manufacturing plant capacity, and
considers such factors as milk supply
locations, transportation costs (both
variable and fixed) associated with raw
milk assembly, final and intermediate
product distribution, per capita demand
by county population, and road weight
limits. In the model, plant capacity,
products produced, and milk
components demanded at each plant are
constrained by a variety of government
and private sources. The resulting
values, said the witnesses, represent the
value of an additional load of milk at a
specific plant location (otherwise
known as the ‘‘marginal value’’).
The witnesses said two sets of USDSS
model results were provided to NMPF,
May and October 2021, to provide
marginal values for both flush and
deficit months. According to the
witnesses, the results suggest
considerable differences between the
values of milk at fluid plants derived
from spatial economic modeling and
current Class I differential values, with
differences as large as $3.00 per cwt in
some locations. The witnesses attributed
these differences to changes in the
location of milk production, the
composition of dairy product demand,
changes in the location of dairy product
demand from regional population shifts,
and the cost of transportation. Both
witnesses discussed how modeling,
even though complex, is a
simplification of reality and that there
may be unaccounted factors in some
areas that would justify deviations from
the model results, including local traffic
congestion, geography, infrastructure
restrictions, and price alignment across
orders. The witnesses said the model
does not account for other factors, such
as existing business relationships and
FMMO regulations, because they could
cause a departure from a market
efficient solution. Lastly, the witnesses
noted the USDSS model does not
produce a base differential value; it
merely provides the additional value
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needed to move milk to a particular
location.
While NMPF cooperative member
witnesses testified on how they used the
USDSS model results to arrive at the
proposed differentials, NMPF witnesses
stated they followed the same iterative
process applied during Order Reform,
starting with the model results and
adjusting for milk movements, plant
locations and historic price
relationships.
One witness explained that NMPF
started with a base differential
assumption of $1.60 per cwt, as
currently contained in the Class I
differentials. The witness said the costs
embedded in the base differential
(Grade A maintenance, balancing, and a
competitive factor) are still applicable
and those costs have not decreased over
the past 25 years. The witness said the
base differential should also serve to
limit class price inversions, incentivize
Class I milk deliveries, and ensure class
price alignment. To accomplish these
goals, the witness said that in some
parts of the country the base differential
is recommended to increase to $2.20 per
cwt.
One NMPF witness testified regarding
the cost to dairy farmers to maintain
Grade A status. The witness said that in
order to participate in the FMMO
program, dairy farmers incur costs
associated with obtaining and
maintaining Grade A licenses. The
witness was of the opinion partial cost
reimbursement for maintaining a Grade
A license, which currently represent
$0.40 per cwt in the base differential,
should continue to be provided. The
witness detailed standards for
maintaining Grade A status, which
include various infrastructure
maintenance and sanitation
requirements, and estimated a total
current cost of $1.30 per cwt to meet
those requirements.
A series of NMPF witnesses testified
on the regional considerations factored
into the proposed Class I differentials
contained in Proposal 19. During their
testimony they also touched on
balancing costs faced by NMPF
cooperative members and the continued
need to include a competitive factor in
the base differential. One witness
described how the average of the May
and October 2021 results was used as a
starting point. From there, NMPF
formed regional committees to evaluate
the USDSS model’s average results and
use their local market knowledge to
derive the final proposed differential
values. According to the witness, a
series of 19 anchor cities were selected
for their proximity near the border of
where two regions abutted. The regional
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committees used these anchor cities as
common starting points to design a final
Class I differential surface that ensured
price alignment between orders. Each
committee looked at current price
relationships between plant locations
and consumer demand areas, compared
those to the USDSS model’s averages,
and designed a Class I differential
structure that accounted for factors
NMPF members thought were not
adequately addressed in the model’s
results.
Northeast
A DFA witness testifying on behalf of
NMPF discussed the changes in the
northeast marketing area, including
increased hauling costs, changes in the
milk production and location of farm
and fluid processing plants, and an
overall increase in production costs.
The witness said milk production in 11
of the 12 northeast states declined from
2000 to 2022, except for New York
which saw a 31.4 percent increase,
resulting in a small overall increase in
the region’s milk production of 2.2
percent. During this time, the witness
said the resident population increased
by 9.1 percent. The witness noted the
geographic shift in where milk is
processed due to the closure of fluid
plants in urban areas since 2000. The
witness surmised local milk supplies in
the northeast are used to meet
increasing Class II and Class III needs,
necessitating milk to travel farther
distances to meet fluid demand. The
witness estimated transportation costs
paid by producers in the region have
increased $0.70 per cwt.
An Agri-Mark witness also testified
regarding the changing marketing
conditions in the northeast region and
described some of the proposed
differential differences from the USDSS
model. The witness opined that if the
USDSS model’s averages were adopted
for Maine, it would incentivize
producers in Maine to supply
Massachusetts, instead of remaining
available to meet local demand.
Therefore, the witness said NMPF
proposed to flatten the differentials in
Maine to maintain current competitive
relationships. NMPF also proposed
lower differentials in northern Vermont
and New York in order to incentivize
milk movements south and east. The
witness said these changes from the
USDSS model’s average results are
needed to preserve current milk
movements and to maintain competitive
relationships.
Mid-Atlantic
An MDVA witness representing
NMPF testified regarding the proposed
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differentials in the Mid-Atlantic region.
The witness said MDVA operates two
balancing plants in the region that help
balance the market’s reserves in both the
Northeast and Appalachian FMMOs.
According to the witness, there are large
seasonal swings in milk delivered to
those balancing plants, which result in
significant costs to the cooperative and
its members. The witness was of the
opinion the base Class I differential
should provide some balancing cost
reimbursement to its members through
its distribution through the marketwide
pool. Transportation costs have also
increased significantly, the witness said,
to a point where Class I differentials are
less effective in attracting milk from
reserve supply areas to Class I plants. In
order to meet fluid demand, the witness
said cooperative members must pay for
the additional cost through milk check
deductions without any additional
compensation through the Class I
differential.
The MDVA witness compared current
and USDSS model average values for
multiple plant locations in the region.
According to the witness, the regional
committee focused on the need to cover
additional transportation costs of
servicing the fluid market and
maintaining current price relationships
as principles when determining
deviations from the USDSS model’s
average results. One example cited two
plants in Landover, Maryland and
Frederick, Maryland, located
approximately 55 miles apart with a
current difference in differential values
of $0.10. The witness said the USDSS
model’s average values would have
resulted in a $0.35 difference and
created an artificial regulated cost
advantage for the lower zoned plant in
Frederick, Maryland. Another example
was in the southeastern region where
two Virginia plants located 15 miles
apart and currently in the same
differential zone would have seen a
$0.10 differential difference under the
USDSS model’s average scenario. In this
case, said the witness, the committee
decided to propose the same differential
value for the two plants in order to
preserve their competitive relationship.
Southeast
A DFA witness representing NMPF
testified on the proposed differentials in
the southeast region. Similar to other
witnesses, their testimony centered on
the decline in dairy farmers and the
closure of fluid processing plants which
necessitate longer milk hauls at a greater
expense to dairy farmers, particularly
cooperative members. The witness
spoke to the unique marketing
conditions in the southeast region, with
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a growing population, local fluid
demand, and a significant milk supply
deficit requiring supplemental milk
supplies to be acquired from outside the
region. The witness said the
supplemental milk supplies are
obtained at great expense to DFA
cooperative members. The witness
stated it is typical for supplemental
loads to travel between 500–650 miles
or more, and while the transportation
credits in the Southeast FMMO provide
partial reimbursement, the fund is
inadequate to cover the full cost. The
witness said the proposed differentials
contained in Proposal 19 would assist in
covering transportation costs and
support dairy farmers who supply the
region.
Florida
An SMI witness representing NMPF
testified on the proposed differential for
the Florida FMMO. The witness said
there is an inadequate milk supply
available in Florida to meet its Class I
needs, necessitating significant volumes
of milk deliveries from outside the
marketing area from Georgia, for
example. According to the witness,
Florida milk production is quickly
shrinking, declining more than 10.9
percent in 2022, and necessitating more
than 24 percent of its milk needs to
come from other states.
The witness discussed Florida’s
significant population increase and high
Class I utilization, which has averaged
greater than 82 percent since 2000. The
witness described significant seasonal
swings in fluid milk needs and SMI’s
efforts to balance those needs through
purchasing additional milk tankers,
marketing milk to non-pool plants at
below FMMO values when needed and
buying supplemental loads at above
FMMO values during other times of the
year. The witness said weather and the
seasonal population influxes also
complicate the region’s milk balancing
efforts. These dynamics make supplying
the Florida region particularly
expensive, estimating that SMI
balancing costs for the first half of 2023
were $1.33 per cwt.
The SMI witness testified the
proposed Florida differentials maintain
the historical differential slope while
more adequately reimbursing for
transportation costs, which the witness
estimated has more than doubled in the
past 20 years, from $2.31 in 2002 to
$5.98 in May 2023. The witness said the
Florida differentials contained in
Proposal 19 are similar to the averages
of the May and October 2021 USDSS
model results but were adjusted to
preserve current competitive
relationships. As a result, the witness
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concluded the region would be assured
an adequate supply of milk for fluid use
and fluid milk buyers would be better
assured of equal raw product costs.
The SMI witness was of the opinion
the differentials should not be adjusted
to reflect recently enacted Distributing
Plant Delivery Credits in the Florida
FMMO, as both are needed to ensure
adequate supplies of fluid milk for the
region.
Southeast/Southwest
A Lone Star witness representing
NMPF testified regarding the
differentials between the southwest and
southeast regions. The witness said the
eastern portion of the Southwest FMMO
and the three southeastern FMMOs are
milk deficit regions. The witness
emphasized the differential
recommendations are designed to
provide proper financial incentives
through a steeper differential slope to
move milk into and within those
regions. The witness said other factors
considered included keeping current
city-to-city price relationships as well as
competitive relationships between
plants often clustered around
metropolitan areas. While differentials
in some areas were increased relative to
the USDSS model’s average to reflect
NMPF member knowledge of milk
movements and related transportation
costs in the region, other differentials
were lowered. The witness noted NMPF
members believe the model
overestimated balancing costs for parts
of Virginia and the Carolinas, and
subsequently is proposing muted
differential increases for those regions.
Regarding Florida, the witness said
the NMPF members accepted the
USDSS model average output of $7.90
as the differential for Miami, Florida.
They then worked up through the state
with a priority of maintaining
competitive relationships between
plants. The only deviation the witness
noted was Myakka City, Florida, whose
current differential is $0.40 higher than
plants in the Tampa-Orlando corridor.
The witness was of the opinion the
spread was too large, and, consequently,
Proposal 19 recommended the spread be
reduced to $0.20.
In the southwest region, the Lone Star
witness said, milk must move
significant distances from the supply
region in the Texas panhandle and
eastern New Mexico to the demand
centers in east Texas. The witness said
milk routinely travels anywhere from
400–650 miles to service the fluid needs
of the state and stressed the current
differentials in the region are inadequate
in covering transportation costs for
these routine milk movements.
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Consequently, Proposal 19 generally
contained higher proposed differentials
than the USDSS model average, with
greater increases moving northwest to
southeast to incentivize milk to move
where needed. The witness added there
is a single differential level proposed for
New Mexico, reflecting what the
witness described as primarily a captive
in-state market for milk.
Mideast
A DFA witness representing NMPF
testified in detail on hauling assembly
costs associated with the Mideast
marketing area. The witness described
the region’s principal supply areas as
central and northeast Michigan,
northern Indiana and northwestern
Ohio, and fluid demand areas centering
around the region’s large cities of
Detroit, Grand Rapids, Indianapolis,
Columbus, and Pittsburgh. The fluid
plants compete for a milk supply with
the numerous small to medium-sized
cheese plants in northeast Ohio, two
large cheese plants in central and
western Michigan and one large cheese
plant in western Pennsylvania,
explained the witness.
The DFA witness testified the Mideast
region has increased milk production 20
percent over the last 23 years, while
simultaneously seeing a 66 percent
reduction in dairy farms. The region’s
Class I utilization was 37 percent in
2022, supplied by approximately 33
distributing plants, down from 57 in
2000. The consolidation in both the
supply and demand sectors, increased
hauling distances to fluid plants, along
with a robust manufacturing sector, has
created challenges in encouraging milk
to meet fluid demand.
The DFA witness estimated that Ohio
assembly and delivery costs have
increased approximately 69 percent
from 2006 to 2023, attributing most of
the increase to fuel, labor and
equipment costs. The witness said
current differentials do not provide
enough financial incentive to move milk
from supply regions to Class I plants. As
a result, said the witness, the cost of
supplying fluid milk needs is largely
borne by cooperatives and their
members.
For the Mideast area, the DFA witness
said the committee concentrated on a
select group of larger cities in the region
to analyze the relative value differences.
The overall objective was to determine
the value needed to encourage milk to
move from milk supply areas in the
north and west to areas of demand. The
committee started with Chicago, Illinois,
and determined that even though no
fluid plants operated in the Chicago
region, its differential should align with
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prices of locations that supply packaged
milk, which are Grand Rapids,
Michigan, Cedarburg Wisconsin,
Rockford, Illinois, and Dubuque, Iowa.
The committee ultimately determined a
$3.10 differential appropriate for
Chicago (Cook County). From there, the
witness reviewed a series of city pairs
and provided justification for why the
proposed differentials were adjusted
from the USDSS model average. Reasons
given for the changes centered on
distance from larger population centers
and/or milk supply areas and providing
enough financial incentive, in the
committee’s opinion, to encourage milk
to move where needed. The witness
mentioned another consideration was
the willingness of milk haulers to
deliver, referring to resistance of milk
haulers to make the long hauls needed
to deliver milk to central Ohio, for
example.
The DFA witness also detailed
considerations for proposed differentials
in western Pennsylvania, centering
around plants in the Pittsburgh area,
and plants in southwest Ohio and
eastern Indiana. They said differentials
were adjusted in those areas to account
for what the committee believed were
current competitive relationships. The
witness said that, ultimately, the
committee recommended more slope
than the USDSS model by reducing the
differential increases in the milk surplus
areas of Michigan and increasing the
slope when moving to the south and
east.
Another DFA witness spoke to
increased hauling costs in the Mideast
area. The witness said that as the
number of dairy farms in the area has
declined, so has the number of available
milk haulers. Compounding the issue is
competition with other industries who
also rely on commercial haulers. As a
result, milk hauling rates have increased
as the fewer number of milk haulers
must travel farther distances to assemble
and deliver milk loads. The witness
presented data on various factors that
contribute to overall transportation
costs, such as wages, diesel fuel prices,
and equipment purchase costs.
A witness from the Michigan Milk
Producers Association (MMPA) testified
on the unique Michigan marketing
conditions that resulted in deviations
from the USDSS model output. The
witness said Michigan has experienced
significant milk production growth,
accounting for 68 percent of the region’s
growth. Michigan milk production
serves as a reserve supply for states
south and east, which are considerably
longer routes than when the
differentials were adopted in 2000, said
the witness. They testified current
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differentials are no longer adequate to
cover current transportation costs and
highlighted how the large flat
differential zone in Michigan, covering
525 miles, makes it difficult to
encourage milk to travel farther
distances to supply fluid demand
instead of satisfying local manufacturing
plant demand. Therefore, NMPF
proposed more, smaller pricing zones
within the state to better reflect the cost
to move milk. The witness estimated
MMPA’s hauling cost for transporting
milk from mid-Michigan to eastern
Ohio, approximately 287 miles, was
$1.06 per cwt per 100 miles.
The MMPA witness testified that is
has been more difficult to obtain overorder premiums to cover increased costs
because national retailers with more
bargaining power have replaced local
independent stores. Consequently, the
witness said, national retailers with a
wider geographic footprint and higher
milk volume needs have put downward
pressure on premiums. The witness
concluded that increasing Class I
differentials to better reflect the cost of
supplying the fluid market would be
more equitable than an increasing
reliance on a dairy farmer’s ability to
negotiate over-order premiums in a
magnitude large enough to fully cover
costs.
Upper Midwest
A Prairie Farms witness representing
NMPF discussed the proposed
Minnesota and Wisconsin differentials.
The witness said the USDSS model
results had too much slope between the
states that would have created too much
financial incentive to move milk out of
Minnesota, creating difficulties for
Minnesota plants to compete for a milk
supply. Consequently, the witness said
NMPF is proposing fewer differential
zones in the Upper Midwest FMMO
region to ensure a local supply could be
maintained. Further, in that region,
NMPF was cognizant to propose
differential levels that would minimize
negative impacts on producer blend
prices. This witness opined the
differentials contained in Proposal 19
would not fully cover the cost of moving
milk the long distances required to
service the fluid market in regions
where they operate. However, they said,
the proposed differentials would
encourage the availability of adequate
milk supplies to support milk demand
in distant markets.
Central
The Prairie Farms witness also
testified on the proposed Class I
differentials in the Illinois, Iowa,
Missouri, and Nebraska areas. The
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witness said that in the last 20 years the
cooperative has become more
dependent on supplemental milk
supplies to serve markets in Illinois and
Missouri, while Iowa has lost milk
processing capacity in the eastern half
of the state due to plant closures. In
addition, the decline of milk production
in southeast Iowa has made it more
difficult for Prairie Farms to supply
milk into the Appalachian and
Southeast FMMOs to meets its
supplemental milk needs. All these
factors have contributed to changes in
the region’s milk movements and
increased producer hauling costs,
stressed the witness. The witness
reviewed several equidistant Prairie
Farms hauling routes and highlighted
the disparity in differential gains. For
example, some routes traveling
approximately 300 miles may see a
differential gain of $0.90, while other
routes traveling a similar distance may
only see a gain of $0.25. The witness
stated the region’s differentials need to
be adjusted to remove some of the
disparity and provide adequate financial
incentive to supply fluid plants located
in the south and east. The Prairie Farms
witness said their cost to move milk to
its four southern and southeastern fluid
plants was approximately $5.25 to $5.50
per loaded mile, and costs to supply
plants in central Illinois was similar.
A DFA witness also testified to
differentials proposed for the Central
FMMO region. The witness echoed
other testimony regarding decreased
farm numbers, longer distances traveled,
and increased hauling expenses. The
witness estimated DFA hauling costs in
the region have increased 151 percent
from 2005 to 2022. The witness spoke
to the proposed differential increases in
the region and explained that Proposal
19 would increase the current
differential values by $1.35 in Kansas
City, $1.15 in Omaha and $1.65 in
Wichita. The witness elaborated that the
higher increase in Wichita reflects the
area’s lack of an adequate local milk
supply. More specifically, the witness
stated that only 27 percent of Wichita’s
demand is delivered from within a 150mile radius, while in Kansas City and
Omaha, 47 percent and 55 percent,
respectively, comes from within 150
miles.
Numerous NMPF witnesses testified
about the proposed Colorado
differentials. One DFA witness testified
the USDSS model overestimated the
amount of milk in Colorado available to
meet the State’s fluid needs because of
private contractual relationships with
manufacturing plants. Consequently,
NMPF recommends deviations from the
model to recognize current competitive
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relationships, said the witness. The
witness also discussed population, milk
production, and fluid demand
similarities between Denver and other
regional cities to justify increasing the
Denver area differentials to more closely
align with differentials in those cities.
The witness said adoption of the USDSS
model output for Colorado, without
adjustments, when combined with other
changes that could result from this
rulemaking would result in significant,
unsustainable decreases in producer pay
prices and, thus, blend price equity
must be considered when making
differential adjustments.
Other DFA witnesses spoke in more
detail on the potential producer price
impact on Colorado dairy farmers. The
witnesses testified hauling and feed
costs in Colorado are higher than other
parts of the region, which they believe
were not properly accounted for in the
USDSS model. One witness said
producer prices in Colorado currently
exceed those of the FMMO’s base zone,
however, if the USDSS model average
were adopted, it would result in
producer blend prices lower than prices
announced at the base zone, causing
significant financial harm to Colorado
dairy farmers.
Arizona
A United Dairymen of Arizona (UDA)
witness representing NMPF testified in
support of Proposal 19. UDA is a dairy
farmer-owned cooperative association,
with 36 cooperative members and a
manufacturing plant located in Arizona.
The witness cited many factors, such as
weather, climate, transportation, fuel,
and increased costs of producing Grade
A milk as challenges for Arizona dairy
farmers. The witness stressed the costs
of maintaining Grade A status in the
state exceeded $2.35 per cwt. According
to the UDA witness, the proposed
Arizona Class I differentials: generally
follow the USDSS model, with
deviations made to reflect local market
conditions; maintain current price
relationships between handlers within
Arizona and the surrounding states; and
establish a smooth differential transition
from surrounding areas.
The witness noted UDA operates a
plant in Tempe, Arizona, that serves as
a balancing plant for the market. The
witness said the cost of operating the
plant does increase in the summer
months as less milk volume is run
through the plant when milk supplies
are lower.
California
A CDI witness testified on the process
for determining the proposed California
differentials. The witness said the goal
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of the California differentials was to
recognize regional cost drivers and local
market conditions unique to servicing
California urban areas, and to maintain
price relationships with surrounding
states. In the witness’ opinion, the
USDSS model did not account for the
impact on producer prices, which could
alter pool stability and incentives to
supply the Class I market, and regionspecific cost drivers such as geography
or traffic. Those considerations form the
basis for the deviations from the USDSS
model output NMPF proposed.
The CDI witness provided an
overview of the similarities between the
California Central Valley and Upper
Midwest milksheds to justify the
position that the lowest differential in
both regions should remain similar. For
that reason, said the witness, NMPF
proposes a minimum differential zone
of $2.50 in California, which is similar
to the lowest Upper Midwest FMMO
differential zone of $2.55. The witness
also discussed dwindling milk supplies,
increased population, pervasive traffic
congestion, and the closure of
manufacturing plants in southern
California as reasons for making offmodel adjustments. The witness
described changes made in three
California regions (Central Valley, Bay
Area, and Southern California) to
provide incentives for dairy farmers to
serve the Class I market in urban areas.
A DFA witness also testified on the
proposed Class I differentials for
California and northern Nevada. The
witness advocated the maintenance of
competitive equity between Class I and
manufacturing plants in northern
Nevada and California counties. The
witness was of the opinion the USDSS
model fell short in adequately capturing
the cost of producing milk in California.
The witness said the current $0.10
difference in zones is not sufficient as
it does not reflect the actual movements
of milk or unique California State
regulations, taxes, geography, and high
milk production costs. The witness
stated the current differentials do not
cover the hauling costs in a state with
high gas prices, heavy traffic, and road
weight limits. The witness supported
testimony from the CDI witness
justifying the proposed California
differentials. The DFA witness also
expressed northern Nevada counties
have a historic competitive relationship
with northern California, which should
be preserved. The witness noted that
Proposal 19 recognizes this dynamic by
proposing a $2.90 differential for the
region.
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Pacific Northwest
A witness representing Northwest
Dairy Association (NDA) testified on
behalf of NMPF regarding the proposed
differentials in the Pacific Northwest
region, which includes the States of
Washington, Oregon, Idaho and
Montana. NDA is a dairy farmer-owned
cooperative that markets the milk of
approximately 295 dairy farmers in
Washington, Oregon, Idaho, and
Montana, and conducts all processing
and marketing operations through the
wholly owned subsidiary Darigold. The
witness described regional
competitiveness at the farm level,
ensuring incentives to supply Class I
markets, and geographic and
population-influenced cost factors were
the primary reasons the proposed
differentials deviate from the USDSS
model’s averages. The witness was of
the opinion proposed differentials in the
Pacific Northwest FMMO urban areas
should mirror those of the Central
FMMO, as the urban areas of the two
regions operate similarly. To ensure
competitive equity and the balancing
needs of distinct areas within the
region, the witness said Proposal 19
recommended fewer pricing zones than
produced by the USDSS model.
The NDA witness also described
market changes similar to those of other
witnesses: declining milk production,
increased population, longer haul
distances, and increased transportation
costs. The witness estimated NDA
transportation costs for servicing Pacific
Northwest Class I plants has increased
$1.10 per cwt in the last 15 years.
Regarding the unregulated areas of the
northwest, the witness used King
County, Washington, as the base at
$3.00 per cwt, and kept the zones the
same as they currently exist. In counties
with little to no milk production, the
differential was reduced to as low as
$2.20 in Idaho. For areas with higher
milk production, the differentials were
proposed at $2.55, reflecting the same
level of differentials in South Dakota.
In its post-hearing brief, NMPF
emphasized adoption of Proposal 19
was necessary to ensure Class I
differentials would be more reflective of
the current costs of supplying the Class
I market. NMPF maintained that the
proposal would result in Class I
differentials below actual costs, keeping
with the FMMO principle of minimum
pricing. NMPF reiterated testimony
given at the hearing regarding the
continued relevancy of the costs
associated with the base differential and
stressed that costs have increased since
it was first adopted in 2000. NMPF
reviewed its own testimony at the
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hearing on what it believed were the
appropriate regional considerations
used to propose deviations from the
USDSS model results. According to
NMPF, adoption of Proposal 19 would
only raise the regulated cost of Class I
milk under FMMOs by slightly less than
8 percent.
NMPF reiterated the importance of
Class I prices remaining the highest
priced class to ensure producers move
surplus milk to deficit regions to meet
Class I demand. Without such pricing
hierarchy, NMPF stated, milk in the
higher-valued use class would not be
pooled and it would result in nonuniform prices to producers.
A witness representing the AFBF
testified in support of Proposal 19. The
witness concurred with NMPF
testimony on the increased costs of
servicing the market since the
differentials were adopted in 2000. In
offering support for the differential
adjustments, the witness said the
purpose of the USDSS model was to
mimic an ideal market solution, so it
would be expected that actual market
costs are higher. The witness mentioned
that given the seasonality of milk
demand, it could be considered more
appropriate to start with the USDSS
model’s October 2021 results, rather
than the average of May and October. In
its post-hearing brief, the AFBF stressed
that regulated Class I differentials
provide for long-term stability;
something that cannot be assured if a
larger portion of milk prices is
negotiated through over-order
premiums.
A witness representing IDFA testified
in opposition to Proposal 19. The
witness was of the opinion NMPF did
not use a consistent methodology when
determining differential level
adjustments from the USDSS model
results. Additionally, stressed the
witness, some of the factors NMPF
considered were not relevant and/or
were unevenly applied (dairy farm
production costs, private business
relationships, blend price impacts, and
regional dairy farm competitiveness), or
were already factored into the USDSS
model (transportation costs and
maintaining handler equity). The
witness was of the opinion that if milk
suppliers and cooperatives experienced
transportation costs higher than those
provided for in the differentials, the
additional cost reimbursement should
be negotiated through over-order
premiums with milk buyers. The
witness also took issue with what they
deemed an undefined base differential,
proposed at $1.60 in some areas and
$2.20 in other areas, because they
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opined, there was no cost justification
for the difference.
The IDFA witness argued the purpose
of Class I differentials is to bring forth
an adequate supply of milk for fluid use.
According to the witness, with an
FMMO Class I utilization of 27 percent,
the current milk supply is more than
adequate to serve Class I needs and
there is no justification for increasing
Class I differentials. The IDFA witness
cited a recent retail milk demand study
that found milk demand is elastic and,
thus, the quantity demanded is sensitive
to price changes. The witness argued
any increase in price would not only
hurt Class I sales, but also increase
government purchase costs for milk
used in nutrition and feeding programs.
The witness stressed retail fluid milk
sales are declining and USDA should
not hasten the decline by increasing
Class I prices. The witness also added
that eliminating or reducing the
depooling of milk should not be a
consideration when evaluating Class I
differential levels. The witness said
depooling is a necessary tool for
manufacturing handlers when the Class
III or Class IV price exceeds the blend
price. They estimated that in some
FMMO areas the Class I differential
would have to increase to $41.32 per
cwt in order to disincentivize
depooling.
The IDFA witness was of the opinion
that if USDA recommends differential
increases, they should not be increased
in the three southeastern FMMOs as
those provisions already require fluid
milk handlers to pay transportation
credits and distributing plant delivery
credit assessments to encourage
producers to service Class I demand in
those deficit markets. The witness
estimated those assessments already
account for approximately 42 to 46
percent of the differential increases
contained in Proposal 19.
The IDFA witness also argued the
$0.40 portion of the base differential
attributed to maintaining Grade A status
is no longer relevant given over 99
percent of all milk currently produced
is Grade A. Consequently, said the
witness, there is no longer a need to
incentivize farms to become Grade A in
order to service the Class I market and
the base differential should be lowered
to $1.20 per cwt.
Two witnesses representing IDFA,
Saputo and Plains Dairy, testified in
opposition to Proposal 19 and offered
support for the arguments put forth by
the IDFA witness. The Saputo witness
said increasing fluid milk prices may
reduce the retail price spread between
fluid milk and plant-based products,
further depress fluid milk sales, and
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ultimately force fluid plants to switch
from HTST to ESL processing. The
witness speculated a further decline in
HTST facilities will force cultured
products to be made elsewhere and
increase costs to consumers. In regard to
obtaining milk supplies, the witness
said Saputo pays over-order premiums
when necessary. The witness also
opposed any increases in minimum
regulated prices on the grounds that
nonuniform increases would put some
of its plants at a cost disadvantage. The
Plains Dairy witness stated the increase
from the model average results would
impact consumer prices by $0.07 per
gallon. Plains Dairy is a fluid milk
processing facility in Texas.
A witness representing MIG also
testified in opposition to Proposal 19 for
many of the same reasons articulated by
the IDFA witness. The MIG witness said
NMPF failed to cost-justify any elements
of the base differential, either at the
$1.60 or $2.20 level, to support why it
should be maintained. In echoing
IDFA’s arguments, the MIG witness also
objected to NMPF’s use of the USDSS
model’s averages as a starting point. As
the FMMO system provides for
minimum prices, the witness was of the
opinion any evaluation of differential
changes should start with the USDSS
model’s May results, which represent
the flush season for milk production.
The witness said Proposal 19’s problems
are compounded because NMPF failed
to use a consistent set of principles to
justify its deviations from the USDSS
model results. In addition, many of the
factors used to justify deviations, the
witness said, were already factors
considered by the model and, thus, are
being double counted.
The MIG witness characterized the
NMPF deviations as substantial and
presented a series of maps to visualize
the magnitude of the disparate changes.
The witness also pointed to areas where
price changes are more dramatic
between neighboring counties and
suggested such price disparities could
create incentives for disorderly
marketing. The witness deemed the
Proposal 19 differentials to be
significantly different from current
differentials and argued the increases
were proposed despite a lack of
evidence from NMPF that there is a
shortage of milk available to meet Class
I demand. Class I differentials should
reflect the minimum cost of supplying
Class I milk, stressed the witness. If
there are additional transportation costs
not provided for under the current
differential, as alleged by NMPF, the
witness testified, those would be
reflected in negotiated over-order
premiums in the market. Instead, many
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areas of the country have no over-order
premiums, which the MIG witness
interpreted as an indication that FMMO
prices are not minimums, but price
enhancing. Similar to the IDFA witness,
the MIG witness was of the opinion no
changes should be made to the
differentials in the three southeastern
FMMOs until the full impact of the
recent amendments to the transportation
credits and establishment of the
distributing plant delivery credits are
known.
Three witnesses representing Organic
Valley testified in opposition to
Proposal 19. Organic Valley consists of
1,600 farmer-owners who produce
certified organic milk, three dairy
manufacturing facilities which make
Class III and IV products and a network
of co-packers to process and distribute
Class I products. The witnesses opposed
the NMPF proposed differentials as they
would increase Organic Valley’s
obligation to FMMO marketwide pools.
The Organic Valley witnesses
described the differences between the
organic and conventional milk markets
(both at the producer and processor
levels). They were of the opinion
Proposal 19 failed to account for these
differences and would result in
inefficient milk movements if adopted.
The witnesses countered arguments that
the conventional market balances the
organic market, claiming only around 2
percent of organic milk finds its way
into conventional products.
A witness from Aurora testified in
opposition to Proposal 19. Aurora is a
vertically integrated organic milk
supplier with four organic dairy farms
located in Colorado and Texas. The
witness was of the opinion no
justification exists to increase Class I
differentials as the areas surrounding
the Aurora plants have adequate organic
milk supplies, something that was not
accounted for in the USDSS model. The
witness described the organic milk
market and argued its structural
differences from the conventional milk
market make any change to the Class I
differentials as applied to organic milk
unwarranted. Similar arguments were
made by a MIG witness on behalf of
Danone and Crystal Creamery.
A witness for Maple Hill Creamery
(Maple Hill) testified in opposition to
Proposal 19. Maple Hill purchases grassfed organic milk for processing and
national distribution but does not own
a fluid milk plant. The witness opposed
the proposed Class I differentials and
estimated their Class I marketwide pool
obligation could increase up to 80
percent as a result. The witness made
arguments similar to other organic
processors and concluded that
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increasing Class I differentials would
result in a choice between paying a
lower organic fixed price to its dairy
farm suppliers and jeopardizing supply
or raising retail prices and jeopardizing
sales.
A witness representing Shamrock, a
member of MIG, testified in opposition
to Proposal 19. The witness said
adoption of Proposal 19 would increase
their raw milk costs anywhere from 29
to 62 percent. The witness testified
Shamrock pays over-order premiums
which they believed cover any
additional costs associated with
servicing their plants in excess of the
Class I differential value. The witness
noted an inconsistency in NMPF
methodology, as the differential for their
Virginia plant is proposed at the USDSS
model average, while the differential at
their Arizona plant is $0.65 greater than
the average.
A witness for AE, a MIG member, also
testified in opposition to Proposal 19.
The witness was of the opinion NMPF
had not provided justification for the
Class I differential increases. They
specifically objected to the Class I
differential changes that would, in the
witness’ opinion, give its nearest
competitor a $0.15 greater advantage
than currently exists.
A MIG member witness for HP Hood
testified in opposition to Proposal 19.
HP Hood also operates four standalone
Class II plants in the northeast. Similar
to the AE witness, the HP Hood witness
testified the proposed Class I
differentials would create competitive
disadvantages for their plants in relation
to nearby cooperative owned plants.
The witness criticized what they
believed was the lack of uniformity used
by NMPF in developing differentials
that deviated from USDSS model
results. The witness said there were
ample milk supplies to meet Class I
needs and any increase in the Class I
price would only serve to decrease fluid
milk sales.
A witness from Turner Dairy, a MIG
member, testified in opposition of
Proposal 19. The witness objected to the
continued relevance of the three base
differential components. The witness
said Turner Dairy had not had difficulty
finding adequate milk supplies through
its independent dairy farm supply. The
witness said any Class I differential
increases would be paid into the FMMO
marketwide pool, not to its direct
suppliers. The witness said this would
make it harder to compete for dairy farm
suppliers, particularly with competitors
in the unregulated area to their east.
Similar to other witnesses, the Turner
Dairy witness detailed how the
proposed Class I differentials created
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competitive disadvantages for their
plants relative to nearby cooperative
plants and would decrease fluid milk
consumption.
A MIG witness testifying on behalf of
fairlife opposed Proposal 19. The
witness argued that if more money is
needed to attract fluid milk supplies, it
should be negotiated in the marketplace,
not mandated in FMMO pricing
provisions. The witness said fairlife
regularly pays over-order premiums for
even day receiving, transportation costs,
and quality attributes. In the witness’
opinion, there were ample fluid milk
supplies and any increase in differential
would only serve to create market
winners and losers.
A witness from Shehadey, testified in
opposition to Proposal 19. Shehadey
operates four manufacturing plants in
California, Nevada, and Oregon,
producing Class I and Class II products.
The witness argued the Class I
differentials proposed for their plant
locations should not be increased as the
local milk supply was adequate to meet
their fluid needs. The witness took
particular objection with the
disproportionate increase by the Fresno,
California, plant in relation to their
competitors located farther from the
state’s primary milk supply in the
Central Valley. The witness added that
their Oregon plant has a more distant
milk supply relative to their other
plants, and over-order premiums are
used to compensate dairy farmers for
the additional costs of servicing the
plant.
A witness representing United Dairy,
Inc. (United) testified in opposition to
Proposal 19. United is a fluid milk
processor operating three plants in West
Virgina, Ohio, and Pennsylvania, which
are primarily supplied by independent
dairy farms. The witness testified their
plants received adequate milk supplies
and pay over-order premiums when
needed to ensure their milk needs are
met. The witness opined the market
should depend on over-order premiums,
not unduly high regulated prices, to
direct milk where needed. Similar to
other witnesses, the United witness
argued FMMO prices should not be
increased because it would negatively
impact Class I sales. The witness
objected to the uneven application of
differential increases, highlighting the
differential increases for the United
plants are higher than every other plant
in the region, even when United has had
no milk supply shortages. A West
Virginia independent dairy farm
supplier of United also testified in
opposition to Proposal 19. The witness
expressed concern the proposed
differential increases would ultimately
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lead to the closure of the independent
fluid milk processors in the State,
leaving local dairy farmers with few, if
any, local market outlets, and would
widen the nutritional gap that already
exists in the Appalachian area as higher
prices would reduce fluid milk
consumption.
A witness representing Lamer’s
testified in opposition to Proposal 19.
The witness said increasing Class I
differentials would not benefit
consumers or processors as higher
prices would lead to a decline in fluid
milk consumption and the closure of
more fluid milk plants. The witness was
of the opinion that limiting or
disallowing the depooling of
manufacturing milk would be a more
beneficial change for all dairy
stakeholders. A post-hearing brief filed
by Lamers contended the hearing record
contained no evidence of Class I
demand not being fulfilled, thus, any
increase in Class I prices was not
justified. The brief argued that if
additional transportation costs of
moving milk to Class I plants exist, they
should be negotiated through over-order
premiums.
A series of academic researchers
testified regarding milk price elasticity.
One researcher testified on behalf of
NMPF regarding the potential impact to
fluid milk demand as a result of
regulated price changes. The witness
referred to this as price elasticity, which
estimates the percentage change in
demand (quantity) due to a 1 percent
change in price. The witness said any
price elasticity less than the absolute
value of 1 is considered price inelastic—
a 1 percent change in price would result
in less than a 1 percent change in
demand—implying increased revenue
due to the price change would more
than offset the decreased revenue from
fewer sales.
The NMPF witness reviewed 38
empirical studies, conducted between
1964 and 2022, measuring milk price
elasticity at the retail level. The witness
found the study average elasticity of
0.35 percent, and a median of 0.2
percent, concluding milk demand is
inelastic. The witness said consumers
remain price insensitive because milk
continues to be considered a staple
food. To illustrate its price inelasticity,
the witness elaborated the real price of
milk relative to all goods and services
has declined 7 percent since 2013,
during which time milk demand has
decreased 18.3 percent. If milk was
elastic, said the witness, a decline in
price should have resulted in an
increase in demand. The witness
reviewed other factors which they
believed were driving decreased milk
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consumption, including increased
competition in the beverage market from
new products and alternative beverages,
an increase in the amount of food
consumed away from home, and the
lower proportion of young kids in the
population.
The NMPF witness evaluated the
average increase in differentials
contained in Proposal 19, $1.49 or an
8.6 percent Class I price increase, to
estimate the impact on demand.
Assuming a 55 percent retail price
transmission rate (1 percent change in
the Class I price would cause a 0.55
percent change in the retail price), the
witness estimated Proposal 19 would
lead to a 1.6 percent decrease in
demand. The witness concluded the
decrease in demand would be lower
than the increase in Class I revenue,
resulting in a net increase of dairy
farmer revenue.
Another researcher testified on behalf
of IDFA. The witness presented the
results of a study evaluating the impact
milk price changes have on the
consumption of milk (in five
disaggregated varieties) and various
alternatives, including soft drinks,
bottled, water, juices, and for the first
time considered plant-based
alternatives. The witness utilized
weekly scanner data from 2017 through
August 2023 to evaluate three distinct
time periods (pre-COVID, COVID and
post-COVID). The witness estimated the
data represented approximately 84
percent of the milk volume sold at retail
outlets, or 64 percent of overall milk
volume. The witness attributed the
remaining 36 percent to milk sales
through untracked retail, foodservice,
schools, and shrinkage. The witness
noted it is likely the elasticity for the
unaccounted milk volume was highly
inelastic.
The IDFA witness said the study
found the own-price elasticities for
traditional white, flavored, and lactosefree milk to be elastic, and when all five
categories of milk were combined, it had
an elasticity of ¥1.26 in the post-COVID
time period. Utilizing some of the
NMPF researcher’s assumptions (8.6
percent increase in Class I prices and a
retail price transmission rate of .55
percent), the witness estimated adoption
of Proposal 19 would result in an
overall 5.98 percent decrease in fluid
milk sales and a 2.1 percent increase in
gross dairy farmer revenue. The witness
concluded this study revealed retail
fluid milk sales are more sensitive to
price changes than previously thought.
The witness also noted other demand
studies that utilize AMS estimated fluid
milk sales, not weekly scanner data, do
not reflect the current retail marketplace
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because they incorporate highly
inelastic sales to schools, colleges and
universities, long-term care and senior
living facilities, hospitals, and
correctional institutions.
A third academic researcher, also
testifying on behalf of IDFA, provided
results of a study evaluating the market
effects of Proposal 19. Looking at milk
production, fluid milk consumption,
and producer price statistics since 2000,
the witness concluded there are
sufficient milk supplies nationally to
meet Class I demands. The witness was
also of the opinion sufficient milk
supplies, at reasonable prices, exist for
the high Class I utilization FMMOs (the
Appalachian, Southeast, and Florida),
because retail prices in the three
markets were below those of a 30-city
average retail milk price when
compared to other regions of the
country. The witness commented that
elasticity studies not accounting for
non-dairy alternatives were not
representative of the current retail
market. The witness reviewed recent
fluid demand studies and concluded
adoption of Proposal 19 would increase
fluid milk prices, decrease
consumption, and result in more milk
use in manufactured products.
A post-hearing brief submitted on
behalf of Select supported increasing
Class I differentials, but not to the levels
contained in Proposal 19. Select
contended deviations from the USDSS
model results made by NMPF may be
appropriate but disagreed with the type
and extent of those included in Proposal
19. Select took exception to the
proposed adjustments in the mideast
and southwest regions where they have
member farms. Select noted reasons for
making deviations were not applied
uniformly, especially in areas that have
similar supply and demand
environments. Select stated increased
transportation costs and shifts in milk
production and processing locations
justify increasing Class I differentials
and offered support for using the
average of the May and October 2021
USDSS results, with minor adjustments
and smoothing of the surface as
appropriate.
A post-hearing brief submitted on
behalf of MIG opposed adoption of
Proposal 19, arguing hearing evidence
supported lowering, not raising, Class I
differentials. MIG cites the abundance of
milk available to serve the Class I
market and FMMO adjustments to
shipping percentages as evidence to
deny Proposal 19. MIG reiterated its
objection to the methodology used and
deviations made by NMPF in
developing the proposed differentials.
The brief contended raising Class I
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differentials would be disorderly
because it would lower Class I demand
and aggravate challenges already faced
by fluid milk processors. MIG also noted
Class I differential changes should not
be considered until the impact of recent
changes to transportation cost-related
provisions in the Appalachian, Florida,
and Southeast FMMOs were known.
A post-hearing brief submitted on
behalf of IDFA opposed Proposal 19 on
the grounds its adoption would cause
market disorder by raising fluid milk
prices, decreasing fluid milk
consumption, harm consumers, and
divert milk into manufacturing uses.
IDFA reiterated hearing testimony in its
brief regarding the price elasticity of
fluid milk and concluded adopting
Proposal 19 would reduce fluid milk
consumption by 5.98 percent, resulting
in over 2.2 billion pounds of milk being
diverted to manufacturing uses.
Similarly, IDFA objected to NMPF’s
methodology in determining the
differential levels offered in Proposal
19. IDFA objected to NMPF’s use of
dairy farm production costs to justify
increases to the Class I differentials and
referenced existing milk production as
more than adequate to meet fluid milk
demand. IDFA maintained Class I
differentials should instead be lowered
by $0.40 per cwt because the Grade A
maintenance cost consideration is
obsolete and inaccurate.
A MIG witness testified in support of
Proposal 20, seeking to reduce the base
differential to $0.00. The witness’
testimony centered around the
continued relevance of the cost
components currently provided for in
the base differential: Grade A
maintenance, balancing, and Class I
incentive costs. The witness was of the
opinion the base differential results in
market enhancing prices that induce
overproduction and reduce fluid milk
consumption. The witness said that
since almost all U.S. produced milk
meets Grade A standards, it is no longer
necessary to provide compensation
through Class I differentials for those
costs as they are not unique to
producers supplying the Class I market.
They argued these costs are already
provided for in market-clearing Class III
and IV prices where most of the U.S.
milk supply is utilized.
The MIG witness said the balancing
cost factor is no longer justified as fluid
milk processors have either invested in
infrastructure to balance their own milk
supply or pay over-order premiums to
their suppliers for balancing services.
The witness was of the opinion
incorporating balancing costs within the
Class I price results in processors paying
for balancing services they do not
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receive or paying twice for such
services—once through the Class I price
and again in an over-order premium.
Lastly, the MIG witness argued the
$0.60 Class I incentive cost factor was
no longer necessary to attract adequate
supplies of fluid milk given the low,
and continually declining Class I
utilization.
Witnesses from MIG member
companies testified in support of
Proposal 20. MIG’s members echoed the
previous MIG testimony challenging the
relevance of the base differential cost
factors in the current market
environment. In particular, the MIG
witnesses argued that through plant
investments, particularly ESL
processing or additional milk silos,
combined with over-order premiums
paid to their milk suppliers, they were
directly paying for their individual milk
balancing needs. The witnesses all
opined that through the base differential
they were being double charged for such
services. All MIG members testified that
if additional monies are needed for
balancing services or to obtain adequate
milk supplies, it is more appropriate for
those costs to be negotiated in the
marketplace and paid directly to their
milk suppliers, rather than as part of a
regulated minimum price shared with
all pooled producers.
Another MIG witness testified
regarding the relevancy of the base
differential in the current marketplace.
The witness was of the opinion the base
differential should be reduced to $0.00,
and if cost recovery is needed by
producers, it can be negotiated with
milk buyers. The witness utilized the
USDSS model to compare the value of
Class I and Class III milk at the county
level. The witness presented the results
and explained in some parts of the
country, where Class III milk is more
valuable, it would take additional
incentives to service a Class I plant
rather than remain at the higher valued
manufacturing plant. In other areas of
the country, namely the southeast,
northeast, and California, the value of
Class I is higher, representing the cost
to balance the region’s Class I demand.
The witness said the national average
value of the differences was negative
$0.38, indicating nationally, it is more
valuable for milk to service Class III
plants. The witness drew the conclusion
this analysis supports the argument for
lowering the base differential to $0.00
and allowing fluid plants to negotiate
and pay premiums directly to their milk
suppliers.
A post-hearing brief submitted on
behalf of MIG reiterated its witnesses’
testimony that the base differential is no
longer economically justified. MIG
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argued the current oversupply of Class
I milk is caused, in part, from high
FMMO blend prices. According to MIG,
adoption of Proposal 20 would correct
this disorder by allowing a greater
proportion of fluid milk costs to be
negotiated and paid directly to
suppliers. The brief reviewed MIG
witness testimony on the relevancy of
the costs associated with the base
differential and the steps taken by its
fluid milk processor members to balance
and obtain a milk supply.
A Lone Star witness, appearing on
behalf of NMPF, testified in opposition
to Proposal 20. The witness argued a
base differential of $0.00 would result in
the elimination of any Class I
differential for large portions of the U.S.,
amounting to approximately $650
million annually, with no guarantee the
money could be recovered through overorder premiums. Additionally, said the
witness, the lower differentials would
lead to disorderly marketing conditions
through increased occurrences of
negative PPDs, higher volumes of
depooled milk, and reduced or
eliminated incentives to supply the
Class I market. The witness stressed that
costs to maintain Grade A status and
balance the market’s milk supply are
real and significant. The witness said
adoption of Proposal 20 would be akin
to adopting individual handler pools in
much of the country, an idea which they
said has been found to cause disorderly
marketing conditions.
The NMPF witness maintained that
milk has an inelastic demand, so any
reduction in Class I prices will not have
a significant impact on Class I sales. The
witness also said that despite opposition
testimony regarding the perils of setting
regulated prices too high, there are also
negative consequences for setting the
regulated price too low. In the witness’s
opinion, dairy farmers face a market
power imbalance when negotiating
prices above FMMO minimums,
reiterating previous testimony on the
difficulty cooperatives faced when
negotiating and maintaining over-order
premiums.
The NMPF witness concluded by
emphasizing the objective of the FMMO
system is to set prices to ensure a
sufficient quantity of milk for fluid use.
The witness stressed providing for
prices that reflect the current costs of
supplying the market as demonstrated
through NMPF testimony should be a
priority of this proceeding.
In their post-hearing brief, NMPF
argued Proposal 20 incorrectly assumes
the cost of servicing Class I demand has
not increased and reiterated witness
testimony on the continued relevancy
and need for the base differential. NMPF
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stressed that costs recognized in the
base differential continued to be
incurred by dairy farmers in servicing
the Class I market and took exception
with the position such costs could be
adequately recovered through overorder premiums. NMPF maintained
Class I demand is inelastic and
reiterated the need for Class I prices to
continue to be the highest priced class
in order to ensure an adequate supply.
The AFBF witness also expressed
opposition to Proposal 20. The witness
testified the cost factors provided for in
the base differential are still relevant
and in fact higher than when the
differential was adopted. The witness
suggested the Department consider
raising the base differential and
provided current cost estimates for each
of the three factors, which resulted in a
base differential increase of
approximately $0.60 per cwt. The
witness stressed the importance of the
base differential in contributing to the
proper alignment of classified prices
which they considered a critical
element of orderly marketing. The
AFBF’s post-hearing brief reiterated its
witnesses’ hearing testimony and
concluded adoption of Proposal 20
would lead to disorderly marketing
conditions.
A post-hearing brief filed by Lamers
offered support for Proposal 20. Lamers
stated its adoption would better reflect
the real value of milk and all four
classes would have a closer price
relationship. Lamers asserted high Class
I differentials were no longer needed to
supply the fluid market given that 98
percent of milk produced is Grade A. A
post-hearing brief submitted by New
Dairy also offered support for Proposal
20.
Select’s post-hearing brief expressed
opposition to Proposal 20 and asserted
a base differential of $1.60 should be
maintained. Select opined the cost of
maintaining Grade A status still exists
and has increased, as have the costs
associated with balancing and
competing for a milk supply.
A post-hearing brief submitted by
Edge, while not offering support or
opposition to Proposals 19 or 20, did
contend Class I milk prices should not
be raised beyond necessary levels and
not be raised merely to offset the
negative producer impact of increasing
make allowances.
The AFBF witness also testified in
support of Proposal 21, seeking to
increase the Class II differential from
$0.70 to $1.56 per cwt. The witness
explained the proposed differential
reflects updated drying costs based on
the current NFDM make allowance. The
witness did not believe the proposed
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increase would lead to the substitution
of Class IV powders in lieu of Class II
fresh milk. The witness estimated that
adoption of Proposal 21 would increase
annual FMMO marketwide pool values
by $122 million and reduce the
likelihood of negative PPDs and
depooling. These views were reiterated
in AFBF’s post-hearing brief.
Several witnesses representing MIG
including Turner Dairy; HP Hood; AE;
Shamrock; CROPP; Aurora; Shehadey;
Crystal Creamery; and fairlife testified
in opposition to Proposal 21. The MIG
witnesses indicated adoption of
Proposal 21 would result in Class II
standalone plants choosing not to
participate in the FMMO system,
putting fully regulated Class I plants
with Class II production at a
competitive disadvantage. This
sentiment was emphasized by witnesses
from Turner Dairy and Shehadey, whose
fully regulated Class I plants also
produced notable volumes of Class II
products. The witness from Crystal
Creamery provided an analysis of CME
NFDM and Class II nonfat solids prices,
projecting an increase of 20 to 50
percent in the use of Class IV nonfat
solids if Proposal 21 was adopted.
Lastly, a witness from fairlife predicted
adoption of Proposal 21 would cause
some manufacturers to reformulate
products in order to avoid paying the
higher Class II price.
In its post-hearing brief, MIG
reiterated hearing testimony and added
that cream, a Class II product, must be
made with fluid milk in accordance
with the standards of identity
established by the U.S. Food and Drug
Administration. As such, according to
MIG, a pooled Class II manufacturer of
cream could not reformulate and,
further, would experience an estimated
3.5 percent increase in its FMMO
marketwide pool obligations.
Several witnesses representing IDFA,
including Saputo, Galloway, and
Lakeview Farms, also testified in
opposition to Proposal 21. The witness
for Saputo indicated the demand for
Class II skim solids is likely to decrease
if Proposal 21 is adopted, as alternative
milk solids would have a greater
substitution value. Further, according to
the witness, costs to consumers for
cream would likely increase.
The witness for Galloway testified
that adoption of Proposal 21 would not
increase blend prices or limit depooling
and negative PPDs, as alleged, because
Class II manufacturers would instead
utilize more Class IV powder
ingredients in lieu of fresh milk. In the
witness’ opinion, increasing the Class II
differential would only serve to promote
disorderly marketing through the
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displacement of the local milk supply
and permanent investment in
equipment to enable the use of Class IV
ingredients. The witness said once a
manufacturer makes the costly capital
investment decision, they do not switch
back to use fresh milk in the future. The
witness estimated adoption of Proposal
21 would result in a $99.4 million loss
to producers through the use of lower
valued Class IV ingredients. A witness
from Lakeview Farms supported the
statements of other witnesses,
emphasizing the likely increase in costs
to the customer. This witness added that
innovation of more oil-based
formulations to offset the price volatility
of dairy fat would lead to a disruption
in the dairy supply chain.
In its post-hearing brief, IDFA
reiterated testimony from the hearing
which stressed that there is already an
adequate supply of milk for Class I and
Class II needs and opined the current
Class II price formula is working well as
is. As such, according to IDFA, there is
no evidence that suggests a need to
increase the Class II differential. IDFA
argued further that farmers are likely to
receive lower net prices as a result of
Proposal 21 due to the anticipated
substitution of lower cost Class IV
NFDM for Class II nonfat solids. Lastly,
IDFA focused on the likely
disproportionate impact of Proposal 21
on Class I handlers that also
manufacture Class II products. Without
the ability to depool, these handlers
could not take advantage of lower
NFDM prices, IDFA wrote.
An MMPA witness appearing on
behalf of NMPF also testified in
opposition to Proposal 21. The witness’
testimony mirrored other witnesses
cautioning that adoption could cause
substitution with Class IV powder
ingredients. The witness said not only
does the Class II and Class IV price
difference need to be considered, but so
does the significantly lower
transportation cost of powder versus
fresh milk. Under the current Class II
differential, Class II milk already has an
incentive not to be pooled, said the
witness. Increasing the differential
would only heighten the incentive and
create competitive disadvantages for
Class I plants making Class II products,
while simultaneously lowering
marketwide pool values. In its posthearing brief, NMPF added that
adoption of Proposal 21 may incentivize
the practice of substituting less
expensive milk powder for fresh milk to
make Class II products. NMPF also
elaborated on its members’ concerns
regarding the likely increase in
depooling of Class II milk if Proposal 21
was adopted.
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USDA received post-hearing briefs
related to Proposal 21 from three
additional stakeholders: New Dairy,
Select, and Lamers. New Dairy
expressed its opposition to the AFBF’s
Proposal 21, emphasizing that the
current milk supply is sufficient, and it
shared the concerns of other hearing
participants regarding the potential
competitive disadvantages for Class I
handlers manufacturing Class II
products. Select explained that the
AFBF’s proposal deviates from the
rationale and methodology USDA
utilized to establish the Class II
differential during Order Reform and,
thus, according to Select, Proposal 21
likely overstates an appropriate Class II
differential. Further, Select was of the
opinion increasing the Class II
differential would discourage the use of
fresh milk and cream in lieu of Class IV
ingredients. Lastly, Lamers expressed its
concern that the adoption of Proposal 21
would lead to disorderly marketing and
stated no evidence was presented to
suggest a need to increase the Class II
differential.
Discussion and Findings
An FMMO (or ‘‘order’’) is a regulation
issued by the Secretary of Agriculture
(Secretary) that places certain
requirements on the handling of milk in
a defined geographic marketing area.
FMMOs are authorized by the AMAA.
The declared policy of the AMAA is to
‘‘. . . establish and maintain such
orderly marketing conditions for
agricultural commodities in interstate
commerce . . .’’ 7 U.S.C. 602(1). As
specified by the AMAA, the principal
means of meeting the objectives of the
FMMO program are through classified
milk pricing and the marketwide
pooling of returns. This rulemaking
concerns and is limited to classified
milk pricing.
FMMOs announce prices each month
for milk received by plants during that
month, according to its use
classification. Since 2000, the FMMO
program has used product price
formulas that rely on the wholesale
price of bulk products to determine the
minimum classified prices handlers pay
for raw milk in the four classes of
utilization. Class III and Class IV prices
are announced on or before the 5th day
of the following month to which they
apply. The Class III and Class IV price
formulas form the base, also known as
the mover, from which Class I and Class
II prices are determined.
The Class I price is announced in
advance of the applicable month. It is
determined by adding the Class I
differential assigned to the plant’s
location, plus the average of advanced
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Class III and Class IV prices (computed
by using the most recent two weeks’
DPMRP data released on or before the
23rd of the preceding month), plus
$0.74. The Class II skim milk price,
announced at the same time as the Class
I price, is determined by adding $0.70
per cwt to the advanced Class IV skim
milk price. Thus, the advanced prices
pertaining to milk marketed in a
particular month use the same formulae
as the calculation of Class III and IV
prices for milk marketed in that same
month, but the specific data are from
different time periods. The Class II
butterfat price is announced at the end
of the month, at the same time as the
Class III and Class IV prices, by adding
$0.007 per pound to the Class IV
butterfat price.
Component prices are based on prices
for the selected bulk products collected
through the AMS-administered DPMRP,
which collects weekly wholesale prices
for four manufactured dairy products in
various bulk package sizes (cheese,
butter, NFDM, and dry whey powder).
Weekly average prices for cheddar
cheese (the weighted average of block
and barrel prices), butter, NFDM, and
dry whey are reported in the NDPSR.1
Butterfat prices for milk used in
products in each of the four classes is
determined through surveyed butter
prices. Protein and other solids prices
for milk used in Class III products are
derived from surveyed cheese and dry
whey prices, respectively. The nonfat
solids price for milk used in Class II and
Class IV products is calculated from
surveyed NFDM product prices.
The butterfat, protein, other solids,
and nonfat solids prices are derived
through the weighted average monthly
NDPSR survey prices of each
corresponding commodity, minus a
manufacturing (make) allowance,
multiplied by a yield factor. The make
allowance factor represents the fixed
and variable processing costs
manufacturers incur in making raw milk
into one pound of product. The yield
factor represents the approximate
quantity of product that can be made
from a cwt of milk received at the plant,
assuming a certain component
composition of the milk and the final
products. Among other factors used to
determine yield, the milk received at a
plant is adjusted to reflect farm-to-plant
shrinkage compared to farm weights.
This relates to the basic question of how
1 Official Notice is taken of the Notice of
Equivalent Price Series: 77 FR 22282 (April 18,
2012). The National Dairy Product Sales Report was
deemed as equivalent to the price series previously
released by the National Agricultural Statistics
Service.
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much milk is required to make a pound
of product.
This product pricing system was
implemented as a part of Order Reform
on January 1, 2000. 64 FR 70868 (Dec.
17, 1999). While individual pieces of
the price formulas have been updated
occasionally since that time, this
proceeding is the first time since their
adoption that the Department is
considering a comprehensive update to
all four classified price formulas. 68 FR
7063 (Feb. 12, 2003); 71 FR 78333 (Dec.
29, 2006); 78 FR 24334 (Apr. 25, 2013).
The objective of this proceeding is to
evaluate whether market or other
economic conditions have changed and
if the price formulas need to be updated
to reflect current conditions, including
economic and technological factors
related to processing, transportation,
and other relevant market functions or
services. Twenty-one proposals, divided
into five main topic areas, were
considered: milk composition factors—
two proposals; surveyed commodity
products—four proposals; Class III and
Class IV formula factors—six proposals;
base Class I skim milk price (often
referred to as the ‘‘higher of’’)—six
proposals; and Class I and Class II
differentials—three proposals.
The record supports the findings that
some price formula factors should be
amended to reflect current market
conditions that were evidenced in this
proceeding. The proposed changes,
which are discussed in detail below,
include:
1. Milk Composition Factors: Update
the factors to 3.3 percent true protein,
6.0 percent other solids, and 9.3 percent
nonfat solids.
2. Surveyed Commodity Products:
Remove 500-pound barrel cheddar
cheese prices from the DPMRP survey
and rely solely on the 40-pound block
cheddar cheese price to determine the
monthly average cheese price used in
the formulas.
3. Class III and Class IV Formula
Factors:
a. Update the manufacturing
allowances as follows:
i. Cheese: $0.2519;
ii. Butter: $0.2272;
iii. NFDM: $0.2393; and
iv. Dry Whey: $0.2668.
b. Update the butterfat recovery factor
to 91 percent.
4. Base Class I Skim Milk Price:
updating the formula as follows:
a. Class I milk used in ESL products:
The average of the advanced Class III
and Class IV skim milk prices, plus a
rolling monthly adjuster. The rolling
monthly adjuster would be equal to the
average of the difference between the
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higher-of and the average-of, for 24
months, with a 12-month lag.
b. Milk used in all other Class I
products: the higher-of the advanced
Class III or Class IV skim milk prices for
the month.
5. Class I and Class II differentials:
Update the Class I differentials to
generally reflect the United States Dairy
Sector Simulator May results contained
in evidence.
Milk Composition Factors
Milk composition factors contained in
the product price formulas represent
assumed component levels of skim milk
on a cwt basis. These factors were
adopted on January 1, 2000. Currently,
the formulas assume 3.1 pounds of true
protein, 5.9 pounds of other solids, and
9 pounds of nonfat solids in 100 pounds
of skim milk.
The level of assumed components in
milk ultimately impacts minimum
regulated prices paid by handlers,
although the impact varies since there
are variations in how components are
used to value milk between FMMOs. All
handlers regulated by the Arizona,
Southeast, Florida, and Appalachian
FMMOs pay for milk used in all four
classes on a volume (cwt) basis,
regardless of the components contained
in the skim milk they receive (referred
to as skim/fat pricing). Simply put,
handlers pay for the pounds of skim and
pounds of butterfat in milk they
purchase from dairy farmers, where the
butterfat payment is calculated
according to actual pounds of butterfat
received but the skim milk is specified
at a standardized composition. In the
remaining seven FMMOs, handlers pay
for manufacturing milk based on the
actual pounds of components in milk
they purchase (referred to as multiple
component pricing). Milk used in fluid
milk products (Class I) is paid on skim/
fat basis as described above. Because of
these pricing differences, changing the
milk component factors primarily
impacts Class I minimum prices paid by
fluid milk processors in all 11 FMMOs,
and to a lesser extent manufacturing
handlers purchasing milk for Class II,
III, and IV uses on skim/fat FMMOs.
Proponents of changing the milk
component factors argue actual average
milk component levels in farm milk
have increased since January 1, 2000,
and milk should be priced to buyers to
reflect the value of those components.
NMPF proposes (Proposal 1) component
levels at observed 2022 levels (3.39 true
protein, 6.02 other solids, and 9.41
pounds of nonfat solids). NMPF also
proposes an updated methodology
whereby components could be updated
once every three years, without a
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rulemaking proceeding, if the nonfat
solids levels in FMMO producer skim
milk changed by 0.07 percentage points
or more from the level stated in
regulation. In its proposal, NAJ seeks an
automatic annual update, with no
change threshold to be met (Proposal 2).
Both NMPF and NAJ argue that
because component levels in producer
milk have risen but are still accounted
for in the price formulas at 2000 levels,
the difference between Class I prices
and manufacturing milk prices (Class III
and IV) has narrowed. Put another way,
milk used in manufacturing in the
multiple component FMMOs is paid
based on actual component levels, so
producers are paid for all component
pounds delivered to manufacturing
plants (approximately 85 percent of
FMMO manufacturing milk is pooled on
the 7 multiple component orders).
Consequently, payments for milk
delivered to manufacturing plants
increase as component levels delivered
to those plants increase. However, milk
delivered to Class I plants is paid on a
skim/fat basis whose formulas contain
component levels that are fixed and do
not change either over time or across
producer milk receipts. Thus, as milk
component levels have risen, Class I
plants have continued to pay for milk
based on the static component levels
contained in the formulas. Proponents
argue the result has been a narrowing
between fluid and manufacturing prices,
thereby creating marketing challenges,
one of which is a preference of suppliers
to sell higher component milk to
manufacturing handlers. They argue this
is especially problematic in the milk
deficit skim/fat markets in the
southeastern region that must compete
with manufacturing milk demands in
multiple component orders to procure a
supplemental Class I milk supply.
Proponents also alleged the narrowing
of the difference between Class I and
manufacturing milk prices increases the
occurrence of price inversions and
depooling.
The record of this proceeding reveals
FMMO component levels in raw milk
have increased since January 1, 2000,
most notably since the mid-2010s.
National FMMO average component
data before 2000 is not part of this
hearing record. The Order Reform
decision did not address specifically
why the current assumptions were
adopted, other than stating they were
based on prevailing protein tests as
reported by AMS/USDA, as correctly
cited by NAJ in its brief and public
comment. While a preliminary Basic
Formula Price report does purport to
provide average protein levels, none of
the Reform related reports in evidence
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in this proceeding provide an adequate
level of detail as to what exactly the
data used represented. However, given
the data in evidence in this rulemaking
shows component levels observed in
FMMO skim milk in 2000 were 3.1
percent true protein, 5.9 percent other
solids, and 9.0 percent nonfat solids, it
is reasonable to assume they were set at
those levels because at the time they
were representative of all pooled milk in
the FMMO system. Evidence from this
proceeding reveals that from 2000,
component levels were relatively flat
with only a slight increase through the
mid-2010s. Beginning in 2016, observed
data shows a marked increase in
component levels. The data also clearly
shows component levels throughout the
country vary by season, with levels
lower in the spring and summer, and
higher in the fall and winter. Hearing
testimony revealed numerous reasons
for the recently observed milk
component increases, including
genomics in dairy cattle selection and
breeding, higher cull rates of less
productive cattle, and improvements in
cattle nutrition and animal husbandry.
Opponents of increasing component
levels, primarily fluid milk handlers,
argued three general reasons an increase
is not justified. First, fluid milk
handlers, who would be primarily
impacted by these proposals, do not
receive producer milk at the proposed
component levels. They contend higher
component milk is delivered to
manufacturing plants, leaving the lower
component milk for fluid milk handlers.
Second, fluid milk handlers testified
they receive no additional market
revenue for higher components in milk
because their customers purchase on a
volume basis (e.g., gallons) not on the
skim component levels in their fluid
milk products. Therefore, they argued,
they could not recover an increased cost
for their raw material from a higher
finished product price. Third,
opponents argued updating component
levels also would unduly harm
manufacturing handlers in the skim/fat
orders who pay for milk based on a
skim/fat basis. They argued the
proposed component levels are higher
than those delivered to plants, both
fluid and manufacturing, in the four
skim/fat orders. An evaluation of the
record evidence for each of these claims
follows.
First, regarding the composition of
producer milk received by Class I
handlers, testimony from fluid milk
handlers during the hearing was
incomplete and mixed. Some fluid milk
handlers would not reveal component
levels for the Department to consider,
citing confidentiality concerns. Other
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fluid handlers offered data that showed
a range of average component levels in
skim milk received: true protein ranged
from 3.09 to 3.63 and other solids
ranged from 5.83 to 6.10. Many
producers who testified also discussed
the rise in their farm component levels
because of the decisions and
investments made at the farm. While
some producers could cite data, for
example true protein tests ranged from
3.12 to 3.83, many who could not cite
specifics did contend a general increase
in their component levels. The
testimony supported an increase in skim
milk component levels since 2000, but
precise increases that apply to all milk
or all Class I milk was not presented.
Second, regarding market
compensation for higher skim
components in finished Class I
products, the record clearly shows fluid
milk handlers sell fluid milk products
based on volume. Proponents of
changing the composition levels
provided anecdotal evidence, such as
marketing claims and product
description, to assert that some fluid
milk products can garner additional
market revenue for higher component
levels. However, no data was provided
to prove there is a general industryaccepted norm or practice that allows
handlers to recover a value for nonfat
milk solids in excess of the nutrition
label claim.
Finally, concerning the claim that the
level of components assigned to skim
milk can create disorder in the
procurement of milk for manufacturing
versus Class I uses, the record contains
actual component tests of producer milk
in the multiple component pricing
orders. However, component data for
the four skim/fat orders could only be
estimated as producers in those orders
are paid based on the volume of skim
milk and butterfat produced, not
component levels. Record evidence
contains USDA estimated data showing
component levels in milk have
consistently been above the current
assumptions in all four skim/fat orders.
Estimated protein and other solids
levels of skim milk pooled in the three
southeastern orders have been above the
assumed levels in most months since
January 2018, and below the levels
contained in Proposal 1 in all months.
Estimated protein and other solids
levels of skim milk pooled in the
Arizona Order have been above the
assumed levels in all months since
January 2018, and above the levels
contained in Proposal 1 some months.
Dairy Herd Improvement Association
(DHIA) component data was offered at
the hearing. This data is from farms who
elected to use DHIA services and are
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neither a proper statistical sampling of
the US nor a census of the US; however,
it is a large data set that covers many
farms of different sizes and locations.
The DHIA data is consistent with
estimated data provided by USDA. In
the four skim/fat orders, average protein
levels from 2020–2022 were above the
current formula assumptions but below
those contained in Proposal 1.
This decision is considering how the
price formulas should be updated to
reflect current market conditions. Milk
composition levels are one piece of the
formulas being addressed. However, as
with all the factors adopted at the time
of Order Reform and updated through
subsequent rulemakings, the question
before the Department is what level is
representative of current supply and
demand conditions, as required by the
AMAA. Some parties argued milk
composition factors should not be
changed because not all milk would
meet the levels proposed by NMPF.
Price formulas in the FMMO system
have never had factors that assumed all
milk was identical, just as it has not
been assumed that each plant has the
same cost of manufacturing or yields.
Because FMMOs utilize a national
pricing system, price formulas have
always relied on benchmarks to set
levels representative of market
conditions. The nature of any
representative number is that some milk
will fall above or below the specified
level. This was true with the milk
composition levels that were adopted in
2000, and similar to other factors used
in the formulas such as make
allowances, survey commodity prices,
and butterfat recovery percentages.
While the record does not contain a
comprehensive data set of milk
component levels received at all fluid
milk plants, it does contain data on milk
component levels of all milk pooled on
the FMMOs, as well as evidence
submitted by some producers on the
component levels in their milk, and
information from some fluid milk
handlers on the component levels they
receive. Importantly, fluid plant
operators testified the milk components
received at their respective plants are
higher than currently assumed in the
formulas, but less than what was
proposed by NMPF and NAJ.
The record clearly supports that
producer milk now contains higher
levels of skim milk components
compared to when the current
composition factors were established in
2000. As FMMO provisions should
reflect current market conditions to
ensure orderly marketing, the question
becomes what specific composition
standards best reflect the current market
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and are consistent with the practice of
specifying levels that ensure minimum
prices are most consistent with supply
and demand conditions. The review of
record evidence described earlier
reveals many factors should be
considered: the component levels of
pooled producer milk, the variability in
milk components regionally and
seasonally, the discrepancy in milk
component levels received by fluid milk
handlers compared to manufacturing
handlers, and the variability of
component levels from farm to farm.
These factors were not specifically
mentioned as being considered in the
Order Reform decision when the current
levels were set. However, given the
evolution of the dairy industry in the
past 24 years, milk composition
benchmarks are relevant for
consideration in this proceeding.
The record indicates milk
composition levels should be increased,
but the levels in Proposal 1 are not
justified. Given the variability and
seasonality of component level
information contained in the record,
this decision continues to find the
average component levels in the
FMMOs from 2016–2022 to be the most
appropriate benchmark to represent
producer skim milk components, and
result in a valuation of skim milk
reflecting current market conditions.
Accordingly, this decision continues to
recommend the following: 3.3 percent
true protein, 6.0 percent other solids,
and 9.3 percent nonfat solids.
Estimated data for the three
southeastern orders shows component
levels exceeding these proposed levels
in recent months, thus addressing
opponents’ claims that manufacturing
handlers in the southeastern orders
receive lower component milk than
other FMMOs.
In its comment on the recommended
decision, NMPF suggested the 2018–
2022 time period would be more
appropriate. However, this decision
continues to find the 2016–2022 time
period the most appropriate as it
maintains a proper balance between
sellers’ and buyers’ concerns expressed
in this rulemaking and would provide
for more orderly marketing.
In public comments submitted on the
recommended decision, IDFA and MIG
reiterated previous arguments offered
that fluid milk handlers do not receive
milk with higher nonfat solids levels
and, even if they did, cannot recover a
higher value for them in traditional
fluid milk products (e.g., gallons and
half gallons) which encompass a vast
majority of Class I sales. They presented
a number of arguments: (1) the
Department failed to justify a policy
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change as it had previously stated Class
I prices should not be priced on
components because there is no
additional value in Class I products; (2)
the Department failed to address why
updated milk composition levels
support orderly marketing and therefore
meet the objective of the AMAA; and (3)
the Department ignored fluid milk
handler testimony regarding the
components levels they receive.
On the other hand, NAJ’s public
comment argued that by not increasing
composition standards to the levels
proposed by NMPF and NAJ, the
Department is artificially constraining
the manufacturing and Class I milk
price relationship and failing to address
the resulting instances of disorderly
price inversions and depooling.
This final decision is not
recommending a Class I policy change,
as some commenters suggest. This
decision continues the Class I pricing
policy adopted as part of Order Reform.
Prior to Order Reform, FMMO prices
were based on prices determined by the
competition for Grade B milk supplies
updated by a product price formula
(referred to as the Basic Formula Price
(BFP)). During Order Reform, the
Department sought to find a
replacement that would: (1) meet the
supply and demand criteria set forth in
the AMAA; (2) not deviate greatly from
the general level of the current BFP; and
(3) demonstrate the ability to change in
response to changes in supply and
demand. 64 FR 16026, 16091 (Apr. 2,
1999).
The BFP, and its predecessor
Minnesota-Wisconsin price (M–W
price), represented a competitive cost of
Grade B milk in the Minnesota and
Wisconsin area as it was the value for
milk at the farm sold into manufacturing
uses in those areas. A butterfat
differential, reflecting the value of
milkfat, was subtracted to determine the
value of milk having no fat—i.e., skim
milk. Class I skim prices at the time
were determined by adding a location
differential to the BFP skim price. As it
was a survey of prices paid for raw milk
in manufacturing, updated by the value
of commodity products, the BFP met the
objective of the AMAA to reflect market
supply and demand conditions. The
BFP had the ability to change in
response to changes in milk component
levels and their value to the
manufacturer. By the same token,
changes in a manufacturer’s costs of
manufacturing or yields could also be
demand factors that could move the
BFP. A change in the BFP due to any of
these underlying factors, including milk
composition, could be passed through to
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the Class I price which was based off the
BFP.
With the adoption of product price
formulas to replace the BFP in 2000,
Class prices became determined, in part,
from the value of commodity dairy
products in wholesale markets whose
values were translated to an implied
value for farm milk used in each Class.
The Class I skim price became
determined through the higher of the
Class III or Class IV skim price. The new
pricing system also required a new
method for determining these Class III
and Class IV skim milk values. Under
the new system, a value of skim milk
had to be built up from its underlying
milk components as there was no farm
milk price to start with, only product
prices. Hence, specifying underlying
composition levels of skim milk based
on either a skim solids standard or
protein plus other solids standards was
necessary. At the time of the transition
from BFP to product price formulas, the
Class I price reflected the supply and
demand conditions for all milk
products, as the BFP replacement was
designed to not deviate greatly from the
BFP price levels at the time of Reform.
As highlighted in the decision, ‘‘The
supply and demand for Grade A milk is
not limited to one category of products.
The same milk may be used for fluid or
soft manufactured products as well as
the Class III and Class IV products used
to determine the BFP. As a result, the
minimum prices established for Class III
and Class IV reflect supply and demand
for the milk used in all products’’ (64 FR
16026, 16095).
The record of this current proceeding
has highlighted that under the current
product price formulas, the standard
component assumptions in the Class III
and Class IV formulas are not able to
automatically adjust to reflect the value
of milk used in all products. Data
reveals the current formulas reflect the
value of very few products in the market
as current average FMMO milk
composition levels are consistently
exceeding the assumed standard levels.
Further, as highlighted earlier, fluid
milk handlers testified to routinely
receiving milk at composition levels
greater than the current assumptions.
USDA data on MCP orders show market
average components consistently above
the current standard components since
Order Reform, with a noticeable
increase in the rate of change since
2016. When combining MCP order data
with USDA estimated data for the fat/
skim markets, market averages have
exceeded the assumed standard
component levels since 2021.
Some commenters claimed data
entered by fluid milk plants was ignored
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and that, instead, USDA relied on less
relevant FMMO data. This decision
rejects the claim that FMMO data is less
relevant to the determination of skim
milk composition standards in the
formulas than the evidence presented by
the plants in question. The current
assumptions reflect FMMO data from
when the standards were first adopted,
and such consideration remains relevant
as a change is being considered. As
described earlier, the objective of the
product price formulas is to represent
the value of milk used in all products.
Milk composition standards are part of
that valuation, and as such, it remains
valid to consider FMMO data that
reflects the composition of milk used in
all products.
As described earlier, aggregated data
supplied by MIG through a survey of
members of its fluid milk plants
regulated by MCP Orders show
components levels consistently
exceeding current assumed levels but
below those proposed by NMPF and
NAJ. This information was specifically
listed as a factor in determining the
proposed skim milk composition levels.
This decision finds updating the skim
milk composition standards will
provide for more orderly marketing as
they will better reflect the supply and
demand conditions for milk used in all
products, as was one of the stated
objectives when the product price
formulas were first adopted. As is the
nature of fixed factors such as milk
composition standards, much like make
allowances, are changed through
rulemaking. This decision continues to
find updating milk composition, as
described earlier, will ensure prices
paid by handlers and received by
producers reflect the supply and
demand of milk, a tenet of the AMAA.
NAJ argued the decision ignored
testimony presented on the impact of
price inversion and depooling and
insisted adoption of the proposed levels
maintains a narrow spread between
Class I and manufacturing prices. Much
testimony was given on the impact of
price inversions and depooling and
attributed at least some cause to
inadequate skim milk composition
levels. While record evidence
demonstrated the occurrence and
magnitude of price inversions and
depooling, such outcomes are not a
reason for changing milk composition
levels. This decision finds that milk
composition levels should be increased
to better reflect current market
conditions. While this change may
decrease the occurrence and/or
magnitude of price inversions and
depooling, this was not a determinant in
proposing the change as this decision
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does not find it an appropriate reason
for updating the valuation of skim milk.
A comment filed by Crystal Creamery
stated the proposed levels will cause a
disproportionate burden for fluid milk
handlers in California that must fortify
Class I products to meet the State nonfat
solids standard. As required by the
AMAA, FMMO class prices are applied
uniformly across all handlers regulated
by a FMMO. Any additional costs a
handler might incur due to State
requirements are outside the purview of
USDA, and outside the scope of this
proceeding.
During the hearing and in its posthearing brief, Edge proposed, in
addition to updating skim component
levels, that the assumed butterfat level
of 3.5 percent should also be updated to
facilitate risk management. This idea
was not proposed by USDA in the
recommended decision.
Edge’s public comments on the
recommended decision reiterated its
request to update the butterfat standard,
citing hearing testimony but providing
no new arguments. A comment by
Sabrosura Foods made the same request.
Some commenters indicated not
changing the butterfat standard would
cause issues related to their risk
management positions.
This decision continues to find
changing the butterfat standard is not
needed to maintain orderly marketing of
milk within the FMMO system. Risk
management programs, which often
utilize FMMO prices, are maintained in
the private sector. These programs can
adapt as necessary to facilitate the use
of updated FMMO price formulas.
Additionally, the butterfat standard
does not impact FMMO prices paid by
handlers, both fluid and manufacturing,
because in all orders handlers pay for
the actual pounds of butterfat received.
Therefore, the request to amend the
butterfat standard continues to be
denied.
The NMPF and NAJ proposals
contained alternative updating and
implementation schedules for the skim
milk composition levels. NMPF
proposed the composition levels be
updated once every three years, but only
if there was a 0.07 percent or greater
change in nonfat solids levels,
compared to what was in regulation. For
example, if Proposal 1 was adopted,
milk composition factors could only be
updated three years later if the average
nonfat solids levels in pooled FMMO
milk was 9.48 percent (9.41 × 1.007).
NAJ proposed the levels be updated
annually, regardless of the magnitude of
increase. Both proponents requested a
12-month implementation lag because
of the implications such a change could
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have on producer risk management
positions. Edge proposed a longer
implementation lag of 151⁄2 months
because of risk management positions
tied to the DRP.
The development and use of dairy
risk management tools is relatively new,
and the Department has never before
been asked to delay implementation of
FMMO changes in consideration of risk
management. However, testimony made
clear producers’ concern regarding the
negative financial impact that could
occur if regulatory changes did not
account for the growing use of risk
management tools.
Producers testified to the use of
numerous market-based risk
management tools, including the CME
futures and options, and the two USDARisk Management Agency approved
insurance products, DRP and Livestock
Gross Margin—Dairy (LGM-Dairy). Use
of risk management tools by producers
testifying at the hearing varied, with
some not using any tools, some only
enrolling in the DMC program which
does not involve futures prices, and
fewer using DRP insurance or the CME
hedging tools. The record reflects 32
percent of U.S. milk production was
covered in 2022 under DRP, and with a
much smaller use of LGM-Dairy.
Producers testifying were particularly
concerned with the implementation
schedule for the initial change, as risk
management positions could be as far
out as 18 to 24 months. Evidence shows
that from 2018 through 2022, almost all
CME contracts, 97.34 percent, expired
within 12 months. According to
producers, any change to the milk
composition level assumptions during
the contract period could result in basis
risk to producers not covered by the
hedge. A CME witness testified they saw
a 54 percent drop in contracts with
expiration dates over 360 days in 2022
as compared to 2018, which the CME
attributed to the industry already
anticipating a regulatory change based
on the outcome of this hearing.
Record evidence depicted the concern
regulatory changes could have on risk
management tools, particularly the
impact on the usability of these tools
during a transition period. However,
producer equity requires that risk
management usage be considered
against the interest of other producers
who do not use risk management tools,
because it would delay recognition of
the higher components in producer
milk.
Risk management issues are not an
appropriate consideration in whether
milk composition standards should be
changed or to what level they should be
changed. However, this decision finds
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the timing of a regulatory change could
impact producer hedging decisions
made before a regulatory pricing change.
This decision continues to find it
appropriate to consider an
implementation timeframe in an attempt
to mitigate potential financial harm to
producers who utilize risk management
tools.
The recommended decision proposed
a 12-month implementation lag,
beginning when other changes from this
proceeding become effective. The 12month lag was selected to cover hedge
positions for the vast majority of
producers utilizing these tools There
was considerable public comment from
six dairy farmers, five State Farm
Bureaus, and four producer-led
organizations opposing the 12-month
implementation delay on the proposed
skim milk composition levels. The
producers and producer organizations
requested the standards be implemented
immediately so producers would be
properly compensated for the
components in their milk without delay.
Some producers questioned why an
implementation delay was proposed for
skim milk composition standards but
not for other factors such as make
allowances that also impact Class III and
Class IV prices. As noted in the
summary of testimony, proponents of
the delay explained they assume
additional basis risk if a change in a
price formula factor results in a price
higher than what was locked in when
they placed a hedge. As described in
testimony, additional basis risk is not
assumed if a price formula change
results in a lower price.
Record testimony from the CME, as
described earlier in the summary of
testimony, indicated a decrease in the
number of contracts with expiration
dates over 12 months due to the
regulatory uncertainty created by the
unknown implementation timeline of
this rulemaking proceeding. A comment
submitted by the CME in response to the
recommended decision noted a
continuing decline in the volume of
contracts over 12 months. This indicates
the market is already adjusting to
potential FMMO changes.
Accordingly, while this decision
continues to find it appropriate to offer
an implementation lag for the skim milk
composition standards because of the
impact to producer hedging positions,
the record evidence indicates that
shortening the implementation lag to 6
months is appropriate. When combined
with the additional rulemaking steps
still needed to determine producer
approval and issuance of a final rule if
approved by producers, this
implementation timeframe still offers
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adequate notice to the vast majority of
producers utilizing risk management
tools, while also allowing Class I skim
milk prices to more quickly reflect milk
supply and demand conditions. The
implementation lag would still begin
when the other changes from this
rulemaking became effective.
Lastly, this decision does not support
an automatic update of the milk
composition levels, as contained in
Proposal 1 or Proposal 2. It is clear from
the record that many factors, as
described earlier, should be considered
when making a change. Those factors
can only be considered through the
course of a rulemaking. This is the same
rationale for changes to make
allowances and yield factors, the other
two sets of fixed parameters in the
pricing formulas, which data shows
tend to change over the long term rather
than short term (i.e., monthly), but
outside of the normal, predictable
seasonal swings in milk components.
The nature of all of these fixed
parameters, including skim milk
components, involve complexities that
are difficult to anticipate, as discussed
throughout this final decision, and
therefore demand robust consideration
through a rulemaking proceeding.
Surveyed Commodity Products
USDA administers the Dairy Product
Mandatory Reporting Program to gather
weekly wholesale prices of four
manufactured dairy products. Average
survey prices are released weekly in the
National Dairy Product Sales Report,
and monthly average commodity prices
are released by AMS on or before the
5th of the following month. The
monthly product prices are then used in
the FMMO price formulas to determine
component values in raw milk. The
same four commodities have been
surveyed since 2000. The National
Agricultural Statistics Service
administered the survey from 2000 to
2012; submitting data was voluntary
until 2008, and then mandatory and
verified from 2008 to 2012. AMS has
administered the survey since 2012 with
the data being mandatory and audited
73 FR 34175 (June 17, 2008).
This proceeding is considering four
proposals that would add or remove a
variety of products in the DPMRP
survey. Because FMMOs enforce
minimum raw milk pricing, the
overarching question for the Department
in this decision is whether the current
surveyed commodities are an
appropriate representation of market
clearing, wholesale commodity products
whose prices provide an accurate
reflection of the minimum value of raw
milk. DPMRP currently surveys cheddar
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cheese, butter, nonfat dry milk, and dry
whey. Proposals submitted in this
proceeding offer changes to the cheese
survey (Proposals 3, 4, and 6) and
changes to the butter survey (Proposal
5). No proposals seek changes to the
NFDM or dry whey surveys.
Cheese Survey
Currently, FMMOs utilize a weighted
average DPMRP survey price of 40-lb
cheddar cheese blocks and 500-lb
cheddar cheese barrels to determine the
protein price used in the Class III price
formula. Although both products meet
the definition of cheddar cheese, the
different package styles reflect that their
intended uses are different. Cheddar
cheese barrels are intended to be further
processed into processed cheeses.
Cheddar cheese blocks can also be used
for that purpose, but they are produced
with the intention of use in a natural
cheese with minimal further processing
(for example cutting into consumer
packages or shredding.) DPMRP weights
the cheese price by the volume of
surveyed blocks and barrels, which
according to record evidence, is
typically around 50 percent blocks and
50 percent barrels.
Proposal 3 seeks to drop barrels from
the survey and solely rely on a survey
of 40-lb blocks. Proponents offered a
few reasons for dropping barrels. First,
they believe barrels are overrepresented
in the survey because the weighting
methodology is based on the production
percentages included in the survey and
not actual production across the entire
cheddar cheese market. Proponents
believe the percentage of cheddar
cheese manufactured and priced off 40pound block prices is significantly
higher than 50 percent of the U.S.
natural cheese market. Second,
proponents argue that having what
amounts to two products in the survey
results in an average price that is not
representative of either blocks or
barrels. They say this has been
particularly evident since 2017, when
market prices between blocks and
barrels began to significantly diverge,
both in magnitude and direction, from
the historical average difference of
$0.03. Barrel prices were even
occasionally higher than blocks
(historically, block prices have been
higher than barrel prices). Proponents
argued that when barrel prices have
been well below the assumed $0.03
difference, the current weighting
methodology results in a lower average
cheddar price than would have been if
the two prices were weighted in
accordance with actual, total production
of each product. Members of NMPF
testified a block-only survey would
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contain adequate survey volume to be
representative of the cheese market.
Opponents of dropping barrels
asserted: (1) it is not appropriate to
eliminate approximately half of the
current cheese survey volume; (2)
barrels are a market-clearing product
and should continue to be included in
the survey; and (3) blocks and barrels
together represent the national cheese
market as they are both commodity
products with different commercial
uses. Opponents also disputed the claim
that most cheese is priced off the block
market.
During the hearing, Edge offered an
alternative that would reweight the
survey average price based on the U.S.
production volume of blocks and barrels
as determined by NASS, instead of
volume from respondents to the AMS
survey. They opined barrels should not
be removed from the survey because in
months where the barrel price exceeded
blocks, the Class III price would have
been lower than it otherwise was, and
consequently producer revenue would
be less. Instead, Edge argued a better
solution to the issue of overweighting
barrels was to use a weighting
methodology reflective of actual U.S.
cheddar cheese production.
Proposal 4, submitted by AFBF, seeks
to add 640-lb blocks of cheddar cheese
to the survey. This type of cheddar
cheese is made using the same process
as 40-lb blocks and differs only in the
final container for the cheese curd. Both
sizes represent an intermediate product
requiring further processing before it
can be consumed. The proponent’s
primary justification is the additional
survey volume that would be added.
The AFBF agreed with NMPF that
barrels are overrepresented in the
survey, and their proposed solution is to
add survey volume through the addition
of 640-lb blocks. This argument
implicitly assumes the accuracy of milk
valuation is improved when a larger
volume of cheese is surveyed.
Opponents to adding 640-lb blocks
argued: (1) most 640-lb blocks are
already priced off 40-lb blocks, so their
inclusion would not enhance price
discovery; and (2) 640-lb blocks are
typically customer-specific which
would exclude those blocks from the
survey. The opposition is premised on
the additional survey volume not
adding new price information either
because the prices are already reflected
in the 40-pound block price, or because
the customized products are valueadded and should not be included for
minimum pricing.
Proposal 6, offered by CDC, seeks to
add mozzarella cheese to the survey.
Proponents argue mozzarella is the
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largest volume of cheese produced in
the U.S., and revenue from mozzarella
products should be captured in the
survey and ultimately reflected in prices
paid by Class III handlers. Further,
proponents argued a higher Class III
price should be reflected in producer
prices to offset increasing farm
production costs.
Opponents argued there is no one
standard of identity for mozzarella
cheese, making it difficult to delineate
what mozzarella product would have a
substantial volume of reportable sales to
represent the market value of mozzarella
cheese. In addition, opponents stated no
manufacturing cost data is available to
be evaluated for inclusion in the
manufacturing allowance calculation for
cheese. Lastly, opponents asserted
mozzarella is not a market-clearing
product and therefore should not be
considered when determining minimum
prices.
While there were three proposals
offering changes to the cheese survey,
two of them lack data and evidence to
support adoption. First, the addition of
mozzarella is not supported by the
record. The record reveals multiple
standards for different mozzarella
cheese products, but no evidence was
presented to show which of those would
be appropriate to survey as an
improvement in finding a minimum
value for milk. Furthermore, no
evidence was presented on what would
define a commodity mozzarella product,
rather than a value-added product,
which is a general rule for inclusion in
the DPMRP. Proponents offered
information on mozzarella in consumer
sized packages (e.g. mozzarella sticks),
but little to no evidence on what should
be considered a commodity mozzarella
product. Evidence shows that a majority
of what is considered mozzarella
production is driven by customer
specification and would not meet any of
the standards of identities offered,
indicating it would be considered a
value-added product and excluded from
the survey. Lastly, the record indicates
mozzarella products are already
typically priced based on the 40-pound
cheddar cheese block price. Therefore,
adoption of Proposal 6 would only
result in significant costs associated
with determining a commodity
mozzarella product to be surveyed and
the ongoing cost of surveying said
product, without adding measurable
new price information to the DPMRP
cheese survey.
Most public comments submitted
regarding changes to the surveyed
commodity products supported the
continued exclusion of mozzarella
cheese. A public comment submitted by
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Leprino stated that continued exclusion
of mozzarella cheese from the Class III
price formula would limit complexity
and more accurately reflect a standard
market price. Two individual dairy
farmers also submitted comments in
support of excluding mozzarella cheese.
In its comments, CDC requested
reevaluation of the decision, reiterating
arguments expressed at the hearing that
more products should be included in
the DPMRP survey and inclusion of
mozzarella would raise producer
revenue. Similar comments were also
submitted by the National Family Farm
Coalition.
Ten dairy farmers from California and
Wisconsin submitted public comments
supporting the inclusion of mozzarella
cheese. The farmers generally expressed
that mozzarella should be included
because it is a key milk price indicator,
and its higher value should be reflected
in their milk check. A Wisconsin dairy
farmer was of the opinion the cheese
value should not be determined from
only one type of cheese.
This decision continues to find
exclusion of mozzarella cheese
appropriate. Hearing testimony and
public comments made in support of
including mozzarella primarily centered
around generating additional revenue
for producers as mozzarella garners a
higher price in the market. FMMO
prices represent minimum prices paid
by handlers for milk used in marketclearing commodity products. The
DPMRP survey specifically excludes
value added products, and the record
contains no evidence that mozzarella is
considered a market-clearing
commodity product. Consequently,
Proposal 6 continues to be denied.
The record lacks evidence to support
adoption of Proposal 4, adding 640-lb
blocks. The record reflects widespread
industry consensus that 640-lb blocks
are typically priced off 40-lb blocks.
Because of this price relationship,
numerous industry witnesses testified
that no new price information would be
captured by including 640-lb blocks. In
addition, several witnesses testified 640lb blocks are largely made-to-order on
long-term price contracts which would
exclude the sales from the survey
because of these marketing
characteristics. No data was presented
to evaluate whether any additional price
information gained through inclusion of
640-lb blocks would offset the burden
(lack of efficiency) to both the industry
and USDA for their inclusion.
One individual dairy farmer and the
AFBF submitted comments on the
recommended decision taking exception
with the continued exclusion of 640-lb
blocks. The AFBF reiterated its
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testimony that inclusion of 640-lb
blocks would add volume to the survey
to ensure more accurate and
representative pricing. Similar
comments were submitted by the New
York, Michigan, Wisconsin, Minnesota,
and Arizona Farm Bureaus. AFBF
further claimed that without inclusion
of 640-lb blocks, manufacturers switch
between 40-lb and 640-lb block
production to avoid reporting prices to
the DPMRP survey. There is no
evidence on the record to support that
such price manipulation would or does
happen given that 640-lb blocks are
currently not reported. This decision
continues to exclude 640-lb blocks as
the record does not demonstrate price
discovery is aided by its inclusion. In
addition, this decision continues to find
it appropriate that more orderly
marketing conditions are best
maintained through price discovery of a
single commodity product, as further
discussed below. Accordingly, Proposal
4 continues to be denied.
The Department considered the idea
presented by Edge to reweight blocks
and barrels in the survey to reflect total
U.S. cheddar cheese production
volumes by packaging type, instead of
survey volumes. However, the record
lacks evidence regarding the market
dynamics of barrel production to
analyze how this idea would be
implemented, or the impact it may have
on prices, to evaluate whether it would
result in a more appropriate cheese
price. In addition, as is made clear
below, this final decision continues to
find that surveying two cheese products
is no longer an appropriate method for
providing orderly marketing in today’s
marketplace, rendering further
discussion of a more proper weighting
methodology unnecessary.
A comment submitted by Edge in
response to the recommended decision
maintained reweighting blocks and
barrels was a more appropriate
alternative to removing 500-lb barrels
from the survey. However, the comment
did not address a methodology to
determine how such a proposal would
be implemented. This decision
maintains that surveying two cheese
products, regardless of how they were
weighted in the survey, results in a
cheese price that does not represent a
single product.
What is left to consider is whether
500-lb barrels should remain in the
survey. When determining which
products are appropriate to be included
in surveys, the Order Reform Final
Decision is instructive. As described in
the decision, ‘‘The importance of using
minimum prices that are marketclearing for milk used to make cheese
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and butter/nonfat dry milk cannot be
overstated. The prices for milk used in
these products must reflect supply and
demand and must not exceed a level
that would require handlers to pay more
for milk than needed to clear the market
and make a profit.’’ 64 FR 16026, 16094
(Apr. 2, 1999). To effectuate that
objective, FMMOs use survey prices of
market-clearing commodity products.
In the Order Reform decision, both
block and barrel cheese were included
in the survey to increase the sample size
and give a better representation of the
cheese market. Since Order Reform was
implemented, an evaluation of which
products should be included in the
cheese survey has occurred twice. In
2000, shortly after implementation of
Order Reform, the Department
considered both the addition and
subtraction of cheese products into the
survey, which at that time was
administered by the NASS. 65 FR 20094
(April 14, 2000). In 2007, the
Department again considered changing
the products in the cheese survey,
including the removal of 500-lb cheddar
cheese barrels. 72 FR 6179 (Feb. 9,
2007). In both proceedings, the
Department maintained that inclusion
of both 40-lb blocks and 500-lb barrels
was representative of the cheese market
at the time.
While not contained in the hearing
notice of the 2000 proceeding, there was
testimony at the hearing for
incorporation of other cheeses in
addition to cheddar. The idea was
denied because ‘‘If the survey included
other descriptions of cheddar and other
types of cheese, such as mozzarella, it
would not be possible to consider the
reported price as representative of the
value of any particular product.’’ 67 FR
67906, 67926 (Nov. 7, 2002). This
reasoning illustrates an important
consideration of which products should
be contained in the survey; products
whose resulting prices are
representative of a distinct product.
For all other product pricing formulas
(butter, nonfat dry milk, and dry whey),
DPMRP only surveys one product. The
butter survey collects prices of 80
percent salted Grade AA butter, the
NFDM survey collects prices of USDA
Extra Grade NFDM, and the dry whey
survey collects prices for USDA Extra
Grade dry whey. While all three of these
products can be in varying bulk
packaging sizes as specified in
regulation, the product itself is
essentially the same. 7 CFR 1170.8
Consequently, the resulting survey
prices represent single, distinct
products.
The same cannot be said of the two
cheddar cheese products surveyed.
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Forty-pound block cheddar cheese is
typically colored, and primarily sent for
further processing into consumer type
packages such as ‘‘cut and wrap’’ and
shredded products. Barrel cheese, on
the other hand, is typically white
(uncolored) and used primarily for
processed cheese and cheese-flavored
products. The hearing record
demonstrates the two products are not
interchangeable but rather are produced
for two distinctly different uses which
have their own supply and demand
factors. These fundamental qualities
have not significantly changed since
Order Reform. At the time of Order
Reform, and during the subsequent two
rulemakings considering changes to the
cheese survey, the prices of blocks and
barrels were relatively close, and it was
determined the additional volume
added with the inclusion of barrels was
a benefit to orderly marketing as it
ensured a robust survey sample.
Testimony and evidence presented
showed the historical price alignment of
the two products, estimated at $0.03 per
pound, until 2017. Proponents argued
the market changed significantly in
2017 when there was a dramatic
increase in price volatility both within
each product and in the relationship
between the two products. To determine
statistical validity of that claim, the
differences in the monthly average block
and barrel prices from 2001–2023 were
analyzed to identify breaks in the
structure of the block-barrel spread. The
analysis found December 2016 to be a
statistically significant month,
indicating the period between 2001 to
2016 and 2017 to 2023 were statistically
different in terms of the block-barrel
spread volatility. Historically, prices for
blocks and barrels were similarly
priced. From 2001–2016, the blockbarrel spread averaged $0.01 per pound,
while from 2017–2023 the spread
significantly increased to $0.115 per
pound.
When surveying prices of two
products that recently are so divergent,
the resulting average cheese price does
not represent either of the products
surveyed. For example, in October 2020,
cheddar block prices averaged $2.5692
per pound and cheddar barrel prices
averaged $0.6052 per pound lower at
$1.9640 per pound. The weighted
average cheese price for October used to
compute FMMO component prices was
$2.2921, a price reflecting neither of the
two survey products. Accordingly, after
careful analysis of the record, this final
decision continues to find the DPMRP
cheese survey should only include 40lb cheddar cheese blocks. Evidence
reveals a clear and statistically
significant shift in the cheddar markets
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occurred in 2017, which witness
testimony attributed to a number of
market factors including plant
investments and increased production
of white whey. As a result, inclusion of
both blocks and barrels in the cheese
survey has resulted in average cheese
prices used in FMMO formulas that are
not representative of any one cheese
product. Therefore, this decision
continues to recommend adoption of
Proposal 3.
Comments submitted by NMPF,
Select, and DFA in response to the
recommended decision supported the
exclusion of 500-lb barrels to provide
for an appropriate market clearing
cheese price representative of a single
product. Comments submitted by two
individual dairy farmers and state Farm
Bureaus from Arizona, Wisconsin,
Minnesota, Michigan, and New York
expressed concern that the exclusion of
500-lb barrels could affect market
transparency and price accuracy. Prices
used in the FMMO system are collected
through the DPMRP, which has a robust
reporting and auditing component to
ensure reporting handlers are complying
with program regulations and reporting
all qualifiable products. In addition,
Annual Validation surveys are
conducted with all current and
potentially qualifying plants (any entity
marketing and selling one million
pounds or more of product) to verify
current reporters know and understand
all reporting requirements and if
potentially qualifying plants are still
exempt from reporting. Consequently,
given the safeguards described, this
decision does not find price accuracy
and market transparency will be
negatively impacted by the exclusion of
500-lb barrels.
There was significant testimony
regarding how cheddar barrel makers
would be impacted if 500-lb barrels
were no longer surveyed. It was clear
there was no industry consensus, not
even between barrel makers, on the
impact. What is paramount to any
rulemaking is to ensure FMMO
provisions provide for orderly
marketing conditions, as required by the
AMAA. The ultimate consideration is
which set of bulk, market-clearing,
commodity type dairy products provide
the most accurate and efficient means of
determining the minimum value of milk
components. One facet of this is to
ensure prices used in the formula best
represent the fundamental products
selected for their purpose. As described
above, that goal is not being met by
using both blocks and barrels in the
survey.
One concern expressed by some barrel
cheese manufacturers is that the Class
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III price resulting from a block-only
calculation would often be too high to
ensure a profitable return to barrel
cheese makers. Multiple considerations
are worth noting. One, there are
numerous styles of cheese represented
in Class III. Manufacturers of each have
no guarantees on their net returns, and,
hence, manage their business by taking
minimum pricing into account. To that
end, there are many steps remaining in
this rulemaking process, including
publication of a final decision, producer
referendum, and if passed, an
implementation period. These steps
should allow barrel manufacturers
ample time to determine if changes are
needed in their business practices to
adjust to the prices that would result
from this recommended price survey.
As FMMOs only enforce minimum
regulated prices on pooled milk, it
should not be overlooked that barrel
manufacturers choose whether to pool
milk subject to minimum prices.
Since this decision proposes to
remove 500-lb barrels from the DPMRP
survey, this decision also proposes a
conforming change to the cheese pricing
reporting specifications in the Dairy
Product Mandatory Reporting Program
regulations (7 CFR 1170.8).
Butter Survey
Currently, FMMOs utilize the
monthly average DPMRP survey price of
80 percent salted Grade AA butter in 25kilogram and 68-pound boxes to
determine the butterfat price used in all
4 classified pricing formulas. Proposal 5
seeks to add unsalted butter to the
survey. Proponents argue the volume of
U.S. butter production captured by the
survey has been decreasing, and adding
unsalted butter would increase the
sample size and yield more robust
survey results.
Testimony in opposition to Proposal 5
asserted the production of unsalted
butter is mostly manufactured to a
particular customer order. Because the
lack of salt results in a shorter shelf life,
unsalted butter is generally not
manufactured unless its sale is
imminent. On the other hand, because
salted butter can be stored, when milk
needs to clear the market and butter
manufacturers lack a buyer, they will
make salted butter to store and sell later.
Opponents also noted unsalted butter is
typically exported, often facilitated
through premium-assisted sales,
rendering those sales unreportable.
The record lacks evidence to support
adoption of Proposal 5. Although data
was entered showing the amount of
unsalted butter graded by the USDA
Dairy Grading Program tripled between
2005 and 2022, the USDA butter grading
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program is voluntary; hence, the data
does not give a complete picture of the
U.S. butter market. Furthermore, there
was no indication regarding what
percentage of the graded butter volume
would be reportable given testimony
noting the structure of the unsalted
butter market would likely make a large
share of it nonreportable. No data was
presented to evaluate whether any
additional price information gained
through inclusion of unsalted butter
would outweigh the burden to both the
industry and USDA for its inclusion. In
fact, the record demonstrates that
unsalted butter is not a market clearing
product given its shorter shelf-life and
on-demand production.
The record evidence supports salted
butter as the market clearing butter
product and continuation as the only
butter product in the survey. In
addition, as discussed in evaluating the
cheese survey, having two commodity
products surveyed (such as blocks and
barrels) can have the unintended
consequence of resulting in a
component price that does not represent
either product produced. As no price
information was entered into evidence
to evaluate how salted and unsalted
butter prices compare, the Department
could not determine if a similar
situation might occur by adding
unsalted butter to the survey.
A comment submitted by CDC in
response to the recommended decision
advocated for increasing the number of
products surveyed, including unsalted
butter, but provided no additional
arguments for why unsalted butter
should be considered a market clearing
product. Accordingly, Proposal 5
continues to be denied.
Class III and Class IV Formula Factors
The Class III and IV formula factors
include four distinct elements—
manufacturing (make) allowance,
butterfat recovery, farm-to-plant
shrinkage, and nonfat solids yield.
a. Make Allowances
Make allowances represent the costs
of converting raw milk into the four
manufactured dairy products surveyed
by USDA. The current make allowance
levels were determined through a 2007
rulemaking that became effective
October 1, 2008, and are as follows ($/
per pound): cheese—0.2003; butter—
0.1715; NFDM—0.1678; and dry whey—
0.1991. The 2007 rulemaking used an
average of two surveys: a voluntary,
unaudited 2006 nationwide cost survey
conducted by the Cornell Program on
Dairy Markets and Policy (CPDMP), and
a mandatory, audited 2006 cost survey
of plants located in California
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conducted by the CDFA. This
proceeding must determine whether
manufacturing costs have increased
such that a change from the current
levels is warranted, and if so, what are
appropriate levels.
Four manufacturing cost data sets
were entered into the record for
consideration in this proceeding. The
first was conducted by the University of
Wisconsin, on behalf of USDA, and was
a voluntary survey of manufacturing
plants throughout the U.S. (2021
survey). This survey was similar to the
2006 CPDMP survey used to determine
current make allowances, as the primary
researcher authored both. The 2021
survey collected cost information
provided from manufacturing plants of
cheese (10 plants), butter (12 plants),
NFDM (27 plants) and dry whey (8
plants). Annual data submitted by
plants primarily represented calendar
year 2019, and included labor, utilities,
non-labor processing, packaging, general
and administrative, and return on
investment cost categories. The 2021
survey results were presented as total
averages, and high and low-cost plant
averages.
The 2021 survey methodology was
similar to the 2006 study, except for the
allocation of non-allocated costs. Some
fixed or overhead costs could not be
allocated directly. Some costs were
inherently direct costs but were not
collected in a manner that allowed them
to be assigned to a particular processing
activity or product. When that occurred
in previous studies, unallocated costs
were allocated on a solids basis, which
testimony revealed to be a common
practice, according to some
manufacturers. In some facilities making
multiple products, such as butter and
powder plants, not all plant operators
had the infrastructure to allocate costs
to the different products. A common
example was plant utilities wherein the
plant only had a single electric meter. If
an operator utilized 70 percent of the
solids received at the plant in butter,
then 70 percent of the unallocated costs
(e.g. electricity) were allocated to butter
production, and the remaining 30
percent were allocated to NFDM
production. This allocation method was
referred to by the study author as the
‘‘non-transformation’’ method.
In the 2021 survey, the author used
what they believed to be a better method
for addressing costs the manufacturer
could not directly allocate. Unallocated
costs were allocated based on an
estimation of the degree of processing
transformation the raw milk underwent
to transform into a manufactured
product. On a scale from 1 to 10,
products with minimum processing
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(liquid whey) were assigned a 1, while
products with a high degree of
transformation (whey protein
concentrate) were assigned a 10. The
survey author argued this somewhat
subjective and ordinal measure of costs
could provide a more logical allocation
of certain costs that were inarguably not
properly attributed through the nontransformation cost allocation method.
The most obvious example was the
highly energy consuming process of
drying for NFDM powders. For example,
operating a milk dryer requires
significant energy, resulting in an
assumption that it was more appropriate
for a higher percentage of the plant’s
energy costs to be attributed to its
powder production.
A second data set was a survey
conducted by the same author,
administered on behalf of IDFA, seeking
to capture more current costs and
increase the number of respondents.
This survey, referred to as the 2023
survey, was similar to the 2021 survey,
except for two elements. First, the
plants that voluntarily submitted data
were different in number and type: 18
cheese, 13 butter, 15 NFDM, and 9 dry
whey plants participated. The survey
author explained that while the number
of participating plants were similar for
butter and whey across both surveys,
the structure of the plants was
noticeably different. Consequently, most
of the variability in average costs
between the 2021 and 2023 surveys is
attributed to the plant sample, rather
than actual cost increases over time. For
example, the 2021 butter plants
surveyed tended to be larger than the
2023 butter plants surveyed, accounting
for a significant portion of the cost
difference between the two surveys.
Some witnesses at hearing also noted
the 2023 survey captured 2022 costs, a
time of historically high inflation which
has since moderated.
The second notable difference was the
2023 survey used the nontransformation methodology of
allocating unallocated costs on a solids
basis. The survey author indicated
mixed industry feedback on the
transformation allocation methodology
used in the 2021 survey, as many
participants stated allocating costs on a
solids basis is standard practice. To
facilitate comparison of the two surveys
the author also presented updated 2021
survey results using the nontransformation allocation methodology.
In support of a separate data set,
mandatory and audited 2004–2016
California manufacturing cost survey
results, conducted by the CDFA, were
entered. These surveys formed the
historical data used to forecast current
costs in the CA Forecast described
below. The 2006 CDFA study was used
by USDA when determining the current
FMMO make allowances.
The fourth data set, entered on behalf
of IDFA, was a result of a statistical
model that used data from the 2004–
Proposal 7
Proposals 8 and 9
Product
IDFA/WCMA
year 1
NMPF
ddrumheller on DSK120RN23PROD with PROPOSALS3
Cheese .................................................................................
Dry Whey .............................................................................
NFDM ...................................................................................
Butter ....................................................................................
NMPF asserted that their proposed
levels take a balanced approach between
recognizing increased manufacturing
costs and the impact to producers if
there is a significant increase from
current levels. They testified that while
they evaluated the 2021 survey when
developing their proposal, the levels
they ultimately proposed were a
consensus judgment of all NMPF
members. By their own description, the
proposal is not intended to reflect the
entirety of current manufacturing costs.
NMPF witnesses argued that their
proposal would update make
allowances to be a closer reflection of
manufacturing costs, but further
increases could not be justified because
of the potential impact to producers.
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0.2400
0.2300
0.2100
0.2100
0.2422
0.2582
0.2198
0.2251
They argued at the hearing, as well as
in their public comments in response to
the recommended decision, that until a
mandatory cost survey can be
conducted to provide assurances of
accuracy in manufacturing cost
calculations, any increases larger than
they proposed would reduce producer
revenue, lower already slim (if any)
margins, and negatively impact the
availability of adequate supplies of milk
for fluid use. They considered such
consequences disorderly.
NMPF stressed current make
allowances are too low and have
resulted in cooperative reblending as a
method of sharing losses among
cooperative members who own
manufacturing plants. NMPF witnesses
PO 00000
Frm 00046
Fmt 4701
2016 California manufacturing cost
surveys and other known input prices
and productivity data (for example, the
producer price index) to project future
California manufacturing costs, referred
to hereinafter as the CA Forecast. The
study author testified the model
predictions were a better estimate of
costs than a simple trend analysis since
they accounted for the impacts of other
factors, such as accelerating inflation,
that are known to describe changes in
manufacturing costs in California.
Unlike the 2021 and 2023 surveys
which evaluated six cost categories
(processing labor, utilities, packaging,
non-labor or utilities processing, general
and administrative, and return on
investment), the CA Forecast only
estimated three cost categories (labor,
utility, and other). Other costs were
defined as the remaining costs after
labor and utility costs were deducted.
Inasmuch as the CDFA results were
used by USDA when previously
amending make allowances, proponents
argued this statistical estimation of what
CA manufacturing costs might have
been for 2022 would be a helpful
indicator to validate other
manufacturing cost data entered into the
record.
These data sets were the basis of the
manufacturing allowance levels
proposed by stakeholders at the hearing.
Two sets of make allowance levels were
offered ($/pound):
Sfmt 4702
IDFA/WCMA
year 2
0.2561
0.2778
0.2370
0.2428
IDFA/WCMA
year 3
0.2701
0.2976
0.2544
0.2607
IDFA/WCMA
year 4
0.2840
0.3172
0.2716
0.2785
also testified to receiving reduced
premiums from manufacturing plant
customers as they attempt to recoup
costs not covered by the current make
allowance levels. Reduced and/or
deferred plant investment caused by
inadequate make allowances was also a
theme discussed by many witnesses.
Cooperative witnesses spoke of the
disproportionate burden on
cooperatives with balancing plants,
which inherently have higher
manufacturing costs as they do not
operate continuously at full capacity
because of the market-wide balancing
role they necessarily assume.
NMPF cooperative witnesses and
dairy farmer members presented
evidence on increasing farm production
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costs and slim farm margins. They
opined at the hearing, as well as in their
public comments to the recommended
decision, that the impact to producers’
profitability should be considered when
determining appropriate make
allowance levels.
WCMA and IDFA offered separate,
but identical, proposals. Their proposed
make allowance levels were derived
from the average of the 2023 study and
the CA Forecast, plus a $0.0015
marketing cost factor. The proposals
contained a 4-year implementation
schedule with 50 percent of the increase
implemented in year 1 and the
remaining 50 percent implemented
evenly across the next 3 years.
Proponents offered a phased
implementation schedule in recognition
of the impact that sudden, large
increases in make allowances would
have on producer revenue.
WCMA and IDFA witnesses asserted
there are limits to a manufacturing
handler’s ability to lower costs through
efficiencies. As make allowances have
not been increased in over 15 years, the
witnesses stated plants have reached the
limit on capturing cost efficiencies, and
inadequate make allowances are now
impacting innovation and capital
investments. Manufacturing handlers
testified their costs of manufacturing
have increased and are in line with the
2021 and 2023 survey results. As a
consequence of inadequate make
allowances, the witnesses said classified
prices are overvaluing raw milk. To
substantiate the claim, witnesses
compared producer mailbox prices with
FMMO blend prices. In regions where
mailbox prices (which contain
premiums and deductions reflecting
reblending) are below blend prices, the
witnesses asserted regulated prices are
too high, as manufacturers have lowered
market premiums to make up for high
manufacturing costs.
The record clearly demonstrates that
current make allowance levels are not
reflective of the costs manufacturers
incur in processing raw milk into the
finished bulk products of cheese, butter,
NFDM, and dry whey. This was one of
the only facts to which all participating
parties agreed and offered evidence in
support, as discussed above. However,
there were divergent views on what
should constitute adequate make
allowance values going forward.
Since 2000, when product pricing was
adopted, FMMO decisions have
consistently relied on surveys of
observed manufacturing costs to
determine proper make allowance
levels. Previous make allowances have
been derived in whole, or in
combination with, surveys conducted
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by CPDMP, CDFA, and the USDA Rural
Business Cooperative Service. The
importance of relying on actual,
observed costs cannot be overstated.
FMMO price formulas determine the
classified prices handlers pay to dairy
farmers. It is important that all variables
reflect actual market conditions.
While the use of modeling is helpful
for policy analysis, the evidentiary
record of this proceeding contains
adequate observed market data to
determine make allowance levels
without the need to rely on model
assumptions. Modeling involves a host
of assumptions made by the modeler, as
was described by the CA Forecast
author, which result in estimates with a
wide confidence interval. In other
words, cost estimates could have a wide
range of possible values consistent with
the model. The confidence interval for
the cost estimates widens when some
indexes used to forecast are not specific
to dairy manufacturing. Economic
modeling was considered and rejected
during Order Reform as a replacement
for the Basic Formula Price. This
decision affirms the Department’s longheld position that this type of modeling,
requiring extensive assumptions, is not
an appropriate methodology for
determining make allowances when
superior information is available. As it
is common for participants to not reveal
confidential information such as
manufacturing costs, the cost surveys
contained in evidence provide the best
available information on observed costs
for this proceeding. Accordingly, this
decision does not find justification for
using the CA Forecast in determining
appropriate make allowances levels.
In opposition to Proposals 8 and 9,
cooperatives and dairy farmer members
offered substantial testimony regarding
the potential impact to dairy farmers
should make allowances be significantly
increased. Accordingly, they
recommend adoption of the NMPF
proposal as it attempts to temper the
impact to producers.
FMMOs are designed to provide for
orderly marketing through classified
prices paid by handlers and marketwide
pooling to determine average minimum
blend prices paid to producers. As
FMMO formulas are market-oriented,
the product prices that drive classified
prices are chosen to reflect current
supply and demand conditions. This
was last reiterated by the Department in
2013, writing ‘‘when the supply of milk
is insufficient to meet the demand for
Class III and Class IV products, the
prices for these products increase as do
regulated minimum milk prices paid to
dairy farmers; because the milk is more
valuable, and the greater value is
PO 00000
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Fmt 4701
Sfmt 4702
95511
captured in the pricing formulas.’’ 78 FR
9248 (Feb. 7, 2013). Further, the
Secretary is expressly authorized in the
AMAA to set prices to reflect ‘‘. . . the
price of feeds, the available supplies of
feeds, and other economic conditions
which affect market supply and demand
for milk or its products. . . .’’ 7 U.S.C.
608c(18). This concept was discussed
and validated by a federal court and is
relevant to this proceeding. Bridgewater
Dairy, LLC et al. v. USDA, No. 3:07–cv–
104, 2007 WL 634059 (N.D. Ohio, 2007).
Therefore, the potential impact to
producers remains an inappropriate
factor in determining make allowance
levels. While many stakeholders look to
the FMMO program to provide stability,
it is not within FMMO authority to
support dairy farmer income.
Accordingly, record evidence does
not support adoption of Proposal 7,
whose make allowances levels are not
reflective of observed costs provided in
evidence and is designed to dampen the
impact to producers.
A vast majority of hearing participants
supported a USDA-administered,
mandatory, and audited survey as the
most appropriate method for obtaining
observed cost data to determine make
allowance levels. Some witnesses
asserted at the hearing, as well as in
public comments to the recommended
decision, that make allowances should
not be changed until such a survey is
administered and results published.
Conducting such a survey is not
currently authorized by law. The lack of
a mandatory survey has not been reason
to delay two previous updates to make
allowance levels, and its continued lack
of existence now is not a reason for
delaying such an update in this
proceeding. As discussed, the record of
this proceeding clearly demonstrates
manufacturing costs have increased
since make allowance levels were last
changed. Given the body of evidence,
this final decision continues to find it
appropriate to increase make allowances
to ensure the price formulas better
reflect manufacturing costs and provide
for more orderly marketing conditions.
The record reveals the voluntary,
unaudited nature of the 2021 and 2023
surveys are not considered an accurate
representation of costs by some
stakeholders, particularly the producer
community. Forty dairy farmers located
throughout the U.S. and 10 dairy farmer
organizations who submitted comments
to the recommended decision opposed
the make allowances levels contained in
the hearing notice and proposed by
USDA due to the unaudited and
voluntary nature of the surveys on
which they were based; further, DFA
and NMPF mentioned that the surveys
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and hearing record do not include cost
data from several large manufacturers,
potentially leading to an upward bias in
the make allowances contained in the
recommended decision. The AFBF; the
Arizona, Florida, New York, Michigan,
and Tennessee Farm Bureaus; and some
dairy farmers argued in their comments
that make allowances should not be
changed without a mandatory audited
survey, reiterating testimony on the
weaknesses of the 2021 and 2023
surveys. In their joint comment, the
Wisconsin and Minnesota Farm Bureaus
rejected raising make allowances, as the
survey data is unaudited and voluntary.
Raising make allowances, they
commented, will be detrimental to dairy
farmers in the Upper Midwest and other
regions with high Class III and IV
utilization, speeding up dairy farm
consolidation and bankruptcies. NMPF
and DFA comments expressed support
of an increase in make allowance levels
at this time but maintained the NMPFproposed make allowances in Proposal
7 are best supported by the record until
a mandatory survey can be conducted.
Questions regarding plant sampling,
cost allocation methodology, and
capturing a high-cost time period
expressed in testimony and public
comments are legitimate considerations.
Issues with the results of voluntary,
unaudited surveys are not new to the
process of determining make
allowances. Similar situations occurred
in both the 2006 and 2007 rulemakings.
In both instances, make allowances
were determined by using parts of
different survey results. The record of
this proceeding continues to support the
use of unaudited, voluntary surveys for
determining make allowances, as has
been done in the past.
What remains for the Department to
consider is determining representative
make allowance levels given the
evidentiary survey data: the 2021
survey, the 2023 survey, and the 2016
CA survey. The record does not support
consideration of the 2021 survey results
that relied on the transformation cost
allocation method for allocating
unallocated costs. Hearing participants
expressed skepticism of this method as
it is standard industry practice to
allocate costs on a solids basis.
Although the study author explained
how the transformation numbers were
assigned to products, the record does
not contain sufficient evidence to
validate the new methodology. Whether
or not the transformation methodology
is theoretically more accurate is not
relevant. What is germane is that
manufacturers allocate costs, manage
their plants, and make marketing and
pricing decisions in accordance with the
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traditional method of allocating fixed
and unallocated costs on a pro-rata basis
of milk solids in the final products.
Accordingly, the 2021 survey results
utilizing this methodology were not
considered when determining the
proposed levels in this decision. Select’s
alternative methodology presented in its
post-hearing brief, which relied on the
transformed 2021 survey numbers, was
not considered further.
The recommended decision found
usage of the revised non-transformed
2021 and 2023 surveys and the 2016 CA
survey appropriate to determine the
proposed make allowances. The
decision found that relying on a
combination of these survey results
provided a consensus set of data to
determine appropriate make allowance
levels and was superior to relying only
on one survey.
The Department received 75
comments regarding amendments to
make allowances, submitted by dairy
farmers (mostly small), cooperatives,
processors, trade associations, and
advocacy groups from 23 different
states.
Dairy farmers and organizations
representing dairy farmers, including
the AFBF; state Farm Bureaus
representing Florida, Michigan,
Minnesota, New York, Tennessee, and
Wisconsin; Farm Women United; the
National Family Farm Coalition; and the
Ohio Farmers Union opposed the make
allowance levels in the recommended
decision. The comments said increasing
make allowances would reduce farm
income, particularly for small and
medium-sized farms, potentially leading
to more closures and accelerating
industry consolidation.
In their comments, NMPF and DFA
also opposed the make allowance levels
specified in the recommended decision
and continued to advocate for the
NMPF-proposed levels in Proposal 7.
They reiterated hearing testimony that
dairy farmer cost of production should
be considered when determining make
allowances to ensure orderly marketing
conditions. In its comment, NMPF cited
a 2008 amendment to the AMAA
stipulating the price for feed and fuel
should be considered when determining
whether to adjust make allowances. (7
U.S.C. 608c(17)(G)). The provision cited
by NMPF applies to hearings
commencing prior to September 20,
2012, and the provision was not
extended in the 2012 Farm Bill. The
Department continues to find it to be
inappropriate to consider producer
income as a factor in determining make
allowance levels.
In its comment to the recommended
decision, Edge reiterated arguments
PO 00000
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from its post-hearing brief that make
allowances should be based on plants at
the technological frontier, rather than
inefficient plants they claim were
represented in the voluntary surveys
whose results are part of this hearing
record. Since Edge offered no details in
their comment on how this
methodology would be implemented
given this proceeding’s evidence, no
further consideration was given.
Also opposing the make allowances
contained in the recommended
decision, IDFA and WCMA advocated
in their comments for use of the 2023
survey data only. IDFA and WCMA
argued that after eliminating the 2022
CA Forecast from consideration, the
only reasonable data remaining is the
2023 survey results. They both objected
to the use of the 2021 survey to
moderate the influence of prices during
an inflationary period. According to
IDFA and WCMA, unless price deflation
occurred, which they argued did not,
there is no reason for adopting anything
other than the 2023 survey results for all
four commodities.
Inflation describes a general price
level increase across the whole
economy, whereas deflation describes a
general price level decrease. Price
decreases can occur in an inflationary
environment just as price increases can
occur in a deflationary one, and
producer price indexes (PPIs) are one
way to evaluate such price movements.
A series of Federal Reserve Bank of St.
Louis input indexes and U.S. Energy
Information Administration price data
relevant to dairy commodity
manufacturing, from June 2022 (marking
the end of most pandemic-related
programs) to June 2024 (the last full
month before the recommended
decision was issued) was evaluated to
analyze IDFA and WCMA comments.
While this decision does not find it
appropriate to rely on indexing or
forecasting to determine make
allowances levels, the consideration of
indexes can serve as a check that the
proposed levels are reasonable and
reflect current costs given the totality of
evidence in this rulemaking.
As stated in the recommended
decision, there have been price
decreases in sectors relevant to the
manufacturing process that indicate
manufacturing costs were high in 2022
and thus are not reflective of current
costs. The PPIs from June 2022 to June
2024 for Corrugated Materials, which
declined approximately 14 percent, and
Lumber, which declined more than 21
percent, as well as the Henry Hub (U.S.
Energy Information Administration)
average spot price for natural gas, which
declined more than 67 percent, serve as
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examples of prices that declined during
an inflationary period. The PPI for All
Commodities, which decreased nearly 9
percent from June 2022 to 2024, is
another more general indicator that
input prices for commodities were
particularly high in 2022 compared to
2024. Other examples of elevated input
prices highlighted in the IDFA and
WCMA public comments include labor,
legal, insurance, and administrative
costs. The presence of cost categories
that have not declined do not preclude
objective declines in other categories.
The record indicates that even after
accounting for wage increases of nearly
9 percent, according to the Employment
Cost Index from the U.S. Bureau of
Labor Statistics, declines in other areas
outweigh increased labor costs, leading
to an overall decrease in manufacturing
costs. These overall input price
decreases are relevant to all surveyed
products; thus, the Department
continues to find sole reliance on the
2023 survey is inappropriate in
determining make allowances that
reflect current costs.
IDFA and Leprino commented the
Department should continue to
incorporate a $0.0015 marketing
allowance in all make allowances, based
on the necessary costs to get commodity
products to market, historical precedent,
and lack of supporting data to merit its
removal. IDFA stated the $0.0015
marketing allowance was first adopted
as part of Order Reform to cover the cost
of moving commodity products to
market, which include maintaining and
staffing warehouses, supporting a
marketing and sales staff, and
transporting product to market. Leprino
commented that the marketing
allowance is necessary to reflect
commodity costs at the same stage in
the value chain as commodity prices in
the NDPSR. In its comment, Leprino
pointed to the make allowance levels
since Order Reform as examples of the
rationale in maintaining the $0.0015
marketing allowance without new data
to merit its removal. IDFA commented
that, while no specific data was offered
to estimate the current marketing
allowance cost level, a review of the
record reveals no evidence to support its
removal.
The Department reevaluated the
record for testimony related to the
marketing allowance. The 2021 and
2023 cost surveys included costs
2021
2023
Non-transformed
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Low Cost ..............................................
High Cost .............................................
Average ................................................
# Plants ................................................
..............................
..............................
$0.2365
10
The recommended decision proposed
a $0.2504 per pound cheese make
allowance, derived from the average of
the 2021 and 2023 non-transformed
survey results. The 2023 survey
incorporates a representative sample
size, accounting for 55.6 percent of
NASS cheddar cheese production. The
record indicates the 2023 survey, which
collected cost data primarily from 2022,
covered a period of relatively high
inflation and rising input costs. An
example is packaging costs, including
lumber and corrugated materials, which
testimony indicates and the input index
analysis described earlier confirms,
have receded since peaking in 2022.
Absent any other data on the record,
this final decision continues to find it
appropriate to utilize an average of the
2023 and 2021 non-transformed survey
results to ensure the proposed cheese
make allowance is not
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$0.3181
$0.2643
18
Fmt 4701
Cheese
Sfmt 4702
Current
USDA
proposed
(recommended
decision)
USDA
proposed
(final
decision-inc.
marketing
allowance)
....................
....................
$0.2003
....................
........................
........................
$0.2504
........................
........................
........................
$0.2519
........................
CA survey
....................
....................
$0.2454
4
disproportionately affected by higher
2022 costs that have since moderated.
The decision continues to find use of
the 2021 and 2023 surveys provides a
manufacturing allowance reflective of
the national cheddar cheese market. In
2022, California cheddar cheese
production represented approximately
6.9 percent of reported NASS cheddar
cheese production. As incorporation of
the 2016 CA survey would result in an
over representation of California cheese
manufacturing costs, this decision does
not support its consideration.
In its public comment, AFBF wrote
the current cheese make allowance is
clearly adequate as there has been
considerable investment in cheese
plants; thus, the recommended cheese
make allowance is too high. While
anecdotal testimony on investments in
cheese plants was presented at the
hearing, data on the record clearly
PO 00000
through product packaging. Postpackaging costs such as warehousing
and marketing were specifically
excluded. Testimony from a cheese
manufacturer estimated the $0.0015
marketing allowance covers postpackaging costs unaccounted for in the
2021 and 2023 cost surveys. Further, the
DPMRP requires manufacturers to report
prices that incorporate all costs
associated with the product before it is
shipped to market. It is important that
prices reported to DPMRP and released
through the NDPSR relate to the costs
accounted for in the make allowance.
Since marketing costs are included in
prices reported through DPMRP, it is
appropriate for such costs to also be
accounted for in the make allowance.
Therefore, this decision finds it
appropriate for make allowances to
include a $0.0015 marketing allowance.
Additional public comments were
submitted which pertained to specific
make allowance levels proposed in the
recommended decision. Those
comments are addressed in the
respective sections below.
2016
Non-transformed
95513
indicates costs of processing commodity
cheese have increased since make
allowances were last updated.
The AFBF, as well as dairy farmers
from Iowa and Pennsylvania,
commented in opposition of all make
allowance increases, but specific to
cheese they argued that only about half
the number of DPMRP reporting
manufacturing plants are represented in
the data. The Department continues to
find it appropriate to use the 2021 and
2023 survey results, as the two samples
together provide a reasonable
representation of cheddar cheese
processing.
This final decision therefore
recommends a $0.2519 per pound
cheese make allowance, derived from
the average of the 2021 and 2023 nontransformed survey results plus the
$0.0015 marketing allowance.
Butter
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2021
2023
Non-transformed
Low Cost ..............................................
High Cost .............................................
Average ................................................
# Plants ................................................
2023
Non-transformed
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$0.1838
$0.2149
$0.1938
7
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$0.2302
$0.3247
$0.2750
15
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....................
....................
$0.1715
....................
........................
........................
$0.2257
........................
........................
........................
$0.2272
........................
not support incorporating the 2016 CA
survey in the calculation as it would
overrepresent California butter
manufacturing costs.
The Department received no public
comments in response to the
recommended decision specifically
addressing the butter make allowance.
However, since this decision finds it
appropriate to continue to incorporate a
marketing allowance into all make
allowances, the final decision
recommends a $0.2272 per pound butter
make allowance, derived from the
average of the 2021 and 2023 nontransformed survey results plus a
$0.0015 marketing allowance.
NFDM
Sfmt 4702
Current
USDA
proposed
(recommended
decision)
USDA
proposed
(final
decision-inc.
marketing
allowance)
....................
....................
$0.1678
....................
........................
........................
$0.2268
........................
........................
........................
$0.2393
........................
CA survey
$0.1854
$0.2786
$0.2082
8
the 2021 survey and the 2016 CDFA cost
of processing survey to determine the
NFDM make allowance. The 2021
survey was selected over 2023 due to a
better plant sample and because the
2023 survey represented costs during a
period of high inflation, in particular for
energy-intensive (natural gas) dried
products like NFDM.
Comments from IDFA, CDI, and AgriMark specifically opposed the NFDM
make allowance contained in the
recommended decision, advocating for
different methodologies to be applied.
IDFA argued the NFDM make allowance
should at least be based on a weighting
of the 2021 non-transformed cost of
production survey and the 2023 nontransformed cost of production survey
for all plants, or at most an adjustment
to the 2023 survey to address higher
energy costs in 2022 could be made.
Agri-Mark and CDI argued that data
sources for the NFDM make allowance
PO 00000
USDA
proposed
(final
decision-inc.
marketing
allowance)
2016
Non-transformed
..............................
..............................
$0.2454
27
The recommended decision proposed
a $0.2268 per pound NFDM make
allowance, derived from the average of
the 2021 non-transformed survey and
2016 CDFA cost of processing survey
results. In 2022, California represented
43.7 percent of U.S. NFDM production.
This supported hearing testimony
describing the importance of California
manufacturing facilities in the total U.S.
production of NFDM powder. Therefore,
the recommended decision found it
appropriate to place more emphasis on
California NFDM plant costs
considering the dominant share of
NFDM production by California plants.
As stated previously, given all the cost
surveys contained in the evidentiary
record had shortcomings, the
recommended decision found it
appropriate to use an average of two
surveys when recommending make
allowances. The recommended decision
concluded that it was best to combine
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$0.2616
$0.4210
$0.3176
13
Current
USDA
proposed
(recommended
decision)
CA survey
relatively high inflation and rising input
costs. According to the Producer Price
Index for All Commodities (PPI),
published by the Bureau of Labor
Statistics, prices have moderated since
their June 2022 peak. Thus, this final
decision continues to find it appropriate
to average the 2023 and 2021 nontransformed surveys to account for the
differences in plant sampling, and to
ensure the proposed butter make
allowance is not disproportionately
affected by higher 2022 input costs that
have since moderated. The decision
continues to find use of the 2021 and
2023 surveys provides a manufacturing
allowance reflective of the national
butter market, as both surveys represent
over 80 percent of 2022 NASS butter
production volumes. This decision does
2021
Low Cost ..............................................
High Cost .............................................
Average ................................................
# Plants ................................................
Non-transformed
..............................
..............................
$0.1338
12
The recommended decision proposed
a $0.2257 per pound butter make
allowance, derived from the average of
the 2021 and 2023 non-transformed
survey results. While the 2021 and 2023
surveys had roughly the same number of
reporting plants and represented
roughly the same volume of NASS U.S.
butter production (approximately 80–82
percent), the plant samples differed
significantly. The study author claimed
sampling was the main driver for the
notably different survey results. The
2023 survey captured data from both
smaller and larger plants while the 2021
survey consisted of a more homogenous
sample of larger and more efficient
plants. The record indicates the 2023
survey, which collected cost data
primarily from 2022, covered a period of
2016
should be reconsidered, questioning
whether use of 2016 data was too old
and not reflective of current costs,
especially given its 50 percent
weighting in the computation. While the
2023 survey was not used due to higherthan-normal natural gas prices that have
since moderated, Agrimark argued in
their comment, other cost categories
have not similarly moderated. CDI
commented that the NFDM make
allowance should be determined using a
similar methodology to dry whey, taking
the simple average of the nontransformed 2021 survey and the 2023
low-cost survey, which would equal
$0.2378.
This decision continues to find it
appropriate, given the shortcomings of
the cost surveys in the record, to use an
average of two surveys to determine
appropriate make allowance levels.
However, after a review of public
comments and a reevaluation of record
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evidence, this final decision finds it
appropriate to apply a consistent
methodology for NFDM and dry whey,
as described in CDI’s comment.
The 2023 survey represents the most
recent cost data but significantly fewer
participating plants than the 2021
survey. Additionally, as NFDM
production is heavily reliant on natural
gas, the 2023 survey captured the
historically high energy costs,
particularly natural gas. Natural gas
prices increased substantially between
2019 and 2022. The Henry Hub Natural
Gas Spot Price increased 153 percent
between 2019 and 2022. However,
prices declined from June 2022 to June
2024, with the spot price falling over 67
percent. Natural gas prices in 2024 were
comparable to prices in 2019, with the
June 2024 spot price only 5 percent
higher than in 2019. This data suggests
current natural gas prices are similar to
price levels observed during the 2021
survey. Cost breakdown of the 2023
survey show that utilities (energy) costs
constituted 15 percent of the total
manufacturing costs of dry whey. This
is in contrast to utilities representing 7
percent of total costs for butter and 6
percent for cheese. As the record reveals
the major component of this difference
in utilities costs share is from drying the
product, this cost category is sensitive to
movements in natural gas prices.
The record reveals the 2021 survey
represents more NFDM plants than the
2023 survey (27 vs. 15), while the 2023
survey represents a larger volume of
NDFM production than the 2021 survey
2021
2023
Non-transformed
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Low Cost ..............................................
High Cost .............................................
Average ................................................
# Plants ................................................
..............................
..............................
$0.2457
8
The recommended decision proposed
a $0.2653 per pound dry whey make
allowance, derived from the 2021 nontransformed survey and 2023 nontransformed low-cost survey result.
Similar to NFDM, dry whey production
is heavily energy (natural gas)
dependent, and the same concerns
regarding the 2023 survey results exist
for dry whey, as discussed above.
Absent any other data on the record, the
recommended decision found it suitable
to utilize the 2023 non-transformed lowcost average ($0.2848) with the 2021
non-transformed survey to ensure the
proposed dry whey make allowance is
not disproportionately affected by
higher 2022 natural gas and utilities
costs that have since moderated.
Several comments were received
specifically on the dry whey make
allowance contained in the
recommended decision. IDFA and
WCMA opposed the methodology used
and opined the dry whey make
allowance should be based solely on the
2023 non-transformed cost of
production survey for dry whey plants.
Due to 2022 being a period of
particularly high prices, this decision
continues to maintain their proposed
methodology is not appropriate. Earlier
analysis of relevant price indices
contained in the record support this
conclusion.
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$0.3952
$0.3361
9
Fmt 4701
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Current
USDA
proposed
(recommended
decision)
USDA
proposed
(final
decision-inc.
marketing
allowance)
....................
....................
$0.1991
....................
........................
........................
$0.2653
........................
........................
........................
$0.2668
........................
CA survey
....................
....................
....................
....................
In its public comment, the AFBF
wrote that the current dry whey make
allowance is clearly sufficient, as there
has been considerable investment in dry
whey plants; thus, the amended dry
whey make allowance contained in the
recommended decision is too high.
While anecdotal testimony on
investments in dry whey plants was
presented at the hearing, data on the
record clearly indicates costs of
processing commodity dry whey have
increased since make allowances were
last updated.
The AFBF, as well as dairy farmers
from Iowa and Pennsylvania,
commented in opposition of all make
allowances, but especially dry whey, as
only about half the number of DPMRP
reporting plants provided cost data.
This decision continues to find it
appropriate to use two surveys in the
make allowance calculation, as together
they provide sufficient representation of
dry whey production.
A public comment filed by the
American Dairy Coalition (ADC)
opposed all make allowances in the
recommended decision and advocated
for reevaluation of all proposed changes.
ADC specifically addressed the
proposed increase in the dry whey make
allowance relative to its small market
price and advocated implementing a
snubber to prevent negative producer
values for other solids. Per ADC’s
PO 00000
(91.2 percent vs. 64.8 percent). Utilizing
a simple average of the 2021 and the
low-cost 2023 surveys results in a better
representation of NFDM production
across the universe of plants making the
product, while moderating the influence
of the high inflationary period in 2022
as described earlier in the PPI analysis,
with particular consideration of
declining utilities costs described above.
Therefore, in the final decision, the
Department recommends a $0.2393 per
pound NFDM make allowance, derived
from the average of the 2021 nontransformed survey and the 2023 nontransformed low-cost survey result, plus
a $0.0015 marketing allowance.
2016
Non-transformed
95515
suggestion, if the market price for dry
whey is less than the make allowance in
a given month, the other solids price
would be zero rather than a resulting
negative value. For historical context,
the Class III price formula briefly
contained a similar snubber from Order
Reform implementation (January 2000)
to October 2001, but it was removed as
it was found to mute market signals and
arbitrarily adjust prices. There is
insufficient evidence on the hearing
record of this proceeding to support
ADC’s comment suggesting a change to
the other solids snubber. Similar to
NFDM, utilities represent a larger share
of manufacturing costs for dry whey at
10 percent of total cost, rather than the
7 percent and 6 percent for butter and
cheese, respectively, which are not
dried during the manufacturing process.
Accordingly, the same consideration of
declining utility costs evaluated in the
NFDM section apply to dry whey.
Utilizing a simple average of the 2021
and low-cost 2023 surveys results in a
better representation of dry whey
production across the universe of plants
making the product, while moderating
the influence of the high inflationary
period in 2022 as described earlier in
the PPI analysis, with particular
consideration of declining utilities cost
since 2022. Therefore, this decision
recommends a $0.2668 per pound dry
whey make allowance, based on the
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average of the 2021 non-transformed
survey and 2023 low-cost dry whey
surveys, plus a $0.0015 marketing
allowance.
The Department finds the proposed
make allowances in this final decision
are more representative of
manufacturing costs than current make
allowances, which were last changed in
2008. Record evidence clearly supports
updates. However, as previously
mentioned, each of the observed costs
surveys have weaknesses. The proposed
make allowance levels are the best
representation of manufacturing costs,
given publicly available data and
evidence contained in this proceeding’s
record.
b. Butterfat Recovery
Currently, the Class III formula
contains a 90-percent butterfat recovery
assumption. This represents the
percentage of butterfat in raw milk that
can be recovered during the
cheesemaking process, recognizing that
for both theoretical and practical
reasons, 100% of utilization of butterfat
(or any other raw milk component) in
the production of a dairy product is
impossible. Proposal 10 seeks to
increase the butterfat recovery
assumption to 93 percent. Proponents
claimed modern cheesemaking
equipment and better cheese handling
techniques make a higher butterfat
recovery not only attainable, but
common in practice.
Opponents mainly consisted of
manufacturers asserting that while some
cheese plants attain butterfat recovery
percentages in excess of 90 percent,
yield assumptions that increase
producer revenue, such as butterfat
recovery, should not be amended
outside a comprehensive review of all
assumptions that determine yield
factors. Multiple opponents mentioned
the overvaluation of whey cream as an
example of a potential issue.
This rulemaking proceeding sought to
consider changes to the FMMO pricing
formulas. Industry participants were
invited to submit proposals concerning
the current pricing provisions of the
FMMOs. Those opposing changes to the
butterfat recovery percentage had an
opportunity to submit proposals on any
of the yield factors, as they fall within
the provisions of the pricing formulas.
None, other than those submitted by
Select, were received. This decision
does not find it appropriate to deny
consideration of any yield related
proposal presented in this proceeding
on the basis of a potential future
evaluation of all yield factors.
The record contains testimony from
several expert witnesses explaining the
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cheesemaking process and use of more
modern cheese equipment and
technology, including improvements in
coagulants and curd handling, allowing
handlers the ability to capture a larger
percentage of butterfat in cheese.
Testimony also described how cheese
fines, or small particles of cheese left in
whey during the cheesemaking process,
represent a significant source of fat loss
to a cheese manufacturer, and are not
returned to the finished cheese product
due to concerns of bacterial
contamination. As butterfat recovery
numbers are considered confidential
information, the record does not contain
a well-developed picture of recovery
levels currently attained in U.S. cheese
plants. The record indicates the age of
equipment and technology used in
cheese plants varies widely. While
evidence was submitted describing high
butterfat retention rates that are
achievable using new equipment, it
does not demonstrate those rates are
reflective of the general industry
conditions. Other than a few new, very
modern plants, the record does not
support a 93 percent butterfat recovery
factor as attainable by most cheese
plants.
The record contains considerable
testimony estimating current butterfat
recovery rates in the universe of cheese
plants with varying ages of equipment
and technology. Expert witnesses
estimated butterfat recovery in cheddar
plants ranged from 88 to 93 percent,
attributing much of the difference to
cheddar vat equipment. It is important
that the product price formulas reflect
current, not theoretical, conditions for
the general population of plants. Experts
generally offered that most commodity
cheddar cheese plants can obtain greater
than 90 percent recovery, but few obtain
93 percent, with a 91 percent butterfat
recovery rate considered the industry
average. Accordingly, this decision
recommends a 91 percent butterfat
recovery rate. Such an increase
necessitates a change to the butterfat
yield factor in cheese from 1.572 to
1.589.
The Department received comments
in support of the amended butterfat
recovery factor contained in the
recommended decision, including from
several state Farm Bureaus (Arizona,
Florida, Michigan, Minnesota, New
York, Tennessee, and Wisconsin) and
five California dairy farmers. These
commenters support increasing the
butterfat recovery factor from 90 to 91
percent, as it more accurately reflects
modern cheesemaking technology and
plant efficiencies.
Several comments were also
submitted in opposition of the proposed
PO 00000
Frm 00052
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butterfat recovery factor. Commenting in
opposition, Select continued to contend
that the factor should be updated to 93
percent. Select pointed to testimony
from its expert witness claiming that 93
percent butterfat recovery is attainable
by most plants. Even with older cheese
making equipment, Select reiterated 93
percent butterfat recovery can be
achieved. This decision maintains that
the butterfat recovery percentage should
represent what is currently attained by
the universe of U.S. cheese
manufacturing plants, not what can
theoretically be attained or may be
attained in modern plants. Therefore,
this decision maintains a proposed 91
percent butterfat recovery factor.
In its comment, Crystal Creamery
argued that cheese moisture levels and
other factors in the cheese making
process should also be considered in the
amended butterfat recovery factor and
requested conforming changes to the
butterfat-to-protein ratio, from 1.17 to
1.16. Sufficient testimony and evidence
was not provided on the record to
justify a change to the butterfat-toprotein ratio, therefore, the proposed
conforming change is denied.
c. Farm-to-Plant Shrinkage
Currently, the FMMO formulas
assume a farm-to-plant shrinkage factor
of 0.25 percent and 0.015 pounds per
cwt of additional butterfat loss. This
represents normal milk losses that occur
when milk is delivered from the farm to
a plant. Under the FMMO system, most
handlers purchase milk from producers
based on farm weights and tests. The
farm-to-plant shrinkage factor
recognizes that when milk is pumped
from a farm bulk tank to a milk tanker,
and then from milk tanker to the plant
silo, milk, and to a greater degree
butterfat, sticks to the sides of the pipes
and tanks. Milk and butterfat can also be
lost in the milk hauling process when
milk haulers must make multiple farm
stops to fill a load. As a result, plants
often physically receive less milk and
butterfat than was measured at the farm.
The record reflects that as the nature of
milk and butterfat has not changed, it
still sticks to equipment. In recognition
of this reality, the yields are slightly
reduced to reflect the amount of milk
and butterfat actually available to make
a product, as compared to the amount
of milk picked up on farms.
The proponents asserted that
producers shipping full tanker loads is
common in the Southwest where they
operate. They testified to and provided
cooperative data regarding the steps
they have taken to reduce shrinkage.
Proponents said increased average farm
size results in fewer stops by the milk
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hauler to fill up a load, thus lowering
overall shrinkage. They opined
shrinkage should no longer be a reality
for farms as losses can be managed on
any size farm through adoption of farm
scales, flow measurements, and other
technologies to improve accuracy.
Opponents argued only a small
percentage of dairy farms are able to
produce enough milk to fill an entire
tanker load. While the number of large
farms has grown, opponents testified
removing the shrinkage factor could
further incentivize manufacturers to
prefer large over small farms.
Consequently, they opined the farm-toplant shrinkage factor should remain.
Record evidence reveals most dairy
farms are unable to fill a tanker load per
day. According to the NASS, daily milk
production per cow averaged 66.5
pounds in 2022. Assuming an average
tanker load of milk is approximately
48,000 pounds, it would require a
milking herd of 722 cows to fill a tanker.
In 2022, of the 24,470 U.S. dairy farms
with milk sales, only 3,451 farms
(approximately 14 percent) had 500 or
more milk cows, and 2,013
(approximately 8 percent) had 1,000 or
more milk cows.
For the approximately 90 percent of
farms that are not able to ship full
tanker loads of milk, the record
indicates farm-to-plant losses remain a
reality for most producers and
cooperatives operating within the
FMMO system. As most handlers pay
producers based on farm weights and
tests, it remains appropriate to provide
recognition in the formulas for milk
solids paid for but not physically
received at the handler’s facility.
Leprino submitted a public comment
in support of maintaining the farm-toplant shrinkage. In contrast, Select
commented in opposition of the
amended shrinkage in the
recommended decision, reiterating
arguments in the hearing that it should
be eliminated. According to Select, the
recommended decision underestimates
the number of farms capable of shipping
a full tanker. Select contends that more
than 75 percent of milk is produced on
farms shipping full tanker loads and
asserts the recommended decision did
not address unsupported additional
butterfat shrink.
While the recommended decision
inadvertently failed to mention the
0.015 pounds per cwt of additional
butterfat loss, the entirety of the farmto-plant shrinkage within the formulas
and the evidentiary record was
evaluated. The record contains evidence
that additional butterfat losses occur as
butterfat naturally clings to equipment.
While Select offered evidence its
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cooperative has developed operating
practices that have greatly reduced
observed shrinkage, no other data was
offered to validate that it is being
attained by other industry stakeholders.
Thus, this decision continues to find it
appropriate to include the 0.25 percent
shrinkage factor and the 0.015 pounds
of additional butterfat loss in the
formulas as these factors should be
based on what is attained, on average,
rather than only attainable by some.
Accordingly, this decision continues to
reject Proposal 11.
d. Nonfat Solids Yield
Currently, the FMMO Class IV price
formula contains a NFDM yield factor of
0.99, representing the pounds of NFDM
that can be made from one pound of
nonfat solids of raw milk delivered from
the farm. This factor is less than 1.0, as
it recognizes both farm-to-plant
shrinkage and the portion of nonfat
solids utilized in NFDM.
Select offered Proposal 12 to adjust
the NFDM yield factor to account for
both the NFDM and buttermilk powder
that can be manufactured from the same
pound of nonfat solids, and proposed an
NFDM yield factor of 1.03. Proponents
claim producers are not compensated
for nonfat solids that end up in
buttermilk powder since such
production is not accounted for in the
yield factor.
A review of previous rulemakings
reveals numerous changes to the NFDM
yield factor both during and since Order
Reform. The Order Reform
recommended decision contained a
nonfat solids yield factor of 0.96 as a
divisor (equivalent to a 1.04 multiplier)
in the nonfat solids price equation. It
represented the percent of nonfat solids
in a pound of NFDM. In other words, if
a NFDM plant had 1 pound of nonfat
solids, it could make 1.04 pounds of
NFDM due to the moisture content in
the final product. The factor was
changed in the Order Reform final
decision to a 1.02 divisor (equivalent to
a 0.98 multiplier) as stakeholders
commented it should represent both the
NFDM and buttermilk powder that
could be produced from one pound of
nonfat solids. In other words, the yield
factor, when converted to a multiplier,
was less than one to reflect that only a
portion of the nonfat solids that arrive
at a plant are utilized in NFDM.
The nonfat solids yield factor was
again considered in a 2000 rulemaking.
Initially, the factor was amended to
1.00. 65 FR 82832 (Dec. 28, 2000).
During that proceeding, stakeholders
argued the yield factor should reflect
that more than one pound of NFDM can
be manufactured from one pound of
PO 00000
Frm 00053
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Sfmt 4702
95517
nonfat solids, resulting in a divisor less
than one, or a multiplier greater than
one. Evidence from that proceeding was
used to demonstrate a calculation using
only the NFDM price, NFDM make
allowance, and a multiplier of 1.00
would be equivalent to a more complex
formula attempting to combine the
NFDM and buttermilk net prices using
corresponding yield factors.
The final decision in the 2000
rulemaking changed all yield factors,
including the nonfat solids yield, from
divisors to multipliers. 67 FR 67906
(Nov. 7, 2002). Keeping in line with
only reflecting the nonfat solids used in
NFDM, the nonfat solids yield
multiplier changed from 1.0 to 0.99,
with the incorporation of a farm-to-plant
shrinkage factor of 0.25 percent. As
calculated, for 1 pound of nonfat solids
leaving the farm, 0.9975 pounds entered
the plant (1.00 ¥ 0.0025 = 0.9975).
Subtracting an estimated 0.0479 pounds
of nonfat solids ending up in buttermilk
powder left 0.9496 pounds of nonfat
solids in NFDM (0.9975 ¥ 0.0479 =
0.9496). It was assumed NFDM is 96.2
percent nonfat solids, resulting in a
NFDM yield factor calculation of
0.9496/0.962 = 0.9871, which was
rounded to 0.99. The final decision
made clear the 0.99 should be
considered a NFDM yield factor, no
longer a nonfat solids yield factor as was
the case when Order Reform was
implemented.
Proposal 12 requests buttermilk
powder again be incorporated into the
NFDM yield. Proponents testified that
without accounting for buttermilk
powder, producers are not compensated
for all the nonfat solids they sell to a
Class IV manufacturer. Record evidence
does not support such a claim. Class IV
manufacturers are required to pay the
nonfat solids price for pooled milk
purchased, regardless of whether those
nonfat solids end up in NFDM, butter,
buttermilk powder, or any other Class
IV product. The same can be said for
other classified products whose
component prices are computed
similarly, even if there are numerous
products in the category. For example,
the other solids price is determined
through a survey of dry whey prices and
a dry whey make allowance.
Manufacturers pay the other solids price
even if they are making other products
in the category, such as whey protein
concentrate or whey protein isolate.
Additionally, while the rulemaking
history of the NFDM and nonfat solids
yield factors is complex, the record
evidence in this proceeding does not
support reflecting two products
(buttermilk powder and NFDM) in the
NFDM yield would provide for more
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orderly marketing conditions. As such,
the recommended decision maintained
the current NFDM yield factor to only
reflect one product and did not propose
the adoption of Proposal 12.
Leprino, as well as the Arizona Farm
Bureau, offered comments on the
recommended decision in favor of
maintaining the 0.99 nonfat solids yield,
as they said it properly reflects a widely
attainable NFDM yield. In its comment,
Select objected to the continuation of
the 0.99 NFDM yield, and reiterated
arguments presented at the hearing that
the value of buttermilk powder should
be included.
This decision maintains that yield
factors are not intended to represent the
value of milk components utilized in
various products, but rather the quantity
of a specific product that can be
manufactured from a given quantity of
milk components. As stated in the
recommended decision, the NFDM yield
factor represents the quantity of NFDM
that can be produced from one pound of
nonfat solids in producer milk. This
decision continues to find the current
NFDM yield factor, and the nonfat
solids price formula, appropriately
represent the value of NFDM to the
nonfat solids utilized in manufacturing
NFDM. This decision finds no basis to
support the claim that powder
manufacturers are not paying for solids
in the buttermilk powder they produce.
To the contrary, all nonfat solids
entering a plant are accounted and paid
for at the appropriate use classification.
Thus, nonfat solids ending up in
buttermilk powder are paid for at the
nonfat solids price. This is similar to
other products such as whey protein
concentrate (WPC), whose other solids
are priced at the FMMO other solids
price which is based on dry whey yields
and prices and does not specifically
account for WPC yields and prices.
This decision continues to find it
appropriate for component price
formulas to utilize a single product
price and an associated make allowance
and yield factor to determine the value
of milk components, which can then be
used to value the components utilized
in all products under a given class.
Accordingly, this decision continues to
find it appropriate to maintain the
NFDM yield factor of 0.99.
Base Class I Skim Milk Price
Currently, the base Class I skim milk
price, also referred to as the ‘‘Class I
mover’’ or ‘‘mover,’’ is the simple
average of the monthly advanced Class
III and Class IV skim milk pricing
factors, plus an adjuster of $0.74 per
cwt. This formula was implemented
under the 2018 Farm Bill, which
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amended the AMAA to revise the
provisions related to determining the
monthly Class I skim milk price. Public
Law 115–334, 132 Stat. 4490 § 1403.
Congress exempted this amendment
from the formal rulemaking process, and
USDA implemented the change through
a final rule. The formula has been in
effect for milk marketed on and after
May 1, 2019. 84 FR 8590 (March 11,
2019). Prior to the change, the base
Class I skim milk price was the higher
of the advanced Class III or Class IV
skim milk prices (the ‘‘higher-of’’),
announced on or before the 23rd of the
prior month. The higher-of formula had
been in effect since January 1, 2000.
Industry stakeholders offered six
proposals to amend the Class I mover.
Proposal 13 would return to the
previous higher-of Class I mover. NMPF
explained the change to the average-of
was supported at the time by both
NMPF and IDFA, as it was intended to
be revenue neutral for producers and
provide Class I processors the ability to
utilize hedging for risk management.
IDFA and MIG proposed maintaining
the average-of mover but argued for
different adjuster calculations. Proposal
14, offered by IDFA, incorporates an
adjuster that resets every January and
would be the higher of either: (1) $0.74;
or (2) the 24-month average difference
between the higher-of and the averageof the advanced Class III and Class IV
skim milk pricing factors. The 24-month
calculation would run from August of
three years prior to July of the previous
year. For example: the 2024 adjuster
would have been calculated by
subtracting the average of the advanced
Class III and IV skim pricing factors
from the higher of the advanced Class III
or Class IV skim pricing factor for each
month of August 2021 through July
2023, then averaging the differences of
the 24 months. The result for the August
2021 to July 2023 time period is $0.95,
which is higher than $0.74, and thus
would have been the adjuster effective
January 1, 2024, for the calendar year.
For the month of January 2024, the
advanced Class III and IV skim pricing
factors were $5.74 per cwt and $9.25 per
cwt, respectively, averaging to $7.50 per
cwt. With the addition of the adjuster,
the January 2024 base Class I skim milk
price would have been $8.45 per cwt
($7.50 + $0.95) under Proposal 14.
Proposal 15, offered by MIG,
incorporates a monthly rolling average
adjuster calculated as the difference
between the higher-of and the averageof, for 24 months, with a 12-month lag.
For example, the adjuster for January
2024 would have been $1.01 per cwt,
calculated from the 24-month average
difference of the higher of the advanced
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Class III or Class IV skim pricing factor
less the average of the advanced Class
III and IV skim pricing factors from
January 2021 to December 2022. The
January 2024 advanced Class III skim
pricing factor was $5.74 per cwt and
advanced Class IV skim pricing factor
was $9.25 per cwt, resulting in an
average of $7.50 per cwt. The averageof, with the addition of the adjuster,
would result in a January 2024 base
Class I skim milk price of $8.51 per cwt
($7.50 + $1.01) under Proposal 15.
Edge offered Proposals 16 and 17. The
Class I mover in Proposal 16 would be
the announced Class III skim milk price,
plus an adjuster reflecting the 36-month
average of the difference between the
higher-of the advanced 2 Class III or
Class IV skim milk prices and the
announced 3 Class III skim milk price
from August of four years prior to July
of the previous year. The adjuster would
be calculated annually and be effective
January of each year. For example: The
adjuster for 2024 would be $1.64 per
cwt, calculated from the 36-month
average difference of the higher of the
advanced Class III or Class IV skim
pricing factor and the announced Class
III skim milk price from August 2020 to
July 2023. The announced Class III skim
milk price for January 2024 was $4.92
per cwt, and with the addition of the
adjuster would result in a January 2024
base Class I skim milk price of $6.56 per
cwt under Proposal 16. Proposal 17
would return to the previous higher-of
calculation. Both Proposals 16 and 17
would eliminate advanced pricing for
Class I and Class II milk. Edge preferred
Proposal 16, stating it would facilitate
Class I hedging.
The AFBF offered Proposal 18, which
is nearly identical to Proposal 17. Both
Edge and the AFBF stressed the
importance of eliminating advanced
pricing as a means for limiting price
inversions that result in significant
volumes of milk not pooled.
NMPF presented testimony describing
how the 2019 mover change was not
revenue neutral, which is why they seek
a return to the higher-of. NMPF and
dairy farmers described volatile markets
in response to the COVID–19 pandemic.
Even as the COVID–19 pandemic has
ended, prices have remained volatile,
and stakeholders opined they expect
volatility to continue. NMPF witnesses
asserted that because of the current
formula and volatile markets, there is no
way for the impact to dairy farmers to
be revenue neutral in the long term.
2 Advanced refers to prices announced on or
before the 23rd of the prior month.
3 Announced refers to prices announced on or
before the 5th of the following month.
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According to NMPF, an unanticipated
consequence of the average-of mover is
the asymmetric risk borne by dairy
farmers. NMPF explained the static
nature of the $0.74 adjuster means that
dairy farmers only benefit from the
average-of when the difference between
the advanced Class III and Class IV skim
milk prices is less than $1.48. When the
difference is greater, producers are paid
less, sometimes significantly less, than
they would have been under the higherof mover. During the 50-month period
from May 2019–June 2023, the averageof mover was lower than the higher-of
in 27 months. NMPF asserted when the
average-of exceeded the higher-of, it did
so by no more than $0.74, regardless of
the magnitude of the difference between
Class III and Class IV skim milk prices.
However, when the average-of was
lower than the higher-of, the reduction
could be significantly more than $0.74.
NMPF cited October 2022 as an
example. At that time, the average-of
was lower than the higher-of by $2.08.
According to NMPF, from May 2019 to
August 2023, producers were paid
$998.3 million less than they would
have if the higher-of mover had been in
place.
Both IDFA and MIG asserted their
adjusters would result in revenue
neutrality to producers over time
because of regular updates to better
reflect current market conditions,
whereas the current static $0.74 adjuster
reflects market conditions from 2000–
2018. IDFA further claimed the $0.74
floor contained in Proposal 14 ensures
producers would receive Class I skim
milk prices at least equating to what
they receive under the current formula.
MIG opined a rolling average adjuster
would provide better dynamic market
signals while also stabilizing prices
through more gradual monthly changes.
In justifying these methods to
continue an average-of mover, IDFA and
MIG witnesses stressed the importance
of maintaining the ability for Class I
processors to hedge their future prices.
The use of an average-of mover would
allow them to continue to spread risk by
taking equal positions in the Class III
and Class IV futures and options
markets. IDFA and MIG maintained
hedging is a critical tool for certain
processors, particularly ESL, to remain
competitive with alternative beverages,
such as bottled water, juice, and milk
alternatives that do not face the same
regulatory pricing framework as fluid
milk. The ability to lock in a future
price makes their cost known and
allows a longer price horizon. They
further asserted promoting and growing
the sale of milk is a goal of the AMAA,
which can be achieved using hedging.
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Both proponents explained a processor’s
ability to hedge is not negatively
impacted by the adjuster calculation
(whether monthly or annually), so long
as it is announced well in advance.
IDFA was amenable to either adjuster
calculation, so long as the average-of
mover is maintained.
Proponents of maintaining an averageof mover argued Congress amended the
AMAA to facilitate risk management for
Class I, and as it directed the
Department to adopt the average-of
mover, the Department must now
continue that policy and refrain from
taking action that would inhibit risk
management. However, in the 2018
Farm Bill, Congress stipulated the
average-of mover must be maintained
for a period of not less than two years,
at which time the formula could be
modified through the standard FMMO
amendment process. Congress did not
direct that risk management
consideration must be maintained
beyond the two years following
implementation of the 2018 Farm Bill.
To evaluate the NMPF claim
regarding asymmetric risk, AMS
analyzed May 2019–December 2023
prices (56 months). The analysis found
the current average-of mover to be
greater than the higher-of mover in 23
months, resulting in $334 million in
additional revenue paid to producers in
those months. The two movers were
equal in 2 months, and in the remaining
31 months, the average-of mover was
less than the higher-of mover, resulting
in $1.4 billion less in revenue paid to
producers in those months than would
have been without the mover change.
The net result to dairy farmers during
those 56 months was negative $1.066
billion. Further, in months when the
average-of was more than the higher-of
mover, the difference was never greater
than $0.74 and, mathematically, could
never be greater than that amount under
the current average-of system. However,
in months when the average-of was less
than the higher-of mover, the difference
was as great as $5.19. This analysis
supports NMPF’s assertion of the
asymmetric risk borne by producers
under the current mover calculation.
The record reveals the $0.74 static
adjuster was adopted because, at the
time, it represented the additional value
paid to producers through the higher-of
versus what would have been the
average-of mover from 2000–2017.
Evidence shows $0.74 is no longer
representative of the additional higherof value to producers as Class III and IV
prices have become significantly more
divergent in recent years. A comparison
of advanced Class III skim and Class IV
skim milk prices from January 2000–
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April 2019 and from May 2019–
December 2023 illustrates the increased
volatility. From January 2000–April
2019, when the Class I skim milk price
was determined by the higher-of mover,
the monthly difference in advanced
prices ranged from $0 to $6.77. From
May 2019 through December 2023, the
range was $0 to $11.86, equating to an
increase of slightly more than 75
percent.
Testimony described rapidly changing
Class III and IV prices resulting not only
in months when the Class I mover was
significantly lower than it would have
been under the higher-of formula, but
times when the Class I price (announced
before the month) was less than the
Class III and/or Class IV price
(announced after the month). As
handlers have the option to pool Class
III and Class IV milk, this price
inversion led to many months when the
higher-valued manufacturing milk was
not pooled. Testimony on the record
described several consequences: (1)
manufacturing handlers opted out of
pool participation, keeping the higher
market revenue instead of sharing it
with all pooled producers; (2) instances
when a manufacturing handler opted
out of pool participation, and the
historically high market revenue was
not shared with their own producer
suppliers; and (3) significant disparity
in payments to pooled and nonpooled
producers in some months.
Testimony detailed the conditions in
2020 when the demand for cheese
relative to butter rapidly widened the
spread between Class III and Class IV
Prices. For example, the base Class I
skim milk price for June 2020
(announced May 20, 2020) was $7.08
(based on an $6.68 advanced Class III
skim milk price and an $5.99 advanced
Class IV skim milk price). Cheese prices
rose rapidly during the month, resulting
in a $15.06 Class III skim milk price and
$6.62 Class IV skim milk price.
According to record evidence, high
volumes of Class III milk were not
pooled in order to avoid paying the
higher valued Class III price into the
marketwide pool.
Record data reveals a significant
increase in the estimated volume of
milk not pooled in 2020 and 2021,
which NMPF attributed to price
volatility. Data shows milk volumes not
pooled in 2020 and 2021 were
approximately 60 percent greater than
in 2019. Testimony and evidence
pointed to pronounced price volatility
being considered the norm, not the
exception, going forward.
Record evidence also shows how the
lower average-of mover value resulted
in muted blend prices in some regions
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of the county, making it difficult to
attract milk supplies for fluid use. This
was particularly a concern in the
southeastern FMMOs which
experienced a disproportionate
reduction in blend prices relative to
other FMMOs because of their high
Class I utilization. Testimony described
how blend prices between the Southeast
FMMO and nearby orders narrowed,
making it difficult to attract
supplemental milk to meet the fluid
demand in the milk deficit region.
During Order Reform, the Department
considered numerous options for
determining Class I prices as it
evaluated an appropriate Class I pricing
system. In the Order Reform
recommended decision, several
variations of an average mover were
considered, including a moving average
and a declining average weighted most
heavily by the current month’s price,
along with a higher-of option based on
the second preceding month’s prices.
When considering its recommendation,
the Department evaluated each option’s
ability to improve price stability while
maintaining appropriate producer price
signals to ensure an adequate supply of
milk for fluid use.
The Department initially
recommended a 6-month declining
average of the higher-of the Class III and
Class IV skim milk prices. The goal was
to ‘‘decrease monthly Class I price
volatility while minimally affecting the
long-run price.’’ 63 FR 4802, 4886 (Jan.
30, 1998). Analysis of that option
compared to the higher-of option
showed only a two-cent difference
based on data from 1992–1997, thus
supporting the notion an average-of
price would not impact prices in the
long run. Public comments in response
to the recommended decision cautioned
the Class I price should be closely and
directly linked to manufacturing prices.
Commenters opposed a six-month
declining average because it would
delay the linkage with the Class I price,
resulting in counter-cyclical pricing—
something noted in the final decision,
which stated that, for example, if Class
I prices are undervalued, ‘‘it reduces
producers’ pay prices at a time when the
producers should be receiving a positive
price signal.’’ 64 FR 16026, 16102 (Apr.
2, 1999). Analysis conducted for the
Order Reform final decision evaluated
prices post-1998 and found using a 6month average mover during times of
increased price volatility would have
led to price inversions. The decision
explained how price inversions could
lead to depooling under which
disorderly marketing conditions may
arise. As a result, the final decision also
articulated, on the same page as the
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most recently noted quotation, ‘‘because
handlers compete for the same milk for
different uses, Class I prices should
exceed Class III and Class IV prices to
assure an adequate supply of milk for
fluid use.’’ Accordingly, the final
decision recommended the higher-of
mover which remained in place until
May 2019.
Record evidence clearly shows that
the price inversions and depooling
predicted in the Order Reform final
decision occurred after the average-of
mover was implemented in 2019. The
principle of maintaining a proper link
between Class I and manufacturing
prices to avoid price inversions and
depooling remains an important
consideration in evaluating change to
the Class I mover in this rulemaking.
Proponents offering modifications to
the average-of mover acknowledge price
inversions and depooling have occurred
with greater frequency and duration.
However, they maintain hedging is a
critical risk management tool that
should be preserved and cannot be
achieved using the higher-of mover.
Record evidence highlights that
although both HTST and ESL are fluid
milk products, there are notable
differences between HTST and ESL
processing and sales. ESL products
require unique processing techniques
and packaging that significantly
increase product shelf-life. The record
indicates ESL products have a shelf-life
of at least 65 days; some ESL processors
stated their products have a shelf-life of
120 days or more.
ESL processors described marketing
differences between the two types of
products. ESL products: (1) have a
longer shelf-life which facilitates a
wider distribution; (2) are typically
shipped to centralized retail warehouses
(distribution centers) and from there are
distributed to individual stores by the
store owners; and (3) are sold to retail
customers who prefer long-term
contracts and a long lead time for any
price changes, often 60–90 days or
more. This is significantly different than
HTST products that: (1) have a
significantly shorter self-life (common
range is 14–21 days) necessitating more
local distribution; (2) are typically
distributed through direct-store-delivery
(DSD); and (3) whose retail customers
are accepting of FMMO Class I prices
that vary monthly.
ESL processors explained the averageof mover has enabled them to meet
customer demand for long-term pricefixed contracts by using the futures and
options market to hedge the risk
associated with changes in monthly
FMMO Class I prices. They credit the
ability to manage risk as a factor in the
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growth of ESL products. Before
adoption of the average-of mover,
processors of ESL products took on a
significant amount of price risk to meet
the long-term, fixed price contracts
required by customers because they had
no way of knowing when they
negotiated contracts whether the
advanced Class III or Class IV price
would become the base Class I skim
milk price. The record contains no
similar evidence that HTST processors
face the same constraints. In fact, record
evidence shows advanced Class I
pricing with monthly sales negotiations
was, and remains, standard practice for
these products.
Given all the record evidence, this
decision must determine the best
method for determining Class I skim
milk prices that ensure adequate fluid
milk supplies and orderly marketing
conditions. The earlier discussion of
record evidence clearly highlights the
disorderly marketing conditions that
occurred as a result of the average-of
mover. However, when considering how
to provide for more orderly marketing
conditions, this decision cannot ignore
how the Class I market has evolved
since 2000.
Prior to FMMO Reform, fluid milk
products were almost exclusively HTST,
which have a shorter shelf-life and
move from farm to retail in a relatively
short time. Advanced pricing ensures
equity among fluid milk handlers,
allowing them to know their regulated
minimum raw milk cost at the time they
negotiate prices with their buyers and
ensure equal raw milk cost between
similarly situated handlers.
The record reflects significant
development and growth of ESL
products since Order Reform. The
record also highlights marketing ESL
products is significantly different than
HTST products. Evidence shows the
different distribution pattern
(warehouse v. DSD) and longer shelf-life
(65–120 days) facilitates wider
geographic, rather than local, marketing
and distribution. In addition, it is
common for competing ESL products
being sold in the same month to have
been processed during a range of
previous months. As a result, processors
of ESL products do not necessarily have
the same regulated minimum raw milk
prices for products sold during the same
month. This undermines handler equity
between processors of ESL products as
they do not have equal raw milk costs
for products competing for sales in the
same month. This decision supports a
hybrid solution that will ensure
adequate supplies of milk for fluid use,
while also accounting for the inequities
between processors of ESL products.
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FMMOs are tasked with ensuring
minimum prices reflect supply and
demand conditions, which is
accomplished, in part, through weekly
surveys of wholesale bulk commodity
products. Weekly survey prices provide
signals to market participants on the
changing value relationships between
dairy product markets. FMMOs do not
control those market-based
relationships. As monthly average
prices are determinants of Class III and
IV prices, it is expected there will be
periods when Class III values will be
higher, and other times when Class IV
values will be higher. Under a monthly
pricing system that allows for voluntary
pooling of manufactured milk and
advanced Class I pricing, there will be
occasions when these value differences
are large enough to have price
inversions and/or incentivize handlers
to not pool milk during a particular
month. The record clearly shows such
situations occurred prior to May 2019.
However, record data highlights the
shift in duration and magnitude of these
occurrences since the average-of mover
was adopted. The record reveals large
and prolonged value differences can
cause significant differences in pay
prices between producers and reduced
willingness to supply the Class I market.
The record of this proceeding supports
returning to the higher-of Class I mover
for HTST products. The higher-of would
provide a better link between Class I
and manufacturing prices and better
ensure Class I prices remain the highest
to bring forth an adequate supply of
fluid milk. Therefore, this decision
continues to recommend adoption of
Proposal 13 for HTST fluid milk
products.
AMS received 29 comments that
specifically supported a return to the
higher-of mover. Comments in support
of the higher-of mover were submitted
by: NMPF; Select; AFBF; ADC; the state
Farm Bureaus of Arizona, Michigan,
New York, Michigan, Wisconsin,
Minnesota, and Tennessee; Georgia Milk
Producers, Inc.; Northeast Dairy
Producers Association (NDPA); National
Family Farm Coalition; Farm Women
United; and 15 individual dairy farmers.
Seven commenters, including NMPF,
ADC, NDPA, and four individual dairy
farmers, expressed the higher-of keeps
dairy markets more orderly. NDPA
noted the return to the higher-of would
have an immediate positive impact on
farmers. The Wisconsin and Minnesota
Farm Bureaus commented the higher-of
often provided better financial returns
to farmers in the past. One dairy farmer
praised a return to the higher-of, arguing
its removal in 2019 decreased revenue.
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In its comment, AFBF reiterated
arguments that the return to the higherof is critical for ensuring dairy farmers
receive fair and adequate compensation
for their milk, especially in the face of
volatile market conditions. AFBF
continued to argue that most fluid milk
processors have not increased or even
begun the use of hedging, which was the
intent of adoption of the average-of
mover. The Michigan Farm Bureau
commented that a return to the higherof would better reflect current market
conditions and improve overall pricing
for farmers. Georgia Milk Producers,
Inc., stated the return to the higher-of is
critical to the success of its producers,
who were disproportionately impacted
by the change to the average-of mover.
A dairy farmer commenter advocated for
a simple and stable price program that
uses the higher-of.
CDC and two dairy farmers
specifically requested the higher-of
mover alone, without the proposed ESL
adjustment, apply to all Class I milk.
AFBF; the state Farm Bureaus of
Arizona, Florida, New York, and
Tennessee; and the two dairy farmers
requested a return to the higher-of on an
expedited basis.
In their comments on the
recommended decision, MIG and
Crystal Creamery opposed a return to a
higher-of Class I mover. MIG reiterated
its hearing testimony that the return to
the higher-of on HTST milk prohibits
effective hedging.
This decision continues to find that
returning to the higher-of mover for ESL
products would deepen the pricing
inequity that naturally exists for those
products, as described earlier. For
example, under the higher-of mover, a
handler processing and selling an ESL
product in January 2023 would have
faced a base Class I skim milk price of
$11.62 per cwt. However, handlers who
processed ESL products two or four
months before, which are also being
sold in January 2023, would have faced
a base Class I skim milk price of $12.61
and $13.82 per cwt, respectively. This
results in a difference of base raw milk
costs of up to $2.20 per cwt for ESL
products competing for sales during
January 2023.
Given the marketing characteristics of
ESL products, short of providing for
fixed minimum prices, price differences
between these competing products will
always exist. However, this decision
strives to recognize the evolution of the
ESL market since Order Reform with a
pricing structure for ESL products that
would narrow differences, make them
more predictable, and provide for more
orderly marketing conditions.
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This decision continues to find
pricing differences would be reduced
through adoption of a Class I ESL
adjustment that would equate to a Class
I price for all ESL products equal to the
average-of mover contained in Proposal
15. The recommended Class I ESL
adjustment would provide more longrun pricing equity for ESL product by
better ensuring handlers whose ESL
products compete for sales during the
same month, but whose raw milk may
have been purchased and processed
during different time periods, have more
similar costs.
This decision continues to find
adoption of the higher-of mover and
Class I ESL adjustment appropriate to
provide for more orderly marketing and
better ensure price equity for handlers
of similar Class I products. As set forth
in the recommended decision, the
higher-of Class I mover would be
announced on or before the 23rd of the
prior month. A Class I ESL adjustment
would be announced at the same time
and equal the difference between the
higher-of mover and the average-of the
advanced Class III and Class IV skim
pricing factors plus a rolling monthly
adjuster. The rolling monthly adjuster
would be calculated as the average of
the differences between the higher-of
and the average-of calculations for the
prior 13 to 36 months and could be
positive or negative.
The recommended decision described
milk subject to the ESL adjustment as all
milk used in ESL products with a shelflife no less than 60 days, regardless of
the type of Class I plant in which they
are made.4 This decision continues to
propose an ESL adjustment that would
be added to or subtracted from the
handler’s pool obligation applicable to
the amount of milk used in ESL
products. The rolling adjuster would be
computed in advance and announced
on or before the 23rd of the month 12
months in advance of its application
(i.e., January 2023 rolling adjuster
would have been announced on or
before December 23, 2021).
For example, the advanced Class III
and IV skim pricing factors for January
2023 were $9.54 per cwt and $11.62 per
cwt, respectively.
• The average-of the two factors
(applicable to ESL milk) would have
been $10.58 plus the rolling adjuster
reflecting the average of the differences
between the higher-of and the averageof from January 2020 to December 2021
($1.58 per cwt), for a total of $12.16 per
cwt.
4 1xxx.7(a)
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• The higher-of mover (applicable to
HTST milk) would have been $11.62 per
cwt.
• The January 2023 Class I ESL
adjustment would have been $0.54
($12.16 ¥ $11.62), calculated by
subtracting the higher-of announced
price from the average plus rolling
average calculation.
The effect of the adjustment would be
a base Class I skim price for HTST milk
of $11.62, and an effective base Class I
skim milk price for ESL milk of $12.16.
While this example computes a positive
adjustment resulting in a higher
effective price for ESL milk, it is to be
expected in some months the
adjustment will be negative, resulting in
a lower effective price. The objective of
the ESL adjustment is not to create a
higher or lower effective Class I price,
but rather to reduce the range of base
Class I skim prices paid for milk used
in ESL products being sold during a
month. Evidence on the record indicates
the Class I ESL adjustment would tend
to moderate the price highs and lows,
thus providing improved price equity
between handlers of ESL products. The
record indicates ESL products represent
approximately 8 to 10 percent of the
Class I market and would be subject to
the Class I ESL adjustment.
Comments to the recommended
decision submitted by Select, Edge,
Nestle, IDFA, and MIG supported the
inclusion of the ESL adjustment as part
of the Class I mover. MIG and IDFA
further advocated for implementation of
a base Class I skim milk price that
supports risk management for all Class
I milk products, not only ESL products.
Both groups expressed that all Class I
processors should benefit from the new
formula, which they maintained is
revenue-neutral with the higher-of
formula over time.
In its comment, MIG stated the ESL
adjustment would allow processors of
ultra-pasteurized or aseptically
processed and packaged fluid milk to
continue to hedge price risk. MIG
credited use of an average-of formula
with allowing ESL processors to offer
stable pricing, which in turn allows ESL
products to more effectively compete
with non-dairy alternatives including
plant-based beverages.
Select stated the ESL adjustment
would accommodate the expressed
desire of handlers of ESL products to
hedge their raw milk costs while
providing dairy farmers the necessary
stability of an overall higher-of Class I
mover. Nestle opined the average-of
formula utilized in the ESL adjuster
provides holistic solutions for the
industry and provides dairy farmers
with assurances on the sale of their
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product before the milk is produced.
These factors, Nestle wrote, create
pricing stability for both retailers and
end consumers.
Many comments submitted expressed
support for a return to the higher-of
mover, but either opposed inclusion of
the Class I ESL adjustment or expressed
concern the provision could be abused.
NMPF, AFBF, Michigan Farm Bureau,
ADC, and seven individual dairy
farmers stated the milk to which the
ESL adjustment would apply was not
well defined in the recommended
decision, or that ESL itself was not
clearly defined. Three commenters
noted that the parameters of an ESL
product are vague, including the
recommended use of shelf-life to define
qualifying products. NMPF, AFBF,
Michigan Farm Bureau, Upstate Niagara,
and an individual dairy farmer
expressed concern that handlers could
potentially abuse or manipulate the
system, for example, by labeling a
product with a shelf life of 59 days to
benefit from a lower mover price when
it is advantageous to do so. Such
scenarios, AFBF noted, create a risk of
inconsistent application and the
potential for market distortions.
AFBF, Michigan Farm Bureau,
Upstate Niagara, and five individual
dairy farmers expressed concern that the
inclusion of the ESL adjustment creates
a potential for handlers to take
advantage of the ESL adjustment by
opting in or out of an adjustment on a
monthly basis when favorable. Some
commenters expressed concern over
handlers attempting to qualify milk for
the more favorable mover in a month in
order to reduce payments to producers,
likening it to depooling. AFBF and other
commenters noted the possible range of
a 95-cent reduction to a $1.18 increase
per cwt difference in base Class I price
creates an incentive for handlers to take
advantage of the system.
Several commenters, including
NMPF, requested a clear definition of
ESL products based on processing
characteristics, not product or marketing
characteristics such as shelf life. While
the recommended decision highlighted
the marketing characteristics of ESL,
including the significantly longer shelflife, the record reflects it is the
processing technique that enables ESL
products to have these marketing
characteristics which facilitate wider
distribution, shipping to centralized
retail warehouses before distribution to
individual stores, and most often, longterm sales contracts. In recognition of
the possibility the ESL adjustment may
be abused by adjusting the shelf life of
a product as highlighted in the
comments received, this decision finds
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it appropriate to rely solely on the
definition of the processing technique to
define milk eligible to receive the ESL
adjustment. While it is an industry term
to refer to ESL products, the method of
achieving ESL is accomplished through
specific temperature and time
thresholds which are contained in the
ultra-pasteurized definition. As
described in the Pasteurized Milk
Ordinance, the process of ultrapasteurization involves heating milk ‘‘at
or above 138 °C (280 °F) for at least 2
seconds . . . so as to produce a milk or
milk product, which has an extended
shelf-life under refrigerated conditions.’’
This process of obtaining ESL products
is to what witnesses testified.
Accordingly, this decision finds it
appropriate that ultra-pasteurized milk
as defined in 21 CFR 131.3(c) would
receive the ESL adjustment. The
regulatory definition also encompasses
aseptically packaged milk products, as
the process of aseptic packaging
requires milk to first be ultra
pasteurized. As a provision defining a
shelf-life threshold was not part of the
original proposed order language, no
changes to the proposed order language
are necessary.
AFBF, Michigan Farm Bureau, and
Upstate Niagara expressed concern
about the potential for the ESL
adjustment to set precedent for other
types of adjustments for marketing
claims for various production practices
at the farm level. The proposed ESL
adjustment would apply to a specific
processing technique at the plant which
the record demonstrates results in
market characteristics that differentiate
ESL products from HTST products.
NMPF requested clear guidance on
how handlers report and account for
Class I milk to ensure handlers cannot
take advantage of the ESL adjustment by
only applying it when advantageous. In
its comment, ADC requested qualifying
Class I fluid products remain with the
ESL designation to avoid opportunistic
use of the ESL adjustment that could
reduce pool payment obligations.
Several other commenters requested a
review process be incorporated into the
ESL adjustment provisions. Upstate
Niagara commented many plants have
the capacity to process both HTST and
ESL products and expressed concern
whether the Department would be able
to prevent plants switching the type of
processing for a pricing advantage.
This decision clarifies that the ESL
adjustment would apply to all ESL milk
meeting the ultra-pasteurized definition.
Current handler reporting provisions in
the regulations require handlers that
process skim milk classified under 7
CFR 1000.44, both ultra-pasteurized and
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HTST, to report monthly utilization for
Class I utilization as defined in
§ 1xxx.30(a). Handlers report the type of
product, how much product is sold or
distributed within, and outside, the
marketing area, as well as any other
information pertaining to milk receipts
and utilization the Market
Administrator requires. If the ESL
adjustment is adopted, handlers would
report HTST and ESL products
separately, ensuring accurate handler
utilization is accounted for.
The FMMO program has a robust
component that audits all handler
reports filed with the Market
Administrator. As part of an ESL
handler’s audit plan, FMMO auditors
would review and verify handler
records currently maintained under 7
CFR 1000.27(a) to ensure the raw milk
was processed using ultra-pasteurized
equipment, in accordance with the
reported utilization. FMMO auditors
would use documents such as
pasteurization reports and State health
department inspection records
identifying equipment used for
processing as verification.
Handlers producing ESL products
would not determine when the Class I
ESL adjustment would apply. The Class
I ESL adjustment would apply
automatically to milk used in ESL
products. Handlers found misreporting
ESL milk would be subject to an audit
adjustment to the FMMO Producer
Settlement Fund, as well as any other
remedies authorized by current
regulations.
Upstate Niagara; AFBF; the state Farm
Bureaus of Arizona, Georgia, and
Michigan; the Kentucky Dairy
Development Council; Pennsylvania
Association of Milk Dealers (PAMD);
CDC; and 10 individual dairy farmers
claimed the recommended ESL
adjustment was not discussed or
evaluated at the hearing, and no
justification was presented. The
Michigan Farm Bureau commented no
testimony specifically supporting this
type of adjustment was offered during
the hearing process, making it difficult
to recognize the necessity of its
inclusion.
The commenters expressed concern
that the impact of the package of
proposed changes to the Class I mover
provisions was not fully analyzed.
Several expressed concern the proposed
adjustment could have unintended
consequences similar to those resulting
from the Congressionally mandated
change to the average-of mover in 2019.
Upstate Niagara commented that as the
percentage of ESL products in the
market grows, the ESL adjustment
would apply to an increasing volume of
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milk. As a result, Upstate Niagara
claimed, while the adjuster could mute
price volatility over the long term for
processors, it could also impact FMMO
pools and producer pay in real-time.
Two commenters, PAMD and Upstate
Niagara, claimed that because the
combination of higher-of and ESL
adjuster proposal was not specifically
discussed at the hearing, the outcome
was not properly noticed. The PAMD, a
group representing fluid milk processors
that own 14 processing plants located in
and around Pennsylvania, opposed the
return to the higher-of mover with the
ESL adjustment. PAMD stated had the
idea been noticed, it would have
presented opposing evidence at the
hearing. Additionally, PAMD argued the
same advantages of less volatility and
the opportunity to engage in risk
management should apply to HTST
processors as well as ESL processors in
order to avoid competitive issues that
would occur.
As set forth in the hearing notice, the
base Class I skim milk price was open
for testimony and evidence to be offered
on the record for amendments. All
FMMO regulated handlers received
notice that changes to how milk in Class
I products was priced were being
considered. The recommended Class I
mover is a combination of two proposals
noticed and examined through
testimony at the hearing. While the
mechanics of adding an ESL adjustment
to a higher-of mover are slightly
different than proposals presented, the
record contains extensive testimony and
evidence on the processing and
marketing of HTST and ESL products.
Based on this evidence, this decision
continues to find the recommended
mover best promotes orderly marketing.
AFBF, Michigan Farm Bureau, ADC,
and seven individual dairy farmers
claimed the recommendation of a
higher-of mover in combination with an
ESL adjustment creates a ‘‘fifth’’ or
‘‘new’’ class of milk. Upstate Niagara,
AFBF, the state Farm Bureaus of
Arizona and Michigan, ADC, and four
individual dairy farmers stated that the
addition of an ESL adjustment
introduces significant complications to
an already complex Class I pricing
system. AFBF and Michigan Farm
Bureau commented the ESL adjuster
creates a dual pricing system and adds
an additional layer of complexity to an
already intricate system. Some
commenters asserted the proposed Class
I mover provisions would likely create
disparities between processors operating
at the same location and undermine the
FMMO principle of uniform prices.
Edge maintained the adjustment does
not create a new classification of milk
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but is an innovative approach to allow
ESL handlers the ability to continue to
use risk management in a changing
industry.
Fluid milk products are defined in the
current regulations as ‘‘. . . any milk
products in fluid or frozen form that are
intended to be used as beverages
containing less than 9 percent butterfat
and 6.5 percent or more nonfat solids or
2.25 percent or more true milk protein
. . .’’ 7 CFR 1000.15(a). Milk used in
both HTST and ESL products meets this
definition of a fluid milk product and,
therefore, a new or separate class of
milk is not being proposed. Inclusion of
the ESL adjustment to the Class I mover
reflects the substantial record evidence
demonstrating the unique ultrapasteurization milk product
characteristics warranting recognition in
the pricing provisions. The ESL
adjustment to a handler’s pool
obligation meets current needs of the
industry seeking to update the price
formula provisions to reflect current
market conditions. While the
adjustment adds a new component to
the Class I mover, the Department
calculates the Class I base price and an
ESL handler’s adjustment. Handlers
already report to the Department the
types of products they distribute and
would not incur any new reporting as a
result of the ESL adjustment.
In its comment, NMPF noted that
until 36 months after implementation,
some or all of the look-back calculation
for the ESL adjuster would be based on
the announced Class III and Class IV
skim milk pricing factors prior to the
regulatory changes stemming from this
proceeding. NMPF requested in its
comment the prices used to compute the
rolling adjuster prior to the
implementation of the Final Rule be
recalculated based on the regulatory
changes proposed in this rulemaking.
The record does not contain evidence
explaining why historical prices should
be recalculated. Therefore, this decision
does not find is appropriate to
recalculate the look-back portion of the
ESL adjuster with updates for other
amendments to the FMMOs.
In its comment opposing a return to
the higher-of, Crystal Creamery
maintained the higher-of mover would
provide no financial value to
mandatorily pooled handlers and would
not incentivize service to the Class I
market. Further, Crystal Creamery
argued, the higher-of would distort
market signals and cause greater
imbalances in manufacturing markets,
leading to disorderly marketing and
increased prices to consumers. Crystal
Creamery reiterated a return to the
higher-of would incentivize the lower-
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value manufacturing class milk to
remain pooled because of the payment
it receives from the producer settlement
fund as a result of marketwide pooling.
Marketwide pooling is a cornerstone
of the FMMO program. As the record
reveals, dairy farmers sell milk to a wide
variety of handlers whose products have
distinctly different supply, demand, and
market conditions. Marketwide pooling
provides for more orderly marketing by
ensuring a minimum uniform price is
paid to producers whose milk is used in
distinctively different products, thus
preventing destructive competition
among producers. While some
commenters allege the higher-of will
cause disorderly marketing, the
evidentiary record shows the adoption
of the higher-of would result in greater
value differences between Class I and
manufacturing prices for shorter time
periods, leading to fewer and smaller
price inversions, less depooling, and
more orderly marketing conditions.
An individual dairy farmer
commented the ESL adjustment would
incentivize a large spread between Class
III and Class IV in the short term,
resulting in increased price volatility
between ESL and HTST milk, against
the intended purpose of FMMOs. The
farmer claimed pricing Class I milk
using two formulas could result in
periods where the price for one product
is increasing month-to-month while the
other is decreasing, depending on the
direction the adjuster moved.
This decision does not find use of an
ESL adjustment would incentivize large
Class III and Class IV price spreads. The
record of this proceeding reveals that
farm milk used to produce products in
each of the four classifications have
distinct supply and demand conditions.
The record does not contain evidence to
support the implication that
manufacturers of dairy products, the
majority of which do not manufacture
ESL products, would make business
decisions to gain an advantage in the
fluid market where they do compete.
In its comment, MIG requested two
changes to the proposed order language.
MIG first requested a reference be added
to the proposed Class I ESL adjustment
in section 1000.50(r) to refer to section
1000.43(e) General classification rules,
in order to link the pricing provision
and eligible Class I milk. This decision
does not find this change necessary
because section 1000.43(e) is referenced
in the section 10xx.60(i) Handler’s value
of milk. The reference in section
10xx.60(i) provides the requested link
between the eligible Class I milk and the
pricing provision.
MIG also requested clarifying
language be added to section 1xxx.60(i)
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that the ESL adjustment may be a
positive or negative value. This decision
finds such technical change warranted
but finds the clarifying clause more
appropriate in section 1000.50(r). The
language is contained in the proposed
regulations below.
This decision also continues to
propose maintaining advanced Class I
pricing. Proponents of Proposals 16, 17,
and 18 argued advanced pricing should
be eliminated to prevent short term
inversions between the monthly Class I
price and Class III and/or IV prices, and
subsequent incentives for depooling. In
their comments, AFBF, and the state
Farm Bureaus of Arizona, Michigan, and
New York expressed disappointment
this decision did not eliminate
advanced pricing. Commenters
reiterated arguments in testimony that
advanced pricing has contributed to
discrepancies in milk prices, has
increased price volatility, and has
caused price inversions and depooling,
resulting in lower payments to pooled
producers. Eliminating advanced
pricing would mitigate these issues,
commenters argued, by improving class
alignment.
Opponents, both independent and
cooperative Class I processors along
with a majority of producers, supported
the continued use of advanced pricing.
As discussed previously, advanced
Class I pricing provides equity to
regulated Class I processors by
informing them of their regulated
minimum raw milk cost in advance of
the sale of their product. This ensures
all dairy processors have an opportunity
to align their raw milk costs with the
sale prices of their products, which are
generally negotiated before the start of
the month. In the case of Class I
products and the nonfat solids portion
of Class II products, this alignment is
facilitated by advanced pricing.
Accordingly, Proposals 16, 17, and 18
are denied.
Class I and Class II Differentials
a. Class I Differentials
The current Class I price structure
was developed during the Order Reform
process when Congress directed the
Department to review the Class I price
structure as part of larger FMMO
consolidation efforts. Federal
Agriculture Improvement and Reform
Act of 1996, Public Law 104–127, 110
Stat. 888. As stated in the recommended
decision, the Department considered
several objectives when determining an
appropriate Class I price surface,
including: being national in scope,
while also accounting for local and
regional conditions; recognizing the
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location value of milk; recognizing all
uses of milk; and meeting AMAA
requirements. The Department met
AMAA requirements governing
classified pricing by ensuring the price
surface would ‘‘reflect enough of the
milk value to maintain sufficient
revenue for producers to maintain an
adequate supply of milk and provide
equity to handlers with regards to raw
product costs.’’ 64 FR 16026, 16109
(Apr. 2, 1999).5 The Class I price surface
adopted on January 1, 2000, met those
objectives.
Class I milk pricing consists of two
pieces: the base Class I mover applied
uniformly to all Class I milk (as
discussed previously) and a location
specific differential which represents
the value of milk at a specific plant
location. The differentials provide
producers a financial incentive to
supply the Class I market, which tends
to be closer to the population centers,
rather than delivering milk to a
manufacturing plant typically closer to
the farm. The location specific
differential consists of two parts: a base
value (also referred to as the ‘‘base
differential’’) applied uniformly to all
Class I milk, and a location value.
The base differential is currently
$1.60 per cwt, representing three costs
whose values were determined to reflect
market conditions during the late 1990s.
First, the cost of maintaining Grade A
farm status ($0.40) which includes costs
associated with the labor, resources and
utility expenses for maintaining
required equipment and facilities, and
adherence to certain management
practices. Second, marketing costs (also
referred to as balancing costs) ($0.60)
which include, among other things, the
costs associated with seasonal and daily
reserve balancing of milk supplies and
transportation to more distant
processing plants. Lastly, a competitive
factor ($0.60) is included to represent a
portion of the competitive costs
incurred by fluid plants to compete with
manufacturing plants for a milk supply.
The location values were developed
during the Order Reform process
through an analysis conducted with the
USDSS model, maintained at the time
by Cornell University. The USDSS
model was used to evaluate the
geographic or ‘‘spatial’’ value of milk
and milk components across the U.S.
under the assumption of efficient
markets. The model used 240 supply
locations, 334 consumption locations,
622 dairy processing plant locations, 5
product groups, 2 milk components, and
transportation and distribution costs
among all locations to determine
5 Order
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mathematically consistent location
values for milk and components. Model
results provided county-specific
information regarding the relationship
of prices between geographic locations
based on May and October 1995 data.
Since adoption on January 1, 2000,
only differentials in the Appalachian,
Florida, and Southeast FMMOs have
been amended. The amendments,
effective May 1, 2008, were the result of
a region-specific rulemaking evaluating
transportation costs in servicing those
milk deficit orders 73 FR 14153 (Mar.
17, 2008).
The record reflects consensus among
hearing participants that the dairy
marketplace has evolved significantly
over the past 25 years. However, there
remains strong disagreement on how the
market changes should be interpreted
and recognized in the Class I
differentials. The producer community
argued Class I differentials no longer
reflect the cost of servicing fluid milk
demand and should be updated to
reflect the current structure and
significantly higher transportation costs
through adoption of Proposal 19. The
processing and manufacturing
community argued certain cost factors
contained in the differentials are no
longer relevant and should be
eliminated through adoption of Proposal
20. They stressed that if the costs of
servicing the Class I market exceed
those of the proposed reduced Class I
differential values, they can be
negotiated between buyers and sellers
through over-order premiums.
Proposal 19 would increase the Class
I differentials based in part on updated
USDSS model results reflecting the
current dairy market structure and
transportation costs. NMPF witnesses
explained model result averages were
the foundation of their deliberations,
and deviations were made to account for
a variety of factors they believed were
not accounted for, including producer
price impacts, competitive
relationships, blend price alignment,
private supply arrangements, and
unique local market conditions such as
traffic or geography. Although NMPF
began with results from a mathematical
model, the process thereafter was
primarily subjective. They started by
selecting a series of cities, which they
called ‘‘anchor cities,’’ to represent areas
which bordered multiple FMMO
regions. Then, regional committees
adjusted model-derived location values
to better align location values and
reflect local marketing and
transportation conditions within their
region, respecting the anchor cities as
starting points. NMPF combined the
independently derived regional results
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and made further refinements to ensure
smooth pricing transitions between the
regions. Ultimately, NMPF proposed the
lowest differential increase from $1.60
per cwt to $2.20 per cwt. NMPF
maintained the cost factors provided for
in the base differential value remain
relevant and presented testimony from
member cooperatives that such costs
have increased.
Opposition to Proposal 19 centered on
several areas. First, opponents argued
there is more than an adequate supply
of milk nationally to meet Class I needs,
therefore, adoption of Proposal 19, or
any increase to Class I differentials, is
not warranted. Second, opponents
contended raising Class I prices would
be disorderly because it would further
decrease already declining Class I
consumption and, they argued, the
FMMO objective of ensuring adequate
milk supplies implies FMMOs should
adopt provisions that encourage Class I
consumption. One such opponent
presented an econometric study which
found fluid milk demand is elastic,
concluding that increasing Class I prices
would decrease consumption and
violate FMMO objectives. Third,
opponents took exception to NMPF’s
proposal development process and what
they considered a lack of unifying
principles used to adjust the USDSS
model results, believing NMPF had
failed to provide cost justification for
maintaining a base differential.
Independent fluid milk processors
further argued the entire development
process led to results with a favorable
bias towards NMPF member-owned
plants. Lastly, organic milk processors
and some organic cooperatives argued
organic milk should not be treated
similarly to conventional milk in the
FMMO program because it has different
and unrelated market structures. In its
post-hearing brief, MIG reiterated its
position on organic milk and further
argued that because NMPF did not
demonstrate that current Class I
differentials create disorderly marketing
conditions the evidentiary threshold for
increasing differentials had not been
met.
MIG offered Proposal 20, which
would lower the base differential value
to $0.00, contending FMMO Class I
prices are too high and have resulted in
an oversupply of milk that they believe
is disorderly. According to MIG, there is
more than an adequate supply of milk
to meet fluid demand. Given 99 percent
of U.S. milk production meets Grade A
standards, MIG argued compensation for
Grade A maintenance is already
provided for in manufacturing milk
prices and, therefore, the $0.40 Grade A
factor is no longer justified.
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Additionally, MIG member
testimonies detailed efforts they have
adopted to balance their own milk
supply, including infrastructure
investments, creating more uniform
receiving and processing schedules, and
paying over-order premiums. Organic
and ESL MIG members testified their
fluid milk products function as wholly
distinct markets with their own
balancing and supply challenges.
Therefore, MIG concluded the balancing
cost and Class I competitive factors
should no longer be recognized in the
Class I price. Lastly, MIG and its
members, and Lamers Dairy, argued that
if additional money is needed to
compensate dairy farmers and
cooperatives for balancing costs or to
incentivize milk to serve Class I plants,
those costs should be negotiated
between the buyer and seller and paid
through over-order premiums, not as
part of the regulated price.
A vast majority of producers and their
cooperatives opposed Proposal 20. They
maintained, both in witness testimony
and post-hearing briefs, there is
relevancy of costs associated with the
base differential. NMPF stressed the
costs, while difficult to precisely
quantify, are still relevant and have
increased since adopted in 2000. NMPF
described the disorder that would arise
if the base differential was reduced to
$0.00 and a greater portion of marketwide cost reimbursement was forced to
be negotiated in the market. While some
NMPF members testified to receiving
over-order premiums, they stressed
establishing and maintaining premiums
is difficult because there remains a
market imbalance of power between
milk sellers and buyers.
Opponents of any change to Class I
prices, either through a change to Class
I differentials or other FMMO
amendments, raised several overarching
objections. First, they alleged disorderly
marketing must first be proven to justify
any changes to FMMO provisions. They
cited a lack of instances of fluid demand
not being met as an indication disorder
is not present in the fluid milk market.
The declared policy of the AMAA is
to ‘‘. . . establish and maintain such
orderly marketing conditions for
agricultural commodities in interstate
commerce . . .’’ FMMOs accomplish
this mandate through the classified
pricing of milk products and
marketwide pooling of those classified
use values. Through these mechanisms,
orderly marketing conditions are
provided so handlers are assured of
uniform minimum raw milk costs and
producers receive minimum uniform
payments for their raw milk, regardless
of its use. While previous FMMO
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amendatory proceedings may have
found market disorder to warrant
changes to provisions, the AMAA does
not contain an express or implied
declaration that a finding of disorderly
marketing conditions is required before
an order can be amended.
Second, opponents argued Class I
prices cannot be amended until the
FMMO system is modified to recognize
the organic milk sector. However,
potential amendments that would adopt
disparate treatment of organic milk were
not within the scope of this proceeding,
as defined in the hearing notice.
Finally, opponents testified that milk
is typically more valuable when used in
Class III products, rather than Class I,
and therefore the record lacks
justification to increase Class I
differentials. Testimony was given
comparing USDSS model results
(utilizing 2016 data) showing, outside of
the southeastern region, higher marginal
location values for milk used at Class III
manufacturing locations than for milk
used in Class I processing in the same
locations. No evidence was presented as
to how the Class III location values
could or should be implemented to
achieve the purposes of the AMAA.
Unlike estimated Class I location values
which have been historically relied
upon to determine Class I differentials,
this was the first time the USDSS model
results were utilized to calculate
location values for Class III milk, and
the first time testimony was offered to
suggest how the correlation between
Class III and Class I location values
should impact pricing decisions. The
record lacks evidence to validate the
interpretation of Class III location
values, as further indicated by the
differing views of the study authors as
to whether this would be an appropriate
interpretation of the various sets of
USDSS model results.
The Department received 33
comments from stakeholders concerning
amendments to the Class I differentials
in the recommended decision. This
included general comments as well as
specific requests to reevaluate the
proposed Class I differentials in certain
counties, as discussed in greater detail
by region below. In sum, the
Department received 20 comments in
support of and 13 comments in
opposition to the Class I differentials as
proposed in the recommended decision.
Seven individual dairy farmers;
AFBF; NMPF; Georgia Milk Producers,
Inc.; Maine Dairy Industry Association
(MDIA); the Arizona, Michigan,
Tennessee, Wisconsin, and Minnesota
State Farm Bureau Federations; Upstate
Niagara; Select; and Plains Dairy
commented in support of the
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recommended decision with some
location-specific changes requested.
These groups largely expressed support
for the decision’s use of the USDSS
model’s May results as the baseline for
Class I differential changes, as well as
the decision to maintain the current
base differential of $1.60. They also
pointed to record evidence from
producer organizations supporting the
need to update the Class I differentials
from the levels set nearly 25 years ago.
Supporters stated that the increases in
the proposed differentials accurately
reflect current costs and would ensure
an adequate supply of fluid milk
nationwide and orderly marketing
conditions.
Crystal Creamery; United Dairy;
Nestle USA; New Dairy; Lamers Dairy;
IDFA; MIG; Pennsylvania Association of
Milk Dealers (PAMD); West Virginia
Department of Agriculture; and Family
Farm Defenders submitted comments
objecting to the proposed amendments
to the location-specific Class I
differentials in the recommended
decision and some specifically objected
to the continuation of the $1.60 base
differential. DFA, the DFA Mountain
Area Council (separately), and an
individual DFA producer submitted
comments specifically objecting to the
Department’s reliance on the USDSS
model’s May results as the basis for
determining Class I differentials. They
argued the USDSS model does not take
into account the unique relationships
between dairy farmers and Class I
manufacturers in Colorado and the
proposed Class I differential levels in
Colorado should be raised.
MIG made numerous assertions
regarding what it believed were
arbitrary and capricious changes
proposed in the recommended decision,
particularly concerning any deviations
from the USDSS model. MIG also
continued to express strong opposition
to the costs accounted for in the $1.60
base differential, stating that the record
lacks sufficient evidence to continue to
account for the Grade A and Class I
incentive costs, in particular. IDFA also
commented that, in its view, there is no
record evidence to support that Class I
demand is not met and, thus, the
decision to increase Class I differentials
to incentivize supply to the Class I
market is unsubstantiated.
Comments by Crystal Creamery and
Lamers Dairy also expressed additional
concerns with the proposed Class I
differentials. Crystal Creamery reiterated
its support for MIG’s proposal to
eliminate the base differential, which
they believed would allow over-order
premiums to incentivize supply to fluid
plants. However, Crystal Creamery
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stated that if the Department continued
to propose Class I differential increases,
it believed the use of the USDSS model
results, with no additional adjustments,
was the best tool available for
determining location differentials.
Lamers Dairy expressed its continued
opposition to any increase in the Class
I differentials and criticized the
Department’s determination not to
account for over-order premiums in its
recommended decision because they
are, in its view, the real incentive to
supplying fluid milk plants.
Considering comments received on
the recommended decision and all
record evidence, this decision continues
to find that the cost of servicing the
Class I market is no longer sufficiently
reflected by existing Class I differentials.
This was evident in the USDSS model
results and validated through firsthand
testimony of cooperative milk suppliers
who described increased servicing costs.
Current Class I differentials were
established based on 1995 data. In the
nearly thirty years since, the record
reflects the market has substantially
changed in size and structure. While
milk production by volume has
increased approximately 45 percent
from 1995 until 2022, during the same
time period the number of dairy farms
has decreased by approximately 74
percent, and the average herd size has
increased from 68 to 261 cows.
Consolidation has also occurred on
the processing and manufacturing side.
The record describes plant closures,
particularly on the fluid processing side,
and plant investment, especially in large
manufacturing plants. Considerable
testimony and evidence were given
describing increased distances milk
must travel to find a market outlet.
Because of the greater distances between
supply locations and fluid processing
plants, cooperative witnesses testified to
increased costs to ensure fluid demand
is met. The witnesses also described in
detail how the increased costs are
disproportionately borne by cooperative
members who often see deductions on
their milk checks to cover increased
organizational and individual
transportation costs, which some
witnesses attested more than doubled in
the past 20 years.
There was little to no rebuttal to the
claim the market has consolidated on
both the producer and processor side,
resulting in increased transportation
costs. The USDSS study authors
themselves attributed the observed
differences in the 2022 results, when
compared to the current differentials, to
four primary factors: change in milk
production locations, change in
compositions of dairy product demand,
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change in demand locations, and
increased transportation costs per mile.
What is at issue is the justification for
increasing Class I differentials. While
only one witness described a situation
in which they were unable to procure
enough milk to meet the demand of
their fluid milk processor, the record is
full of testimony on the difficulty
cooperatives have faced to ensure fluid
milk demand is met. Cooperative
witnesses discussed needing to reach
out to more distant supply locations to
find available milk supplies willing to
serve the Class I market instead of
remaining at a manufacturing plant, and
the inability to recoup a large portion of
the additional transportation costs
through over-order premiums.
FMMOs were established in the 1930s
when the market contained many sellers
and few buyers of milk. The highly
perishable nature of raw milk resulted
in producers engaging in pricing
behavior that lowered farm prices as
producers undercut one another in
order to find a market outlet, a
condition generally described as
destructive competition. This
unavoidable competitive behavior was
among the reasons producers petitioned
Congress to authorize a marketing order
program to provide orderly marketing
through known terms of trade and the
pooling of market returns, which in turn
provided a more equitable balance of
power between buyers and sellers.
While the record of this proceeding
reveals continued consolidation on both
the producer and processing sides of the
market, it also contains evidence the
fundamental elements that were the
genesis of the FMMO program still exist.
Raw milk remains a highly perishable
product, produced every day, that
cannot be stored for any significant
length of time and incurs high costs
when transported over long distances.
No substantive evidence was presented
to indicate there is no longer an
imbalance of market power between
buyers and sellers. Processors spoke of
the abundance of milk produced as a
reason Class I prices should not be
increased. However, that reality also
highlights how the dairy marketplace
continues to place processors in a price
setting role. As a price taker, the record
reflects considerable testimony attesting
to the difficulty dairy farmers have had
and continue to have in obtaining and
maintaining over-order premiums at
levels sufficient to cover actual and/or
opportunity costs.
It is natural for buyers of milk to want
to pay less and for sellers of milk to
want to be paid more. The role of
FMMOs is to determine minimum
prices that provide for orderly
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marketing conditions that balance these
natural competitive desires. The AMAA
expressly authorizes marketwide
pooling of classified prices as a tool for
accomplishing orderly marketing. In
determining appropriate classified
prices, the Department cannot place an
undue reliance on over-order premiums
which diminish the role of marketwide
revenue pooling and can lead to
disorderly marketing conditions.
Accordingly, this decision recommends
changes to the Class I differentials to
better reflect the various aspects of the
current marketplace.
The first step in evaluating
appropriate Class I differential levels is
the base differential. While the USDSS
model is appropriate to show the value
differences of milk between two fluid
plant locations, as will be discussed
later, it is not designed to inform the
level of the minimum value needed to
service Class I plants. Proposal 20 seeks
to reduce the base differential to $0.00
on the premise the costs represented
either are no longer relevant (Grade A
maintenance) or should be left up to
negotiation with the fluid milk
processor and their supplier (balancing
and Class I incentive cost). This
decision continues to find that while the
record does not precisely describe how
much the cost components of the base
differential have increased, it lacks
evidence to demonstrate those costs
have decreased. In fact, discussion of
various costs throughout the proceeding
indicates that costs have instead
increased. Given the lack of clear record
evidence specific to costs accounted for
in the base differential, this decision
continues to recommend that the $1.60
per cwt base differential remain.
Despite arguments Grade A
maintenance costs should no longer be
covered because 99 percent of U.S. milk
production is Grade A, this decision
continues to find it appropriate to
recognize the additional costs for
maintaining Grade A status in a
regulatory pricing system requiring
Grade A standards be met for
participation. When the Grade A factor
was incorporated into the base
differential, it was specifically for Grade
A maintenance costs, not costs
associated with conversion to Grade A
status. Proponents argue that because
almost all milk meets Grade A
standards, it is no longer necessary to
provide a recognition of that cost in the
base differential. Whether 99 percent of
milk production today is Grade A, or 96
percent as it was at the time of Order
Reform, is irrelevant. The record
demonstrates dairy producers incur
costs to maintain Grade A standards
which are a requirement for
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participating in the FMMO system. As
only Class I milk is required to
participate and raw milk used in fluid
milk products is required to meet Grade
A standards, it is appropriate for the
Class I price to continue to recognize
those costs.
The record does not demonstrate the
remaining two base differential factors,
balancing costs and additional monies
needed to compete for a milk supply,
are no longer relevant. All parties
testified to their continued existence.
Proposal 20 would require those costs to
be negotiated in the market.
Proponents of Proposal 20 argued
they have made capital investments to
balance their supply and/or pay overorder premiums to their suppliers to
meet their milk needs, and/or provide
balancing services. While their
testimony acknowledges these costs
exist, proponents argued the FMMO is
making them pay twice for such
services—once through the regulated
price and again through their negotiated
over-order premium. They further
argued that if cost reimbursement is
needed for such services, they should be
able to pay that value to their suppliers
directly through over-order premiums,
not into the marketwide pool.
Cooperative witnesses testified at
length on the costs associated with
ensuring daily, weekly, monthly, and
seasonal fluctuating needs of the fluid
market are met. While their balancing
costs were considered confidential
information, cooperative witnesses
testified to the overall increase in costs
associated with providing those
services. In particular, cooperative
witnesses spoke to the higher costs
incurred to operate regional balancing
plants. These plants often do not run at
full capacity year-round in order to
ensure capacity to balance excess
supply during flush periods or provide
additional milk to fluid processing
plants during months of increased
demand. The record reflects these
marketing costs are incurred for the
benefit of balancing the entire market’s
milk supplies, thus, providing for the
orderly marketing of milk for fluid use.
It has always been the case that an
individual processor may find it
necessary and/or advantageous to pay
premiums above the minimum value to
suit their individual and fluctuating
needs. FMMO pricing balances the
value needed to be reflected in the
minimum regulated prices, without an
over-reliance on over-order premiums
that can undermine marketwide revenue
pooling and lead to unequal raw
product costs between similarly situated
handlers and non-uniform payments to
producers.
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An additional function of the base
differential, as described in the Order
Reform Recommended Decision, is to
generate the additional monies
necessary for the FMMO pools to
balance the reliance on over-order
premiums. This was of particular
concern in marketing orders with low
Class I differentials and low Class I
utilization, for which the decision noted
‘‘there is a risk that handlers may not
face equal raw product costs for various
reasons. Thus, having a larger
proportion of the actual value of Class
I milk in the market order pool in these
areas, than is now the case, should
promote pricing equity among market
participants.’’ 63 FR 4802, 4909 (Jan. 30,
1998). As this decision seeks to update
Class I differentials, maintaining the
balance of what proportion of the value
of Class I should be reflected in the
marketwide pool remains a
consideration. Negotiations for overorder premiums are not conducted in a
vacuum but are done with the benefit of
both parties knowing minimum FMMO
values and the costs represented in the
minimum values the plant is
responsible for paying. If Class I
processors believe they are being double
charged, they can use that information
in their over-order premium
negotiations.
Maintaining the $1.60 per cwt base
differential would ensure Class I prices
typically remain the highest, which is of
particular importance in locations
where the base differential is the
effective differential. Without a base
differential value in these locations,
there would be little difference between
the Class I price and the manufacturing
price, and, thus, no financial incentive
to supply the fluid market would exist
to ensure the FMMO policy objective is
met. Accordingly, this decision finds a
$1.60 per cwt base differential remains
an appropriate minimum value to
ensure Class I demand is met.
While the Department appreciates the
effort put forth to submit a
comprehensive option in Proposal 19,
the record of this proceeding does not
support its adoption. Proposal 19
contains a base differential of $2.20,
which is an increase of $0.60 from the
current level. However, the record lacks
data to quantify costs in excess of the
$1.60 base value.
Proponents described using the
average of the USDSS model’s May and
October results as a starting point for
consideration but did not provide
evidence as to why, under a minimum
pricing system, the average rather than
the minimum values observed in the
May results was appropriate or
preferable. Furthermore, the record does
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not contain evidence to support how the
deviations made from the model’s
averages are appropriate. Proponents
described their own marketing expertise
but presented insufficient evidence to
determine if the proposed differentials
would result in Class I prices in excess
of what is appropriate for a minimum
pricing system. Accordingly, this
decision does not recommend adoption
of Proposal 19.
However, this decision continues to
find there is record evidence to support
raising the Class I differentials from
current levels. The record of this
proceeding demonstrates the cost of
servicing the Class I market has
increased since the Class I differentials
were adopted in 2000 and amended in
the southeastern FMMOs in 2008.
Evidence reflects the market structure of
Class I plants and the milk supply have
changed considerably in the last 25
years. That was supported in witness
testimony, as well as USDSS model
results, which clearly show the location
value of milk has changed. The
Department continues to find the
USDSS model to be the best available
tool for determining the location value
of milk given the vast array of factors
that contribute to how milk is produced,
transported, processed, and distributed
in the U.S.
When the differentials were adopted
during Order Reform, testimony reflects
the Department used USDSS model
results as a starting point and made
adjustments for various reasons. The
Order Reform Recommended Decision
described several options the
Department considered. Of the
differential surface ultimately adopted,
AMS wrote, ‘‘. . . [n]ine differential
zones provide the basis for establishing
the price structure. These zones were
established based on results of the
USDSS model, knowledge of current
supply and demand conditions, and
recognition of other marketing
conditions such as fluid versus
manufacturing markets, urban versus
rural areas, and surplus versus deficit
markets.’’ 63 FR 4802, 4905 (Jan. 30,
1998). The decision went on to outline
additional reasons for adjustments
including ensuring price alignment with
neighboring zones and adequate
marketwide pool draws.
The USDSS model estimates results
for an efficient milk supply and
distribution network, provided at its
lowest cost. The USDSS study authors
acknowledged when using the model
results to determine Class I differentials,
adjustments would be appropriate as
there are factors unaccounted for in the
model, such as FMMO provisions,
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abnormal traffic patterns, and
competitive relationships.
Accordingly, this decision continues
to recommend that Class I differentials
be amended, as appropriate, to better
reflect the current cost of serving the
Class I market. When determining
appropriate levels, the Department
began with the USDSS model’s May
results, referred to hereinafter as ‘‘May
results.’’ The May results are the lower
of the two months provided in evidence,
which is an appropriate starting point
for determining minimum prices. The
Department then evaluated the results
on a regional basis and made
adjustments based on three principles
and two additional considerations.
First, adjustments were made where
necessary to better align Class I handler
equity. This means the proposed Class
I differentials should not give one
handler an uneconomic cost advantage
relative to an actual or potential
competing handler. Second,
adjustments were made to maintain
producer equity and prevent
uneconomic rewards or penalties to
producers who deliver or could deliver
milk to the same plant or market. Third,
adjustments were made to ensure the
marketwide pools continue to provide
orderly marketing conditions. The
combination of handler and producer
equity goals is further achieved through
the size and shape of pricing zones. The
model results are determined at specific
locations, or ‘‘nodes,’’ in the model.
Model results can be displayed on a
map or in a list of counties to convey
the price surface, but the methodology
for doing so, as explained by the study
authors, was a mathematical tool which
interpolated values between distances.
Additional information about markets
can be added to the model results
through knowledge about the economic
or geographic (roads, natural barriers,
etc.) conditions in specific locations.
This may lead to a decision to change
the shape or contours of the pricing
surface that is estimated from the model
results. Lastly, adjustments were made
to reflect unique challenges associated
with servicing dense urban
environments. The changes by regions
and any changes from the recommended
decision for specific locations—made in
this final decision are described below.
The general process began with
roughly $0.20 differential bands
generated from the May results. The
May and October results formed a soft
boundary for differential adjustments.
The current differentials formed a hard
lower boundary, which were rounded to
the nearest dime to eliminate $0.05
differences between zones, consistent
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with the USDSS model results which
were in $0.10 increments.
Northeast
The recommended Class I
differentials in the Northeast region
continue to largely follow the May
results with minimal changes. The
differential for Portland, Maine,
continues to be raised to $4.50 to match
the results in Concord, New Hampshire,
and ensure handler equity. Albany
County, New York, and Rensselaer
County, New York, were moved to the
same differential by increasing the
Albany differential $0.10 to meet the
Rensselaer differential, as plants in
those counties are located just across a
bridge from one another but were
assigned different prices by the model.
Comments on the recommended
decision from NMPF and Upstate
Niagara expressed concern with
inconsistent Class I differentials across
the area of western New York. NMPF
and Upstate Niagara commented that
the proposed differentials in the
recommended decision would require
milk supplying Class I destinations in
that region to move from higher to lower
differential zones, largely due to the
geography of the Great Lakes. They
requested the Department consider a
flatter differential area by raising some
counties from $3.80 to $3.90 and
decreasing others from $4.00 to $3.90 to
facilitate the movement of milk in
different directions. Without an
adjustment, they argue, producers will
not have the necessary incentive to
supply Class I handlers in the region.
After closer review of the record, this
decision recommends increasing the
Class I differentials in the following
counties from $3.80 to $3.90: Niagara,
Erie, Orleans, Genesee, Wyoming,
Livingston, Yates, Ontario, Monroe, and
Wayne. This decision also recommends
decreasing the currently proposed Class
I differentials from $4.00 to $3.90 in the
counties of Lewis, Jefferson, and St.
Lawrence. These changes will create a
consistent $3.90 zone that addresses
milk movements in the region. This
decision is consistent with record
testimony concerning the market in
western New York and expected
increases in capacity and demand in the
region which may potentially require
milk to be sourced from outside of the
immediate local area.
MDIA, NMPF, and MIG commented
on the recommended decision’s
proposed Class I differentials in Maine
and New Hampshire. MDIA requested
that the proposed Class I differential for
Cumberland County, Maine, be
increased from $4.50 to $4.85 to restore
the previous $0.25 variance between the
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Portland and Boston areas and ensure
handler equity in the region. The
current spread, MDIA argued, will
incentivize Maine producers to ship to
handlers in Boston, rather than those
located in Cumberland County, Maine
(Portland). Similarly, NMPF requested
an increase from $4.50 to $4.70 for 6
counties in Maine and New Hampshire
to maintain producer and handler
equity. Lastly, MIG commented in
opposition to the Department’s proposal
to align certain counties in Maine and
New Hampshire, at levels $0.20 above
the model results.
The Department considered MDIA,
NMPF, and MIG’s comments in the
context of the overall marketing
dynamic in the northeast marketing
areas and concluded that the Class I
differential for Cumberland County,
Maine should remain at $4.50, as
indicated in the recommended decision.
This will align the Portland area with
nearby Merrimack County, New
Hampshire (Concord) to ensure handler
equity in the region. The larger increase
in Suffolk County, Massachusetts
(Boston) reflects the increase in costs to
service that market and fluid milk
demand. Accordingly, no changes were
made to the Class I differentials
assigned in this region from the
recommended decision to the final
decision.
Differentials in most New Jersey
counties are proposed to be $0.10 to
$0.20 above the May results, but within
the May and October range, to reflect
testimony on the cost of servicing urban
areas and transportation concerns.
NMPF requested the differentials be
aligned across southern New Jersey to
ensure handlers competing in the same
market face the same raw milk costs.
The recommended decision proposed
changes to the current Class I
differentials at varied levels for certain
counties in southern New Jersey. More
specifically, the proposal for
Cumberland County, New Jersey was
$4.70, while the proposal for
neighboring Burlington, Atlantic and
Cape May counties was $4.80. However,
a review of the record reveals these fluid
milk plants compete for sales in the
same market and should face similar
raw milk costs. Therefore, this decision
decreases the Class I differentials for
Burlington, Atlantic, and Cape May
counties from $4.80 to $4.70. This
change will also align the differentials
with the May results and maintain
uniform Class I differentials across the
region, as has been the case historically.
The differential for Washington, DC,
continues to be $0.10 above the May
result to reflect testimony on servicing
an urban area.
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In eastern Pennsylvania and northern
Maryland, NMPF’s comments to the
recommended decision requested a
$0.10 increase for 7 counties to maintain
a historical $0.10 price difference with
Berks County, Pennsylvania, and to
promote handler equity. Similarly, in
the Philadelphia and Baltimore corridor,
which includes areas in Maryland,
Delaware, and southern Pennsylvania,
NMPF requested $0.10 to $0.20
increases in 15 counties due to milk
movements in the region and handler
equity concerns. The Department
considered NMPF’s requests to increase
the differentials in Pennsylvania,
Maryland, and Delaware. However, the
proposed differentials are aligned with
the USDSS model results and record
evidence does not support the requested
increases. Accordingly, no additional
changes were made to the Class I
differentials proposed in Pennsylvania,
Maryland, and Delaware from the
recommended decision to the final
decision.
Appalachian
The variation between the model
results in May and October are more
significant in the three southeastern
orders. As discussed by several
witnesses, this region experiences
unique marketing conditions with high
Class I utilization and deficit local milk
supply. Due to the substantial
seasonality of the local milk supply, it
requires significant but variable
volumes of supplemental milk supplies
from outside the region as well as
changes in milk movements of regular
suppliers to the market throughout the
year. The Transportation Credit
Balancing Fund (TCBF) and the recently
implemented Distributing Plant
Delivery Credit (DPDC) are programs to
compensate handlers for some of the
additional and variable transportation
costs associated with supplying the
Class I markets in these orders during
different periods of the year. The
reimbursement rates for these programs
include adjustments for any gain in
Class I differentials from supply point to
receiving plant. Therefore, any changes
in the difference between Class I
differentials would be reflected in the
calculated rate for eligible payments in
both the TCBF and DPDC in all three
southeastern orders.
The Class I differentials in the
Appalachian region are largely formed
in $0.20 and $0.30 bands based on the
May results starting with $3.70 in
southern Indiana and, moving
southeast, increasing to $6.00 along the
North and South Carolina coasts. In
most areas, the proposed differentials
are within $0.10 (+/¥) of the May
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results. There are a few exceptions
where the proposed differentials are
$0.20 less than the May results to better
align handler equity. For example, in
Spartanburg County, South Carolina, the
proposed differential is $5.60, $0.20 less
than the May results. This maintains the
current competitive relationship
between this area and the Atlanta,
Georgia area, and with the competing
handlers in North Carolina.
The Department received comments
on the Class I differentials proposed in
the recommended decision in the
Appalachian region from NMPF, IDFA,
MIG, and New Dairy. NMPF requested
a $0.20 increase in 9 Virginia counties
to align with the differential proposed
for nearby Kanawha County, West
Virginia. NMPF explained that the
handlers in these areas all compete for
the same market and receive milk from
the same milkshed. NMPF also
requested a $0.20 increase to 40
additional Virginia counties to reduce
the spread in the proposed differentials
in Virginia and northern North Carolina,
as well as a series of changes to the
proposed differentials in other Virginia,
West Virginia, and North Carolina
counties considering logistical and
geographical challenges. Conversely,
IDFA, MIG, and New Dairy commented
in strong opposition to the proposed
increases and requested general
downward adjustments.
The Department considered all
comments on the Class I differentials
proposed for the Appalachian region.
First, rather than increasing the
differentials for certain Virginia
counties by $0.20 to align with
Kanawha County, West Virginia, this
final decision decreases the proposed
differentials for Kanawha County, West
Virginia by $0.20 to $4.30. As discussed
later in this decision with regard to the
Mideast region, this change effectively
aligns the region and addresses handler
equity concerns described on the record
in both West Virginia and neighboring
Ohio counties that compete in the same
market. Second, with regard to all other
requested adjustments in this region,
this decision finds that the Class I
differentials proposed in the
recommended decision are aligned with
the model results and record evidence
does not support additional changes. As
such, no additional changes were made
to the Class I differentials assigned in
this region from the recommended
decision to the final decision.
Southeast
The proposed Class I differentials in
the Southeast FMMO start at $3.20 in
southwest Missouri and increase
moving southeast to $6.00 in southeast
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Georgia. The proposed differentials
continue to follow the May results
closely, within $0.10 (+/¥), with a few
modifications. The East Baton Rouge
Parish differential was reduced by $0.20
from the May results to be consistent
with the May result of $5.20 for
competing areas such as Lafayette
Parish. Tangipahoa Parish was placed in
the $5.40 zone, or $0.30 below the May
result. These decreases are meant to
ensure handler equity while still
acknowledging the thinner and steeper
surface reflected in the May results in
the southeastern U.S.
Rutherford County, Tennessee, is also
proposed to be modified to be consistent
with neighboring Davidson County,
Tennessee, at $4.60 ($0.20 below the
May result) to provide for handler
equity. In Missouri, Webster County was
placed in the $3.20 zone to match the
Greene, Hickory, and Polk County
differentials. This addresses handler
equity concerns and results in a $0.10
proposed decrease for Webster County
from the May result.
NMPF provided specific comments on
the Class I differentials proposed in the
recommended decision for the southeast
region and requested a series of
increases in 12 counties located in
Tennessee and Kentucky. NMPF’s
rationale for these requests was based
on historical and expected milk
movements and known producer equity
concerns among those delivering milk
from the same milkshed to the same
plant locations. The Department
considered NMPF’s request to increase
the Class I differentials in this region.
However, the differentials proposed in
the recommended decision are aligned
with the model results and record
evidence does not support the requested
increases. Accordingly, no changes were
made to the Class I differentials
assigned in this region from the
recommended decision to the final
decision.
Florida
The proposed Class I differentials for
Florida largely follow the May results
with modification to address handler
equity concerns. The differentials start
at $6.00 in the Florida panhandle region
and increase going south with mostly
$0.40 bands ending at $7.40 in south
Florida. Processing plants in central
Florida were placed in the same $6.80
band to match the May result in Volusia
County due to handler equity concerns.
This necessitated decreases from the
May results of $0.10 in Orange County,
$0.10 in Hillsborough County, and $0.20
in Polk County. For similar handler
equity concerns, Broward County is
proposed to match the May result in
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Dade County of $7.40 in the
southernmost part of Florida.
In its comments on the recommended
decision, NMPF requested a series of
increases of $0.20 to $0.40 to the Class
I differentials proposed for 14 Florida
counties. NMPF cited producer equity
concerns and their ability to ensure a
sufficient supply of fluid milk to meet
consumer demand in high-population
areas such as Miami. The Department
considered NMPF’s requests to increase
the differentials in Florida. However,
the proposed differentials are generally
aligned with the model results and
record evidence does not support
additional increases. Accordingly, no
changes were made to the Class I
differentials proposed in this region
from the recommended decision to the
final decision.
Upper Midwest
In the Upper Midwest region, this
decision continues to propose
deviations from the May results to
ensure producer equity and ensure the
marketwide pool provides for orderly
marketing. The Upper Midwest FMMO
is unique in its low Class I utilization,
which creates challenges in setting a
differential surface that sends the proper
signals to producers supplying the Class
I market, while also ensuring producer
equity and orderly marketing among
producers supplying the region’s plants.
Record evidence indicates a large
differential range in the region would
not result in equity between producers
and could result in disorderly
marketing. Therefore, the differential
surface was flattened from the May
results, in general, by raising the Class
I differentials in the western part of the
region—in the eastern Dakotas and
much of Minnesota—and lowering the
differentials in the eastern part—in
northern Illinois, southeastern
Minnesota, and Wisconsin.
Differentials in five counties, Dakota,
Hennepin, Ramsey, Scott, and
Washington, in the Minneapolis/St.
Paul metropolitan area of Minnesota, are
raised $0.10 higher than neighboring
counties to reflect higher costs of
serving an urban area and incentivize
Class I service relative to surrounding
manufacturing plants. In addition, they
are set at the same differential of $2.90
to promote handler equity among fluid
processing plants in the metropolitan
area. The new differential for these
counties, except for Hennepin, are $0.10
to $0.20 above the May results. The
differential for Hennepin, $0.30 above
the May results, is set the same as its
peer counties to ensure that handlers in
this county are able to compete for
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available milk supplies on an equitable
basis.
Differentials in the regions supplying
the Chicago, Illinois, area are adjusted to
ensure handler equity. Generally, the
differentials in this area are set at $3.10
to $3.20. The record reflects bottling
plants in eastern Iowa, northern Illinois,
southeastern Wisconsin, northern
Indiana, and southwest Michigan all
compete for Class I sales into the
Chicago area. Thus, Class I differentials
in northern Illinois are lowered $0.20
and $0.10 in Kane and Winnebago
counties, respectively, from the May
results. Similarly, comparisons and
adjustments were made to the May
results to align with northern Indiana
and southwest Michigan counties
supplying the Chicago area.
The Department received a comment
from NMPF concerning the Class I
differentials assigned to eastern North
Dakota and western Minnesota. NMPF
stated the Department’s recommended
decision changed the historical
relationship in the Class I differentials
assigned to Cass County, North Dakota,
and four, adjacent western Minnesota
counties compared to the rest of western
Minnesota. More specifically, these
counties were proposed at $2.70, while
the surrounding counties were proposed
at $2.80. Without a change, NMPF
commented, dairy farmers would be
disincentivized to supply Class I
handlers in the recommended $2.70
zone. Considering these comments, this
decision increases the Class I
differentials for Cass County, North
Dakota, and Clay, Becker, Hubbard, and
Wilkin counties in Minnesota from
$2.70 to $2.80. These changes will help
to align these counties with the
neighboring counties in Minnesota
where the record reveals the reserve
supply is located. The increase will also
incentivize the supply of milk to Class
I plants in the area to ensure fluid milk
availability to populations throughout
North Dakota and northwestern
Minnesota.
Central
The proposed Class I differentials in
the Central FMMO start at $2.30 in
western Colorado and increase moving
east to $4.00 in southern Illinois. This
decision continues to align the
production area of northern Colorado
with the large production areas of New
Mexico, the Texas Panhandle, and
southwest Kansas at $2.50. This
required increasing the differential in
Weld, Boulder, and Morgan counties of
Colorado by $0.10 to $0.20 from the
May model results. In order to
encourage milk to service Class I
demand, some counties in the greater
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Denver area, including Colorado
Springs, are proposed to remain aligned
with the May results of $2.70, while
others are proposed to increase as much
as $0.20 above the May results to
provide for handler equity.
In southern Illinois, testimony reflects
plants compete for sales within a similar
distribution area. Therefore, counties
were grouped into a $3.60 zone. This
represents an increase of $0.10 for some
plants, while others remained at the
May result of $3.60. In Iowa, all
counties with distributing plants remain
aligned with the May result of $2.70.
Douglas County, Nebraska, and
Minnehaha County, South Dakota,
proposed Class I differentials are $2.70
and $2.60, an increase of $0.20 and
$0.10, respectively, from the May
results. These increases continue to
recognize handler equity both to the east
with Polk County, Iowa, and to the
north with Cass County, North Dakota.
In Kansas, the two counties with
distributing plants, Reno and Sedgwick,
are proposed to be aligned at $2.90; as
they are neighboring counties, the same
differential levels would provide for
handler equity. This increase also
provides handler equity and price
alignment with Oklahoma plants to the
south.
In Oklahoma, Lincoln, Cleveland, and
Grady counties continue to be proposed
at the same differential of $3.30. Lincoln
and Cleveland counties continue to be
proposed in alignment with the May
results, which represents a $0.20
increase for Grady County. The $3.30
differential for these three counties
provides for handler equity and price
alignment both to the north in Kansas
and the south in Texas.
The Department received specific
comments on the Class I differentials
proposed in the recommended decision
for the Central FMMO region from
NMPF, DFA, and DFA’s Mountain Area
Council in collaboration with Colorado
dairy farmers. NMPF’s comments
focused on producer and handler equity
concerns in the region and included a
request for a $0.20 increase in the
proposed Class I differentials for 23
Colorado counties. DFA and its
Mountain Area Council provided
similar comments and argued further
that the USDSS model is inappropriate
for the Colorado market because of the
unique circumstances in that market
where a single Class III handler absorbs
nearly all the milk produced in
Colorado. The DFA Mountain Area
Council also reiterated hearing
testimony on Colorado milk production
costs.
The Department considered all
comments received on the Class I
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differentials in the State of Colorado.
Record evidence, however, does not
justify a change in the proposed
differentials. While the record reflects
the USDSS model did not account for a
variety of milk cost of production
factors and plant supply relationships,
this decision has consistently
articulated consideration of producer
costs is not appropriate when
determining Class I differential levels.
As such, no changes were made to the
Class I differentials proposed in
Colorado from the recommended
decision to the final decision.
NMPF also commented on the Class I
differentials proposed for 35 counties
across Oklahoma, Missouri, and
Arkansas, covered by both the Central
and Southeast FMMOs. NMPF
requested that the Department align
these counties at $3.40 because handlers
in the tri-state area all compete for the
same markets and are supplied by the
same milkshed. This decision finds,
however, that record evidence does not
justify an additional increase or a reason
to align the tri-state area at $3.40, as the
proposed differentials generally follow
the model results. As such, no changes
were made to the Class I differentials
proposed in this region from the
recommended decision to the final
decision.
Mideast
Differentials in the Mideast region
were evaluated on a state-by-state basis.
Michigan differentials are set at the May
results, $3.00 in the upper peninsula
and $3.30 in the lower peninsula,
because there were no additional
producer or handler equity issues to
address. Indiana is divided into three
differential zones moving north to south
($3.30, $3.60, and $3.70) which align
with the May results. This decision
continues to propose Class I
differentials for Lake and Huntington
counties $0.40 and $0.10 lower,
respectively, from the May results to
provide handler equity in the northern
Indiana zone. This decision continues to
propose an increase to the Class I
differentials in Madison and Wayne
counties by $0.10 and $0.20,
respectively, from the May results to
provide handler equity in the central
Indiana zone of $3.60. Southern Indiana
counties are proposed at the May result
of $3.70.
Proposed differentials in Ohio
generally follow the May results within
$0.10 (+/¥) and zones were determined
based on handler equity concerns.
Moving northwest to southeast,
proposed differential zones are $3.30,
$3.60, $3.80, $4.00, and $4.30. The five
differential zones align within a $0.10
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(+/¥) range of the May results. The
exception is Cuyahoga County with a
proposed $0.20 decrease from the May
result to provide for hander equity with
Wayne and Stark counties.
Considering additional handler equity
concerns in southern Ohio, as expressed
in comments received from United
Dairy, and competition among plants in
the region as revealed in hearing
testimony, this decision decreases the
Class I differentials from $4.00 to $3.80
in the counties of Noble, Belmont,
Morgan, Jefferson, and Perry, Ohio.
United Dairy noted in its comments that
current Class I differentials in the region
are aligned, yet the recommended
decision amended the differentials at
higher levels for some counties. United
Dairy added that the proposed Class I
differentials in the recommended
decision set the minimum raw milk
price for some Class I handlers located
in southern Ohio $0.20 higher than
those in neighboring central Ohio
counties. United Dairy asserted that
with such a large price difference, it
would be at a competitive disadvantage
relative to its current price relationships
with competitors. Upon further review,
this decision finds the Class I
differentials proposed in the
recommended decision would create
competitive disadvantages for plants
located in southern Ohio and, thus, a
decrease in these counties was
appropriate.
West Virgina differentials range from
$4.00 to $4.80, moving northwest to
southeast, and are largely consistent
with the May results. However,
considering handler equity concerns in
West Virginia, as expressed in
comments received from NMPF, United
Dairy, and the West Virginia
Department of Agriculture, this decision
decreases the Class I differentials in
Cabell, Putnam, Clay, and Kanawha
Counties in West Virginia from $4.50 to
$4.30. NMPF, United Dairy, and the
West Virginia Department of Agriculture
all highlighted handler equity concerns
in their comments because of
significantly higher differentials in
Kanawha County, West Virginia
compared to neighboring West Virginia,
Virginia, and southern Ohio counties.
To address these concerns, this decision
will align the Class I differentials in
Cabell, Putnam, Clay, and Kanawha
Counties in West Virginia with nearby
counties that compete in the same
market.
MIG provided specific comments
regarding Pennsylvania, urging the
Department to lower additional Class I
differentials to ensure handler equity
with unregulated areas of the State. The
Department reviewed relevant record
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evidence and found no justification to
modify the proposed Class I differentials
from the recommended decision to the
final decision. While the proposed
differentials in western Pennsylvania
are higher than the May results, they
generally follow the model results that
showed multiple differential zones
through the state moving west to east.
As such, this decision continues to
propose a Class I differential for Butler,
Fayette, Lawrence, and Mercer counties
of $4.00, $0.10 lower than the May
results, to encourage service to the
demand areas of Western Pennsylvania.
Southwest
The proposed Class I differentials in
the Southwest FMMO start at $2.30 in
northwest New Mexico and increase
moving southeast to $4.80 in southeast
Texas. Testimony reflects the Texas
Panhandle and southeastern New
Mexico regions contain mostly
manufacturing plants and draw milk
from the same supply region in the
Panhandle. For producer equity
concerns, these regions are proposed to
be in a $2.50 zone. This aligns with the
May results for the eastern New Mexico
plant locations, necessitating a proposed
increase of $0.10 to $0.30 in counties
within the Panhandle region to reach a
uniform $2.50 zone. In Lubbock County,
Texas, the differential is proposed at
$2.60, a decrease of $0.20 from the May
result, recognizing handler equity in the
Panhandle region and producer equity
considerations with manufacturing
plants competing for milk supplies.
Dallas County, Texas, continues to be
proposed in alignment with the May
result of $3.70 and a $0.10 increase is
proposed for Tarrant County to maintain
handler equity. Bexar County, Texas is
proposed at $4.30, a $0.10 increase from
the May result, and Harris and
Montgomery counties are proposed at
$4.80, a $0.20 increase from the May
result to reflect difficulties in servicing
congested urban areas.
Upon review of comments received
from NMPF and Plains Dairy regarding
Class I differentials in New Mexico, this
decision proposes to increase the Class
I differentials for Bernalillo, Los
Alamos, Sandoval, Santa Fe, Socorro,
Torrance, and Valencia counties from
$2.40 to $2.50. NMPF commented
specifically that, as proposed in the
recommended decision, there would be
a $0.10 disincentive to supply the Class
I market in Bernalillo County, New
Mexico (Albuquerque). NMPF argued an
increase is needed in these counties to
ensure there remains an incentive to
supply the Class I market in
Albuquerque from the reserve supply
available in New Mexico, as reflected in
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hearing testimony. This change aligns
the differentials for the fluid market of
Albuquerque with nearby
manufacturing markets that compete for
the same milk supply and would not
disincentivize service to the Class I
market in Albuquerque.
Plains Dairy was the only Class I
handler to comment in support of the
recommended Class I differentials and
for use of the USDSS model results.
Plains Dairy requested a series of
decreases in the southwest region to
align with the May results. While this
decision increases some of the Class I
differentials included in Plains Dairy’s
comments, it creates a consistent $2.50
zone in New Mexico so as to not
disincentivize milk movements to the
milk demand location in Bernalillo
County, New Mexico. This change is
supported by record testimony
concerning the location of the milk
supply and demand locations in New
Mexico.
This decision also recognizes the
competitive relationship between plants
located in the Texas panhandle that
draw from a common local milk supply,
as also discussed by Plains Dairy in its
comments. While Plains Dairy requests
decreases in some locations, NMPF
requests increases in other locations in
Texas and neighboring Oklahoma
counties. Because processors and
manufacturing plants located in the
panhandle compete for a shared milk
supply, as revealed in the hearing
record, this decision finds lowering the
differentials in the region to the May
results would both disrupt this
competitive relationship and
disincentivize service to the Class I
market. Considering resulting producer
and handler equity concerns, deviations
from the model results are appropriate
for the Southwest region.
MIG also provided specific comments
questioning the Department’s proposed
Class I differentials in certain Texas and
New Mexico counties where the model
suggested a Class I differential lower
than current levels, but the Department
proposed an increase. The record of this
proceeding reflects the model estimates
for some supply locations in Texas and
New Mexico were higher than the
demand areas where the bottling plants
are located. The record does not
indicate why such a price relationship
is suggested given that economic theory
would assume the opposite—the
demand areas should have higher
differential levels to incentivize milk to
supply bottling plants in those
locations. During the national hearing,
the model authors testified that while
the model results entered into evidence
give estimates for the 3,108 counties in
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the contiguous United States, the model
only produces estimates for 663 demand
locations. The model then uses a
Kriging process which interpolates
estimates for the counties between the
demand locations. As such, when
determining the proposed differentials,
adjustments from the model were made
to some demand locations in the Texas
and New Mexico areas to not
disincentivize milk movements from
supply to demand locations.
Arizona
In Arizona, the metropolitan area of
Phoenix encompasses both Maricopa
and Pinal counties. This decision
continues to propose an increase to the
Class I differentials for these counties by
$0.30 and $0.20, respectively, above the
May results to reflect the higher cost of
servicing an urban area, in addition to
providing handler equity with Clark
County, Nevada. The differential for
Yuma County is proposed at $2.50, an
increase of $0.40 from the May result to
maintain handler equity between
Maricopa County, Arizona, and Los
Angeles, California.
In its comments on the recommended
decision, MIG indicated its opposition
to the proposed increase in Kern
County, California to align with Yuma
County, Arizona. The record reflects
there are additional costs to service the
Los Angeles market that are not
accounted for in the USDSS model and,
thus, the differentials as proposed in the
recommended decision would
incentivize milk to service the Los
Angeles market, MIG argued the
proposed differentials will incentivize
dairy farmers in Arizona to supply the
California market rather than the
Phoenix area, where demand is high.
However, the record does not indicate
the proposed differentials would cause
a milk shortage for the Phoenix market
as hearing evidence demonstrates the
supply for Phoenix comes from its
surrounding area.
Considering the same urban area,
NMPF requested an increase from $2.60
to $2.80 in Maricopa County, Arizona
due to a number of logistical,
geographical and climate-related
challenges when servicing Phoenix. The
Department considered NMPF’s
comments, however, this decision finds
that record evidence does not justify a
change in the proposed differentials.
Additional costs of servicing the urban
area were already considered in
determining the proposed differentials,
and as already articulated in the
decision, producer costs are not an
appropriate consideration when
determining Class I differential levels.
As such, no changes were made to the
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Class I differentials assigned in this
region from the recommended decision
to the final decision.
California
For California, testimony was given
regarding additional transportation costs
from excessive traffic congestion and
geographic obstacles in southern
California that were not accounted for in
the model. Accordingly, this decision
continues to propose an increase to the
Class I differential in San Diego by $0.20
from the May result to $2.80. To
maintain handler equity within the
southern California region, the
differentials for Orange, Riverside, and
Los Angeles counties are proposed to be
$2.80. This is $0.40, $0.50 and $0.60
above the May results in Orange,
Riverside, and Los Angeles counties,
respectively. Ventura County is
proposed to increase $0.40 from the
May result, to $2.60, to address
producer equity concerns and ensure
price alignment with the surrounding
counties. For Kern County, the primary
milk supply area for much of this
region, the differential is proposed to be
$2.50. This also serves to encourage
Kern County milk to move south to
distributing plants, rather than north to
manufacturing plants where the
proposed differential is $2.20.
The differentials in the remaining San
Joaquin Valley counties, Tulare, Kings,
Fresno, Madera, Merced, Stanislaus, and
San Joaquin, are proposed to be $2.20
based on testimony indicating these
counties are considered one supply
area. Of these counties, Madera County
has the highest increase from the May
result, $0.40, to maintain handler equity
as well as maintain producer equity for
the producer milk in this area.
The proposed $2.20 differential zone
is then carried into the Sacramento
Valley counties of Sacramento, Yolo,
Colusa, and Glenn, an increase of $0.20
to $0.30 from the May results. These
counties, along with those in the San
Joaquin Valley, supply milk for
distributing plants in the San Francisco
Bay area. The proposed Class I
differentials for Alameda, Contra Costa,
Solano, Napa, Marin, and Sonoma
counties continue to be proposed at
$2.40 to encourage milk to service the
San Francisco Bay area. This represents
an increase of $0.40 to $0.50 from the
May model results for these supply
counties to maintain handler equity.
San Francisco and counties south
along the central California coast are
further from a milk supply. The
differentials in that area are proposed at
$2.50 and include San Francisco, San
Mateo, Santa Cruz, Santa Clara, San
Benito, Monterey, San Luis Obispo, and
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Santa Barbara counties, representing
increases from the May results of $0.20
to $0.50.
Similar to the Sacramento Valley, the
differentials for the counties of
Mendocino, Lake, and Humboldt, which
are located along the northeast
California coast and supply the San
Francisco Bay area, are proposed to be
$2.20 to provide for producer equity.
The Department received specific
comments from MIG, NMPF, and
Crystal Creamery regarding the Class I
differentials proposed in California.
MIG and Crystal Creamery commented
in opposition to the Department’s
deviations from the USDSS model
results in the region and emphasized
specific concerns with the Class I
differentials proposed for the Fresno
area. NMPF requested an increase from
$2.60 to $2.80 to the Class I differentials
for San Bernardino County to align with
neighboring counties where handlers
compete for the same milk supply.
The Department reviewed and
considered these comments and
reexamined relevant record evidence.
The proposed differentials reflect
consideration of the cost to supply the
multiple California metropolitan
demand centers given its unique
geography and significant logistical
supply challenges. Witnesses testified
and the model authors indicated the
USDSS model was not capable of taking
these factors into consideration.
Therefore, the record supported
differential levels higher than the model
results. The differentials in the
metropolitan areas were raised with
consideration for record evidence
pertaining to handler equity, geography
and traffic congestion. These increases
then necessitated changes to the supply
regions. A review of the record evidence
regarding milk movements in southern
California similarly finds no
justification for change. Given the large
size of San Bernadino County, the
largest county in the state, this decision
does not find justification to increase
the differential applicable to the entire
county, given only a small portion is
located next to Los Angeles County.
Considering this analysis, no changes
were made to the Class I differentials
assigned in this region from the
recommended decision to the final
decision.
Western Unregulated States
Differentials in Nevada generally
follow the May results, except for a few
modifications. In northern Nevada, to
provide for handler equity, Washoe
County is proposed to increase $0.10
from the May result to align with the
neighboring $2.00 California zone.
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Eureka, Nye, and Esmerelda counties
are proposed at $2.20, resulting in
changes from the May results of plus or
minus $0.10.
The proposed Class I differentials in
Utah start at $2.00 in the north and
increase moving south up to $2.50 in
the southwest part of the State. While
most of the proposed differentials are
aligned with the May results, the
counties of Davis, Morgan, Salt Lake,
Tooele, Utah, and Weber are
recommended at $2.20, an increase of
$0.10. This aligns those counties with
counties to the north and west, ensuring
both producer and handler equity.
The proposed Class I differentials in
the state of Montana start at $1.70 and
increase to $2.40 in the southeast part
of the state. Most of the proposed
differentials are aligned with the May
results. The only county with a
proposed differential that is more than
$0.10 different from the May result is
Golden Valley which is lowered $0.20
to ensure handler equity with the
counties to its north and south.
The proposed differentials in the
unregulated portions of the state of
Idaho start at $1.70 and increase to
$2.20. While most of the proposed
differentials are within $0.10 of the May
results, the county of Cassia is
decreased $0.20 for handler equity with
plants to the south into Utah. This
brings the unregulated Idaho counties in
alignment with counties to the north
and south, ensuring both producer and
handler equity with those areas.
Lastly, the proposed differentials in
Wyoming generally follow the May
results as there were no producer or
handler equity concerns to address.
Except for Laramie, Wyoming, which is
proposed at $2.50 to align with
neighboring Northeast Colorado. This
represents a $0.20 increase compared to
the May results.
The Department received specific
requests from NMPF, DFA, and an
individual dairy farmer for changes to
the Class I differentials proposed for
certain counties in northwestern Nevada
to address alleged producer equity
concerns. NMPF and DFA suggested a
flat pricing surface of $2.20 for 6 Nevada
counties, while the dairy farmer
requested a $0.30 increase for Churchill
County, Nevada, specifically. The
Department reviewed record evidence
relevant to the requested changes in
Nevada and found no justification for
change. The proposed differentials
generally follow the May results with a
slight increase in Washoe county to
encourage milk movements to service
the demand in Reno, NV. As such, no
changes were made to the Class I
differentials assigned in this region from
the recommended decision to the final
decision.
Pacific Northwest
In the Pacific Northwest, the proposed
Class I differential in Seattle increased
$0.30 above the May result to reflect
unique geography and the cost of
serving an urban market. Likewise, the
proposed differential in Portland,
Oregon, was increased from the May
result to align with Seattle to provide for
producer and handler equity. Testimony
reflected both cities are equidistant to
milk supplies in south central
Washington, and both have similar
supply issues. The remaining proposed
differentials reflect a $0.20 banding
around the May results.
MIG commented that the Department
deviated from the model results in the
Pacific Northwest without justification.
It also stated that the $0.20 banding of
the Class I differentials is inconsistent
with the Department’s proposals for
other regions and highlighted several
specific differentials of concern. The
Department reviewed the record
regarding the differentials in the Pacific
Northwest FMMO. While MIG contends
Portland and Seattle are not comparable
demand areas, the record shows similar
population areas facing similar
geographic and traffic congestion issues
that cause milk supply logistical issues
necessitating an increase over the model
results. The differential for Spokane,
Washington was proposed at the model
result as it does not face some of the
same logistical challenges. The modelrecommended $2.40 differential for
Spokane, which is higher than the
surrounding areas, will encourage milk
to move to the demand location. As for
the banding of differentials in the
middle of the Pacific Northwestmarketing area, as referenced in MIGs
comment, the model suggested a more
gradual differential gradient between
the milk supply and demand centers.
However, the record does not
demonstrate that there are plants
located in many of those areas to justify
the numerous differential areas. The
decision does not find such additional
differential values necessary to move
milk from supply and demand areas. As
such, no changes were made to the Class
I differentials assigned in this region
from the recommended decision to the
final decision.
Summary
In total, the Class I differentials
proposed in this decision reflect a
simple average of $0.01 higher than the
May results ($3.81 versus $3.80) for the
3,108 counties in the contiguous U.S.
The following is a general description
of the changes from the May results:
Number of counties
Range of difference
5 ..............................................................................................
227 ..........................................................................................
2,648 .......................................................................................
187 ..........................................................................................
41 ............................................................................................
¥$0.40 to ¥$0.60 .................................................................
¥$0.20 to ¥$0.30 .................................................................
¥$0.10 to +$0.10 ...................................................................
+$0.20 to +$0.30 ....................................................................
+$0.40 to $0.60 ......................................................................
An analysis shows the proposed
differentials, on a weighted average
basis for FMMO Class I milk (2019–
2023), increased $1.24 per cwt. Based
on pooled Class I milk during 2019–
2023, the current weighted Class I
differential was $2.63 per cwt. The
differentials proposed in this decision
would have increased the weighted
average to $3.87 per cwt.
This final decision details all
requested changes to the proposed Class
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I differentials from the recommended
decision to the final decision. The
Department reviewed and considered all
33 comments received on the Class I
differentials but found, as detailed by
region above, that any additional
changes not made in this final decision
were either already considered or were
not supported by record evidence.
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Number of plants
1
13
171
34
23
Other Issues
In post-hearing briefs, some
stakeholders objected to NMPF’s use of
producer costs of production for
proposing updated Class I differential
levels. As described above, such costs
were not considered in the development
of the Class I differentials recommended
in this decision.
As discussed above, with regard to the
Appalachian region, another argument
made in post-hearing briefs and in
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comments centered on the amended
TCBF provisions in the Appalachian
and Southeast FMMOs and newly
established DPDC provisions in the
Appalachian, Florida, and Southeast
FMMOs. These provisions became
effective March 1, 2024, and were a
result of a regional rulemaking
proceeding to address the chronic milk
supply issues of those regions 89 FR
6401 (Feb.1, 2024). As the proceeding
resulted in increased transportation cost
related assessments on Class I handlers,
some stakeholders argue no changes
should be made to the Class I
differentials until the impact of these
regional changes can be observed. MIG,
New Dairy, NMPF, and IDFA reiterated
these concerns in their comments on the
recommended decision and requested
the Class I differentials in these orders
be reduced by the amount of the TCBF
and DPDC payments.
The Appalachian, Florida, and
Southeast FMMOs adopted marketwide
service payment provisions that
authorize year-round assessments on
Class I milk, paid by handlers, for
payment to handlers for Class I
deliveries made to their plants
according to the TCBF and DPDC
provisions. Under the marketwide
service provisions of the AMAA,
marketwide service programs are only
authorized to pay monies to handlers 7
U.S.C. 608c(5)(J). Therefore, it would
not be appropriate to delay
consideration of Class I differential
levels, monies which are paid to
producers (both cooperative and
independent), for TCBF and DPDC
payments which are made only to
handlers. As was stated in the
recommended decision, if Class I
differential levels are changed as a
result of this proceeding, thus,
impacting the market conditions which
led to the creation of the marketwide
service programs, stakeholders could
petition USDA to make changes to the
TCBF and DPDC provisions.
Demand Elasticity
IDFA, and Nestle USA, commented
that Class I differentials should not be
increased until a thorough econometric
study is conducted to inform decisionmaking. This study, they argued, should
center around the relationship between
fluid milk prices and retail consumer
demand, otherwise referred to by these
and other commentors as changes in
demand elasticity. Several Class I
processors such as United Dairy, Crystal
Creamery, New Dairy, and Lamers
Dairy, as well as the trade association
Pennsylvania Association of Milk
Dealers, provided similar comments that
described, in their view, changes in
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consumer demand because of higher
prices and competition from alternative
beverages in the marketplace. MIG,
IDFA, and PAMD go further in their
comments, repeating arguments made at
the hearing and in post-hearing briefs
centered around the notion that USDA
is not authorized to raise differentials
because it would decrease demand,
which they believe is a violation of the
AMAA. More specifically, IDFA and
MIG commented that the AMAA
requires that FMMOs: (1) consider
economic conditions which affect
market supply and consumer demand,
and (2) be in the public interest. IDFA
acknowledged the Department’s
explanation in the recommended
decision that the AMAA does not
explicitly state that FMMO provisions
should encourage Class I sales.
However, IDFA opined that the AMAA
does so implicitly. In its view, per the
AMAA, FMMOs should never reduce
quantity demanded by consumers.
During the hearing and in posthearing briefs, Class I processors and
manufacturers similarly argued that the
Department should consider the impact
to Class I sales when evaluating changes
as they allege the AMAA objective of
ensuring adequate milk supplies implies
the FMMO should encourage fluid
consumption. They further argued that
consumer demand for fluid milk is
elastic and, therefore, raising Class I
differentials would be disorderly as it
would result in a decline in Class I
sales.
As to whether fluid milk has an
inelastic or elastic demand, four studies
were entered onto the record, some
drawing opposite conclusions. One
study found the consumer demand for
regular milk to be inelastic, while
specialty milk (i.e., lactose free) to be
price elastic. A second study concluded
consumer demand was elastic, but less
so than was determined in the fourth
study on the record. Another witness
reviewed time series data published
within the last 20 years, concluding that
consumer demand for fluid milk
remains inelastic with respect to milk
prices.
The recommended decision
highlighted the fourth study which
looked at cross-sectional data over
relatively short periods of time as an
example. This econometric study,
entered on behalf of IDFA and
emphasized by IDFA and MIG in their
comments on the recommended
decision, found the retail level demand
for fluid milk to be elastic. An analysis
of the IDFA study indicates that other
than product prices and quantities, no
other variables were considered that
could explain changes in demand. Some
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variables that are generally recognized
to be determinants of demand outside of
price include, but are not limited to,
household income, demographics, and
measures of preferences. While the
IDFA study found retail price affects
retail milk demand, it did not
demonstrate price was the only factor
that impacts demand. By design, the
study estimated that only prices for milk
and competing products could account
for changes in quantities sold. Certainly,
more studies may be warranted given
the evolution of the dairy industry in
the last 25 years. However, a conclusion
of the long-term consumer demand
elasticity of fluid milk cannot be drawn
from the varying results of the four
studies contained in the record.
MIG and IDFA arguments around
elasticity rely on the premise that fluid
milk product demand at the retail level
is elastic and thus, any increase in Class
I prices would lower consumer demand,
which they assert would not be in the
public interest and violate the AMAA
policy objective. The AMAA authorizes
marketing orders to provide for more
orderly marketing conditions. In the
context of milk prices, the AMAA states
FMMOs shall ‘‘. . . insure a sufficient
quantity of pure and wholesome milk,
and be in the public interest . . .’’ 7
U.S.C. 608c(18). This decision
emphasizes that one objective of
FMMOs is to ensure minimum milk
prices reflect supply and demand
conditions. In so doing, FMMOs satisfy
the AMAA’s public interest requirement
by ensuring buyers are purchasing raw
milk at minimum prices that reflect
current market conditions.
Upon review of comments received
and all record evidence, the Department
maintains the changes proposed in this
decision would ensure the FMMO
pricing provisions reflect current supply
and demand conditions. This decision
does not find that the AMAA explicitly
states or implies FMMO provisions
should encourage Class I sales and thus,
a determination of fluid milk consumer
demand elasticity is not required. As
described in detail throughout this
decision, the record of this proceeding
reveals the cost of supplying the Class
I market has increased. This was
demonstrated through the USDSS
model, which was an academic exercise
to quantify the location-specific cost of
servicing Class I plants, and
corroborated through witness testimony
concerning increasing transportation
costs and distances traveled for milk to
supply Class I plants.
b. Class II Differential
The FMMO system currently prices
milk used in Class II products
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uniformly. The Class II skim milk price
is computed as the advanced Class IV
skim price plus $0.70 per cwt. The Class
II butterfat price is the Class III butterfat
price for the month, plus the same
amount expressed as $0.007 per pound.
The $0.70 differential between the Class
IV and Class II skim milk prices,
adopted in the Order Reform Final
Decision, was based on an estimate of
the cost of drying condensed milk and
re-wetting the solids for use in Class II
products, which was seen as an
economic, upper-bound constraint on
the use of fresh milk in Class II
processing.
Proposal 21, submitted by AFBF,
seeks to update the Class II differential
to $1.56 per cwt. AFBF derived the
proposed level by updating the factors
originally used to determine drying cost.
Those include the NFDM make
allowance and the nonfat solids yield
factor used in the FMMO formulas, and
butterfat and nonfat solids levels in
FMMO pooled milk. As rewetting
solids, the practice of first reconstituting
powdered milk with water, is no longer
a common practice, AFBF argued such
cost no longer needs to be considered.
AFBF opined a $1.56 Class II
differential would not be high enough to
incentivize the substitution of Class IV
products for fresh milk. AFBF claimed
the additional Class II value added to
the marketwide pool because of the
higher differential would reduce the
occurrence of negative PPDs and
depooling.
Opponents of Proposal 21 argued
such a large Class II differential increase
would incentivize the substitution of
Class IV products in the manufacture of
Class II products. Class I processors,
who also have Class II production,
argued such an increase would put them
at a competitive disadvantage with
standalone Class II manufacturers. They
indicated processors who produce both
products are required to pool all milk
received at the plant but processors who
only produce Class II products can opt
to pool milk.
As indicated in the recommended
decision, record evidence does not
support adoption of Proposal 21.
Mathematically, the formula used by
AFBF to compute an updated Class II
differential mimics the calculation from
Order Reform. However, it is clear from
record testimony that more than
doubling the current Class II
differential, as proposed by AFBF,
would result in handler equity issues
and increased substitution of Class IV
products in lieu of fresh fluid milk in
Class II products. Class II production is
unusual, if not unique, among dairy
processing facilities as some products
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are produced at Class I plants, and
others at standalone Class II plants.
Because all milk received at Class I
plants is required to be pooled,
regardless of use, this can result in the
same products having different
regulatory burdens depending on the
type of plant where it was produced.
That phenomenon has existed since
2000. However, the record shows that
instances of milk in Class II products
produced from Class II plants not being
pooled could dramatically increase with
adoption of Proposal 21. The result
would be a competitive disadvantage for
Class I plants by creating a pricing
inequity that would produce disorderly
marketing conditions.
AMS received four comments specific
to the Class II differential. NMPF and
the Arizona Farm Bureau Federation
commented in support of the decision to
maintain the current Class II
differential. Comments filed in
opposition to the recommended
decision, from AFBF and the Tennessee
Farm Bureau, requested that USDA
reconsider increasing the Class II
differential for the final decision for
reasons previously communicated on
the record, which were specifically
addressed and rejected in the
recommended decision. Therefore, this
final decision continues to find it
appropriate to maintain the current
Class II differential. Accordingly,
Proposal 21 is denied.
Conforming Changes
Proposal 22, authored by AMS, would
authorize changes, where necessary, in
the respective marketing orders to
conform with any amendments resulting
from this proceeding. The record
contains no opposition to the proposal.
Accordingly, this decision recommends
a series of conforming changes to ensure
the proposed amendments to the
uniform pricing formulas applicable to
the respective marketing orders can be
effectuated. The proposed changes are
as follows:
1. Amending 7 CFR 1000.43 to
remove references to 1135.11, as the
order is no longer in effect. Also adding
7 CFR 1000.43(e) which would define
skim milk used in ultra-pasteurized or
aseptically processed and packaged
fluid milk products eligible for the Class
I ESL adjustment be limited to available
Class I producer milk classified
pursuant to the allocation process
contained in Section1000.44(a);
2. Amending 7 CFR 1000.50 to
remove all references to NASS and
replace them with AMS;
3. Amending the following counties
(and FIPS code) in 7 CFR 1000.52, to be
consistent with the Federal Information
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Procession Series maintained by the
Federal Communication Commission:
Yellowstone, MT (30113) has been
merged into Gallatin and Park Counties,
MT (30031) (30067), Shannon, SD
(46113) has been renamed Oglala
Lakota, SD (46102), Bedford City, VA
(51515) has been merged into Bedford
County, VA (51019), and Clifton Forge
City, VA (51560) has been merged into
Alleghany County, VA (51005).
Additionally, amending the FIPS code
for Pierce, WA (53053) as it was original
printed incorrectly. The differentials are
also listed in order of FIPS code, not
state abbreviation, in order to be listed
alphabetically by state;
4. Amending 7 CFR 1000.76,
provisions governing partially regulated
distributing plants to add ‘‘applicable’’
to references to the Class I price
throughout the section to indicate
application of a Class I ESL adjustment,
when applicable, and remove the
reference in 7 CFR 1000.76(b)(1)(i) to 7
CFR 1135.11 as the latter is no longer in
effect;
5. Amend the introductory paragraphs
of 7 CFR 1001.60, 1005.60, 1006.60,
1007.60, 1030.60, 1032.60, 1033.60,
1051.60, 1124.60, 1126.60, and 1131.60,
sections which calculate the handler’s
value of milk in each FMMO. Section
.60 of each order would be revised with
the addition of an instruction to
compute an adjustment to a handler’s
producer milk obligation for Class I
producer milk eligible for the Class I
ESL adjustment. The adjustment would
be calculated by multiplying the
monthly Class I ESL adjustment by the
monthly pounds of eligible Class I skim
milk. The instruction would be inserted
prior to the instruction regarding
reconstituted milk for each order. Other
paragraphs are proposed to be
redesignated to reflect the insertion;
6. Further amending 7 CFR
1005.60(g), 1006.60(g)–(i), and
1007.60(g) to remove language
pertaining to transportation cost
reimbursement during the months of
January 2005 through March 2005 and
September 2017, which is no longer in
effect;
7. Amending 7 CFR 1005.51, 1006.51,
and 1007.51 to remove Class I price
adjustments in the Appalachian,
Florida, and Southeast FMMOs. The
order language would no longer be
necessary with the proposed
amendments to the Class I differentials;
and
8. Amending 7 CFR 1170.8 to remove
the collection of 500-pound barrel price
information. The order language would
no longer be necessary with the
proposed amendments to cheese survey.
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Rulings on Proposed Findings and
Conclusions
AMS has also considered proposed
findings submitted in post-hearing
briefs, officially noticed documents, and
comments and exceptions filed in
response to the recommended decision
to formulate this proposed FMMO.
These briefs, proposed findings and
conclusions, comments and exceptions,
and the evidence in the record were
considered in making the findings and
conclusions set forth above. To the
extent that the suggested findings and
conclusions filed by interested parties
are inconsistent with the findings and
conclusions set forth herein, the claims
to make such findings or reach such
conclusions are denied for the reasons
previously stated in this decision.
ddrumheller on DSK120RN23PROD with PROPOSALS3
General Findings
The findings and determinations
hereinafter set forth supplement those
that were made when the Northeast,
Southeast, Appalachian, Florida, Upper
Midwest, Central, Mideast, California,
Southwest, Pacific Northwest, and
Arizona FMMOs were first issued and
when they were amended. The previous
findings and determinations are hereby
ratified and confirmed, except where
they may conflict with those set forth
herein.
The following findings are hereby
made with respect to the aforenamed
marketing agreements and orders:
a. The tentative marketing agreements
and the orders, as hereby proposed to be
amended, and all of the terms and
conditions thereof, will tend to
effectuate the declared policy of the Act;
b. The parity prices of milk as
determined pursuant to section 2 of the
Act are not reasonable with respect to
the price of feeds, available supplies of
feeds, and other economic conditions
that affect market supply and demand
for milk in the marketing area, and the
minimum prices specified in the
proposed marketing agreements and the
orders are such prices as will reflect the
aforesaid factors, ensure a sufficient
quantity of pure and wholesome milk,
and be in the public interest; and
c. The proposed marketing
agreements and the orders will regulate
the handling of milk in the same
manner as and will be applicable only
to persons in the respective classes of
industrial and commercial activity
specified in, the marketing agreements
upon which a hearing have been held.
d. All milk and milk products
handled by handlers, as defined in the
marketing agreements and the orders as
hereby proposed to be amended, are in
the current of interstate commerce or
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directly burden, obstruct, or affect
interstate commerce in milk or its
products.
Recommended Marketing Agreements
and Orders
The recommended marketing
agreements are not included in this
decision because the regulatory
provisions thereof would be the same as
those contained in the orders, as hereby
proposed to be amended. The following
orders regulating the handling of milk in
the Northeast, Appalachian, Florida,
Southeast, Upper Midwest, Central,
Mideast, California, Pacific Northwest,
Southwest, and Arizona marketing areas
are recommended as the detailed and
appropriate means by which the
foregoing conclusions may be carried
out.
January 2024 is hereby determined to
be the representative period for the
purpose of ascertaining whether the
issuance of the orders, as amended and
as hereby proposed to be amended the
uniform pricing provisions in the
Northeast, Appalachian, Florida,
Southeast, Upper Midwest, Central,
Mideast, California, Pacific Northwest,
Southwest, and Arizona FMMOs, are
approved or favored by producers, as
defined under the terms of the orders (as
amended and as hereby proposed to be
amended), who during such
representative period were engaged in
the production of milk for sale within
the aforesaid marketing areas.
Referendum Order To Determine
Producer Approval; Determination of
Representative Period; and Designation
of Referendum Agent
It is hereby directed that a referendum
be conducted and completed on
December 31, 2024, in accordance with
the procedures for the conduct of
referenda (7 CFR 900.300–311), to
determine whether the issuance of the
order regulating the handling of milk in
the Northeast, Appalachian, Florida,
Southeast, Upper Midwest, Central,
Mideast, California, Pacific Northwest,
Southwest, and Arizona marketing areas
is approved or favored by producers, as
defined under the terms of the order,
who during such representative period
were engaged in the production of milk
for sale within the aforesaid marketing
area. The representative period for the
conduct of such referenda is hereby
determined to be January 2024. The
agent of the Secretary of Agriculture to
conduct such referenda is hereby
designated to be the Director of
Operations and Accountability, Dairy
Program, AMS, USDA.
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95537
List of Subjects in 7 CFR Parts 1000,
1001, 1005, 1006, 1007, 1030, 1032,
1033, 1051, 1124, 1126, 1131, and 1170
Milk marketing orders.
Order Amending the Orders Regulating
the Handling of Milk in the Northeast,
Appalachian, Florida, Southeast, Upper
Midwest, Central, Mideast, California,
Pacific Northwest, Southwest, and
Arizona Marketing Areas
(This order shall not become effective
unless and until the requirements of
§ 900.14 of the rules of practice and
procedure governing proceedings to
formulate marketing agreements and
marketing orders have been met.)
Findings and Determinations
The findings and determinations
hereinafter set forth supplement those
that were made when the orders were
first issued and when they were
amended. The previous findings and
determinations are hereby ratified and
confirmed, except where they may
conflict with those set forth herein.
(a) Findings. A public hearing was
held upon certain proposed
amendments to the marketing agreement
and to the orders regulating the
handling of milk in the Northeast,
Southeast, Appalachian, Florida, Upper
Midwest, Central, Mideast, California,
Southwest, Pacific Northwest, and
Arizona marketing areas. The hearing
was held pursuant to the provisions of
the AMAA, as amended (7 U.S.C. 601–
674), and the applicable rules of
practice and procedure governing the
formulation of marketing agreements
and marketing orders (7 CFR part 900).
Upon the basis of the evidence
introduced at such hearing and the
record thereof, it is determined that:
(1) The said orders as hereby
amended, and all of the terms and
conditions thereof, will tend to
effectuate the declared policy of the
AMAA;
(2) The parity prices of milk, as
determined pursuant to section 2 of the
AMAA, are not reasonable in view of
the price of feeds, available supplies of
feeds, and other economic conditions
which affect market supply and demand
for milk in the aforesaid marketing area.
The minimum prices specified in the
orders as hereby amended are such
prices as will reflect the aforesaid
factors, ensure a sufficient quantity of
pure and wholesome milk, and be in the
public interest; and
(3) The said orders, as hereby
amended, regulate the handling of milk
in the same manner as and are
applicable only to persons in the
respective classes of industrial or
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commercial activity specified in,
marketing agreements upon which a
hearing has been held.
Order Relative to Handling
It is therefore ordered, that on and
after the effective date hereof, the
handling of milk in the Northeast,
Southeast, Appalachian, Florida, Upper
Midwest, Central, Mideast, California,
Southwest, Pacific Northwest, and
Arizona marketing areas shall be in
conformity to and in compliance with
the terms and conditions of the orders,
as amended, and as hereby amended, as
follows:
For the reasons set forth in the
preamble, AMS proposes to amend 7
CFR chapter X as follows:
PART 1000—GENERAL PROVISIONS
OF FEDERAL MILK MARKETING
ORDERS
1. The authority citation for 7 CFR
part 1000 continues to read as follows:
■
Authority: 7 U.S.C. 601–674, and 7253.
2. Amend § 1000.43 by:
a. In paragraph (a) and paragraph (b)
introductory text, removing the words
‘‘and § 1135.11 of this chapter’’;
■ b. In paragraph (b)(2) removing the
words ‘‘or § 1135.11 of this chapter’’;
and
■ c. Adding paragraph (e).
The addition reads as follows:
■
■
§ 1000.43
General classification rules.
*
*
*
*
*
(e) Any skim milk used in ultrapasteurized or aseptically processed and
packaged fluid milk products shall be
allocated in combination with Class I
milk and the quantity of producer milk
eligible to be priced shall be limited to
available Class I producer milk
classified pursuant to § 1000.44(a).
■ 3. Revise and republish § 1000.50 to
read as follows:
ddrumheller on DSK120RN23PROD with PROPOSALS3
§ 1000.50 Class prices, component prices,
and advanced pricing factors.
Class prices per hundredweight of
milk containing 3.5 percent butterfat,
component prices, and advanced
pricing factors shall be as follows. The
prices and pricing factors described in
paragraphs (a), (b), (c), (e), (f), and (q) of
this section shall be based on a
weighted average of the most recent 2
weekly prices announced by the
Agricultural Marketing Service (AMS)
before the 24th day of the month. These
prices shall be announced on or before
the 23rd day of the month and shall
apply to milk received during the
following month. The prices described
in paragraphs (g) through (p) of this
section shall be based on a weighted
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average for the preceding month of
weekly prices announced by AMS on or
before the 5th day of the month and
shall apply to milk received during the
preceding month. The price described
in paragraph (d) of this section shall be
derived from the Class II skim milk
price announced on or before the 23rd
day of the month preceding the month
to which it applies and the butterfat
price announced on or before the 5th
day of the month following the month
to which it applies.
(a) Class I price. The Class I price per
hundredweight, rounded to the nearest
cent, shall be 0.965 times the Class I
skim milk price plus 3.5 times the Class
I butterfat price.
(b) Class I skim milk price. The Class
I skim milk price per hundredweight
shall be the adjusted Class I differential
specified in § 1000.52, plus the higher of
the advanced pricing factors computed
in paragraph (q)(1) or (2) of this section
rounded to the nearest cent.
(c) Class I butterfat price. The Class I
butterfat price per pound shall be the
adjusted Class I differential specified in
§ 1000.52 divided by 100, plus the
advanced butterfat price computed in
paragraph (q)(3) of this section.
(d) Class II price. The Class II price
per hundredweight, rounded to the
nearest cent, shall be .965 times the
Class II skim milk price plus 3.5 times
the Class II butterfat price.
(e) Class II skim milk price. The Class
II skim milk price per hundredweight
shall be the advanced Class IV skim
milk price computed in paragraph (q)(2)
of this section plus 70 cents.
(f) Class II nonfat solids price. The
Class II nonfat solids price per pound,
rounded to the nearest one-hundredth
cent, shall be the Class II skim milk
price divided by 9.3.
(g) Class II butterfat price. The Class
II butterfat price per pound shall be the
butterfat price plus $0.007.
(h) Class III price. The Class III price
per hundredweight, rounded to the
nearest cent, shall be 0.965 times the
Class III skim milk price plus 3.5 times
the butterfat price.
(i) Class III skim milk price. The Class
III skim milk price per hundredweight,
rounded to the nearest cent, shall be the
protein price per pound times 3.30 plus
the other solids price per pound times
6.00.
(j) Class IV price. The Class IV price
per hundredweight, rounded to the
nearest cent, shall be 0.965 times the
Class IV skim milk price plus 3.5 times
the butterfat price.
(k) Class IV skim milk price. The Class
IV skim milk price per hundredweight,
rounded to the nearest cent, shall be the
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nonfat solids price per pound times
9.30.
(l) Butterfat price. The butterfat price
per pound, rounded to the nearest onehundredth cent, shall be the U.S.
average AMS AA Butter survey price
reported by the Department for the
month, less 22.72 cents, with the result
multiplied by 1.211.
(m) Nonfat solids price. The nonfat
solids price per pound, rounded to the
nearest one-hundredth cent, shall be the
U.S. average AMS nonfat dry milk
survey price reported by the Department
for the month, less 23.93 cents and
multiplying the result by 0.99.
(n) Protein price. The protein price
per pound, rounded to the nearest onehundredth cent, shall be computed as
follows:
(1) The U.S. average AMS survey
price for 40-lb. block cheese reported by
the Department for the month;
(2) Subtract 25.19 cents from the price
computed pursuant to paragraph (n)(1)
of this section and multiply the result
by 1.383;
(3) Add to the amount computed
pursuant to paragraph (n)(2) of this
section an amount computed as follows:
(i) Subtract 25.19 cents from the price
computed pursuant to paragraph (n)(1)
of this section and multiply the result
by 1.589; and
(ii) Subtract 0.91 times the butterfat
price computed pursuant to paragraph
(l) of this section from the amount
computed pursuant to paragraph
(n)(3)(i) of this section; and
(iii) Multiply the amount computed
pursuant to paragraph (n)(3)(ii) of this
section by 1.17.
(o) Other solids price. The other solids
price per pound, rounded to the nearest
one-hundredth cent, shall be the U.S.
average AMS dry whey survey price
reported by the Department for the
month minus 26.68 cents, with the
result multiplied by 1.03.
(p) Somatic cell adjustment. The
somatic cell adjustment per
hundredweight of milk shall be
determined as follows:
(1) Multiply 0.0005 by the weighted
average price computed pursuant to
paragraph (n)(1) of this section and
round to the 5th decimal place;
(2) Subtract the somatic cell count of
the milk (reported in thousands) from
350; and
(3) Multiply the amount computed in
paragraph (p)(1) of this section by the
amount computed in paragraph (p)(2) of
this section and round to the nearest full
cent.
(q) Advanced pricing factors. For the
purpose of computing the Class I skim
milk price, the Class II skim milk price,
the Class II nonfat solids price, and the
E:\FR\FM\02DEP3.SGM
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Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
Class I butterfat price for the following
month, the following pricing factors
shall be computed using the weighted
average of the 2 most recent AMS U.S.
average weekly survey prices
announced before the 24th day of the
month:
(1) An advanced Class III skim milk
price per hundredweight, rounded to
the nearest cent, shall be computed as
follows:
(i) Following the procedure set forth
in paragraphs (n) and (o) of this section,
but using the weighted average of the 2
most recent AMS U.S. average weekly
survey prices announced before the 24th
day of the month, compute a protein
price and an other solids price;
(ii) Multiply the protein price
computed in paragraph (q)(1)(i) of this
section by 3.30;
(iii) Multiply the other solids price
per pound computed in paragraph
(q)(1)(i) of this section by 6.0; and
(iv) Add the amounts computed in
paragraphs (q)(1)(ii) and (iii) of this
section.
(2) An advanced Class IV skim milk
price per hundredweight, rounded to
the nearest cent, shall be computed as
follows:
(i) Following the procedure set forth
in paragraph (m) of this section, but
using the weighted average of the 2 most
recent AMS U.S. average weekly survey
prices announced before the 24th day of
the month, compute a nonfat solids
price; and
(ii) Multiply the nonfat solids price
computed in paragraph (q)(2)(i) of this
section by 9.30.
(3) An advanced butterfat price per
pound rounded to the nearest onehundredth cent, shall be calculated by
computing a weighted average of the 2
most recent U.S. average AMS AA
Butter survey prices announced before
the 24th day of the month, subtracting
22.72 cents from this average, and
multiplying the result by 1.211.
(r) Class I Extended Shelf Life (ESL)
adjustment. The Class I ESL adjustment,
whether positive or negative, rounded to
the nearest cent, shall be computed as
follows:
(1) Compute the simple average of the
advanced pricing factors computed in
paragraphs (q)(1) and (2) of this section;
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(2) Add the following:
(i) Determine the higher of the
advanced pricing factors computed in
paragraphs (q)(1) and (2) of this section,
for each of the preceding 13 to 36
months;
(ii) Calculate the average of the
advanced pricing factors computed in
paragraphs (q)(1) and (2) of this section,
for each of the preceding 13 to 36
months;
(iii) For each of the preceding 13 to
36 months, subtract the amount
computed in paragraph (r)(2)(ii) of this
section from the amount computed in
paragraph (r)(2)(i) of this section; and
(iv) Compute the average of the
differences computed in paragraph
(r)(2)(iii) of this section.
(3) Subtract the higher of the
advanced pricing factors computed in
paragraphs (q)(1) and (2) of this section.
■ 4. Revise and republish § 1000.52 to
read as follows:
§ 1000.52
Adjusted Class I differentials.
The Class I differential adjusted for
location to be used in § 1000.50(b) and
(c) shall be as follows:
State
AUTAUGA ...........................................................................................................................................
BALDWIN ............................................................................................................................................
BARBOUR ...........................................................................................................................................
BIBB .....................................................................................................................................................
BLOUNT ..............................................................................................................................................
BULLOCK ............................................................................................................................................
BUTLER ...............................................................................................................................................
CALHOUN ...........................................................................................................................................
CHAMBERS ........................................................................................................................................
CHEROKEE .........................................................................................................................................
CHILTON .............................................................................................................................................
CHOCTAW ..........................................................................................................................................
CLARKE ..............................................................................................................................................
CLAY ...................................................................................................................................................
CLEBURNE .........................................................................................................................................
COFFEE ..............................................................................................................................................
COLBERT ............................................................................................................................................
CONECUH ...........................................................................................................................................
COOSA ................................................................................................................................................
COVINGTON .......................................................................................................................................
CRENSHAW ........................................................................................................................................
CULLMAN ............................................................................................................................................
DALE ...................................................................................................................................................
DALLAS ...............................................................................................................................................
DE KALB .............................................................................................................................................
ELMORE ..............................................................................................................................................
ESCAMBIA ..........................................................................................................................................
ETOWAH .............................................................................................................................................
FAYETTE .............................................................................................................................................
FRANKLIN ...........................................................................................................................................
GENEVA ..............................................................................................................................................
GREENE ..............................................................................................................................................
HALE ...................................................................................................................................................
HENRY ................................................................................................................................................
HOUSTON ...........................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
LAMAR ................................................................................................................................................
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differential
adjusted for
location
5.80
5.80
5.80
5.60
5.40
5.80
5.80
5.60
5.60
5.40
5.60
5.80
5.80
5.60
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5.80
4.90
5.80
5.60
5.80
5.80
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5.60
5.80
5.80
5.20
5.60
5.40
95540
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
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State
LAUDERDALE .....................................................................................................................................
LAWRENCE ........................................................................................................................................
LEE ......................................................................................................................................................
LIMESTONE ........................................................................................................................................
LOWNDES ...........................................................................................................................................
MACON ...............................................................................................................................................
MADISON ............................................................................................................................................
MARENGO ..........................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MOBILE ...............................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
PERRY ................................................................................................................................................
PICKENS .............................................................................................................................................
PIKE .....................................................................................................................................................
RANDOLPH .........................................................................................................................................
RUSSELL ............................................................................................................................................
ST. CLAIR ...........................................................................................................................................
SHELBY ...............................................................................................................................................
SUMTER ..............................................................................................................................................
TALLADEGA ........................................................................................................................................
TALLAPOOSA .....................................................................................................................................
TUSCALOOSA ....................................................................................................................................
WALKER ..............................................................................................................................................
WASHINGTON ....................................................................................................................................
WILCOX ...............................................................................................................................................
WINSTON ............................................................................................................................................
APACHE ..............................................................................................................................................
COCHISE ............................................................................................................................................
COCONINO .........................................................................................................................................
GILA .....................................................................................................................................................
GRAHAM .............................................................................................................................................
GREENLEE .........................................................................................................................................
LA PAZ ................................................................................................................................................
MARICOPA ..........................................................................................................................................
MOHAVE .............................................................................................................................................
NAVAJO ..............................................................................................................................................
PIMA ....................................................................................................................................................
PINAL ..................................................................................................................................................
SANTA CRUZ ......................................................................................................................................
YAVAPAI .............................................................................................................................................
YUMA ..................................................................................................................................................
ARKANSAS .........................................................................................................................................
ASHLEY ...............................................................................................................................................
BAXTER ..............................................................................................................................................
BENTON ..............................................................................................................................................
BOONE ................................................................................................................................................
BRADLEY ............................................................................................................................................
CALHOUN ...........................................................................................................................................
CARROLL ............................................................................................................................................
CHICOT ...............................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CLEBURNE .........................................................................................................................................
CLEVELAND .......................................................................................................................................
COLUMBIA ..........................................................................................................................................
CONWAY .............................................................................................................................................
CRAIGHEAD .......................................................................................................................................
CRAWFORD ........................................................................................................................................
CRITTENDEN ......................................................................................................................................
CROSS ................................................................................................................................................
DALLAS ...............................................................................................................................................
DESHA ................................................................................................................................................
DREW ..................................................................................................................................................
FAULKNER ..........................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GARLAND ...........................................................................................................................................
GRANT ................................................................................................................................................
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01079
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01101
01103
01105
01107
01109
01111
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01117
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01127
01129
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01133
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05029
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05043
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05047
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02DEP3
Class I
differential
adjusted for
location
4.90
5.20
5.80
5.20
5.80
5.80
5.20
5.80
5.20
5.40
5.80
5.80
5.80
5.40
5.60
5.40
5.80
5.60
5.80
5.60
5.60
5.60
5.60
5.60
5.60
5.40
5.80
5.80
5.40
2.30
2.40
2.40
2.40
2.40
2.40
2.50
2.60
2.50
2.30
2.40
2.60
2.40
2.40
2.50
4.60
4.90
3.60
3.20
3.30
4.60
4.60
3.30
4.90
4.00
4.30
4.00
4.60
4.30
4.00
4.30
3.30
4.60
4.30
4.30
4.90
4.60
4.00
3.60
4.00
4.00
4.30
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
GREENE ..............................................................................................................................................
HEMPSTEAD ......................................................................................................................................
HOT SPRING ......................................................................................................................................
HOWARD ............................................................................................................................................
INDEPENDENCE ................................................................................................................................
IZARD ..................................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOHNSON ...........................................................................................................................................
LAFAYETTE ........................................................................................................................................
LAWRENCE ........................................................................................................................................
LEE ......................................................................................................................................................
LINCOLN .............................................................................................................................................
LITTLE RIVER .....................................................................................................................................
LOGAN ................................................................................................................................................
LONOKE ..............................................................................................................................................
MADISON ............................................................................................................................................
MARION ..............................................................................................................................................
MILLER ................................................................................................................................................
MISSISSIPPI .......................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
NEVADA ..............................................................................................................................................
NEWTON .............................................................................................................................................
OUACHITA ..........................................................................................................................................
PERRY ................................................................................................................................................
PHILLIPS .............................................................................................................................................
PIKE .....................................................................................................................................................
POINSETT ...........................................................................................................................................
POLK ...................................................................................................................................................
POPE ...................................................................................................................................................
PRAIRIE ..............................................................................................................................................
PULASKI ..............................................................................................................................................
RANDOLPH .........................................................................................................................................
ST. FRANCIS ......................................................................................................................................
SALINE ................................................................................................................................................
SCOTT .................................................................................................................................................
SEARCY ..............................................................................................................................................
SEBASTIAN .........................................................................................................................................
SEVIER ................................................................................................................................................
SHARP ................................................................................................................................................
STONE ................................................................................................................................................
UNION .................................................................................................................................................
VAN BUREN ........................................................................................................................................
WASHINGTON ....................................................................................................................................
WHITE .................................................................................................................................................
WOODRUFF ........................................................................................................................................
YELL ....................................................................................................................................................
ALAMEDA ............................................................................................................................................
ALPINE ................................................................................................................................................
AMADOR .............................................................................................................................................
BUTTE .................................................................................................................................................
CALAVERAS .......................................................................................................................................
COLUSA ..............................................................................................................................................
CONTRA COSTA ................................................................................................................................
DEL NORTE ........................................................................................................................................
EL DORADO .......................................................................................................................................
FRESNO ..............................................................................................................................................
GLENN ................................................................................................................................................
HUMBOLDT .........................................................................................................................................
IMPERIAL ............................................................................................................................................
INYO ....................................................................................................................................................
KERN ...................................................................................................................................................
KINGS ..................................................................................................................................................
LAKE ....................................................................................................................................................
LASSEN ...............................................................................................................................................
LOS ANGELES ...................................................................................................................................
MADERA .............................................................................................................................................
MARIN .................................................................................................................................................
MARIPOSA ..........................................................................................................................................
MENDOCINO ......................................................................................................................................
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95541
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differential
adjusted for
location
4.30
4.00
4.30
4.00
4.00
4.00
4.30
4.60
3.60
4.30
4.30
4.60
4.60
3.60
3.60
4.30
3.30
3.60
4.00
4.30
4.60
4.00
4.30
3.60
4.30
4.00
4.60
4.00
4.30
3.60
3.60
4.30
4.30
4.00
4.60
4.30
3.60
3.60
3.60
3.60
4.00
4.00
4.60
4.00
3.30
4.30
4.30
3.60
2.40
1.80
1.80
2.00
1.80
2.20
2.40
2.20
1.80
2.20
2.20
2.20
2.50
2.20
2.50
2.20
2.20
2.00
2.80
2.20
2.40
1.80
2.20
95542
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
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State
MERCED .............................................................................................................................................
MODOC ...............................................................................................................................................
MONO ..................................................................................................................................................
MONTEREY ........................................................................................................................................
NAPA ...................................................................................................................................................
NEVADA ..............................................................................................................................................
ORANGE .............................................................................................................................................
PLACER ..............................................................................................................................................
PLUMAS ..............................................................................................................................................
RIVERSIDE .........................................................................................................................................
SACRAMENTO ...................................................................................................................................
SAN BENITO .......................................................................................................................................
SAN BERNARDINO ............................................................................................................................
SAN DIEGO .........................................................................................................................................
SAN FRANCISCO ...............................................................................................................................
SAN JOAQUIN ....................................................................................................................................
SAN LUIS OBISPO .............................................................................................................................
SAN MATEO .......................................................................................................................................
SANTA BARBARA ..............................................................................................................................
SANTA CLARA ....................................................................................................................................
SANTA CRUZ ......................................................................................................................................
SHASTA ..............................................................................................................................................
SIERRA ...............................................................................................................................................
SISKIYOU ............................................................................................................................................
SOLANO ..............................................................................................................................................
SONOMA .............................................................................................................................................
STANISLAUS ......................................................................................................................................
SUTTER ..............................................................................................................................................
TEHAMA ..............................................................................................................................................
TRINITY ...............................................................................................................................................
TULARE ...............................................................................................................................................
TUOLUMNE .........................................................................................................................................
VENTURA ............................................................................................................................................
YOLO ...................................................................................................................................................
YUBA ...................................................................................................................................................
ADAMS ................................................................................................................................................
ALAMOSA ...........................................................................................................................................
ARAPAHOE .........................................................................................................................................
ARCHULETA .......................................................................................................................................
BACA ...................................................................................................................................................
BENT ...................................................................................................................................................
BOULDER ...........................................................................................................................................
BROOMFIELD .....................................................................................................................................
CHAFFEE ............................................................................................................................................
CHEYENNE .........................................................................................................................................
CLEAR CREEK ...................................................................................................................................
CONEJOS ...........................................................................................................................................
COSTILLA ...........................................................................................................................................
CROWLEY ...........................................................................................................................................
CUSTER ..............................................................................................................................................
DELTA .................................................................................................................................................
DENVER ..............................................................................................................................................
DOLORES ...........................................................................................................................................
DOUGLAS ...........................................................................................................................................
EAGLE .................................................................................................................................................
ELBERT ...............................................................................................................................................
EL PASO .............................................................................................................................................
FREMONT ...........................................................................................................................................
GARFIELD ...........................................................................................................................................
GILPIN .................................................................................................................................................
GRAND ................................................................................................................................................
GUNNISON .........................................................................................................................................
HINSDALE ...........................................................................................................................................
HUERFANO .........................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
KIOWA .................................................................................................................................................
KIT CARSON .......................................................................................................................................
LAKE ....................................................................................................................................................
LA PLATA ............................................................................................................................................
LARIMER .............................................................................................................................................
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CO
CO
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E:\FR\FM\02DEP3.SGM
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06071
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06075
06077
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08047
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08051
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08059
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08069
02DEP3
Class I
differential
adjusted for
location
2.20
2.00
2.00
2.50
2.40
2.00
2.80
2.00
2.00
2.80
2.20
2.50
2.60
2.80
2.50
2.20
2.50
2.50
2.50
2.50
2.50
2.00
2.00
2.00
2.40
2.40
2.20
2.20
2.20
2.00
2.20
1.80
2.60
2.20
2.00
2.70
2.50
2.70
2.30
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.70
2.70
2.30
2.70
2.30
2.70
2.50
2.70
2.70
2.70
2.30
2.50
2.50
2.50
2.30
2.70
2.50
2.70
2.50
2.50
2.50
2.30
2.50
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
LAS ANIMAS .......................................................................................................................................
LINCOLN .............................................................................................................................................
LOGAN ................................................................................................................................................
MESA ...................................................................................................................................................
MINERAL .............................................................................................................................................
MOFFAT ..............................................................................................................................................
MONTEZUMA ......................................................................................................................................
MONTROSE ........................................................................................................................................
MORGAN .............................................................................................................................................
OTERO ................................................................................................................................................
OURAY ................................................................................................................................................
PARK ...................................................................................................................................................
PHILLIPS .............................................................................................................................................
PITKIN .................................................................................................................................................
PROWERS ..........................................................................................................................................
PUEBLO ..............................................................................................................................................
RIO BLANCO ......................................................................................................................................
RIO GRANDE ......................................................................................................................................
ROUTT ................................................................................................................................................
SAGUACHE .........................................................................................................................................
SAN JUAN ...........................................................................................................................................
SAN MIGUEL ......................................................................................................................................
SEDGWICK .........................................................................................................................................
SUMMIT ...............................................................................................................................................
TELLER ...............................................................................................................................................
WASHINGTON ....................................................................................................................................
WELD ..................................................................................................................................................
YUMA ..................................................................................................................................................
FAIRFIELD ..........................................................................................................................................
HARTFORD .........................................................................................................................................
LITCHFIELD ........................................................................................................................................
MIDDLESEX ........................................................................................................................................
NEW HAVEN .......................................................................................................................................
NEW LONDON ....................................................................................................................................
TOLLAND ............................................................................................................................................
WINDHAM ...........................................................................................................................................
KENT ...................................................................................................................................................
NEW CASTLE .....................................................................................................................................
SUSSEX ..............................................................................................................................................
DISTRICT OF COLUMBIA ..................................................................................................................
ALACHUA ............................................................................................................................................
BAKER .................................................................................................................................................
BAY ......................................................................................................................................................
BRADFORD .........................................................................................................................................
BREVARD ...........................................................................................................................................
BROWARD ..........................................................................................................................................
CALHOUN ...........................................................................................................................................
CHARLOTTE .......................................................................................................................................
CITRUS ...............................................................................................................................................
CLAY ...................................................................................................................................................
COLLIER .............................................................................................................................................
COLUMBIA ..........................................................................................................................................
DE SOTO ............................................................................................................................................
DIXIE ...................................................................................................................................................
DUVAL .................................................................................................................................................
ESCAMBIA ..........................................................................................................................................
FLAGLER ............................................................................................................................................
FRANKLIN ...........................................................................................................................................
GADSDEN ...........................................................................................................................................
GILCHRIST ..........................................................................................................................................
GLADES ..............................................................................................................................................
GULF ...................................................................................................................................................
HAMILTON ..........................................................................................................................................
HARDEE ..............................................................................................................................................
HENDRY ..............................................................................................................................................
HERNANDO ........................................................................................................................................
HIGHLANDS ........................................................................................................................................
HILLSBOROUGH ................................................................................................................................
HOLMES ..............................................................................................................................................
INDIAN RIVER ....................................................................................................................................
JACKSON ............................................................................................................................................
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CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CT
CT
CT
CT
CT
CT
CT
CT
DE
DE
DE
DC
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
E:\FR\FM\02DEP3.SGM
FIPS code
08071
08073
08075
08077
08079
08081
08083
08085
08087
08089
08091
08093
08095
08097
08099
08101
08103
08105
08107
08109
08111
08113
08115
08117
08119
08121
08123
08125
09001
09003
09005
09007
09009
09011
09013
09015
10001
10003
10005
11001
12001
12003
12005
12007
12009
12011
12013
12015
12017
12019
12021
12023
12027
12029
12031
12033
12035
12037
12039
12041
12043
12045
12047
12049
12051
12053
12055
12057
12059
12061
12063
02DEP3
95543
Class I
differential
adjusted for
location
2.50
2.70
2.50
2.30
2.50
2.30
2.30
2.30
2.50
2.70
2.30
2.70
2.50
2.50
2.50
2.70
2.30
2.50
2.50
2.50
2.30
2.30
2.50
2.50
2.70
2.50
2.50
2.50
5.00
4.80
4.80
4.80
4.80
4.80
4.80
4.80
4.60
4.40
4.80
4.70
6.40
6.40
6.00
6.40
6.80
7.40
6.00
7.00
6.80
6.40
7.40
6.40
7.00
6.40
6.40
5.80
6.80
6.00
6.00
6.40
7.00
6.00
6.40
7.00
7.40
6.80
7.00
6.80
6.00
7.00
6.00
95544
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
JEFFERSON .......................................................................................................................................
LAFAYETTE ........................................................................................................................................
LAKE ....................................................................................................................................................
LEE ......................................................................................................................................................
LEON ...................................................................................................................................................
LEVY ....................................................................................................................................................
LIBERTY ..............................................................................................................................................
MADISON ............................................................................................................................................
MANATEE ...........................................................................................................................................
MARION ..............................................................................................................................................
MARTIN ...............................................................................................................................................
MIAMI-DADE .......................................................................................................................................
MONROE .............................................................................................................................................
NASSAU ..............................................................................................................................................
OKALOOSA .........................................................................................................................................
OKEECHOBEE ....................................................................................................................................
ORANGE .............................................................................................................................................
OSCEOLA ...........................................................................................................................................
PALM BEACH .....................................................................................................................................
PASCO ................................................................................................................................................
PINELLAS ............................................................................................................................................
POLK ...................................................................................................................................................
PUTNAM ..............................................................................................................................................
ST. JOHNS ..........................................................................................................................................
ST. LUCIE ...........................................................................................................................................
SANTA ROSA .....................................................................................................................................
SARASOTA .........................................................................................................................................
SEMINOLE ..........................................................................................................................................
SUMTER ..............................................................................................................................................
SUWANNEE ........................................................................................................................................
TAYLOR ..............................................................................................................................................
UNION .................................................................................................................................................
VOLUSIA .............................................................................................................................................
WAKULLA ............................................................................................................................................
WALTON .............................................................................................................................................
WASHINGTON ....................................................................................................................................
APPLING .............................................................................................................................................
ATKINSON ..........................................................................................................................................
BACON ................................................................................................................................................
BAKER .................................................................................................................................................
BALDWIN ............................................................................................................................................
BANKS .................................................................................................................................................
BARROW .............................................................................................................................................
BARTOW .............................................................................................................................................
BEN HILL .............................................................................................................................................
BERRIEN .............................................................................................................................................
BIBB .....................................................................................................................................................
BLECKLEY ..........................................................................................................................................
BRANTLEY ..........................................................................................................................................
BROOKS .............................................................................................................................................
BRYAN ................................................................................................................................................
BULLOCH ............................................................................................................................................
BURKE ................................................................................................................................................
BUTTS .................................................................................................................................................
CALHOUN ...........................................................................................................................................
CAMDEN .............................................................................................................................................
CANDLER ............................................................................................................................................
CARROLL ............................................................................................................................................
CATOOSA ...........................................................................................................................................
CHARLTON .........................................................................................................................................
CHATHAM ...........................................................................................................................................
CHATTAHOOCHEE ............................................................................................................................
CHATTOOGA ......................................................................................................................................
CHEROKEE .........................................................................................................................................
CLARKE ..............................................................................................................................................
CLAY ...................................................................................................................................................
CLAYTON ............................................................................................................................................
CLINCH ...............................................................................................................................................
COBB ...................................................................................................................................................
COFFEE ..............................................................................................................................................
COLQUITT ...........................................................................................................................................
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FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
E:\FR\FM\02DEP3.SGM
FIPS code
12065
12067
12069
12071
12073
12075
12077
12079
12081
12083
12085
12086
12087
12089
12091
12093
12095
12097
12099
12101
12103
12105
12107
12109
12111
12113
12115
12117
12119
12121
12123
12125
12127
12129
12131
12133
13001
13003
13005
13007
13009
13011
13013
13015
13017
13019
13021
13023
13025
13027
13029
13031
13033
13035
13037
13039
13043
13045
13047
13049
13051
13053
13055
13057
13059
13061
13063
13065
13067
13069
13071
02DEP3
Class I
differential
adjusted for
location
6.00
6.40
6.80
7.00
6.00
6.40
6.00
6.00
7.00
6.80
7.00
7.40
7.40
6.40
5.80
7.00
6.80
6.80
7.40
6.80
6.80
6.80
6.40
6.40
7.00
5.80
7.00
6.80
6.80
6.40
6.40
6.40
6.80
6.00
6.00
6.00
6.00
6.00
6.00
5.80
5.80
5.60
5.80
5.60
6.00
6.00
5.80
5.80
6.00
6.00
6.00
6.00
6.00
5.80
5.80
6.00
6.00
5.60
5.40
6.00
6.00
5.80
5.40
5.60
5.80
5.80
5.80
6.00
5.60
6.00
6.00
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
COLUMBIA ..........................................................................................................................................
COOK ..................................................................................................................................................
COWETA .............................................................................................................................................
CRAWFORD ........................................................................................................................................
CRISP ..................................................................................................................................................
DADE ...................................................................................................................................................
DAWSON .............................................................................................................................................
DECATUR ...........................................................................................................................................
DE KALB .............................................................................................................................................
DODGE ................................................................................................................................................
DOOLY ................................................................................................................................................
DOUGHERTY ......................................................................................................................................
DOUGLAS ...........................................................................................................................................
EARLY .................................................................................................................................................
ECHOLS ..............................................................................................................................................
EFFINGHAM ........................................................................................................................................
ELBERT ...............................................................................................................................................
EMANUEL ...........................................................................................................................................
EVANS .................................................................................................................................................
FANNIN ...............................................................................................................................................
FAYETTE .............................................................................................................................................
FLOYD .................................................................................................................................................
FORSYTH ............................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GILMER ...............................................................................................................................................
GLASCOCK .........................................................................................................................................
GLYNN ................................................................................................................................................
GORDON .............................................................................................................................................
GRADY ................................................................................................................................................
GREENE ..............................................................................................................................................
GWINNETT ..........................................................................................................................................
HABERSHAM ......................................................................................................................................
HALL ....................................................................................................................................................
HANCOCK ...........................................................................................................................................
HARALSON .........................................................................................................................................
HARRIS ...............................................................................................................................................
HART ...................................................................................................................................................
HEARD ................................................................................................................................................
HENRY ................................................................................................................................................
HOUSTON ...........................................................................................................................................
IRWIN ..................................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JEFF DAVIS ........................................................................................................................................
JEFFERSON .......................................................................................................................................
JENKINS ..............................................................................................................................................
JOHNSON ...........................................................................................................................................
JONES .................................................................................................................................................
LAMAR ................................................................................................................................................
LANIER ................................................................................................................................................
LAURENS ............................................................................................................................................
LEE ......................................................................................................................................................
LIBERTY ..............................................................................................................................................
LINCOLN .............................................................................................................................................
LONG ...................................................................................................................................................
LOWNDES ...........................................................................................................................................
LUMPKIN .............................................................................................................................................
MCDUFFIE ..........................................................................................................................................
MCINTOSH ..........................................................................................................................................
MACON ...............................................................................................................................................
MADISON ............................................................................................................................................
MARION ..............................................................................................................................................
MERIWETHER ....................................................................................................................................
MILLER ................................................................................................................................................
MITCHELL ...........................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
MURRAY .............................................................................................................................................
MUSCOGEE ........................................................................................................................................
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GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
E:\FR\FM\02DEP3.SGM
FIPS code
13073
13075
13077
13079
13081
13083
13085
13087
13089
13091
13093
13095
13097
13099
13101
13103
13105
13107
13109
13111
13113
13115
13117
13119
13121
13123
13125
13127
13129
13131
13133
13135
13137
13139
13141
13143
13145
13147
13149
13151
13153
13155
13157
13159
13161
13163
13165
13167
13169
13171
13173
13175
13177
13179
13181
13183
13185
13187
13189
13191
13193
13195
13197
13199
13201
13205
13207
13209
13211
13213
13215
02DEP3
95545
Class I
differential
adjusted for
location
5.80
6.00
5.80
5.80
5.80
5.40
5.60
6.00
5.80
5.80
5.80
5.80
5.60
5.80
6.00
6.00
5.80
6.00
6.00
5.60
5.80
5.60
5.60
5.60
5.80
5.60
5.80
6.00
5.60
6.00
5.80
5.80
5.60
5.60
5.80
5.60
5.80
5.60
5.60
5.80
5.80
6.00
5.80
5.80
6.00
5.80
6.00
5.80
5.80
5.80
6.00
5.80
5.80
6.00
5.80
6.00
6.00
5.60
5.80
6.00
5.80
5.80
5.80
5.80
5.80
5.80
5.80
6.00
5.80
5.40
5.80
95546
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
NEWTON .............................................................................................................................................
OCONEE .............................................................................................................................................
OGLETHORPE ....................................................................................................................................
PAULDING ..........................................................................................................................................
PEACH ................................................................................................................................................
PICKENS .............................................................................................................................................
PIERCE ...............................................................................................................................................
PIKE .....................................................................................................................................................
POLK ...................................................................................................................................................
PULASKI ..............................................................................................................................................
PUTNAM ..............................................................................................................................................
QUITMAN ............................................................................................................................................
RABUN ................................................................................................................................................
RANDOLPH .........................................................................................................................................
RICHMOND .........................................................................................................................................
ROCKDALE .........................................................................................................................................
SCHLEY ..............................................................................................................................................
SCREVEN ...........................................................................................................................................
SEMINOLE ..........................................................................................................................................
SPALDING ...........................................................................................................................................
STEPHENS .........................................................................................................................................
STEWART ...........................................................................................................................................
SUMTER ..............................................................................................................................................
TALBOT ...............................................................................................................................................
TALIAFERRO ......................................................................................................................................
TATTNALL ...........................................................................................................................................
TAYLOR ..............................................................................................................................................
TELFAIR ..............................................................................................................................................
TERRELL .............................................................................................................................................
THOMAS .............................................................................................................................................
TIFT .....................................................................................................................................................
TOOMBS .............................................................................................................................................
TOWNS ...............................................................................................................................................
TREUTLEN ..........................................................................................................................................
TROUP ................................................................................................................................................
TURNER ..............................................................................................................................................
TWIGGS ..............................................................................................................................................
UNION .................................................................................................................................................
UPSON ................................................................................................................................................
WALKER ..............................................................................................................................................
WALTON .............................................................................................................................................
WARE ..................................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBSTER ...........................................................................................................................................
WHEELER ...........................................................................................................................................
WHITE .................................................................................................................................................
WHITFIELD .........................................................................................................................................
WILCOX ...............................................................................................................................................
WILKES ...............................................................................................................................................
WILKINSON .........................................................................................................................................
WORTH ...............................................................................................................................................
ADA .....................................................................................................................................................
ADAMS ................................................................................................................................................
BANNOCK ...........................................................................................................................................
BEAR LAKE .........................................................................................................................................
BENEWAH ...........................................................................................................................................
BINGHAM ............................................................................................................................................
BLAINE ................................................................................................................................................
BOISE ..................................................................................................................................................
BONNER .............................................................................................................................................
BONNEVILLE ......................................................................................................................................
BOUNDARY ........................................................................................................................................
BUTTE .................................................................................................................................................
CAMAS ................................................................................................................................................
CANYON .............................................................................................................................................
CARIBOU ............................................................................................................................................
CASSIA ................................................................................................................................................
CLARK .................................................................................................................................................
CLEARWATER ....................................................................................................................................
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GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
ID
E:\FR\FM\02DEP3.SGM
FIPS code
13217
13219
13221
13223
13225
13227
13229
13231
13233
13235
13237
13239
13241
13243
13245
13247
13249
13251
13253
13255
13257
13259
13261
13263
13265
13267
13269
13271
13273
13275
13277
13279
13281
13283
13285
13287
13289
13291
13293
13295
13297
13299
13301
13303
13305
13307
13309
13311
13313
13315
13317
13319
13321
16001
16003
16005
16007
16009
16011
16013
16015
16017
16019
16021
16023
16025
16027
16029
16031
16033
16035
02DEP3
Class I
differential
adjusted for
location
5.80
5.80
5.80
5.60
5.80
5.60
6.00
5.80
5.60
5.80
5.80
5.80
5.60
5.80
6.00
5.80
5.80
6.00
6.00
5.80
5.60
5.80
5.80
5.80
5.80
6.00
5.80
6.00
5.80
6.00
5.80
6.00
5.60
6.00
5.60
5.80
5.80
5.60
5.80
5.40
5.80
6.00
5.80
5.80
6.00
5.80
6.00
5.60
5.40
5.80
5.80
5.80
5.80
1.70
2.00
2.00
2.20
2.40
2.00
1.80
1.70
2.40
2.00
2.40
2.00
1.80
1.70
2.00
1.70
2.00
2.00
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
CUSTER ..............................................................................................................................................
ELMORE ..............................................................................................................................................
FRANKLIN ...........................................................................................................................................
FREMONT ...........................................................................................................................................
GEM .....................................................................................................................................................
GOODING ...........................................................................................................................................
IDAHO .................................................................................................................................................
JEFFERSON .......................................................................................................................................
JEROME ..............................................................................................................................................
KOOTENAI ..........................................................................................................................................
LATAH .................................................................................................................................................
LEMHI ..................................................................................................................................................
LEWIS ..................................................................................................................................................
LINCOLN .............................................................................................................................................
MADISON ............................................................................................................................................
MINIDOKA ...........................................................................................................................................
NEZ PERCE ........................................................................................................................................
ONEIDA ...............................................................................................................................................
OWYHEE .............................................................................................................................................
PAYETTE ............................................................................................................................................
POWER ...............................................................................................................................................
SHOSHONE ........................................................................................................................................
TETON .................................................................................................................................................
TWIN FALLS .......................................................................................................................................
VALLEY ...............................................................................................................................................
WASHINGTON ....................................................................................................................................
ADAMS ................................................................................................................................................
ALEXANDER .......................................................................................................................................
BOND ..................................................................................................................................................
BOONE ................................................................................................................................................
BROWN ...............................................................................................................................................
BUREAU ..............................................................................................................................................
CALHOUN ...........................................................................................................................................
CARROLL ............................................................................................................................................
CASS ...................................................................................................................................................
CHAMPAIGN .......................................................................................................................................
CHRISTIAN .........................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CLINTON .............................................................................................................................................
COLES .................................................................................................................................................
COOK ..................................................................................................................................................
CRAWFORD ........................................................................................................................................
CUMBERLAND ....................................................................................................................................
DE KALB .............................................................................................................................................
DE WITT ..............................................................................................................................................
DOUGLAS ...........................................................................................................................................
DU PAGE ............................................................................................................................................
EDGAR ................................................................................................................................................
EDWARDS ..........................................................................................................................................
EFFINGHAM ........................................................................................................................................
FAYETTE .............................................................................................................................................
FORD ...................................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GALLATIN ...........................................................................................................................................
GREENE ..............................................................................................................................................
GRUNDY .............................................................................................................................................
HAMILTON ..........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARDIN ...............................................................................................................................................
HENDERSON ......................................................................................................................................
HENRY ................................................................................................................................................
IROQUOIS ...........................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JEFFERSON .......................................................................................................................................
JERSEY ...............................................................................................................................................
JO DAVIESS .......................................................................................................................................
JOHNSON ...........................................................................................................................................
KANE ...................................................................................................................................................
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ID
ID
ID
ID
ID
ID
ID
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
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IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
E:\FR\FM\02DEP3.SGM
FIPS code
16037
16039
16041
16043
16045
16047
16049
16051
16053
16055
16057
16059
16061
16063
16065
16067
16069
16071
16073
16075
16077
16079
16081
16083
16085
16087
17001
17003
17005
17007
17009
17011
17013
17015
17017
17019
17021
17023
17025
17027
17029
17031
17033
17035
17037
17039
17041
17043
17045
17047
17049
17051
17053
17055
17057
17059
17061
17063
17065
17067
17069
17071
17073
17075
17077
17079
17081
17083
17085
17087
17089
02DEP3
95547
Class I
differential
adjusted for
location
1.80
1.70
2.00
2.00
1.70
1.70
2.00
2.00
1.70
2.40
2.20
1.80
2.00
1.70
2.00
1.70
2.00
2.00
1.80
1.70
2.00
2.20
2.00
1.70
1.80
1.70
3.20
4.00
3.60
3.10
3.40
3.40
3.60
3.20
3.40
3.60
3.60
3.60
3.60
3.60
3.60
3.20
3.60
3.60
3.20
3.40
3.60
3.20
3.60
3.60
3.60
3.60
3.60
3.60
3.40
4.00
3.60
3.40
3.60
3.20
4.00
3.20
3.20
3.60
3.60
3.60
3.60
3.60
3.10
4.00
3.20
95548
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
KANKAKEE .........................................................................................................................................
KENDALL ............................................................................................................................................
KNOX ...................................................................................................................................................
LAKE ....................................................................................................................................................
LA SALLE ............................................................................................................................................
LAWRENCE ........................................................................................................................................
LEE ......................................................................................................................................................
LIVINGSTON .......................................................................................................................................
LOGAN ................................................................................................................................................
MCDONOUGH ....................................................................................................................................
MCHENRY ...........................................................................................................................................
MCLEAN ..............................................................................................................................................
MACON ...............................................................................................................................................
MACOUPIN .........................................................................................................................................
MADISON ............................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MASON ................................................................................................................................................
MASSAC ..............................................................................................................................................
MENARD .............................................................................................................................................
MERCER .............................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
MOULTRIE ..........................................................................................................................................
OGLE ...................................................................................................................................................
PEORIA ...............................................................................................................................................
PERRY ................................................................................................................................................
PIATT ...................................................................................................................................................
PIKE .....................................................................................................................................................
POPE ...................................................................................................................................................
PULASKI ..............................................................................................................................................
PUTNAM ..............................................................................................................................................
RANDOLPH .........................................................................................................................................
RICHLAND ..........................................................................................................................................
ROCK ISLAND ....................................................................................................................................
ST. CLAIR ...........................................................................................................................................
SALINE ................................................................................................................................................
SANGAMON ........................................................................................................................................
SCHUYLER .........................................................................................................................................
SCOTT .................................................................................................................................................
SHELBY ...............................................................................................................................................
STARK .................................................................................................................................................
STEPHENSON ....................................................................................................................................
TAZEWELL ..........................................................................................................................................
UNION .................................................................................................................................................
VERMILION .........................................................................................................................................
WABASH .............................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WHITE .................................................................................................................................................
WHITESIDE .........................................................................................................................................
WILL ....................................................................................................................................................
WILLIAMSON ......................................................................................................................................
WINNEBAGO ......................................................................................................................................
WOODFORD .......................................................................................................................................
ADAMS ................................................................................................................................................
ALLEN .................................................................................................................................................
BARTHOLOMEW ................................................................................................................................
BENTON ..............................................................................................................................................
BLACKFORD .......................................................................................................................................
BOONE ................................................................................................................................................
BROWN ...............................................................................................................................................
CARROLL ............................................................................................................................................
CASS ...................................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CLINTON .............................................................................................................................................
CRAWFORD ........................................................................................................................................
DAVIESS .............................................................................................................................................
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IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IN
IN
IN
IN
IN
IN
IN
IN
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IN
IN
IN
IN
IN
E:\FR\FM\02DEP3.SGM
FIPS code
17091
17093
17095
17097
17099
17101
17103
17105
17107
17109
17111
17113
17115
17117
17119
17121
17123
17125
17127
17129
17131
17133
17135
17137
17139
17141
17143
17145
17147
17149
17151
17153
17155
17157
17159
17161
17163
17165
17167
17169
17171
17173
17175
17177
17179
17181
17183
17185
17187
17189
17191
17193
17195
17197
17199
17201
17203
18001
18003
18005
18007
18009
18011
18013
18015
18017
18019
18021
18023
18025
18027
02DEP3
Class I
differential
adjusted for
location
3.40
3.20
3.40
3.10
3.40
3.60
3.20
3.40
3.40
3.40
3.10
3.40
3.40
3.60
3.60
3.60
3.40
3.40
4.00
3.40
3.20
3.60
3.60
3.40
3.60
3.20
3.40
3.60
3.40
3.40
4.00
4.00
3.40
3.60
3.60
3.20
3.60
4.00
3.40
3.40
3.40
3.60
3.40
3.10
3.40
4.00
3.60
3.60
3.20
3.60
3.60
3.60
3.20
3.20
4.00
3.10
3.40
3.30
3.30
3.70
3.60
3.30
3.60
3.70
3.60
3.30
4.00
3.60
3.60
4.00
3.70
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
DEARBORN ........................................................................................................................................
DECATUR ...........................................................................................................................................
DEKALB ...............................................................................................................................................
DELAWARE .........................................................................................................................................
DUBOIS ...............................................................................................................................................
ELKHART ............................................................................................................................................
FAYETTE .............................................................................................................................................
FLOYD .................................................................................................................................................
FOUNTAIN ..........................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GIBSON ...............................................................................................................................................
GRANT ................................................................................................................................................
GREENE ..............................................................................................................................................
HAMILTON ..........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARRISON ..........................................................................................................................................
HENDRICKS ........................................................................................................................................
HENRY ................................................................................................................................................
HOWARD ............................................................................................................................................
HUNTINGTON .....................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JAY ......................................................................................................................................................
JEFFERSON .......................................................................................................................................
JENNINGS ...........................................................................................................................................
JOHNSON ...........................................................................................................................................
KNOX ...................................................................................................................................................
KOSCIUSKO .......................................................................................................................................
LAGRANGE .........................................................................................................................................
LAKE ....................................................................................................................................................
LA PORTE ...........................................................................................................................................
LAWRENCE ........................................................................................................................................
MADISON ............................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MARTIN ...............................................................................................................................................
MIAMI ..................................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
NEWTON .............................................................................................................................................
NOBLE .................................................................................................................................................
OHIO ....................................................................................................................................................
ORANGE .............................................................................................................................................
OWEN ..................................................................................................................................................
PARKE .................................................................................................................................................
PERRY ................................................................................................................................................
PIKE .....................................................................................................................................................
PORTER ..............................................................................................................................................
POSEY ................................................................................................................................................
PULASKI ..............................................................................................................................................
PUTNAM ..............................................................................................................................................
RANDOLPH .........................................................................................................................................
RIPLEY ................................................................................................................................................
RUSH ...................................................................................................................................................
ST. JOSEPH ........................................................................................................................................
SCOTT .................................................................................................................................................
SHELBY ...............................................................................................................................................
SPENCER ...........................................................................................................................................
STARKE ..............................................................................................................................................
STEUBEN ............................................................................................................................................
SULLIVAN ...........................................................................................................................................
SWITZERLAND ...................................................................................................................................
TIPPECANOE ......................................................................................................................................
TIPTON ................................................................................................................................................
UNION .................................................................................................................................................
VANDERBURGH .................................................................................................................................
VERMILLION .......................................................................................................................................
VIGO ....................................................................................................................................................
WABASH .............................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
18029
18031
18033
18035
18037
18039
18041
18043
18045
18047
18049
18051
18053
18055
18057
18059
18061
18063
18065
18067
18069
18071
18073
18075
18077
18079
18081
18083
18085
18087
18089
18091
18093
18095
18097
18099
18101
18103
18105
18107
18109
18111
18113
18115
18117
18119
18121
18123
18125
18127
18129
18131
18133
18135
18137
18139
18141
18143
18145
18147
18149
18151
18153
18155
18157
18159
18161
18163
18165
18167
18169
02DEP3
95549
Class I
differential
adjusted for
location
3.70
3.70
3.30
3.60
3.70
3.30
3.60
4.00
3.60
3.70
3.30
3.70
3.30
3.70
3.60
3.60
4.00
3.60
3.60
3.60
3.30
3.70
3.60
3.30
4.00
3.70
3.60
3.70
3.30
3.30
3.30
3.30
3.70
3.60
3.60
3.30
3.70
3.30
3.70
3.60
3.60
3.60
3.30
3.70
3.70
3.60
3.60
4.00
3.70
3.30
3.70
3.30
3.60
3.60
3.70
3.60
3.30
4.00
3.60
4.00
3.30
3.30
3.70
4.00
3.60
3.60
3.60
3.70
3.60
3.60
3.30
95550
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
WARREN .............................................................................................................................................
WARRICK ............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WELLS .................................................................................................................................................
WHITE .................................................................................................................................................
WHITLEY .............................................................................................................................................
ADAIR ..................................................................................................................................................
ADAMS ................................................................................................................................................
ALLAMAKEE .......................................................................................................................................
APPANOOSE ......................................................................................................................................
AUDUBON ...........................................................................................................................................
BENTON ..............................................................................................................................................
BLACK HAWK .....................................................................................................................................
BOONE ................................................................................................................................................
BREMER .............................................................................................................................................
BUCHANAN .........................................................................................................................................
BUENA VISTA .....................................................................................................................................
BUTLER ...............................................................................................................................................
CALHOUN ...........................................................................................................................................
CARROLL ............................................................................................................................................
CASS ...................................................................................................................................................
CEDAR ................................................................................................................................................
CERRO GORDO .................................................................................................................................
CHEROKEE .........................................................................................................................................
CHICKASAW .......................................................................................................................................
CLARKE ..............................................................................................................................................
CLAY ...................................................................................................................................................
CLAYTON ............................................................................................................................................
CLINTON .............................................................................................................................................
CRAWFORD ........................................................................................................................................
DALLAS ...............................................................................................................................................
DAVIS ..................................................................................................................................................
DECATUR ...........................................................................................................................................
DELAWARE .........................................................................................................................................
DES MOINES ......................................................................................................................................
DICKINSON .........................................................................................................................................
DUBUQUE ...........................................................................................................................................
EMMET ................................................................................................................................................
FAYETTE .............................................................................................................................................
FLOYD .................................................................................................................................................
FRANKLIN ...........................................................................................................................................
FREMONT ...........................................................................................................................................
GREENE ..............................................................................................................................................
GRUNDY .............................................................................................................................................
GUTHRIE .............................................................................................................................................
HAMILTON ..........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARDIN ...............................................................................................................................................
HARRISON ..........................................................................................................................................
HENRY ................................................................................................................................................
HOWARD ............................................................................................................................................
HUMBOLDT .........................................................................................................................................
IDA .......................................................................................................................................................
IOWA ...................................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOHNSON ...........................................................................................................................................
JONES .................................................................................................................................................
KEOKUK ..............................................................................................................................................
KOSSUTH ...........................................................................................................................................
LEE ......................................................................................................................................................
LINN .....................................................................................................................................................
LOUISA ................................................................................................................................................
LUCAS .................................................................................................................................................
LYON ...................................................................................................................................................
MADISON ............................................................................................................................................
MAHASKA ...........................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
18171
18173
18175
18177
18179
18181
18183
19001
19003
19005
19007
19009
19011
19013
19015
19017
19019
19021
19023
19025
19027
19029
19031
19033
19035
19037
19039
19041
19043
19045
19047
19049
19051
19053
19055
19057
19059
19061
19063
19065
19067
19069
19071
19073
19075
19077
19079
19081
19083
19085
19087
19089
19091
19093
19095
19097
19099
19101
19103
19105
19107
19109
19111
19113
19115
19117
19119
19121
19123
19125
19127
02DEP3
Class I
differential
adjusted for
location
3.60
3.70
4.00
3.60
3.30
3.60
3.30
2.70
2.90
2.90
2.90
2.70
2.90
2.90
2.70
2.90
2.90
2.60
2.90
2.70
2.70
2.70
3.10
2.90
2.60
2.90
2.90
2.60
2.90
3.10
2.60
2.70
2.90
2.90
2.90
3.10
2.70
3.10
2.70
2.90
2.90
2.70
2.70
2.70
2.90
2.70
2.70
2.70
2.70
2.60
2.90
2.80
2.70
2.60
2.90
3.10
2.90
2.90
2.90
3.10
2.90
2.70
3.10
2.90
3.10
2.90
2.60
2.70
2.90
2.90
2.90
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
MILLS ..................................................................................................................................................
MITCHELL ...........................................................................................................................................
MONONA .............................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MUSCATINE ........................................................................................................................................
O’BRIEN ..............................................................................................................................................
OSCEOLA ...........................................................................................................................................
PAGE ...................................................................................................................................................
PALO ALTO .........................................................................................................................................
PLYMOUTH .........................................................................................................................................
POCAHONTAS ....................................................................................................................................
POLK ...................................................................................................................................................
POTTAWATTAMIE ..............................................................................................................................
POWESHIEK .......................................................................................................................................
RINGGOLD ..........................................................................................................................................
SAC .....................................................................................................................................................
SCOTT .................................................................................................................................................
SHELBY ...............................................................................................................................................
SIOUX ..................................................................................................................................................
STORY ................................................................................................................................................
TAMA ...................................................................................................................................................
TAYLOR ..............................................................................................................................................
UNION .................................................................................................................................................
VAN BUREN ........................................................................................................................................
WAPELLO ...........................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBSTER ...........................................................................................................................................
WINNEBAGO ......................................................................................................................................
WINNESHIEK ......................................................................................................................................
WOODBURY .......................................................................................................................................
WORTH ...............................................................................................................................................
WRIGHT ..............................................................................................................................................
ALLEN .................................................................................................................................................
ANDERSON ........................................................................................................................................
ATCHISON ..........................................................................................................................................
BARBER ..............................................................................................................................................
BARTON ..............................................................................................................................................
BOURBON ...........................................................................................................................................
BROWN ...............................................................................................................................................
BUTLER ...............................................................................................................................................
CHASE ................................................................................................................................................
CHAUTAUQUA ....................................................................................................................................
CHEROKEE .........................................................................................................................................
CHEYENNE .........................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CLOUD ................................................................................................................................................
COFFEY ..............................................................................................................................................
COMANCHE ........................................................................................................................................
COWLEY .............................................................................................................................................
CRAWFORD ........................................................................................................................................
DECATUR ...........................................................................................................................................
DICKINSON .........................................................................................................................................
DONIPHAN ..........................................................................................................................................
DOUGLAS ...........................................................................................................................................
EDWARDS ..........................................................................................................................................
ELK ......................................................................................................................................................
ELLIS ...................................................................................................................................................
ELLSWORTH ......................................................................................................................................
FINNEY ................................................................................................................................................
FORD ...................................................................................................................................................
FRANKLIN ...........................................................................................................................................
GEARY ................................................................................................................................................
GOVE ..................................................................................................................................................
GRAHAM .............................................................................................................................................
GRANT ................................................................................................................................................
GRAY ...................................................................................................................................................
GREELEY ............................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
19129
19131
19133
19135
19137
19139
19141
19143
19145
19147
19149
19151
19153
19155
19157
19159
19161
19163
19165
19167
19169
19171
19173
19175
19177
19179
19181
19183
19185
19187
19189
19191
19193
19195
19197
20001
20003
20005
20007
20009
20011
20013
20015
20017
20019
20021
20023
20025
20027
20029
20031
20033
20035
20037
20039
20041
20043
20045
20047
20049
20051
20053
20055
20057
20059
20061
20063
20065
20067
20069
20071
02DEP3
95551
Class I
differential
adjusted for
location
2.70
2.80
2.60
2.90
2.70
3.10
2.60
2.70
2.90
2.70
2.60
2.70
2.70
2.70
2.90
2.90
2.60
3.10
2.60
2.60
2.70
2.90
2.90
2.90
2.90
2.90
2.70
2.90
2.90
2.70
2.70
2.80
2.60
2.80
2.70
2.90
2.90
2.90
2.60
2.60
3.20
2.90
2.90
2.70
2.90
3.20
2.50
2.60
2.70
2.70
2.90
2.60
2.90
3.20
2.50
2.70
2.90
2.90
2.60
2.90
2.50
2.60
2.50
2.50
2.90
2.70
2.50
2.50
2.50
2.50
2.50
95552
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
GREENWOOD ....................................................................................................................................
HAMILTON ..........................................................................................................................................
HARPER ..............................................................................................................................................
HARVEY ..............................................................................................................................................
HASKELL .............................................................................................................................................
HODGEMAN ........................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JEWELL ...............................................................................................................................................
JOHNSON ...........................................................................................................................................
KEARNY ..............................................................................................................................................
KINGMAN ............................................................................................................................................
KIOWA .................................................................................................................................................
LABETTE .............................................................................................................................................
LANE ...................................................................................................................................................
LEAVENWORTH .................................................................................................................................
LINCOLN .............................................................................................................................................
LINN .....................................................................................................................................................
LOGAN ................................................................................................................................................
LYON ...................................................................................................................................................
MCPHERSON .....................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MEADE ................................................................................................................................................
MIAMI ..................................................................................................................................................
MITCHELL ...........................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORRIS ..............................................................................................................................................
MORTON .............................................................................................................................................
NEMAHA .............................................................................................................................................
NEOSHO .............................................................................................................................................
NESS ...................................................................................................................................................
NORTON .............................................................................................................................................
OSAGE ................................................................................................................................................
OSBORNE ...........................................................................................................................................
OTTAWA .............................................................................................................................................
PAWNEE .............................................................................................................................................
PHILLIPS .............................................................................................................................................
POTTAWATOMIE ................................................................................................................................
PRATT .................................................................................................................................................
RAWLINS ............................................................................................................................................
RENO ..................................................................................................................................................
REPUBLIC ...........................................................................................................................................
RICE ....................................................................................................................................................
RILEY ..................................................................................................................................................
ROOKS ................................................................................................................................................
RUSH ...................................................................................................................................................
RUSSELL ............................................................................................................................................
SALINE ................................................................................................................................................
SCOTT .................................................................................................................................................
SEDGWICK .........................................................................................................................................
SEWARD .............................................................................................................................................
SHAWNEE ...........................................................................................................................................
SHERIDAN ..........................................................................................................................................
SHERMAN ...........................................................................................................................................
SMITH ..................................................................................................................................................
STAFFORD .........................................................................................................................................
STANTON ............................................................................................................................................
STEVENS ............................................................................................................................................
SUMNER .............................................................................................................................................
THOMAS .............................................................................................................................................
TREGO ................................................................................................................................................
WABAUNSEE ......................................................................................................................................
WALLACE ............................................................................................................................................
WASHINGTON ....................................................................................................................................
WICHITA ..............................................................................................................................................
WILSON ...............................................................................................................................................
WOODSON .........................................................................................................................................
WYANDOTTE ......................................................................................................................................
ADAIR ..................................................................................................................................................
ALLEN .................................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
20073
20075
20077
20079
20081
20083
20085
20087
20089
20091
20093
20095
20097
20099
20101
20103
20105
20107
20109
20111
20113
20115
20117
20119
20121
20123
20125
20127
20129
20131
20133
20135
20137
20139
20141
20143
20145
20147
20149
20151
20153
20155
20157
20159
20161
20163
20165
20167
20169
20171
20173
20175
20177
20179
20181
20183
20185
20187
20189
20191
20193
20195
20197
20199
20201
20203
20205
20207
20209
21001
21003
02DEP3
Class I
differential
adjusted for
location
2.90
2.50
2.90
2.90
2.50
2.50
2.90
2.90
2.60
3.20
2.50
2.90
2.60
3.20
2.50
2.90
2.60
3.20
2.50
2.90
2.70
2.70
2.70
2.50
3.20
2.60
3.20
2.70
2.50
2.70
2.90
2.50
2.50
2.90
2.50
2.70
2.50
2.50
2.70
2.60
2.50
2.90
2.60
2.60
2.70
2.50
2.50
2.50
2.70
2.50
2.90
2.50
2.90
2.50
2.50
2.50
2.60
2.50
2.50
2.90
2.50
2.50
2.90
2.50
2.70
2.50
2.90
2.90
3.20
4.20
4.20
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
ANDERSON ........................................................................................................................................
BALLARD ............................................................................................................................................
BARREN ..............................................................................................................................................
BATH ...................................................................................................................................................
BELL ....................................................................................................................................................
BOONE ................................................................................................................................................
BOURBON ...........................................................................................................................................
BOYD ...................................................................................................................................................
BOYLE .................................................................................................................................................
BRACKEN ...........................................................................................................................................
BREATHITT .........................................................................................................................................
BRECKINRIDGE .................................................................................................................................
BULLITT ..............................................................................................................................................
BUTLER ...............................................................................................................................................
CALDWELL .........................................................................................................................................
CALLOWAY .........................................................................................................................................
CAMPBELL ..........................................................................................................................................
CARLISLE ...........................................................................................................................................
CARROLL ............................................................................................................................................
CARTER ..............................................................................................................................................
CASEY .................................................................................................................................................
CHRISTIAN .........................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CLINTON .............................................................................................................................................
CRITTENDEN ......................................................................................................................................
CUMBERLAND ....................................................................................................................................
DAVIESS .............................................................................................................................................
EDMONSON ........................................................................................................................................
ELLIOTT ..............................................................................................................................................
ESTILL .................................................................................................................................................
FAYETTE .............................................................................................................................................
FLEMING .............................................................................................................................................
FLOYD .................................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GALLATIN ...........................................................................................................................................
GARRARD ...........................................................................................................................................
GRANT ................................................................................................................................................
GRAVES ..............................................................................................................................................
GRAYSON ...........................................................................................................................................
GREEN ................................................................................................................................................
GREENUP ...........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARDIN ...............................................................................................................................................
HARLAN ..............................................................................................................................................
HARRISON ..........................................................................................................................................
HART ...................................................................................................................................................
HENDERSON ......................................................................................................................................
HENRY ................................................................................................................................................
HICKMAN ............................................................................................................................................
HOPKINS .............................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JESSAMINE ........................................................................................................................................
JOHNSON ...........................................................................................................................................
KENTON ..............................................................................................................................................
KNOTT .................................................................................................................................................
KNOX ...................................................................................................................................................
LARUE .................................................................................................................................................
LAUREL ...............................................................................................................................................
LAWRENCE ........................................................................................................................................
LEE ......................................................................................................................................................
LESLIE .................................................................................................................................................
LETCHER ............................................................................................................................................
LEWIS ..................................................................................................................................................
LINCOLN .............................................................................................................................................
LIVINGSTON .......................................................................................................................................
LOGAN ................................................................................................................................................
LYON ...................................................................................................................................................
MCCRACKEN ......................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
21005
21007
21009
21011
21013
21015
21017
21019
21021
21023
21025
21027
21029
21031
21033
21035
21037
21039
21041
21043
21045
21047
21049
21051
21053
21055
21057
21059
21061
21063
21065
21067
21069
21071
21073
21075
21077
21079
21081
21083
21085
21087
21089
21091
21093
21095
21097
21099
21101
21103
21105
21107
21109
21111
21113
21115
21117
21119
21121
21123
21125
21127
21129
21131
21133
21135
21137
21139
21141
21143
21145
02DEP3
95553
Class I
differential
adjusted for
location
4.20
4.00
4.20
4.20
4.80
4.00
4.20
4.20
4.20
4.00
4.50
4.00
4.00
4.20
4.00
4.20
4.00
4.00
4.00
4.20
4.20
4.20
4.20
4.50
4.50
4.00
4.50
4.00
4.20
4.20
4.20
4.20
4.20
4.50
4.00
4.00
4.00
4.20
4.00
4.20
4.00
4.20
4.20
4.00
4.20
4.80
4.20
4.20
4.00
4.00
4.00
4.00
4.20
4.00
4.20
4.50
4.00
4.50
4.50
4.20
4.50
4.20
4.20
4.50
4.80
4.20
4.20
4.00
4.20
4.00
4.00
95554
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
MCCREARY ........................................................................................................................................
MCLEAN ..............................................................................................................................................
MADISON ............................................................................................................................................
MAGOFFIN ..........................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MARTIN ...............................................................................................................................................
MASON ................................................................................................................................................
MEADE ................................................................................................................................................
MENIFEE .............................................................................................................................................
MERCER .............................................................................................................................................
METCALFE ..........................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
MUHLENBERG ...................................................................................................................................
NELSON ..............................................................................................................................................
NICHOLAS ..........................................................................................................................................
OHIO ....................................................................................................................................................
OLDHAM .............................................................................................................................................
OWEN ..................................................................................................................................................
OWSLEY .............................................................................................................................................
PENDLETON .......................................................................................................................................
PERRY ................................................................................................................................................
PIKE .....................................................................................................................................................
POWELL ..............................................................................................................................................
PULASKI ..............................................................................................................................................
ROBERTSON ......................................................................................................................................
ROCKCASTLE ....................................................................................................................................
ROWAN ...............................................................................................................................................
RUSSELL ............................................................................................................................................
SCOTT .................................................................................................................................................
SHELBY ...............................................................................................................................................
SIMPSON ............................................................................................................................................
SPENCER ...........................................................................................................................................
TAYLOR ..............................................................................................................................................
TODD ...................................................................................................................................................
TRIGG .................................................................................................................................................
TRIMBLE .............................................................................................................................................
UNION .................................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBSTER ...........................................................................................................................................
WHITLEY .............................................................................................................................................
WOLFE ................................................................................................................................................
WOODFORD .......................................................................................................................................
ACADIA ...............................................................................................................................................
ALLEN .................................................................................................................................................
ASCENSION ........................................................................................................................................
ASSUMPTION .....................................................................................................................................
AVOYELLES ........................................................................................................................................
BEAUREGARD ....................................................................................................................................
BIENVILLE ...........................................................................................................................................
BOSSIER .............................................................................................................................................
CADDO ................................................................................................................................................
CALCASIEU ........................................................................................................................................
CALDWELL .........................................................................................................................................
CAMERON ..........................................................................................................................................
CATAHOULA .......................................................................................................................................
CLAIBORNE ........................................................................................................................................
CONCORDIA .......................................................................................................................................
DE SOTO ............................................................................................................................................
EAST BATON ROUGE .......................................................................................................................
EAST CARROLL .................................................................................................................................
EAST FELICIANA ................................................................................................................................
EVANGELINE ......................................................................................................................................
FRANKLIN ...........................................................................................................................................
GRANT ................................................................................................................................................
IBERIA .................................................................................................................................................
IBERVILLE ...........................................................................................................................................
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KY
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KY
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KY
KY
KY
KY
KY
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LA
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E:\FR\FM\02DEP3.SGM
FIPS code
21147
21149
21151
21153
21155
21157
21159
21161
21163
21165
21167
21169
21171
21173
21175
21177
21179
21181
21183
21185
21187
21189
21191
21193
21195
21197
21199
21201
21203
21205
21207
21209
21211
21213
21215
21217
21219
21221
21223
21225
21227
21229
21231
21233
21235
21237
21239
22001
22003
22005
22007
22009
22011
22013
22015
22017
22019
22021
22023
22025
22027
22029
22031
22033
22035
22037
22039
22041
22043
22045
22047
02DEP3
Class I
differential
adjusted for
location
4.50
4.00
4.20
4.50
4.20
4.00
4.50
4.20
4.00
4.20
4.20
4.20
4.50
4.20
4.20
4.00
4.20
4.20
4.00
4.00
4.00
4.50
4.00
4.50
4.50
4.20
4.50
4.20
4.20
4.20
4.50
4.00
4.00
4.20
4.00
4.20
4.20
4.20
4.00
4.00
4.20
4.20
4.50
4.00
4.50
4.20
4.20
5.20
4.90
5.20
5.20
5.20
4.90
4.60
4.30
4.30
4.90
4.90
4.90
5.20
4.30
5.20
4.30
5.20
5.20
5.20
4.90
4.90
4.90
5.20
5.20
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JEFFERSON DAVIS ...........................................................................................................................
LAFAYETTE ........................................................................................................................................
LAFOURCHE .......................................................................................................................................
LA SALLE ............................................................................................................................................
LINCOLN .............................................................................................................................................
LIVINGSTON .......................................................................................................................................
MADISON ............................................................................................................................................
MOREHOUSE .....................................................................................................................................
NATCHITOCHES ................................................................................................................................
ORLEANS ............................................................................................................................................
OUACHITA ..........................................................................................................................................
PLAQUEMINES ...................................................................................................................................
POINTE COUPEE ...............................................................................................................................
RAPIDES .............................................................................................................................................
RED RIVER .........................................................................................................................................
RICHLAND ..........................................................................................................................................
SABINE ................................................................................................................................................
ST. BERNARD ....................................................................................................................................
ST. CHARLES .....................................................................................................................................
ST. HELENA ........................................................................................................................................
ST. JAMES ..........................................................................................................................................
ST. JOHN THE BAPTIST ....................................................................................................................
ST. LANDRY .......................................................................................................................................
ST. MARTIN ........................................................................................................................................
ST. MARY ............................................................................................................................................
ST. TAMMANY ....................................................................................................................................
TANGIPAHOA .....................................................................................................................................
TENSAS ..............................................................................................................................................
TERREBONNE ....................................................................................................................................
UNION .................................................................................................................................................
VERMILION .........................................................................................................................................
VERNON .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WEBSTER ...........................................................................................................................................
WEST BATON ROUGE ......................................................................................................................
WEST CARROLL ................................................................................................................................
WEST FELICIANA ...............................................................................................................................
WINN ...................................................................................................................................................
ANDROSCOGGIN ...............................................................................................................................
AROOSTOOK ......................................................................................................................................
CUMBERLAND ....................................................................................................................................
FRANKLIN ...........................................................................................................................................
HANCOCK ...........................................................................................................................................
KENNEBEC .........................................................................................................................................
KNOX ...................................................................................................................................................
LINCOLN .............................................................................................................................................
OXFORD .............................................................................................................................................
PENOBSCOT ......................................................................................................................................
PISCATAQUIS .....................................................................................................................................
SAGADAHOC ......................................................................................................................................
SOMERSET .........................................................................................................................................
WALDO ................................................................................................................................................
WASHINGTON ....................................................................................................................................
YORK ...................................................................................................................................................
ALLEGANY ..........................................................................................................................................
ANNE ARUNDEL ................................................................................................................................
BALTIMORE ........................................................................................................................................
CALVERT ............................................................................................................................................
CAROLINE ..........................................................................................................................................
CARROLL ............................................................................................................................................
CECIL ..................................................................................................................................................
CHARLES ............................................................................................................................................
DORCHESTER ....................................................................................................................................
FREDERICK ........................................................................................................................................
GARRETT ............................................................................................................................................
HARFORD ...........................................................................................................................................
HOWARD ............................................................................................................................................
KENT ...................................................................................................................................................
MONTGOMERY ..................................................................................................................................
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LA
LA
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LA
LA
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LA
LA
LA
LA
LA
LA
LA
LA
ME
ME
ME
ME
ME
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ME
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ME
MD
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E:\FR\FM\02DEP3.SGM
FIPS code
22049
22051
22053
22055
22057
22059
22061
22063
22065
22067
22069
22071
22073
22075
22077
22079
22081
22083
22085
22087
22089
22091
22093
22095
22097
22099
22101
22103
22105
22107
22109
22111
22113
22115
22117
22119
22121
22123
22125
22127
23001
23003
23005
23007
23009
23011
23013
23015
23017
23019
23021
23023
23025
23027
23029
23031
24001
24003
24005
24009
24011
24013
24015
24017
24019
24021
24023
24025
24027
24029
24031
02DEP3
95555
Class I
differential
adjusted for
location
4.60
5.60
4.90
5.20
5.60
4.90
4.60
5.40
5.20
4.90
4.60
5.60
4.90
5.60
5.20
4.90
4.60
4.90
4.60
5.60
5.60
5.40
5.20
5.60
5.20
5.20
5.20
5.60
5.40
5.20
5.60
4.60
5.20
4.60
5.60
4.30
5.20
4.90
5.20
4.60
4.20
3.90
4.50
4.20
3.90
4.20
4.20
4.20
4.20
3.90
3.90
4.20
3.90
3.90
3.90
4.50
4.10
4.60
4.40
4.80
4.60
4.40
4.40
4.80
4.80
4.40
4.10
4.40
4.60
4.60
4.60
95556
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
PRINCE GEORGE’S ...........................................................................................................................
QUEEN ANNE’S ..................................................................................................................................
ST. MARY’S ........................................................................................................................................
SOMERSET .........................................................................................................................................
TALBOT ...............................................................................................................................................
WASHINGTON ....................................................................................................................................
WICOMICO ..........................................................................................................................................
WORCESTER .....................................................................................................................................
BALTIMORE CITY ...............................................................................................................................
BARNSTABLE .....................................................................................................................................
BERKSHIRE ........................................................................................................................................
BRISTOL .............................................................................................................................................
DUKES ................................................................................................................................................
ESSEX .................................................................................................................................................
FRANKLIN ...........................................................................................................................................
HAMPDEN ...........................................................................................................................................
HAMPSHIRE .......................................................................................................................................
MIDDLESEX ........................................................................................................................................
NANTUCKET .......................................................................................................................................
NORFOLK ...........................................................................................................................................
PLYMOUTH .........................................................................................................................................
SUFFOLK ............................................................................................................................................
WORCESTER .....................................................................................................................................
ALCONA ..............................................................................................................................................
ALGER .................................................................................................................................................
ALLEGAN ............................................................................................................................................
ALPENA ...............................................................................................................................................
ANTRIM ...............................................................................................................................................
ARENAC ..............................................................................................................................................
BARAGA ..............................................................................................................................................
BARRY ................................................................................................................................................
BAY ......................................................................................................................................................
BENZIE ................................................................................................................................................
BERRIEN .............................................................................................................................................
BRANCH ..............................................................................................................................................
CALHOUN ...........................................................................................................................................
CASS ...................................................................................................................................................
CHARLEVOIX ......................................................................................................................................
CHEBOYGAN ......................................................................................................................................
CHIPPEWA ..........................................................................................................................................
CLARE .................................................................................................................................................
CLINTON .............................................................................................................................................
CRAWFORD ........................................................................................................................................
DELTA .................................................................................................................................................
DICKINSON .........................................................................................................................................
EATON ................................................................................................................................................
EMMET ................................................................................................................................................
GENESEE ...........................................................................................................................................
GLADWIN ............................................................................................................................................
GOGEBIC ............................................................................................................................................
GRAND TRAVERSE ...........................................................................................................................
GRATIOT .............................................................................................................................................
HILLSDALE .........................................................................................................................................
HOUGHTON ........................................................................................................................................
HURON ................................................................................................................................................
INGHAM ..............................................................................................................................................
IONIA ...................................................................................................................................................
IOSCO .................................................................................................................................................
IRON ....................................................................................................................................................
ISABELLA ............................................................................................................................................
JACKSON ............................................................................................................................................
KALAMAZOO ......................................................................................................................................
KALKASKA ..........................................................................................................................................
KENT ...................................................................................................................................................
KEWEENAW .......................................................................................................................................
LAKE ....................................................................................................................................................
LAPEER ...............................................................................................................................................
LEELANAU ..........................................................................................................................................
LENAWEE ...........................................................................................................................................
LIVINGSTON .......................................................................................................................................
LUCE ...................................................................................................................................................
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MA
MA
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
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MI
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MI
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MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
E:\FR\FM\02DEP3.SGM
FIPS code
24033
24035
24037
24039
24041
24043
24045
24047
24510
25001
25003
25005
25007
25009
25011
25013
25015
25017
25019
25021
25023
25025
25027
26001
26003
26005
26007
26009
26011
26013
26015
26017
26019
26021
26023
26025
26027
26029
26031
26033
26035
26037
26039
26041
26043
26045
26047
26049
26051
26053
26055
26057
26059
26061
26063
26065
26067
26069
26071
26073
26075
26077
26079
26081
26083
26085
26087
26089
26091
26093
26095
02DEP3
Class I
differential
adjusted for
location
4.60
4.60
4.80
4.80
4.60
4.20
4.80
4.80
4.60
5.10
4.50
5.10
5.10
5.10
4.70
4.70
4.70
5.10
5.10
5.10
5.10
5.10
4.90
3.30
3.00
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
2.80
2.80
3.30
3.30
3.30
3.30
2.80
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30
2.80
3.30
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30
3.30
3.00
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
MACKINAC ..........................................................................................................................................
MACOMB .............................................................................................................................................
MANISTEE ..........................................................................................................................................
MARQUETTE ......................................................................................................................................
MASON ................................................................................................................................................
MECOSTA ...........................................................................................................................................
MENOMINEE .......................................................................................................................................
MIDLAND .............................................................................................................................................
MISSAUKEE ........................................................................................................................................
MONROE .............................................................................................................................................
MONTCALM ........................................................................................................................................
MONTMORENCY ................................................................................................................................
MUSKEGON ........................................................................................................................................
NEWAYGO ..........................................................................................................................................
OAKLAND ............................................................................................................................................
OCEANA ..............................................................................................................................................
OGEMAW ............................................................................................................................................
ONTONAGON .....................................................................................................................................
OSCEOLA ...........................................................................................................................................
OSCODA .............................................................................................................................................
OTSEGO .............................................................................................................................................
OTTAWA .............................................................................................................................................
PRESQUE ISLE ..................................................................................................................................
ROSCOMMON ....................................................................................................................................
SAGINAW ............................................................................................................................................
ST. CLAIR ...........................................................................................................................................
ST. JOSEPH ........................................................................................................................................
SANILAC .............................................................................................................................................
SCHOOLCRAFT ..................................................................................................................................
SHIAWASSEE .....................................................................................................................................
TUSCOLA ............................................................................................................................................
VAN BUREN ........................................................................................................................................
WASHTENAW .....................................................................................................................................
WAYNE ................................................................................................................................................
WEXFORD ..........................................................................................................................................
AITKIN .................................................................................................................................................
ANOKA ................................................................................................................................................
BECKER ..............................................................................................................................................
BELTRAMI ...........................................................................................................................................
BENTON ..............................................................................................................................................
BIG STONE .........................................................................................................................................
BLUE EARTH ......................................................................................................................................
BROWN ...............................................................................................................................................
CARLTON ............................................................................................................................................
CARVER ..............................................................................................................................................
CASS ...................................................................................................................................................
CHIPPEWA ..........................................................................................................................................
CHISAGO ............................................................................................................................................
CLAY ...................................................................................................................................................
CLEARWATER ....................................................................................................................................
COOK ..................................................................................................................................................
COTTONWOOD ..................................................................................................................................
CROW WING ......................................................................................................................................
DAKOTA ..............................................................................................................................................
DODGE ................................................................................................................................................
DOUGLAS ...........................................................................................................................................
FARIBAULT .........................................................................................................................................
FILLMORE ...........................................................................................................................................
FREEBORN .........................................................................................................................................
GOODHUE ..........................................................................................................................................
GRANT ................................................................................................................................................
HENNEPIN ..........................................................................................................................................
HOUSTON ...........................................................................................................................................
HUBBARD ...........................................................................................................................................
ISANTI .................................................................................................................................................
ITASCA ................................................................................................................................................
JACKSON ............................................................................................................................................
KANABEC ............................................................................................................................................
KANDIYOHI .........................................................................................................................................
KITTSON .............................................................................................................................................
KOOCHICHING ...................................................................................................................................
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MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
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MN
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MN
MN
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E:\FR\FM\02DEP3.SGM
FIPS code
26097
26099
26101
26103
26105
26107
26109
26111
26113
26115
26117
26119
26121
26123
26125
26127
26129
26131
26133
26135
26137
26139
26141
26143
26145
26147
26149
26151
26153
26155
26157
26159
26161
26163
26165
27001
27003
27005
27007
27009
27011
27013
27015
27017
27019
27021
27023
27025
27027
27029
27031
27033
27035
27037
27039
27041
27043
27045
27047
27049
27051
27053
27055
27057
27059
27061
27063
27065
27067
27069
27071
02DEP3
95557
Class I
differential
adjusted for
location
3.00
3.30
3.30
3.00
3.30
3.30
2.80
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
2.80
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.00
3.30
3.30
3.30
3.30
3.30
3.30
2.80
2.80
2.80
2.30
2.80
2.70
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.30
2.30
2.80
2.80
2.90
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.90
2.80
2.80
2.80
2.30
2.80
2.80
2.80
2.30
2.30
95558
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
LAC QUI PARLE .................................................................................................................................
LAKE ....................................................................................................................................................
LAKE OF THE WOODS ......................................................................................................................
LE SUEUR ...........................................................................................................................................
LINCOLN .............................................................................................................................................
LYON ...................................................................................................................................................
MCLEOD .............................................................................................................................................
MAHNOMEN .......................................................................................................................................
MARSHALL .........................................................................................................................................
MARTIN ...............................................................................................................................................
MEEKER ..............................................................................................................................................
MILLE LACS ........................................................................................................................................
MORRISON .........................................................................................................................................
MOWER ...............................................................................................................................................
MURRAY .............................................................................................................................................
NICOLLET ...........................................................................................................................................
NOBLES ..............................................................................................................................................
NORMAN .............................................................................................................................................
OLMSTED ...........................................................................................................................................
OTTER TAIL ........................................................................................................................................
PENNINGTON .....................................................................................................................................
PINE ....................................................................................................................................................
PIPESTONE ........................................................................................................................................
POLK ...................................................................................................................................................
POPE ...................................................................................................................................................
RAMSEY ..............................................................................................................................................
RED LAKE ...........................................................................................................................................
REDWOOD ..........................................................................................................................................
RENVILLE ...........................................................................................................................................
RICE ....................................................................................................................................................
ROCK ..................................................................................................................................................
ROSEAU ..............................................................................................................................................
ST. LOUIS ...........................................................................................................................................
SCOTT .................................................................................................................................................
SHERBURNE ......................................................................................................................................
SIBLEY ................................................................................................................................................
STEARNS ............................................................................................................................................
STEELE ...............................................................................................................................................
STEVENS ............................................................................................................................................
SWIFT ..................................................................................................................................................
TODD ...................................................................................................................................................
TRAVERSE .........................................................................................................................................
WABASHA ...........................................................................................................................................
WADENA .............................................................................................................................................
WASECA .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WATONWAN .......................................................................................................................................
WILKIN ................................................................................................................................................
WINONA ..............................................................................................................................................
WRIGHT ..............................................................................................................................................
YELLOW MEDICINE ...........................................................................................................................
ADAMS ................................................................................................................................................
ALCORN ..............................................................................................................................................
AMITE ..................................................................................................................................................
ATTALA ...............................................................................................................................................
BENTON ..............................................................................................................................................
BOLIVAR .............................................................................................................................................
CALHOUN ...........................................................................................................................................
CARROLL ............................................................................................................................................
CHICKASAW .......................................................................................................................................
CHOCTAW ..........................................................................................................................................
CLAIBORNE ........................................................................................................................................
CLARKE ..............................................................................................................................................
CLAY ...................................................................................................................................................
COAHOMA ..........................................................................................................................................
COPIAH ...............................................................................................................................................
COVINGTON .......................................................................................................................................
DE SOTO ............................................................................................................................................
FORREST ............................................................................................................................................
FRANKLIN ...........................................................................................................................................
GEORGE .............................................................................................................................................
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MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
MN
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E:\FR\FM\02DEP3.SGM
FIPS code
27073
27075
27077
27079
27081
27083
27085
27087
27089
27091
27093
27095
27097
27099
27101
27103
27105
27107
27109
27111
27113
27115
27117
27119
27121
27123
27125
27127
27129
27131
27133
27135
27137
27139
27141
27143
27145
27147
27149
27151
27153
27155
27157
27159
27161
27163
27165
27167
27169
27171
27173
28001
28003
28005
28007
28009
28011
28013
28015
28017
28019
28021
28023
28025
28027
28029
28031
28033
28035
28037
28039
02DEP3
Class I
differential
adjusted for
location
2.70
2.30
2.30
2.80
2.60
2.70
2.80
2.60
2.30
2.80
2.80
2.80
2.80
2.80
2.70
2.80
2.70
2.60
2.80
2.80
2.30
2.80
2.60
2.30
2.80
2.90
2.30
2.80
2.80
2.80
2.60
2.30
2.30
2.90
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.70
2.80
2.80
2.80
2.90
2.80
2.80
2.80
2.80
2.70
5.20
4.90
5.40
5.20
4.90
4.90
5.20
5.20
5.20
5.20
5.20
5.60
5.20
4.90
5.40
5.60
4.60
5.80
5.20
5.80
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
GREENE ..............................................................................................................................................
GRENADA ...........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARRISON ..........................................................................................................................................
HINDS ..................................................................................................................................................
HOLMES ..............................................................................................................................................
HUMPHREYS ......................................................................................................................................
ISSAQUENA ........................................................................................................................................
ITAWAMBA ..........................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JEFFERSON .......................................................................................................................................
JEFFERSON DAVIS ...........................................................................................................................
JONES .................................................................................................................................................
KEMPER ..............................................................................................................................................
LAFAYETTE ........................................................................................................................................
LAMAR ................................................................................................................................................
LAUDERDALE .....................................................................................................................................
LAWRENCE ........................................................................................................................................
LEAKE .................................................................................................................................................
LEE ......................................................................................................................................................
LEFLORE ............................................................................................................................................
LINCOLN .............................................................................................................................................
LOWNDES ...........................................................................................................................................
MADISON ............................................................................................................................................
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
NESHOBA ...........................................................................................................................................
NEWTON .............................................................................................................................................
NOXUBEE ...........................................................................................................................................
OKTIBBEHA ........................................................................................................................................
PANOLA ..............................................................................................................................................
PEARL RIVER .....................................................................................................................................
PERRY ................................................................................................................................................
PIKE .....................................................................................................................................................
PONTOTOC ........................................................................................................................................
PRENTISS ...........................................................................................................................................
QUITMAN ............................................................................................................................................
RANKIN ...............................................................................................................................................
SCOTT .................................................................................................................................................
SHARKEY ............................................................................................................................................
SIMPSON ............................................................................................................................................
SMITH ..................................................................................................................................................
STONE ................................................................................................................................................
SUNFLOWER ......................................................................................................................................
TALLAHATCHIE ..................................................................................................................................
TATE ....................................................................................................................................................
TIPPAH ................................................................................................................................................
TISHOMINGO ......................................................................................................................................
TUNICA ...............................................................................................................................................
UNION .................................................................................................................................................
WALTHALL ..........................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBSTER ...........................................................................................................................................
WILKINSON .........................................................................................................................................
WINSTON ............................................................................................................................................
YALOBUSHA .......................................................................................................................................
YAZOO ................................................................................................................................................
ADAIR ..................................................................................................................................................
ANDREW .............................................................................................................................................
ATCHISON ..........................................................................................................................................
AUDRAIN .............................................................................................................................................
BARRY ................................................................................................................................................
BARTON ..............................................................................................................................................
BATES .................................................................................................................................................
BENTON ..............................................................................................................................................
BOLLINGER ........................................................................................................................................
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MS
MS
MS
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MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
MS
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MS
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MS
MS
MS
MS
MO
MO
MO
MO
MO
MO
MO
MO
MO
E:\FR\FM\02DEP3.SGM
FIPS code
28041
28043
28045
28047
28049
28051
28053
28055
28057
28059
28061
28063
28065
28067
28069
28071
28073
28075
28077
28079
28081
28083
28085
28087
28089
28091
28093
28095
28097
28099
28101
28103
28105
28107
28109
28111
28113
28115
28117
28119
28121
28123
28125
28127
28129
28131
28133
28135
28137
28139
28141
28143
28145
28147
28149
28151
28153
28155
28157
28159
28161
28163
29001
29003
29005
29007
29009
29011
29013
29015
29017
02DEP3
95559
Class I
differential
adjusted for
location
5.80
5.20
5.80
5.80
5.40
5.20
5.20
5.20
5.20
5.80
5.60
5.20
5.60
5.60
5.40
4.90
5.80
5.60
5.60
5.40
5.20
5.20
5.40
5.20
5.40
5.60
4.90
5.20
5.20
5.40
5.60
5.40
5.20
4.90
5.80
5.80
5.40
4.90
4.90
4.90
5.40
5.40
5.20
5.60
5.60
5.80
4.90
4.90
4.90
4.90
4.90
4.60
4.90
5.60
5.20
4.90
5.80
5.20
5.20
5.40
4.90
5.20
3.20
2.90
2.70
3.40
3.20
3.20
3.20
3.20
3.60
95560
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
BOONE ................................................................................................................................................
BUCHANAN .........................................................................................................................................
BUTLER ...............................................................................................................................................
CALDWELL .........................................................................................................................................
CALLAWAY .........................................................................................................................................
CAMDEN .............................................................................................................................................
CAPE GIRARDEAU ............................................................................................................................
CARROLL ............................................................................................................................................
CARTER ..............................................................................................................................................
CASS ...................................................................................................................................................
CEDAR ................................................................................................................................................
CHARITON ..........................................................................................................................................
CHRISTIAN .........................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CLINTON .............................................................................................................................................
COLE ...................................................................................................................................................
COOPER .............................................................................................................................................
CRAWFORD ........................................................................................................................................
DADE ...................................................................................................................................................
DALLAS ...............................................................................................................................................
DAVIESS .............................................................................................................................................
DE KALB .............................................................................................................................................
DENT ...................................................................................................................................................
DOUGLAS ...........................................................................................................................................
DUNKLIN .............................................................................................................................................
FRANKLIN ...........................................................................................................................................
GASCONADE ......................................................................................................................................
GENTRY ..............................................................................................................................................
GREENE ..............................................................................................................................................
GRUNDY .............................................................................................................................................
HARRISON ..........................................................................................................................................
HENRY ................................................................................................................................................
HICKORY ............................................................................................................................................
HOLT ...................................................................................................................................................
HOWARD ............................................................................................................................................
HOWELL ..............................................................................................................................................
IRON ....................................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOHNSON ...........................................................................................................................................
KNOX ...................................................................................................................................................
LACLEDE ............................................................................................................................................
LAFAYETTE ........................................................................................................................................
LAWRENCE ........................................................................................................................................
LEWIS ..................................................................................................................................................
LINCOLN .............................................................................................................................................
LINN .....................................................................................................................................................
LIVINGSTON .......................................................................................................................................
MCDONALD ........................................................................................................................................
MACON ...............................................................................................................................................
MADISON ............................................................................................................................................
MARIES ...............................................................................................................................................
MARION ..............................................................................................................................................
MERCER .............................................................................................................................................
MILLER ................................................................................................................................................
MISSISSIPPI .......................................................................................................................................
MONITEAU ..........................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
NEW MADRID .....................................................................................................................................
NEWTON .............................................................................................................................................
NODAWAY ..........................................................................................................................................
OREGON .............................................................................................................................................
OSAGE ................................................................................................................................................
OZARK ................................................................................................................................................
PEMISCOT ..........................................................................................................................................
PERRY ................................................................................................................................................
PETTIS ................................................................................................................................................
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MO
MO
MO
MO
MO
MO
MO
MO
E:\FR\FM\02DEP3.SGM
FIPS code
29019
29021
29023
29025
29027
29029
29031
29033
29035
29037
29039
29041
29043
29045
29047
29049
29051
29053
29055
29057
29059
29061
29063
29065
29067
29069
29071
29073
29075
29077
29079
29081
29083
29085
29087
29089
29091
29093
29095
29097
29099
29101
29103
29105
29107
29109
29111
29113
29115
29117
29119
29121
29123
29125
29127
29129
29131
29133
29135
29137
29139
29141
29143
29145
29147
29149
29151
29153
29155
29157
29159
02DEP3
Class I
differential
adjusted for
location
3.40
3.20
4.00
3.20
3.40
3.40
3.60
3.20
4.00
3.20
3.20
3.20
3.30
3.20
3.20
3.20
3.40
3.40
3.60
3.20
3.30
3.20
3.20
3.60
3.30
4.30
3.60
3.60
2.90
3.20
3.20
2.90
3.20
3.20
2.90
3.40
3.60
3.60
3.20
3.20
3.60
3.20
3.20
3.30
3.20
3.20
3.20
3.60
3.20
3.20
3.20
3.20
3.60
3.60
3.20
2.90
3.40
4.00
3.40
3.40
3.40
3.40
4.00
3.20
2.90
4.00
3.60
3.60
4.30
3.60
3.40
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
PHELPS ...............................................................................................................................................
PIKE .....................................................................................................................................................
PLATTE ...............................................................................................................................................
POLK ...................................................................................................................................................
PULASKI ..............................................................................................................................................
PUTNAM ..............................................................................................................................................
RALLS .................................................................................................................................................
RANDOLPH .........................................................................................................................................
RAY .....................................................................................................................................................
REYNOLDS .........................................................................................................................................
RIPLEY ................................................................................................................................................
ST. CHARLES .....................................................................................................................................
ST. CLAIR ...........................................................................................................................................
STE. GENEVIEVE ...............................................................................................................................
ST. FRANCOIS ...................................................................................................................................
ST. LOUIS ...........................................................................................................................................
SALINE ................................................................................................................................................
SCHUYLER .........................................................................................................................................
SCOTLAND .........................................................................................................................................
SCOTT .................................................................................................................................................
SHANNON ...........................................................................................................................................
SHELBY ...............................................................................................................................................
STODDARD .........................................................................................................................................
STONE ................................................................................................................................................
SULLIVAN ...........................................................................................................................................
TANEY .................................................................................................................................................
TEXAS .................................................................................................................................................
VERNON .............................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBSTER ...........................................................................................................................................
WORTH ...............................................................................................................................................
WRIGHT ..............................................................................................................................................
ST. LOUIS CITY ..................................................................................................................................
BEAVERHEAD ....................................................................................................................................
BIG HORN ...........................................................................................................................................
BLAINE ................................................................................................................................................
BROADWATER ...................................................................................................................................
CARBON .............................................................................................................................................
CARTER ..............................................................................................................................................
CASCADE ...........................................................................................................................................
CHOUTEAU .........................................................................................................................................
CUSTER ..............................................................................................................................................
DANIELS .............................................................................................................................................
DAWSON .............................................................................................................................................
DEER LODGE .....................................................................................................................................
FALLON ...............................................................................................................................................
FERGUS ..............................................................................................................................................
FLATHEAD ..........................................................................................................................................
GALLATIN ...........................................................................................................................................
GARFIELD ...........................................................................................................................................
GLACIER .............................................................................................................................................
GOLDEN VALLEY ...............................................................................................................................
GRANITE .............................................................................................................................................
HILL .....................................................................................................................................................
JEFFERSON .......................................................................................................................................
JUDITH BASIN ....................................................................................................................................
LAKE ....................................................................................................................................................
LEWIS AND CLARK ............................................................................................................................
LIBERTY ..............................................................................................................................................
LINCOLN .............................................................................................................................................
MCCONE .............................................................................................................................................
MADISON ............................................................................................................................................
MEAGHER ...........................................................................................................................................
MINERAL .............................................................................................................................................
MISSOULA ..........................................................................................................................................
MUSSELSHELL ...................................................................................................................................
PARK ...................................................................................................................................................
PETROLEUM ......................................................................................................................................
PHILLIPS .............................................................................................................................................
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MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MO
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
MT
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MT
MT
MT
MT
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MT
MT
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MT
MT
MT
E:\FR\FM\02DEP3.SGM
FIPS code
29161
29163
29165
29167
29169
29171
29173
29175
29177
29179
29181
29183
29185
29186
29187
29189
29195
29197
29199
29201
29203
29205
29207
29209
29211
29213
29215
29217
29219
29221
29223
29225
29227
29229
29510
30001
30003
30005
30007
30009
30011
30013
30015
30017
30019
30021
30023
30025
30027
30029
30031
30033
30035
30037
30039
30041
30043
30045
30047
30049
30051
30053
30055
30057
30059
30061
30063
30065
30067
30069
30071
02DEP3
95561
Class I
differential
adjusted for
location
3.60
3.40
3.20
3.20
3.40
2.90
3.40
3.40
3.20
3.60
4.00
3.60
3.20
3.60
3.60
3.60
3.40
3.20
3.20
4.00
3.60
3.20
4.00
3.30
3.20
3.30
3.60
3.20
3.60
3.60
4.00
3.20
2.90
3.30
3.60
1.80
2.40
2.00
1.80
2.40
2.40
1.80
1.80
2.40
2.30
2.40
1.80
2.40
2.00
2.00
2.00
2.40
1.80
2.00
1.80
1.80
1.80
2.00
2.00
1.70
1.80
2.00
2.40
1.80
1.80
2.00
1.80
2.40
2.00
2.40
2.30
95562
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
PONDERA ...........................................................................................................................................
POWDER RIVER ................................................................................................................................
POWELL ..............................................................................................................................................
PRAIRIE ..............................................................................................................................................
RAVALLI ..............................................................................................................................................
RICHLAND ..........................................................................................................................................
ROOSEVELT .......................................................................................................................................
ROSEBUD ...........................................................................................................................................
SANDERS ...........................................................................................................................................
SHERIDAN ..........................................................................................................................................
SILVER BOW ......................................................................................................................................
STILLWATER ......................................................................................................................................
SWEET GRASS ..................................................................................................................................
TETON .................................................................................................................................................
TOOLE .................................................................................................................................................
TREASURE .........................................................................................................................................
VALLEY ...............................................................................................................................................
WHEATLAND ......................................................................................................................................
WIBAUX ...............................................................................................................................................
YELLOWSTONE .................................................................................................................................
ADAMS ................................................................................................................................................
ANTELOPE ..........................................................................................................................................
ARTHUR ..............................................................................................................................................
BANNER ..............................................................................................................................................
BLAINE ................................................................................................................................................
BOONE ................................................................................................................................................
BOX BUTTE ........................................................................................................................................
BOYD ...................................................................................................................................................
BROWN ...............................................................................................................................................
BUFFALO ............................................................................................................................................
BURT ...................................................................................................................................................
BUTLER ...............................................................................................................................................
CASS ...................................................................................................................................................
CEDAR ................................................................................................................................................
CHASE ................................................................................................................................................
CHERRY ..............................................................................................................................................
CHEYENNE .........................................................................................................................................
CLAY ...................................................................................................................................................
COLFAX ..............................................................................................................................................
CUMING ..............................................................................................................................................
CUSTER ..............................................................................................................................................
DAKOTA ..............................................................................................................................................
DAWES ................................................................................................................................................
DAWSON .............................................................................................................................................
DEUEL .................................................................................................................................................
DIXON .................................................................................................................................................
DODGE ................................................................................................................................................
DOUGLAS ...........................................................................................................................................
DUNDY ................................................................................................................................................
FILLMORE ...........................................................................................................................................
FRANKLIN ...........................................................................................................................................
FRONTIER ..........................................................................................................................................
FURNAS ..............................................................................................................................................
GAGE ..................................................................................................................................................
GARDEN .............................................................................................................................................
GARFIELD ...........................................................................................................................................
GOSPER .............................................................................................................................................
GRANT ................................................................................................................................................
GREELEY ............................................................................................................................................
HALL ....................................................................................................................................................
HAMILTON ..........................................................................................................................................
HARLAN ..............................................................................................................................................
HAYES .................................................................................................................................................
HITCHCOCK .......................................................................................................................................
HOLT ...................................................................................................................................................
HOOKER .............................................................................................................................................
HOWARD ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOHNSON ...........................................................................................................................................
KEARNEY ............................................................................................................................................
KEITH ..................................................................................................................................................
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MT
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
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NE
NE
NE
NE
NE
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NE
NE
NE
NE
E:\FR\FM\02DEP3.SGM
FIPS code
30073
30075
30077
30079
30081
30083
30085
30087
30089
30091
30093
30095
30097
30099
30101
30103
30105
30107
30109
30111
31001
31003
31005
31007
31009
31011
31013
31015
31017
31019
31021
31023
31025
31027
31029
31031
31033
31035
31037
31039
31041
31043
31045
31047
31049
31051
31053
31055
31057
31059
31061
31063
31065
31067
31069
31071
31073
31075
31077
31079
31081
31083
31085
31087
31089
31091
31093
31095
31097
31099
31101
02DEP3
Class I
differential
adjusted for
location
1.70
2.40
1.80
2.40
1.80
2.40
2.30
2.40
2.00
2.30
1.80
2.40
2.00
1.70
1.80
2.40
2.30
2.00
2.40
2.40
2.60
2.60
2.40
2.40
2.50
2.60
2.40
2.50
2.50
2.50
2.60
2.60
2.70
2.60
2.50
2.40
2.40
2.60
2.60
2.60
2.50
2.60
2.40
2.50
2.40
2.60
2.60
2.70
2.50
2.60
2.60
2.50
2.50
2.70
2.40
2.50
2.50
2.40
2.60
2.60
2.60
2.50
2.50
2.50
2.50
2.40
2.60
2.60
2.70
2.60
2.50
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
KEYA PAHA ........................................................................................................................................
KIMBALL ..............................................................................................................................................
KNOX ...................................................................................................................................................
LANCASTER .......................................................................................................................................
LINCOLN .............................................................................................................................................
LOGAN ................................................................................................................................................
LOUP ...................................................................................................................................................
MCPHERSON .....................................................................................................................................
MADISON ............................................................................................................................................
MERRICK ............................................................................................................................................
MORRILL .............................................................................................................................................
NANCE ................................................................................................................................................
NEMAHA .............................................................................................................................................
NUCKOLLS .........................................................................................................................................
OTOE ...................................................................................................................................................
PAWNEE .............................................................................................................................................
PERKINS .............................................................................................................................................
PHELPS ...............................................................................................................................................
PIERCE ...............................................................................................................................................
PLATTE ...............................................................................................................................................
POLK ...................................................................................................................................................
RED WILLOW .....................................................................................................................................
RICHARDSON .....................................................................................................................................
ROCK ..................................................................................................................................................
SALINE ................................................................................................................................................
SARPY .................................................................................................................................................
SAUNDERS .........................................................................................................................................
SCOTTS BLUFF ..................................................................................................................................
SEWARD .............................................................................................................................................
SHERIDAN ..........................................................................................................................................
SHERMAN ...........................................................................................................................................
SIOUX ..................................................................................................................................................
STANTON ............................................................................................................................................
THAYER ..............................................................................................................................................
THOMAS .............................................................................................................................................
THURSTON .........................................................................................................................................
VALLEY ...............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBSTER ...........................................................................................................................................
WHEELER ...........................................................................................................................................
YORK ...................................................................................................................................................
CHURCHILL ........................................................................................................................................
CLARK .................................................................................................................................................
DOUGLAS ...........................................................................................................................................
ELKO ...................................................................................................................................................
ESMERALDA .......................................................................................................................................
EUREKA ..............................................................................................................................................
HUMBOLDT .........................................................................................................................................
LANDER ..............................................................................................................................................
LINCOLN .............................................................................................................................................
LYON ...................................................................................................................................................
MINERAL .............................................................................................................................................
NYE .....................................................................................................................................................
PERSHING ..........................................................................................................................................
STOREY ..............................................................................................................................................
WASHOE .............................................................................................................................................
WHITE PINE ........................................................................................................................................
CARSON CITY ....................................................................................................................................
BELKNAP ............................................................................................................................................
CARROLL ............................................................................................................................................
CHESHIRE ..........................................................................................................................................
COOS ..................................................................................................................................................
GRAFTON ...........................................................................................................................................
HILLSBOROUGH ................................................................................................................................
MERRIMACK .......................................................................................................................................
ROCKINGHAM ....................................................................................................................................
STRAFFORD .......................................................................................................................................
SULLIVAN ...........................................................................................................................................
ATLANTIC ...........................................................................................................................................
BERGEN ..............................................................................................................................................
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NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NH
NH
NH
NH
NH
NH
NH
NH
NH
NH
NJ
NJ
E:\FR\FM\02DEP3.SGM
FIPS code
31103
31105
31107
31109
31111
31113
31115
31117
31119
31121
31123
31125
31127
31129
31131
31133
31135
31137
31139
31141
31143
31145
31147
31149
31151
31153
31155
31157
31159
31161
31163
31165
31167
31169
31171
31173
31175
31177
31179
31181
31183
31185
32001
32003
32005
32007
32009
32011
32013
32015
32017
32019
32021
32023
32027
32029
32031
32033
32510
33001
33003
33005
33007
33009
33011
33013
33015
33017
33019
34001
34003
02DEP3
95563
Class I
differential
adjusted for
location
2.50
2.40
2.60
2.60
2.50
2.40
2.50
2.40
2.60
2.60
2.40
2.60
2.70
2.60
2.70
2.70
2.50
2.50
2.60
2.60
2.60
2.50
2.70
2.50
2.60
2.70
2.60
2.40
2.60
2.40
2.50
2.40
2.60
2.60
2.40
2.60
2.50
2.60
2.60
2.60
2.50
2.60
1.90
2.60
1.80
2.00
2.20
2.20
1.90
2.00
2.50
1.90
2.00
2.20
1.90
1.90
2.00
2.20
1.90
4.50
4.50
4.50
4.20
4.40
4.50
4.50
4.50
4.50
4.50
4.70
5.00
95564
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
BURLINGTON .....................................................................................................................................
CAMDEN .............................................................................................................................................
CAPE MAY ..........................................................................................................................................
CUMBERLAND ....................................................................................................................................
ESSEX .................................................................................................................................................
GLOUCESTER ....................................................................................................................................
HUDSON .............................................................................................................................................
HUNTERDON ......................................................................................................................................
MERCER .............................................................................................................................................
MIDDLESEX ........................................................................................................................................
MONMOUTH .......................................................................................................................................
MORRIS ..............................................................................................................................................
OCEAN ................................................................................................................................................
PASSAIC .............................................................................................................................................
SALEM .................................................................................................................................................
SOMERSET .........................................................................................................................................
SUSSEX ..............................................................................................................................................
UNION .................................................................................................................................................
WARREN .............................................................................................................................................
BERNALILLO .......................................................................................................................................
CATRON ..............................................................................................................................................
CHAVES ..............................................................................................................................................
CIBOLA ................................................................................................................................................
COLFAX ..............................................................................................................................................
CURRY ................................................................................................................................................
DE BACA .............................................................................................................................................
DONA ANA ..........................................................................................................................................
EDDY ...................................................................................................................................................
GRANT ................................................................................................................................................
GUADALUPE .......................................................................................................................................
HARDING ............................................................................................................................................
HIDALGO .............................................................................................................................................
LEA ......................................................................................................................................................
LINCOLN .............................................................................................................................................
LOS ALAMOS .....................................................................................................................................
LUNA ...................................................................................................................................................
MCKINLEY ..........................................................................................................................................
MORA ..................................................................................................................................................
OTERO ................................................................................................................................................
QUAY ...................................................................................................................................................
RIO ARRIBA ........................................................................................................................................
ROOSEVELT .......................................................................................................................................
SANDOVAL .........................................................................................................................................
SAN JUAN ...........................................................................................................................................
SAN MIGUEL ......................................................................................................................................
SANTA FE ...........................................................................................................................................
SIERRA ...............................................................................................................................................
SOCORRO ..........................................................................................................................................
TAOS ...................................................................................................................................................
TORRANCE .........................................................................................................................................
UNION .................................................................................................................................................
VALENCIA ...........................................................................................................................................
ALBANY ...............................................................................................................................................
ALLEGANY ..........................................................................................................................................
BRONX ................................................................................................................................................
BROOME .............................................................................................................................................
CATTARAUGUS ..................................................................................................................................
CAYUGA ..............................................................................................................................................
CHAUTAUQUA ....................................................................................................................................
CHEMUNG ..........................................................................................................................................
CHENANGO ........................................................................................................................................
CLINTON .............................................................................................................................................
COLUMBIA ..........................................................................................................................................
CORTLAND .........................................................................................................................................
DELAWARE .........................................................................................................................................
DUTCHESS .........................................................................................................................................
ERIE ....................................................................................................................................................
ESSEX .................................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GENESEE ...........................................................................................................................................
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NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
E:\FR\FM\02DEP3.SGM
FIPS code
34005
34007
34009
34011
34013
34015
34017
34019
34021
34023
34025
34027
34029
34031
34033
34035
34037
34039
34041
35001
35003
35005
35006
35007
35009
35011
35013
35015
35017
35019
35021
35023
35025
35027
35028
35029
35031
35033
35035
35037
35039
35041
35043
35045
35047
35049
35051
35053
35055
35057
35059
35061
36001
36003
36005
36007
36009
36011
36013
36015
36017
36019
36021
36023
36025
36027
36029
36031
36033
36035
36037
02DEP3
Class I
differential
adjusted for
location
4.70
4.70
4.70
4.70
5.00
4.70
5.00
4.70
4.70
4.90
4.90
4.90
4.90
5.00
4.70
4.90
4.70
5.00
4.70
2.50
2.30
2.50
2.30
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.30
2.50
2.50
2.50
2.30
2.50
2.50
2.30
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
4.40
3.90
5.10
4.00
3.90
3.90
3.90
4.00
4.00
4.20
4.40
3.90
4.20
4.70
3.90
4.20
4.10
4.10
3.90
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
GREENE ..............................................................................................................................................
HAMILTON ..........................................................................................................................................
HERKIMER ..........................................................................................................................................
JEFFERSON .......................................................................................................................................
KINGS ..................................................................................................................................................
LEWIS ..................................................................................................................................................
LIVINGSTON .......................................................................................................................................
MADISON ............................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
NASSAU ..............................................................................................................................................
NEW YORK .........................................................................................................................................
NIAGARA .............................................................................................................................................
ONEIDA ...............................................................................................................................................
ONONDAGA ........................................................................................................................................
ONTARIO ............................................................................................................................................
ORANGE .............................................................................................................................................
ORLEANS ............................................................................................................................................
OSWEGO ............................................................................................................................................
OTSEGO .............................................................................................................................................
PUTNAM ..............................................................................................................................................
QUEENS ..............................................................................................................................................
RENSSELAER .....................................................................................................................................
RICHMOND .........................................................................................................................................
ROCKLAND .........................................................................................................................................
ST. LAWRENCE ..................................................................................................................................
SARATOGA .........................................................................................................................................
SCHENECTADY ..................................................................................................................................
SCHOHARIE .......................................................................................................................................
SCHUYLER .........................................................................................................................................
SENECA ..............................................................................................................................................
STEUBEN ............................................................................................................................................
SUFFOLK ............................................................................................................................................
SULLIVAN ...........................................................................................................................................
TIOGA ..................................................................................................................................................
TOMPKINS ..........................................................................................................................................
ULSTER ...............................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WESTCHESTER .................................................................................................................................
WYOMING ...........................................................................................................................................
YATES .................................................................................................................................................
ALAMANCE .........................................................................................................................................
ALEXANDER .......................................................................................................................................
ALLEGHANY .......................................................................................................................................
ANSON ................................................................................................................................................
ASHE ...................................................................................................................................................
AVERY .................................................................................................................................................
BEAUFORT .........................................................................................................................................
BERTIE ................................................................................................................................................
BLADEN ..............................................................................................................................................
BRUNSWICK .......................................................................................................................................
BUNCOMBE ........................................................................................................................................
BURKE ................................................................................................................................................
CABARRUS .........................................................................................................................................
CALDWELL .........................................................................................................................................
CAMDEN .............................................................................................................................................
CARTERET .........................................................................................................................................
CASWELL ............................................................................................................................................
CATAWBA ...........................................................................................................................................
CHATHAM ...........................................................................................................................................
CHEROKEE .........................................................................................................................................
CHOWAN ............................................................................................................................................
CLAY ...................................................................................................................................................
CLEVELAND .......................................................................................................................................
COLUMBUS ........................................................................................................................................
CRAVEN ..............................................................................................................................................
CUMBERLAND ....................................................................................................................................
CURRITUCK ........................................................................................................................................
DARE ...................................................................................................................................................
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NY
NY
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NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
E:\FR\FM\02DEP3.SGM
FIPS code
36039
36041
36043
36045
36047
36049
36051
36053
36055
36057
36059
36061
36063
36065
36067
36069
36071
36073
36075
36077
36079
36081
36083
36085
36087
36089
36091
36093
36095
36097
36099
36101
36103
36105
36107
36109
36111
36113
36115
36117
36119
36121
36123
37001
37003
37005
37007
37009
37011
37013
37015
37017
37019
37021
37023
37025
37027
37029
37031
37033
37035
37037
37039
37041
37043
37045
37047
37049
37051
37053
37055
02DEP3
95565
Class I
differential
adjusted for
location
4.40
4.10
4.00
3.90
5.10
3.90
3.90
3.90
3.90
4.10
5.10
5.10
3.90
3.90
3.90
3.90
4.70
3.90
3.90
4.10
4.70
5.10
4.40
5.10
5.00
3.90
4.20
4.20
4.20
3.90
3.90
3.90
5.10
4.40
4.00
3.90
4.40
4.20
4.20
3.90
5.00
3.90
3.90
5.40
5.60
5.40
5.80
5.40
5.40
5.80
5.60
5.80
6.00
5.40
5.60
5.60
5.60
5.60
6.00
5.40
5.60
5.60
5.40
5.60
5.60
5.60
6.00
6.00
5.80
5.60
5.80
95566
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
DAVIDSON ..........................................................................................................................................
DAVIE ..................................................................................................................................................
DUPLIN ................................................................................................................................................
DURHAM .............................................................................................................................................
EDGECOMBE .....................................................................................................................................
FORSYTH ............................................................................................................................................
FRANKLIN ...........................................................................................................................................
GASTON ..............................................................................................................................................
GATES .................................................................................................................................................
GRAHAM .............................................................................................................................................
GRANVILLE .........................................................................................................................................
GREENE ..............................................................................................................................................
GUILFORD ..........................................................................................................................................
HALIFAX ..............................................................................................................................................
HARNETT ............................................................................................................................................
HAYWOOD ..........................................................................................................................................
HENDERSON ......................................................................................................................................
HERTFORD .........................................................................................................................................
HOKE ...................................................................................................................................................
HYDE ...................................................................................................................................................
IREDELL ..............................................................................................................................................
JACKSON ............................................................................................................................................
JOHNSTON .........................................................................................................................................
JONES .................................................................................................................................................
LEE ......................................................................................................................................................
LENOIR ...............................................................................................................................................
LINCOLN .............................................................................................................................................
MCDOWELL ........................................................................................................................................
MACON ...............................................................................................................................................
MADISON ............................................................................................................................................
MARTIN ...............................................................................................................................................
MECKLENBURG .................................................................................................................................
MITCHELL ...........................................................................................................................................
MONTGOMERY ..................................................................................................................................
MOORE ...............................................................................................................................................
NASH ...................................................................................................................................................
NEW HANOVER .................................................................................................................................
NORTHAMPTON .................................................................................................................................
ONSLOW .............................................................................................................................................
ORANGE .............................................................................................................................................
PAMLICO .............................................................................................................................................
PASQUOTANK ....................................................................................................................................
PENDER ..............................................................................................................................................
PERQUIMANS .....................................................................................................................................
PERSON ..............................................................................................................................................
PITT .....................................................................................................................................................
POLK ...................................................................................................................................................
RANDOLPH .........................................................................................................................................
RICHMOND .........................................................................................................................................
ROBESON ...........................................................................................................................................
ROCKINGHAM ....................................................................................................................................
ROWAN ...............................................................................................................................................
RUTHERFORD ....................................................................................................................................
SAMPSON ...........................................................................................................................................
SCOTLAND .........................................................................................................................................
STANLY ...............................................................................................................................................
STOKES ..............................................................................................................................................
SURRY ................................................................................................................................................
SWAIN .................................................................................................................................................
TRANSYLVANIA .................................................................................................................................
TYRRELL .............................................................................................................................................
UNION .................................................................................................................................................
VANCE ................................................................................................................................................
WAKE ..................................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WATAUGA ...........................................................................................................................................
WAYNE ................................................................................................................................................
WILKES ...............................................................................................................................................
WILSON ...............................................................................................................................................
YADKIN ...............................................................................................................................................
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NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
E:\FR\FM\02DEP3.SGM
FIPS code
37057
37059
37061
37063
37065
37067
37069
37071
37073
37075
37077
37079
37081
37083
37085
37087
37089
37091
37093
37095
37097
37099
37101
37103
37105
37107
37109
37111
37113
37115
37117
37119
37121
37123
37125
37127
37129
37131
37133
37135
37137
37139
37141
37143
37145
37147
37149
37151
37153
37155
37157
37159
37161
37163
37165
37167
37169
37171
37173
37175
37177
37179
37181
37183
37185
37187
37189
37191
37193
37195
37197
02DEP3
Class I
differential
adjusted for
location
5.60
5.60
5.80
5.40
5.60
5.40
5.60
5.60
5.60
5.40
5.40
5.80
5.40
5.60
5.80
5.40
5.60
5.60
5.80
5.80
5.60
5.60
5.80
6.00
5.60
5.80
5.60
5.60
5.60
5.40
5.80
5.60
5.40
5.60
5.60
5.60
6.00
5.60
6.00
5.40
6.00
5.60
6.00
5.60
5.40
5.80
5.60
5.60
5.80
5.80
5.40
5.60
5.60
5.80
5.80
5.60
5.40
5.40
5.40
5.60
5.80
5.80
5.40
5.60
5.40
5.80
5.40
5.80
5.40
5.80
5.40
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
YANCEY ..............................................................................................................................................
ADAMS ................................................................................................................................................
BARNES ..............................................................................................................................................
BENSON ..............................................................................................................................................
BILLINGS .............................................................................................................................................
BOTTINEAU ........................................................................................................................................
BOWMAN ............................................................................................................................................
BURKE ................................................................................................................................................
BURLEIGH ..........................................................................................................................................
CASS ...................................................................................................................................................
CAVALIER ...........................................................................................................................................
DICKEY ...............................................................................................................................................
DIVIDE .................................................................................................................................................
DUNN ..................................................................................................................................................
EDDY ...................................................................................................................................................
EMMONS .............................................................................................................................................
FOSTER ..............................................................................................................................................
GOLDEN VALLEY ...............................................................................................................................
GRAND FORKS ..................................................................................................................................
GRANT ................................................................................................................................................
GRIGGS ..............................................................................................................................................
HETTINGER ........................................................................................................................................
KIDDER ...............................................................................................................................................
LA MOURE ..........................................................................................................................................
LOGAN ................................................................................................................................................
MCHENRY ...........................................................................................................................................
MCINTOSH ..........................................................................................................................................
MCKENZIE ..........................................................................................................................................
MCLEAN ..............................................................................................................................................
MERCER .............................................................................................................................................
MORTON .............................................................................................................................................
MOUNTRAIL ........................................................................................................................................
NELSON ..............................................................................................................................................
OLIVER ................................................................................................................................................
PEMBINA .............................................................................................................................................
PIERCE ...............................................................................................................................................
RAMSEY ..............................................................................................................................................
RANSOM .............................................................................................................................................
RENVILLE ...........................................................................................................................................
RICHLAND ..........................................................................................................................................
ROLETTE ............................................................................................................................................
SARGENT ...........................................................................................................................................
SHERIDAN ..........................................................................................................................................
SIOUX ..................................................................................................................................................
SLOPE .................................................................................................................................................
STARK .................................................................................................................................................
STEELE ...............................................................................................................................................
STUTSMAN .........................................................................................................................................
TOWNER .............................................................................................................................................
TRAILL .................................................................................................................................................
WALSH ................................................................................................................................................
WARD ..................................................................................................................................................
WELLS .................................................................................................................................................
WILLIAMS ............................................................................................................................................
ADAMS ................................................................................................................................................
ALLEN .................................................................................................................................................
ASHLAND ............................................................................................................................................
ASHTABULA .......................................................................................................................................
ATHENS ..............................................................................................................................................
AUGLAIZE ...........................................................................................................................................
BELMONT ...........................................................................................................................................
BROWN ...............................................................................................................................................
BUTLER ...............................................................................................................................................
CARROLL ............................................................................................................................................
CHAMPAIGN .......................................................................................................................................
CLARK .................................................................................................................................................
CLERMONT .........................................................................................................................................
CLINTON .............................................................................................................................................
COLUMBIANA .....................................................................................................................................
COSHOCTON .....................................................................................................................................
CRAWFORD ........................................................................................................................................
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ND
ND
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ND
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ND
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ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
ND
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
E:\FR\FM\02DEP3.SGM
FIPS code
37199
38001
38003
38005
38007
38009
38011
38013
38015
38017
38019
38021
38023
38025
38027
38029
38031
38033
38035
38037
38039
38041
38043
38045
38047
38049
38051
38053
38055
38057
38059
38061
38063
38065
38067
38069
38071
38073
38075
38077
38079
38081
38083
38085
38087
38089
38091
38093
38095
38097
38099
38101
38103
38105
39001
39003
39005
39007
39009
39011
39013
39015
39017
39019
39021
39023
39025
39027
39029
39031
39033
02DEP3
95567
Class I
differential
adjusted for
location
5.40
2.40
2.60
2.30
2.40
2.30
2.40
2.30
2.40
2.80
2.30
2.60
2.30
2.40
2.40
2.40
2.40
2.40
2.30
2.40
2.60
2.40
2.40
2.60
2.40
2.30
2.40
2.40
2.40
2.40
2.40
2.30
2.30
2.40
2.30
2.30
2.30
2.60
2.30
2.60
2.30
2.60
2.40
2.40
2.40
2.40
2.60
2.40
2.30
2.60
2.30
2.30
2.40
2.30
4.00
3.30
3.80
3.80
4.00
3.60
3.80
4.00
3.80
3.80
3.60
3.60
4.00
3.80
4.00
3.80
3.60
95568
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
CUYAHOGA ........................................................................................................................................
DARKE ................................................................................................................................................
DEFIANCE ...........................................................................................................................................
DELAWARE .........................................................................................................................................
ERIE ....................................................................................................................................................
FAIRFIELD ..........................................................................................................................................
FAYETTE .............................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
GALLIA ................................................................................................................................................
GEAUGA .............................................................................................................................................
GREENE ..............................................................................................................................................
GUERNSEY .........................................................................................................................................
HAMILTON ..........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARDIN ...............................................................................................................................................
HARRISON ..........................................................................................................................................
HENRY ................................................................................................................................................
HIGHLAND ..........................................................................................................................................
HOCKING ............................................................................................................................................
HOLMES ..............................................................................................................................................
HURON ................................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
KNOX ...................................................................................................................................................
LAKE ....................................................................................................................................................
LAWRENCE ........................................................................................................................................
LICKING ..............................................................................................................................................
LOGAN ................................................................................................................................................
LORAIN ...............................................................................................................................................
LUCAS .................................................................................................................................................
MADISON ............................................................................................................................................
MAHONING .........................................................................................................................................
MARION ..............................................................................................................................................
MEDINA ...............................................................................................................................................
MEIGS .................................................................................................................................................
MERCER .............................................................................................................................................
MIAMI ..................................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MORGAN .............................................................................................................................................
MORROW ............................................................................................................................................
MUSKINGUM ......................................................................................................................................
NOBLE .................................................................................................................................................
OTTAWA .............................................................................................................................................
PAULDING ..........................................................................................................................................
PERRY ................................................................................................................................................
PICKAWAY ..........................................................................................................................................
PIKE .....................................................................................................................................................
PORTAGE ...........................................................................................................................................
PREBLE ...............................................................................................................................................
PUTNAM ..............................................................................................................................................
RICHLAND ..........................................................................................................................................
ROSS ...................................................................................................................................................
SANDUSKY .........................................................................................................................................
SCIOTO ...............................................................................................................................................
SENECA ..............................................................................................................................................
SHELBY ...............................................................................................................................................
STARK .................................................................................................................................................
SUMMIT ...............................................................................................................................................
TRUMBULL .........................................................................................................................................
TUSCARAWAS ...................................................................................................................................
UNION .................................................................................................................................................
VAN WERT ..........................................................................................................................................
VINTON ...............................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WILLIAMS ............................................................................................................................................
WOOD .................................................................................................................................................
WYANDOT ..........................................................................................................................................
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OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
E:\FR\FM\02DEP3.SGM
FIPS code
39035
39037
39039
39041
39043
39045
39047
39049
39051
39053
39055
39057
39059
39061
39063
39065
39067
39069
39071
39073
39075
39077
39079
39081
39083
39085
39087
39089
39091
39093
39095
39097
39099
39101
39103
39105
39107
39109
39111
39113
39115
39117
39119
39121
39123
39125
39127
39129
39131
39133
39135
39137
39139
39141
39143
39145
39147
39149
39151
39153
39155
39157
39159
39161
39163
39165
39167
39169
39171
39173
39175
02DEP3
Class I
differential
adjusted for
location
3.80
3.60
3.30
3.60
3.60
3.80
3.80
3.60
3.30
4.30
3.80
3.60
3.80
3.80
3.60
3.60
3.80
3.30
4.00
4.00
3.80
3.60
4.00
3.80
3.80
3.80
4.30
3.80
3.60
3.80
3.30
3.60
4.00
3.60
3.80
4.30
3.30
3.60
4.00
3.60
3.90
3.60
3.80
3.80
3.60
3.30
3.80
3.80
4.00
3.80
3.60
3.30
3.60
4.00
3.60
4.00
3.60
3.60
3.80
3.80
4.00
3.80
3.60
3.30
4.00
3.80
4.00
3.80
3.30
3.60
3.60
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
ADAIR ..................................................................................................................................................
ALFALFA .............................................................................................................................................
ATOKA .................................................................................................................................................
BEAVER ..............................................................................................................................................
BECKHAM ...........................................................................................................................................
BLAINE ................................................................................................................................................
BRYAN ................................................................................................................................................
CADDO ................................................................................................................................................
CANADIAN ..........................................................................................................................................
CARTER ..............................................................................................................................................
CHEROKEE .........................................................................................................................................
CHOCTAW ..........................................................................................................................................
CIMARRON .........................................................................................................................................
CLEVELAND .......................................................................................................................................
COAL ...................................................................................................................................................
COMANCHE ........................................................................................................................................
COTTON ..............................................................................................................................................
CRAIG .................................................................................................................................................
CREEK ................................................................................................................................................
CUSTER ..............................................................................................................................................
DELAWARE .........................................................................................................................................
DEWEY ................................................................................................................................................
ELLIS ...................................................................................................................................................
GARFIELD ...........................................................................................................................................
GARVIN ...............................................................................................................................................
GRADY ................................................................................................................................................
GRANT ................................................................................................................................................
GREER ................................................................................................................................................
HARMON .............................................................................................................................................
HARPER ..............................................................................................................................................
HASKELL .............................................................................................................................................
HUGHES .............................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOHNSTON .........................................................................................................................................
KAY ......................................................................................................................................................
KINGFISHER .......................................................................................................................................
KIOWA .................................................................................................................................................
LATIMER .............................................................................................................................................
LE FLORE ...........................................................................................................................................
LINCOLN .............................................................................................................................................
LOGAN ................................................................................................................................................
LOVE ...................................................................................................................................................
MCCLAIN .............................................................................................................................................
MCCURTAIN .......................................................................................................................................
MCINTOSH ..........................................................................................................................................
MAJOR ................................................................................................................................................
MARSHALL .........................................................................................................................................
MAYES ................................................................................................................................................
MURRAY .............................................................................................................................................
MUSKOGEE ........................................................................................................................................
NOBLE .................................................................................................................................................
NOWATA .............................................................................................................................................
OKFUSKEE .........................................................................................................................................
OKLAHOMA ........................................................................................................................................
OKMULGEE ........................................................................................................................................
OSAGE ................................................................................................................................................
OTTAWA .............................................................................................................................................
PAWNEE .............................................................................................................................................
PAYNE .................................................................................................................................................
PITTSBURG ........................................................................................................................................
PONTOTOC ........................................................................................................................................
POTTAWATOMIE ................................................................................................................................
PUSHMATAHA ....................................................................................................................................
ROGER MILLS ....................................................................................................................................
ROGERS .............................................................................................................................................
SEMINOLE ..........................................................................................................................................
SEQUOYAH ........................................................................................................................................
STEPHENS .........................................................................................................................................
TEXAS .................................................................................................................................................
TILLMAN ..............................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
40001
40003
40005
40007
40009
40011
40013
40015
40017
40019
40021
40023
40025
40027
40029
40031
40033
40035
40037
40039
40041
40043
40045
40047
40049
40051
40053
40055
40057
40059
40061
40063
40065
40067
40069
40071
40073
40075
40077
40079
40081
40083
40085
40087
40089
40091
40093
40095
40097
40099
40101
40103
40105
40107
40109
40111
40113
40115
40117
40119
40121
40123
40125
40127
40129
40131
40133
40135
40137
40139
40141
02DEP3
95569
Class I
differential
adjusted for
location
3.30
2.60
3.60
2.50
2.60
2.90
3.60
2.90
2.90
3.30
3.30
3.60
2.50
3.30
3.60
2.90
3.30
3.20
3.30
2.60
3.20
2.60
2.60
2.90
3.30
3.30
2.90
2.60
2.60
2.60
3.60
3.30
2.90
3.30
3.60
2.90
2.90
2.90
3.60
3.60
3.30
3.30
3.30
3.30
3.60
3.30
2.60
3.60
3.20
3.30
3.30
3.20
3.20
3.30
3.30
3.30
3.20
3.20
3.20
3.30
3.60
3.30
3.30
3.60
2.60
3.20
3.30
3.30
3.30
2.50
2.90
95570
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
TULSA .................................................................................................................................................
WAGONER ..........................................................................................................................................
WASHINGTON ....................................................................................................................................
WASHITA ............................................................................................................................................
WOODS ...............................................................................................................................................
WOODWARD ......................................................................................................................................
BAKER .................................................................................................................................................
BENTON ..............................................................................................................................................
CLACKAMAS .......................................................................................................................................
CLATSOP ............................................................................................................................................
COLUMBIA ..........................................................................................................................................
COOS ..................................................................................................................................................
CROOK ................................................................................................................................................
CURRY ................................................................................................................................................
DESCHUTES .......................................................................................................................................
DOUGLAS ...........................................................................................................................................
GILLIAM ...............................................................................................................................................
GRANT ................................................................................................................................................
HARNEY ..............................................................................................................................................
HOOD RIVER ......................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOSEPHINE ........................................................................................................................................
KLAMATH ............................................................................................................................................
LAKE ....................................................................................................................................................
LANE ...................................................................................................................................................
LINCOLN .............................................................................................................................................
LINN .....................................................................................................................................................
MALHEUR ...........................................................................................................................................
MARION ..............................................................................................................................................
MORROW ............................................................................................................................................
MULTNOMAH ......................................................................................................................................
POLK ...................................................................................................................................................
SHERMAN ...........................................................................................................................................
TILLAMOOK ........................................................................................................................................
UMATILLA ...........................................................................................................................................
UNION .................................................................................................................................................
WALLOWA ..........................................................................................................................................
WASCO ...............................................................................................................................................
WASHINGTON ....................................................................................................................................
WHEELER ...........................................................................................................................................
YAMHILL .............................................................................................................................................
ADAMS ................................................................................................................................................
ALLEGHENY .......................................................................................................................................
ARMSTRONG .....................................................................................................................................
BEAVER ..............................................................................................................................................
BEDFORD ...........................................................................................................................................
BERKS .................................................................................................................................................
BLAIR ..................................................................................................................................................
BRADFORD .........................................................................................................................................
BUCKS ................................................................................................................................................
BUTLER ...............................................................................................................................................
CAMBRIA ............................................................................................................................................
CAMERON ..........................................................................................................................................
CARBON .............................................................................................................................................
CENTRE ..............................................................................................................................................
CHESTER ............................................................................................................................................
CLARION .............................................................................................................................................
CLEARFIELD .......................................................................................................................................
CLINTON .............................................................................................................................................
COLUMBIA ..........................................................................................................................................
CRAWFORD ........................................................................................................................................
CUMBERLAND ....................................................................................................................................
DAUPHIN .............................................................................................................................................
DELAWARE .........................................................................................................................................
ELK ......................................................................................................................................................
ERIE ....................................................................................................................................................
FAYETTE .............................................................................................................................................
FOREST ..............................................................................................................................................
FRANKLIN ...........................................................................................................................................
FULTON ..............................................................................................................................................
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OR
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OR
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OR
OR
OR
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PA
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E:\FR\FM\02DEP3.SGM
FIPS code
40143
40145
40147
40149
40151
40153
41001
41003
41005
41007
41009
41011
41013
41015
41017
41019
41021
41023
41025
41027
41029
41031
41033
41035
41037
41039
41041
41043
41045
41047
41049
41051
41053
41055
41057
41059
41061
41063
41065
41067
41069
41071
42001
42003
42005
42007
42009
42011
42013
42015
42017
42019
42021
42023
42025
42027
42029
42031
42033
42035
42037
42039
42041
42043
42045
42047
42049
42051
42053
42055
42057
02DEP3
Class I
differential
adjusted for
location
3.30
3.30
3.20
2.60
2.60
2.60
2.20
2.20
2.70
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
1.80
2.20
2.20
2.70
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
2.20
4.30
4.00
4.00
4.00
4.10
4.30
4.00
4.00
4.50
4.00
4.00
4.00
4.30
4.00
4.30
4.00
4.00
4.00
4.10
4.00
4.20
4.20
4.40
4.00
3.90
4.00
4.00
4.20
4.10
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
GREENE ..............................................................................................................................................
HUNTINGDON ....................................................................................................................................
INDIANA ..............................................................................................................................................
JEFFERSON .......................................................................................................................................
JUNIATA ..............................................................................................................................................
LACKAWANNA ....................................................................................................................................
LANCASTER .......................................................................................................................................
LAWRENCE ........................................................................................................................................
LEBANON ............................................................................................................................................
LEHIGH ...............................................................................................................................................
LUZERNE ............................................................................................................................................
LYCOMING ..........................................................................................................................................
MCKEAN .............................................................................................................................................
MERCER .............................................................................................................................................
MIFFLIN ...............................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MONTOUR ..........................................................................................................................................
NORTHAMPTON .................................................................................................................................
NORTHUMBERLAND .........................................................................................................................
PERRY ................................................................................................................................................
PHILADELPHIA ...................................................................................................................................
PIKE .....................................................................................................................................................
POTTER ..............................................................................................................................................
SCHUYLKILL .......................................................................................................................................
SNYDER ..............................................................................................................................................
SOMERSET .........................................................................................................................................
SULLIVAN ...........................................................................................................................................
SUSQUEHANNA .................................................................................................................................
TIOGA ..................................................................................................................................................
UNION .................................................................................................................................................
VENANGO ...........................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WESTMORELAND ..............................................................................................................................
WYOMING ...........................................................................................................................................
YORK ...................................................................................................................................................
BRISTOL .............................................................................................................................................
KENT ...................................................................................................................................................
NEWPORT ..........................................................................................................................................
PROVIDENCE .....................................................................................................................................
WASHINGTON ....................................................................................................................................
ABBEVILLE .........................................................................................................................................
AIKEN ..................................................................................................................................................
ALLENDALE ........................................................................................................................................
ANDERSON ........................................................................................................................................
BAMBERG ...........................................................................................................................................
BARNWELL .........................................................................................................................................
BEAUFORT .........................................................................................................................................
BERKELEY ..........................................................................................................................................
CALHOUN ...........................................................................................................................................
CHARLESTON ....................................................................................................................................
CHEROKEE .........................................................................................................................................
CHESTER ............................................................................................................................................
CHESTERFIELD .................................................................................................................................
CLARENDON ......................................................................................................................................
COLLETON .........................................................................................................................................
DARLINGTON .....................................................................................................................................
DILLON ................................................................................................................................................
DORCHESTER ....................................................................................................................................
EDGEFIELD ........................................................................................................................................
FAIRFIELD ..........................................................................................................................................
FLORENCE .........................................................................................................................................
GEORGETOWN ..................................................................................................................................
GREENVILLE ......................................................................................................................................
GREENWOOD ....................................................................................................................................
HAMPTON ...........................................................................................................................................
HORRY ................................................................................................................................................
JASPER ...............................................................................................................................................
KERSHAW ...........................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
42059
42061
42063
42065
42067
42069
42071
42073
42075
42077
42079
42081
42083
42085
42087
42089
42091
42093
42095
42097
42099
42101
42103
42105
42107
42109
42111
42113
42115
42117
42119
42121
42123
42125
42127
42129
42131
42133
44001
44003
44005
44007
44009
45001
45003
45005
45007
45009
45011
45013
45015
45017
45019
45021
45023
45025
45027
45029
45031
45033
45035
45037
45039
45041
45043
45045
45047
45049
45051
45053
45055
02DEP3
95571
Class I
differential
adjusted for
location
4.00
4.10
4.00
4.00
4.10
4.30
4.30
4.00
4.20
4.30
4.20
4.10
3.90
4.00
4.10
4.40
4.40
4.10
4.40
4.10
4.20
4.60
4.40
3.90
4.20
4.10
4.10
4.10
4.20
4.00
4.10
4.00
3.90
4.00
4.30
4.00
4.20
4.30
5.10
5.10
5.10
5.10
5.10
5.80
6.00
6.00
5.60
6.00
6.00
6.00
6.00
6.00
6.00
5.60
5.80
5.80
6.00
6.00
6.00
6.00
6.00
5.80
5.80
6.00
6.00
5.60
5.80
6.00
6.00
6.00
6.00
95572
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
LANCASTER .......................................................................................................................................
LAURENS ............................................................................................................................................
LEE ......................................................................................................................................................
LEXINGTON ........................................................................................................................................
MCCORMICK ......................................................................................................................................
MARION ..............................................................................................................................................
MARLBORO ........................................................................................................................................
NEWBERRY ........................................................................................................................................
OCONEE .............................................................................................................................................
ORANGEBURG ...................................................................................................................................
PICKENS .............................................................................................................................................
RICHLAND ..........................................................................................................................................
SALUDA ..............................................................................................................................................
SPARTANBURG .................................................................................................................................
SUMTER ..............................................................................................................................................
UNION .................................................................................................................................................
WILLIAMSBURG .................................................................................................................................
YORK ...................................................................................................................................................
AURORA .............................................................................................................................................
BEADLE ...............................................................................................................................................
BENNETT ............................................................................................................................................
BON HOMME ......................................................................................................................................
BROOKINGS .......................................................................................................................................
BROWN ...............................................................................................................................................
BRULE .................................................................................................................................................
BUFFALO ............................................................................................................................................
BUTTE .................................................................................................................................................
CAMPBELL ..........................................................................................................................................
CHARLES MIX ....................................................................................................................................
CLARK .................................................................................................................................................
CLAY ...................................................................................................................................................
CODINGTON .......................................................................................................................................
CORSON .............................................................................................................................................
CUSTER ..............................................................................................................................................
DAVISON .............................................................................................................................................
DAY .....................................................................................................................................................
DEUEL .................................................................................................................................................
DEWEY ................................................................................................................................................
DOUGLAS ...........................................................................................................................................
EDMUNDS ...........................................................................................................................................
FALL RIVER ........................................................................................................................................
FAULK .................................................................................................................................................
GRANT ................................................................................................................................................
GREGORY ..........................................................................................................................................
HAAKON ..............................................................................................................................................
HAMLIN ...............................................................................................................................................
HAND ...................................................................................................................................................
HANSON .............................................................................................................................................
HARDING ............................................................................................................................................
HUGHES .............................................................................................................................................
HUTCHINSON .....................................................................................................................................
HYDE ...................................................................................................................................................
JACKSON ............................................................................................................................................
JERAULD ............................................................................................................................................
JONES .................................................................................................................................................
KINGSBURY ........................................................................................................................................
LAKE ....................................................................................................................................................
LAWRENCE ........................................................................................................................................
LINCOLN .............................................................................................................................................
LYMAN ................................................................................................................................................
MCCOOK .............................................................................................................................................
MCPHERSON .....................................................................................................................................
MARSHALL .........................................................................................................................................
MEADE ................................................................................................................................................
MELLETTE ..........................................................................................................................................
MINER .................................................................................................................................................
MINNEHAHA .......................................................................................................................................
MOODY ...............................................................................................................................................
OGLALA LAKOTA ...............................................................................................................................
PENNINGTON .....................................................................................................................................
PERKINS .............................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
45057
45059
45061
45063
45065
45067
45069
45071
45073
45075
45077
45079
45081
45083
45085
45087
45089
45091
46003
46005
46007
46009
46011
46013
46015
46017
46019
46021
46023
46025
46027
46029
46031
46033
46035
46037
46039
46041
46043
46045
46047
46049
46051
46053
46055
46057
46059
46061
46063
46065
46067
46069
46071
46073
46075
46077
46079
46081
46083
46085
46087
46089
46091
46093
46095
46097
46099
46101
46102
46103
46105
02DEP3
Class I
differential
adjusted for
location
5.80
5.80
6.00
6.00
5.80
6.00
5.80
5.80
5.60
6.00
5.60
6.00
5.80
5.60
6.00
5.80
6.00
5.60
2.60
2.60
2.40
2.60
2.60
2.60
2.50
2.50
2.40
2.50
2.50
2.60
2.60
2.60
2.40
2.40
2.60
2.60
2.60
2.40
2.60
2.50
2.40
2.50
2.60
2.50
2.40
2.60
2.50
2.60
2.40
2.50
2.60
2.50
2.40
2.60
2.40
2.60
2.60
2.40
2.60
2.50
2.60
2.50
2.60
2.40
2.40
2.60
2.60
2.60
2.40
2.40
2.40
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
POTTER ..............................................................................................................................................
ROBERTS ...........................................................................................................................................
SANBORN ...........................................................................................................................................
SHANNON ...........................................................................................................................................
SPINK ..................................................................................................................................................
STANLEY ............................................................................................................................................
SULLY .................................................................................................................................................
TODD ...................................................................................................................................................
TRIPP ..................................................................................................................................................
TURNER ..............................................................................................................................................
UNION .................................................................................................................................................
WALWORTH .......................................................................................................................................
YANKTON ...........................................................................................................................................
ZIEBACH .............................................................................................................................................
ANDERSON ........................................................................................................................................
BEDFORD ...........................................................................................................................................
BENTON ..............................................................................................................................................
BLEDSOE ............................................................................................................................................
BLOUNT ..............................................................................................................................................
BRADLEY ............................................................................................................................................
CAMPBELL ..........................................................................................................................................
CANNON .............................................................................................................................................
CARROLL ............................................................................................................................................
CARTER ..............................................................................................................................................
CHEATHAM .........................................................................................................................................
CHESTER ............................................................................................................................................
CLAIBORNE ........................................................................................................................................
CLAY ...................................................................................................................................................
COCKE ................................................................................................................................................
COFFEE ..............................................................................................................................................
CROCKETT .........................................................................................................................................
CUMBERLAND ....................................................................................................................................
DAVIDSON ..........................................................................................................................................
DECATUR ...........................................................................................................................................
DE KALB .............................................................................................................................................
DICKSON ............................................................................................................................................
DYER ...................................................................................................................................................
FAYETTE .............................................................................................................................................
FENTRESS ..........................................................................................................................................
FRANKLIN ...........................................................................................................................................
GIBSON ...............................................................................................................................................
GILES ..................................................................................................................................................
GRAINGER ..........................................................................................................................................
GREENE ..............................................................................................................................................
GRUNDY .............................................................................................................................................
HAMBLEN ...........................................................................................................................................
HAMILTON ..........................................................................................................................................
HANCOCK ...........................................................................................................................................
HARDEMAN ........................................................................................................................................
HARDIN ...............................................................................................................................................
HAWKINS ............................................................................................................................................
HAYWOOD ..........................................................................................................................................
HENDERSON ......................................................................................................................................
HENRY ................................................................................................................................................
HICKMAN ............................................................................................................................................
HOUSTON ...........................................................................................................................................
HUMPHREYS ......................................................................................................................................
JACKSON ............................................................................................................................................
JEFFERSON .......................................................................................................................................
JOHNSON ...........................................................................................................................................
KNOX ...................................................................................................................................................
LAKE ....................................................................................................................................................
LAUDERDALE .....................................................................................................................................
LAWRENCE ........................................................................................................................................
LEWIS ..................................................................................................................................................
LINCOLN .............................................................................................................................................
LOUDON .............................................................................................................................................
MCMINN ..............................................................................................................................................
MCNAIRY ............................................................................................................................................
MACON ...............................................................................................................................................
MADISON ............................................................................................................................................
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E:\FR\FM\02DEP3.SGM
FIPS code
46107
46109
46111
46113
46115
46117
46119
46121
46123
46125
46127
46129
46135
46137
47001
47003
47005
47007
47009
47011
47013
47015
47017
47019
47021
47023
47025
47027
47029
47031
47033
47035
47037
47039
47041
47043
47045
47047
47049
47051
47053
47055
47057
47059
47061
47063
47065
47067
47069
47071
47073
47075
47077
47079
47081
47083
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47089
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47095
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47101
47103
47105
47107
47109
47111
47113
02DEP3
95573
Class I
differential
adjusted for
location
2.50
2.60
2.60
0.00
2.60
2.40
2.50
2.40
2.50
2.60
2.60
2.50
2.60
2.40
4.90
4.90
4.60
4.90
5.20
5.20
4.90
4.90
4.60
5.20
4.60
4.60
4.90
4.60
5.20
4.90
4.30
4.90
4.60
4.60
4.90
4.60
4.30
4.60
4.60
5.20
4.30
4.90
4.90
5.20
4.90
5.20
5.20
4.90
4.60
4.90
5.20
4.60
4.60
4.30
4.60
4.60
4.60
4.60
5.20
5.20
4.90
4.30
4.30
4.90
4.90
5.20
5.20
5.20
4.90
4.60
4.60
95574
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
MARION ..............................................................................................................................................
MARSHALL .........................................................................................................................................
MAURY ................................................................................................................................................
MEIGS .................................................................................................................................................
MONROE .............................................................................................................................................
MONTGOMERY ..................................................................................................................................
MOORE ...............................................................................................................................................
MORGAN .............................................................................................................................................
OBION .................................................................................................................................................
OVERTON ...........................................................................................................................................
PERRY ................................................................................................................................................
PICKETT ..............................................................................................................................................
POLK ...................................................................................................................................................
PUTNAM ..............................................................................................................................................
RHEA ...................................................................................................................................................
ROANE ................................................................................................................................................
ROBERTSON ......................................................................................................................................
RUTHERFORD ....................................................................................................................................
SCOTT .................................................................................................................................................
SEQUATCHIE .....................................................................................................................................
SEVIER ................................................................................................................................................
SHELBY ...............................................................................................................................................
SMITH ..................................................................................................................................................
STEWART ...........................................................................................................................................
SULLIVAN ...........................................................................................................................................
SUMNER .............................................................................................................................................
TIPTON ................................................................................................................................................
TROUSDALE .......................................................................................................................................
UNICOI ................................................................................................................................................
UNION .................................................................................................................................................
VAN BUREN ........................................................................................................................................
WARREN .............................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEAKLEY ...........................................................................................................................................
WHITE .................................................................................................................................................
WILLIAMSON ......................................................................................................................................
WILSON ...............................................................................................................................................
ANDERSON ........................................................................................................................................
ANDREWS ..........................................................................................................................................
ANGELINA ...........................................................................................................................................
ARANSAS ............................................................................................................................................
ARCHER ..............................................................................................................................................
ARMSTRONG .....................................................................................................................................
ATASCOSA .........................................................................................................................................
AUSTIN ................................................................................................................................................
BAILEY ................................................................................................................................................
BANDERA ...........................................................................................................................................
BASTROP ............................................................................................................................................
BAYLOR ..............................................................................................................................................
BEE ......................................................................................................................................................
BELL ....................................................................................................................................................
BEXAR .................................................................................................................................................
BLANCO ..............................................................................................................................................
BORDEN .............................................................................................................................................
BOSQUE .............................................................................................................................................
BOWIE .................................................................................................................................................
BRAZORIA ..........................................................................................................................................
BRAZOS ..............................................................................................................................................
BREWSTER ........................................................................................................................................
BRISCOE .............................................................................................................................................
BROOKS .............................................................................................................................................
BROWN ...............................................................................................................................................
BURLESON .........................................................................................................................................
BURNET ..............................................................................................................................................
CALDWELL .........................................................................................................................................
CALHOUN ...........................................................................................................................................
CALLAHAN ..........................................................................................................................................
CAMERON ..........................................................................................................................................
CAMP ..................................................................................................................................................
CARSON .............................................................................................................................................
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TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TN
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
E:\FR\FM\02DEP3.SGM
FIPS code
47115
47117
47119
47121
47123
47125
47127
47129
47131
47133
47135
47137
47139
47141
47143
47145
47147
47149
47151
47153
47155
47157
47159
47161
47163
47165
47167
47169
47171
47173
47175
47177
47179
47181
47183
47185
47187
47189
48001
48003
48005
48007
48009
48011
48013
48015
48017
48019
48021
48023
48025
48027
48029
48031
48033
48035
48037
48039
48041
48043
48045
48047
48049
48051
48053
48055
48057
48059
48061
48063
48065
02DEP3
Class I
differential
adjusted for
location
5.20
4.90
4.90
5.20
5.20
4.30
4.90
4.90
4.30
4.60
4.60
4.60
5.40
4.60
4.90
4.90
4.60
4.60
4.90
5.20
5.20
4.60
4.60
4.30
5.20
4.60
4.60
4.60
5.40
4.90
4.90
4.90
5.20
4.90
4.30
4.90
4.60
4.60
4.00
2.90
4.60
4.60
3.30
2.50
4.30
4.30
2.50
4.00
4.30
2.90
4.60
4.00
4.30
4.00
2.90
3.60
4.00
4.80
4.30
3.30
2.50
4.60
3.60
4.30
4.00
4.30
4.60
3.30
4.60
3.70
2.50
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
CASS ...................................................................................................................................................
CASTRO ..............................................................................................................................................
CHAMBERS ........................................................................................................................................
CHEROKEE .........................................................................................................................................
CHILDRESS ........................................................................................................................................
CLAY ...................................................................................................................................................
COCHRAN ...........................................................................................................................................
COKE ...................................................................................................................................................
COLEMAN ...........................................................................................................................................
COLLIN ................................................................................................................................................
COLLINGSWORTH .............................................................................................................................
COLORADO ........................................................................................................................................
COMAL ................................................................................................................................................
COMANCHE ........................................................................................................................................
CONCHO .............................................................................................................................................
COOKE ................................................................................................................................................
CORYELL ............................................................................................................................................
COTTLE ...............................................................................................................................................
CRANE ................................................................................................................................................
CROCKETT .........................................................................................................................................
CROSBY ..............................................................................................................................................
CULBERSON ......................................................................................................................................
DALLAM ..............................................................................................................................................
DALLAS ...............................................................................................................................................
DAWSON .............................................................................................................................................
DEAF SMITH .......................................................................................................................................
DELTA .................................................................................................................................................
DENTON ..............................................................................................................................................
DE WITT ..............................................................................................................................................
DICKENS .............................................................................................................................................
DIMMIT ................................................................................................................................................
DONLEY ..............................................................................................................................................
DUVAL .................................................................................................................................................
EASTLAND ..........................................................................................................................................
ECTOR ................................................................................................................................................
EDWARDS ..........................................................................................................................................
ELLIS ...................................................................................................................................................
EL PASO .............................................................................................................................................
ERATH .................................................................................................................................................
FALLS ..................................................................................................................................................
FANNIN ...............................................................................................................................................
FAYETTE .............................................................................................................................................
FISHER ................................................................................................................................................
FLOYD .................................................................................................................................................
FOARD ................................................................................................................................................
FORT BEND ........................................................................................................................................
FRANKLIN ...........................................................................................................................................
FREESTONE .......................................................................................................................................
FRIO ....................................................................................................................................................
GAINES ...............................................................................................................................................
GALVESTON .......................................................................................................................................
GARZA ................................................................................................................................................
GILLESPIE ..........................................................................................................................................
GLASSCOCK ......................................................................................................................................
GOLIAD ...............................................................................................................................................
GONZALES .........................................................................................................................................
GRAY ...................................................................................................................................................
GRAYSON ...........................................................................................................................................
GREGG ...............................................................................................................................................
GRIMES ...............................................................................................................................................
GUADALUPE .......................................................................................................................................
HALE ...................................................................................................................................................
HALL ....................................................................................................................................................
HAMILTON ..........................................................................................................................................
HANSFORD .........................................................................................................................................
HARDEMAN ........................................................................................................................................
HARDIN ...............................................................................................................................................
HARRIS ...............................................................................................................................................
HARRISON ..........................................................................................................................................
HARTLEY ............................................................................................................................................
HASKELL .............................................................................................................................................
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TX
TX
TX
TX
TX
TX
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TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
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TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
E:\FR\FM\02DEP3.SGM
FIPS code
48067
48069
48071
48073
48075
48077
48079
48081
48083
48085
48087
48089
48091
48093
48095
48097
48099
48101
48103
48105
48107
48109
48111
48113
48115
48117
48119
48121
48123
48125
48127
48129
48131
48133
48135
48137
48139
48141
48143
48145
48147
48149
48151
48153
48155
48157
48159
48161
48163
48165
48167
48169
48171
48173
48175
48177
48179
48181
48183
48185
48187
48189
48191
48193
48195
48197
48199
48201
48203
48205
48207
02DEP3
95575
Class I
differential
adjusted for
location
4.00
2.50
4.80
4.00
2.60
3.30
2.50
3.30
3.60
3.70
2.60
4.30
4.00
3.60
3.60
3.30
4.00
2.60
2.90
3.30
2.60
2.90
2.50
3.70
2.90
2.50
3.70
3.70
4.30
2.60
4.00
2.50
4.60
3.60
2.90
3.60
3.70
2.70
3.60
4.00
3.70
4.30
2.90
2.60
2.90
4.60
3.70
4.00
4.30
2.60
4.80
2.90
4.00
3.30
4.60
4.30
2.50
3.70
4.00
4.60
4.30
2.50
2.50
3.60
2.50
2.90
4.80
4.80
4.00
2.50
2.90
95576
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
HAYS ...................................................................................................................................................
HEMPHILL ...........................................................................................................................................
HENDERSON ......................................................................................................................................
HIDALGO .............................................................................................................................................
HILL .....................................................................................................................................................
HOCKLEY ............................................................................................................................................
HOOD ..................................................................................................................................................
HOPKINS .............................................................................................................................................
HOUSTON ...........................................................................................................................................
HOWARD ............................................................................................................................................
HUDSPETH .........................................................................................................................................
HUNT ...................................................................................................................................................
HUTCHINSON .....................................................................................................................................
IRION ...................................................................................................................................................
JACK ....................................................................................................................................................
JACKSON ............................................................................................................................................
JASPER ...............................................................................................................................................
JEFF DAVIS ........................................................................................................................................
JEFFERSON .......................................................................................................................................
JIM HOGG ...........................................................................................................................................
JIM WELLS ..........................................................................................................................................
JOHNSON ...........................................................................................................................................
JONES .................................................................................................................................................
KARNES ..............................................................................................................................................
KAUFMAN ...........................................................................................................................................
KENDALL ............................................................................................................................................
KENEDY ..............................................................................................................................................
KENT ...................................................................................................................................................
KERR ...................................................................................................................................................
KIMBLE ................................................................................................................................................
KING ....................................................................................................................................................
KINNEY ...............................................................................................................................................
KLEBERG ............................................................................................................................................
KNOX ...................................................................................................................................................
LAMAR ................................................................................................................................................
LAMB ...................................................................................................................................................
LAMPASAS .........................................................................................................................................
LA SALLE ............................................................................................................................................
LAVACA ...............................................................................................................................................
LEE ......................................................................................................................................................
LEON ...................................................................................................................................................
LIBERTY ..............................................................................................................................................
LIMESTONE ........................................................................................................................................
LIPSCOMB ..........................................................................................................................................
LIVE OAK ............................................................................................................................................
LLANO .................................................................................................................................................
LOVING ...............................................................................................................................................
LUBBOCK ............................................................................................................................................
LYNN ...................................................................................................................................................
MCCULLOCH ......................................................................................................................................
MCLENNAN .........................................................................................................................................
MCMULLEN .........................................................................................................................................
MADISON ............................................................................................................................................
MARION ..............................................................................................................................................
MARTIN ...............................................................................................................................................
MASON ................................................................................................................................................
MATAGORDA ......................................................................................................................................
MAVERICK ..........................................................................................................................................
MEDINA ...............................................................................................................................................
MENARD .............................................................................................................................................
MIDLAND .............................................................................................................................................
MILAM .................................................................................................................................................
MILLS ..................................................................................................................................................
MITCHELL ...........................................................................................................................................
MONTAGUE ........................................................................................................................................
MONTGOMERY ..................................................................................................................................
MOORE ...............................................................................................................................................
MORRIS ..............................................................................................................................................
MOTLEY ..............................................................................................................................................
NACOGDOCHES ................................................................................................................................
NAVARRO ...........................................................................................................................................
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TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
E:\FR\FM\02DEP3.SGM
FIPS code
48209
48211
48213
48215
48217
48219
48221
48223
48225
48227
48229
48231
48233
48235
48237
48239
48241
48243
48245
48247
48249
48251
48253
48255
48257
48259
48261
48263
48265
48267
48269
48271
48273
48275
48277
48279
48281
48283
48285
48287
48289
48291
48293
48295
48297
48299
48301
48303
48305
48307
48309
48311
48313
48315
48317
48319
48321
48323
48325
48327
48329
48331
48333
48335
48337
48339
48341
48343
48345
48347
48349
02DEP3
Class I
differential
adjusted for
location
4.00
2.60
3.70
4.60
3.70
2.60
3.70
3.70
4.00
2.90
2.70
3.70
2.50
3.30
3.30
4.60
4.80
2.90
4.80
4.60
4.60
3.70
3.30
4.30
3.70
4.00
4.60
2.90
4.00
3.60
2.90
4.00
4.60
2.90
3.70
2.50
4.00
4.30
4.30
4.30
4.00
4.80
4.00
2.60
4.30
4.00
2.90
2.60
2.90
3.60
4.00
4.30
4.00
4.00
2.90
3.60
4.80
4.00
4.00
3.60
2.90
4.00
3.60
3.30
3.30
4.80
2.50
3.70
2.60
4.00
3.70
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
NEWTON .............................................................................................................................................
NOLAN ................................................................................................................................................
NUECES ..............................................................................................................................................
OCHILTREE ........................................................................................................................................
OLDHAM .............................................................................................................................................
ORANGE .............................................................................................................................................
PALO PINTO .......................................................................................................................................
PANOLA ..............................................................................................................................................
PARKER ..............................................................................................................................................
PARMER .............................................................................................................................................
PECOS ................................................................................................................................................
POLK ...................................................................................................................................................
POTTER ..............................................................................................................................................
PRESIDIO ............................................................................................................................................
RAINS ..................................................................................................................................................
RANDALL ............................................................................................................................................
REAGAN ..............................................................................................................................................
REAL ...................................................................................................................................................
RED RIVER .........................................................................................................................................
REEVES ..............................................................................................................................................
REFUGIO ............................................................................................................................................
ROBERTS ...........................................................................................................................................
ROBERTSON ......................................................................................................................................
ROCKWALL .........................................................................................................................................
RUNNELS ............................................................................................................................................
RUSK ...................................................................................................................................................
SABINE ................................................................................................................................................
SAN AUGUSTINE ...............................................................................................................................
SAN JACINTO .....................................................................................................................................
SAN PATRICIO ...................................................................................................................................
SAN SABA ...........................................................................................................................................
SCHLEICHER ......................................................................................................................................
SCURRY ..............................................................................................................................................
SHACKELFORD ..................................................................................................................................
SHELBY ...............................................................................................................................................
SHERMAN ...........................................................................................................................................
SMITH ..................................................................................................................................................
SOMERVELL .......................................................................................................................................
STARR .................................................................................................................................................
STEPHENS .........................................................................................................................................
STERLING ...........................................................................................................................................
STONEWALL .......................................................................................................................................
SUTTON ..............................................................................................................................................
SWISHER ............................................................................................................................................
TARRANT ............................................................................................................................................
TAYLOR ..............................................................................................................................................
TERRELL .............................................................................................................................................
TERRY .................................................................................................................................................
THROCKMORTON ..............................................................................................................................
TITUS ..................................................................................................................................................
TOM GREEN .......................................................................................................................................
TRAVIS ................................................................................................................................................
TRINITY ...............................................................................................................................................
TYLER .................................................................................................................................................
UPSHUR ..............................................................................................................................................
UPTON ................................................................................................................................................
UVALDE ..............................................................................................................................................
VAL VERDE ........................................................................................................................................
VAN ZANDT ........................................................................................................................................
VICTORIA ............................................................................................................................................
WALKER ..............................................................................................................................................
WALLER ..............................................................................................................................................
WARD ..................................................................................................................................................
WASHINGTON ....................................................................................................................................
WEBB ..................................................................................................................................................
WHARTON ..........................................................................................................................................
WHEELER ...........................................................................................................................................
WICHITA ..............................................................................................................................................
WILBARGER .......................................................................................................................................
WILLACY .............................................................................................................................................
WILLIAMSON ......................................................................................................................................
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TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
E:\FR\FM\02DEP3.SGM
FIPS code
48351
48353
48355
48357
48359
48361
48363
48365
48367
48369
48371
48373
48375
48377
48379
48381
48383
48385
48387
48389
48391
48393
48395
48397
48399
48401
48403
48405
48407
48409
48411
48413
48415
48417
48419
48421
48423
48425
48427
48429
48431
48433
48435
48437
48439
48441
48443
48445
48447
48449
48451
48453
48455
48457
48459
48461
48463
48465
48467
48469
48471
48473
48475
48477
48479
48481
48483
48485
48487
48489
48491
02DEP3
95577
Class I
differential
adjusted for
location
4.80
3.30
4.60
2.50
2.50
4.80
3.30
4.00
3.70
2.50
3.30
4.60
2.50
2.90
3.70
2.50
3.30
4.00
3.70
2.90
4.60
2.50
4.00
3.70
3.30
4.00
4.60
4.60
4.60
4.60
3.60
3.60
2.90
3.30
4.60
2.50
3.70
3.70
4.60
3.30
3.30
2.90
3.60
2.50
3.70
3.30
3.30
2.60
3.30
3.70
3.30
4.00
4.60
4.80
3.70
3.30
4.00
3.60
3.70
4.60
4.60
4.60
2.90
4.30
4.30
4.60
2.60
2.90
2.90
4.60
4.00
95578
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS3
County/parish/city
State
WILSON ...............................................................................................................................................
WINKLER ............................................................................................................................................
WISE ....................................................................................................................................................
WOOD .................................................................................................................................................
YOAKUM .............................................................................................................................................
YOUNG ................................................................................................................................................
ZAPATA ...............................................................................................................................................
ZAVALA ...............................................................................................................................................
BEAVER ..............................................................................................................................................
BOX ELDER ........................................................................................................................................
CACHE ................................................................................................................................................
CARBON .............................................................................................................................................
DAGGETT ...........................................................................................................................................
DAVIS ..................................................................................................................................................
DUCHESNE .........................................................................................................................................
EMERY ................................................................................................................................................
GARFIELD ...........................................................................................................................................
GRAND ................................................................................................................................................
IRON ....................................................................................................................................................
JUAB ....................................................................................................................................................
KANE ...................................................................................................................................................
MILLARD .............................................................................................................................................
MORGAN .............................................................................................................................................
PIUTE ..................................................................................................................................................
RICH ....................................................................................................................................................
SALT LAKE .........................................................................................................................................
SAN JUAN ...........................................................................................................................................
SANPETE ............................................................................................................................................
SEVIER ................................................................................................................................................
SUMMIT ...............................................................................................................................................
TOOELE ..............................................................................................................................................
UINTAH ...............................................................................................................................................
UTAH ...................................................................................................................................................
WASATCH ...........................................................................................................................................
WASHINGTON ....................................................................................................................................
WAYNE ................................................................................................................................................
WEBER ................................................................................................................................................
ADDISON ............................................................................................................................................
BENNINGTON .....................................................................................................................................
CALEDONIA ........................................................................................................................................
CHITTENDEN ......................................................................................................................................
ESSEX .................................................................................................................................................
FRANKLIN ...........................................................................................................................................
GRAND ISLE .......................................................................................................................................
LAMOILLE ...........................................................................................................................................
ORANGE .............................................................................................................................................
ORLEANS ............................................................................................................................................
RUTLAND ............................................................................................................................................
WASHINGTON ....................................................................................................................................
WINDHAM ...........................................................................................................................................
WINDSOR ...........................................................................................................................................
ACCOMACK ........................................................................................................................................
ALBEMARLE .......................................................................................................................................
ALLEGHANY .......................................................................................................................................
AMELIA ................................................................................................................................................
AMHERST ...........................................................................................................................................
APPOMATTOX ....................................................................................................................................
ARLINGTON ........................................................................................................................................
AUGUSTA ...........................................................................................................................................
BATH ...................................................................................................................................................
BEDFORD ...........................................................................................................................................
BLAND .................................................................................................................................................
BOTETOURT .......................................................................................................................................
BRUNSWICK .......................................................................................................................................
BUCHANAN .........................................................................................................................................
BUCKINGHAM ....................................................................................................................................
CAMPBELL ..........................................................................................................................................
CAROLINE ..........................................................................................................................................
CARROLL ...........................................................................................................................
