Fluid Milk Promotion Order; Amendments to the Order

SUMMARY: This final rule amends certain provisions of the Fluid Milk

Promotion Order. The amendments, requested by the National Fluid Milk

Processor Promotion Board, which administers the Order, modify the term

limits and membership status of Board members. This rule also amends

certain order language in conformance with the 1996 Federal Agriculture

Improvement and Reform Act. In conformance with the President's

Regulatory Reform Initiative, this rule revises or removes order

language that has become obsolete.

EFFECTIVE DATE: January 29, 1997.

FOR FURTHER INFORMATION CONTACT: Eugene Krueger, Head, Promotion and

Research Staff, USDA/AMS/Dairy Division, Room 2734, South Building,

P.O. Box 96456, Washington, DC 20090-6456, (202) 720-6909.

SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act (5 U.S.C.

601-612) requires the Agency to examine the impact of a proposed rule

on small entities. Small businesses in the fluid milk processing

industry have been defined by the Small Business Administration as

those employing less than 500 employees. There are approximately 250

fluid milk processors subject to the provisions of the Fluid Milk

Promotion Order. Most of the parties subject to the Order are

considered small entities.

This rule will modify the term of office and membership provisions

of the Fluid Milk Promotion Order. The amendments will allow a National

Fluid Milk Processor Promotion Board member who changes fluid milk

processor affiliations during his or her term to be eligible to serve

on the Board in another capacity during that same term. The amendments

will also modify the term of Board members to allow any member

appointed during the initial period to serve a term of one or two years

to be eligible for reappointment for two additional three-year terms.

The amendments also provide that a Board member's appointment to

another seat or position on the Board will be considered a consecutive

term. The amendments should clarify the Order with respect to

membership status and term limits of Board members.

This rule will also amend order language in conformance with the

1996 Federal Agriculture Improvement and Reform Act. The definition of

research will be changed to conform with the definition in the Act and

the Order will be revised to reflect changes in the 1996 Act concerning

the required volume of milk that must be represented by those fluid

milk processors who may request a referendum to suspend or terminate

the Order and who favor the referendum question to suspend or terminate

the Order. The rule will also revise the Order to specify the duties of

the referendum agent regarding a referendum to adjust the rate of

assessment. Further, the rule will revise or remove obsolete or

unnecessary order language in conformance with the President's

Regulatory Reform Initiative.

Accordingly, pursuant to 5 U.S.C. 605(b), the Agricultural

Marketing Service has certified that this rule will not have a

significant economic impact on a substantial number of small entities.

Prior document in this proceeding: Invitation to Submit Comments to

Proposed Amendments to the Order: Issued August 30, 1996; published

September 6, 1996 (61 FR 47093).

The Department is issuing this rule in conformance with Executive

Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to have a retroactive effect.

This rule will not preempt any State or local laws, regulations, or

policies unless they present an irreconcilable conflict with this rule.

The Fluid Milk Promotion Act of 1990, as amended, authorizes the

Fluid Milk Promotion Order. The Act provides that administrative

proceedings must be exhausted before parties may file suit in court.

Under section 1999K of the Act, any person subject to a Fluid Milk

Promotion Order may file with the Secretary a petition stating that the

Order, any provision of the Order, or any obligation imposed in

connection with the Order is not in accordance with the law and request

a modification of the Order or to be exempted from the Order. A person

subject to an order is afforded the opportunity for a hearing on the

petition. After a hearing, the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the person is an inhabitant, or has his principal

place of business, has jurisdiction to review the Secretary's ruling on

the petition, provided a complaint is filed not later than 20 days

after the date of the entry of the ruling.

In accordance with the Paperwork Reduction Act (44 U.S.C. Chapter

35), the forms and reporting and recordkeeping requirements that are

included in the Fluid Milk Promotion Order have been approved

previously by the Office of Management and Budget (OMB) and were

assigned OMB No. 0581-0093, except for Board members' nominee

information sheets that were assigned OMB No. 0505-0001.

Statement of Consideration

This final rule amends certain provisions of the Fluid Milk

Promotion Order. Certain amendments will modify the term limits and the

membership status provisions of the Order. The amendments allow a

National Fluid Milk Processor Promotion Board member who changes fluid

milk processor affiliations during his or her term to be eligible to

serve on the Board in another capacity during that same term. Under

current order provisions, a Board member who changes fluid milk

processor affiliations during his or her term is ineligible to serve on

the Board in any capacity.

The amendments will also modify the term of Board members to allow

any member appointed during the initial period to serve a term of one

or two years to be eligible for reappointment

[[Page 3982]]

for two additional three-year terms. The amendments also provide that a

Board member's appointment to another seat or position on the Board

will be considered a consecutive term. Currently, the Order states that

Board members shall serve no more than two consecutive terms.

Therefore, a Board member appointed to serve an initial term of one or

two years is eligible to be reappointed to serve only one additional

three-year term. Under these order provisions, some Board members will

serve an initial term of less than three years because of the

staggering of terms. The Board contends that the amendments will

clarify the Order with respect to membership status and term limits of

its members.

This document also amends the Fluid Milk Promotion Order to conform

with legislated changes made by the recently enacted 1996 Federal

Agriculture Improvement and Reform Act (P.L. 104-127). Section 146 of

the Act amends sections 1999C(6), 1999N(b)(2), 1999O(c), and 1999O(a)

of the Fluid Milk Promotion Act of 1990, as amended, thereby

necessitating changes to the Fluid Milk Promotion Order. The following

sections of the Order are amended on this basis:

1. In Sec. 1160.112, Research is redefined in conformance with the

Act.

2. In Sec. 1160.501, paragraphs (a) and (b)(2) are amended in

conformance with the Act in order to specify the volume of milk that

must be represented by those fluid milk processors who may request a

referendum to suspend or terminate the Order and to specify the

required volume of milk, necessary for suspension or termination, that

must be represented by those fluid milk processors voting in the

referendum.

3. In Sec. 1160.604, paragraph (a) is amended to identify order

language applicable only to the duties of the referendum agent

concerning a referendum to adjust the rate of assessment.

4. Section 1160.605 is amended in conformance with the Act in order

to specify the volume of milk that must be represented by those fluid

milk processors who may request a referendum to suspend or terminate

the Order.

The President's Regulatory Reform Initiative, among other things,

directs agencies to remove obsolete and unnecessary language and to

find less burdensome ways to achieve regulatory goals. Changes are in

conformance with the initiative. These amendments to the Order and

regulations will revise or remove order language that was needed to

implement the order but is no longer needed. This language is obsolete

and unnecessary because it relates to the initial fiscal period and the

previously conducted initial continuation referendum. Provisions of the

following sections of the Order are amended on this basis:

1. Sec. 1160.108 Fluid milk processor.

2. Sec. 1160.113 Fiscal period.

3. Sec. 1160.116 Initial referendum.

4. Sec. 1160.209 Duties of the Board.

5. Sec. 1160.211 Assessments.

6. Sec. 1160.501 Continuation referenda.

7. Sec. 1160.605 Date of the referendum.

Notice of proposed rulemaking was given to interested parties and

they were afforded an opportunity to file written data, views, or

arguments concerning this proposed rule. One comment supporting, one

opposing, and one of modified support to the proposed amendments were

received. However, the notice of proposed rulemaking contained proposed

amendments to section 605 (i.e., date of the referendum) of the Order

that were not in conformance with the legislative changes of the 1996

Federal Agriculture Improvement and Reform Act.

The notice proposed to amend section 605 to specify the volume of

milk that must be represented by those fluid milk processors who may

request a referendum to suspend or terminate the Order, or adjust the

assessment rate. However, the statutory changes concern suspending or

terminating the Order and do not involve changing language regarding

adjusting the rate of assessment. Therefore, the proposed language in

section 605 is revised in this final rule in conformance with the Act

to specify the volume of milk that must be represented by those fluid

milk processors who may request a referendum to suspend or terminate

the Order. The current order language in this section which pertains to

adjusting the rate of assessment is unchanged. Further, a conforming

change is made to section 604(a) (i.e., duties of the referendum agent)

to identify the order language applicable only for a referendum to

adjust the rate of assessment.

The National Fluid Milk Processor Promotion Board submitted

comments reiterating its support for the amendments to modify order

provisions regarding term limits and membership status of Board

members. The Board also expressed support for the other amendments to

amend the Order in conformance with the Act, and to revise or remove

obsolete language. The Board urged the immediate implementation of the

amendments because it relies on several provisions that the amendments

will clarify.

Homestead Dairies, Inc. (Homestead), filed comments in opposition

to proposed term limits for Board members. Homestead recommended that

the Order be amended to allow Board members to hold seats for no more

than three consecutive years, as opposed to the Board's proposal which

would allow a Board member to serve an initial term of one or two years

and two additional three-year terms. Homestead stated that its

recommendation would provide other processors an opportunity to serve

on the Board on a more regular basis.

Homestead's proposed amendment, which would modify the term limits

of Board members, should not be adopted. The amended order will provide

the Board more continuity because members will be eligible to serve at

least two full three-year terms as opposed to three consecutive one-

year terms. Additionally, the Order will still provide other processors

an opportunity to be appointed to serve on the Board on a regular

basis.

Peeler Jersey Farms, Inc. (Peeler), a regional proprietary

processor, filed a comment letter in support of term limits for Board

members but suggested modifications. Peeler recommended that Board

members should be required to remain off of the Board for a period of

time before being eligible for re-election. Peeler also suggested that

restrictions regarding fluid milk processor affiliation should be

placed on Board members to allow proprietary processors representation.

The recommendations by Peeler regarding modifying the term of

office provisions and membership status provisions should not be

adopted. The Order provides that the National Fluid Milk Processor

Promotion Board shall consist of 15 members representing geographic

regions and five at-large members. The Order states that to the extent

possible members representing geographical regions shall represent

fluid milk processing operations of differing sizes and that no fluid

milk processors shall be represented by more than one member.

The Order does not provide that Board members remain off the Board

a specified time period before being eligible to be reappointed to

serve in the same capacity. However, the Order provides that the

Secretary shall announce 180 days prior to the expiration date of Board

member' terms that such terms are expiring and solicit nominations for

such positions from individual fluid milk processors and other

interested parties, including eligible organizations. Therefore, all

fluid milk processors are provided

[[Page 3983]]

adequate notice of available seats on the Board and are eligible to be

nominated for such positions. Moreover, as stated above, the amendments

regarding term limits will provide the Board continuity between terms

to more effectively administer the Order.

Homestead and Peeler proposed other changes to the Order. However,

the proposed changes are not relevant to this proceeding and will be

addressed through another process.

It is appropriate to make this final rule effective one day after

the date of publication in the Federal Register. Issuance of this rule

is necessary to clarify order provisions with respect to term limits

and membership status of Board members, and provide the Board

flexibility to more effectively administer the order. These proposed

amendments must be effective before nominations can be submitted to the

Secretary of the United States Department of Agriculture to fill vacant

positions on the Board. These positions should be filled as soon as

possible. The rule also amends certain order provisions in conformance

with the 1996 Federal Agriculture Improvement and Reform Act, and

revises or removes order language that has become obsolete in

conformance with the President's Regulatory Reform Initiative. Thus,

the rule will allow the Board to fill vacant seats in a timely manner

and ensure that the order will function properly.

Therefore, good cause exists for making this rule effective less

than 30 days from the date of publication in the Federal Register. The

proposed amendments to the order are made final in this action.

List of Subjects in 7 CFR Part 1160

Fluid milk products, Milk, Promotion.

For the reasons set forth in the preamble, 7 CFR Part 1160 is

amended as follows:

PART 1160--FLUID MILK PROMOTION PROGRAM

1. The authority citation for 7 CFR part 1160 continues to read as

follows:

Authority: 7 U.S.C. 6401-6417.

2. In Sec. 1160.108, paragraph (a) is revised to read as follows:

Sec. 1160.108 Fluid milk processor.

(a) Fluid milk processor means any person who processes and markets

commercially fluid milk products in consumer-type packages in the

United States, except that the term fluid milk processor shall not

include in each of the respective fiscal periods those persons who

process and market not more than 500,000 pounds of such fluid milk

products during the representative month, which shall be the first

month of the fiscal period; Provided, however, that for the fiscal

period following the initial fiscal period, the representative month

shall be September 1995.

* * * * *

3. Section 1160.112 is revised to read as follows:

Sec. 1160.112 Research.

Research means market research to support advertising and promotion

efforts, including educational activities, research directed to product

characteristics, and product development, including new products or

improved technology in production, manufacturing or processing of milk

and the products of milk.

4. Section 1160.113 is revised to read as follows:

Sec. 1160.113 Fiscal period.

Fiscal period means the initial period of up to 30 months that this

subpart is effective. Thereafter, the fiscal period shall be such

annual period as the Board may determine, except that the Board may

provide for a lesser or greater period as it may find appropriate for

the period immediately after the initial fiscal period to assure

continuity of fiscal periods until the beginning of the first annual

fiscal period.

Sec. 1160.116 [Removed and Reserved]

5. Section 1160.116 is removed and reserved.

Sec. 1160.200 [Amended]

6. In Sec. 1160.200, the last sentence of paragraph (a) is amended

by adding the words ``in the position previously held by such member''

after the words ``membership on the Board'.

7. In Sec. 1160.201, paragraph (b) is revised to read as follows:

Sec. 1160.201 Term of office.

* * * * *

(b) No member shall serve more than two consecutive terms, except

that any member who is appointed to serve for an initial term of one or

two years shall be eligible to be reappointed for two three-year terms.

Appointment to another position on the Board is considered a

consecutive term.

Sec. 1160.209 Duties of the Board.

8. In Sec. 1160.209, paragraph (b) is revised to read as follows:

* * * * *

(b) To prepare and submit to the Secretary for approval a budget

for each fiscal period of the anticipated expenses and disbursements in

the administration of this subpart, including a description of and the

probable costs of consumer education, promotion and research projects;

* * * * *

9. In Sec. 1160.211, paragraphs (a)(1) and (a)(2) are revised to

read as follows:

Sec. 1160.211 Assessments.

(a) (1) Each fluid milk processor shall pay to the Board or its

designated agent an assessment of $.20 per hundredweight of fluid milk

products processed and marketed commercially in consumer-type packages

in the United States by such fluid milk processor. Producer-handlers

required to pay assessments under section 113(g) of the Dairy

Production Stabilization Act of 1983 (7 U.S.C. 4504(g)), and not exempt

under Sec. 1160.108, shall also pay the assessment under this subpart.

No assessments are required on fluid milk products exported from the

United States. The Secretary shall have the authority to receive

assessments on behalf of the Board.

(2) The Secretary shall announce the establishment of the

assessment each month in the Class I price announcement in each milk

marketing area by adding it to the Class I price for the following

month. In the event the assessment is suspended for a given month, the

Secretary shall inform all fluid milk processors of the suspension in

the Class I price announcement for that month. The Secretary shall also

inform fluid milk processors marketing fluid milk in areas not subject

to milk marketing orders administered by the Secretary of the

establishment or suspension of the assessment.

* * * * *

10. Section 1160.501 is amended by removing paragraph (a),

redesignating paragraphs (b) through (d) as paragraphs (a) through (c),

removing the cross reference ``1160.501(c)'' in newly designated

paragraph (c) and adding in its place ``1160.501(b)'', and revising

newly designated paragraphs (a) and (b)(2) to read as follows:

Sec. 1160.501 Continuation referenda.

(a) The Secretary at any time may conduct a referendum among those

persons who the Secretary determines were fluid milk processors during

a representative period, as determined by the Secretary, on whether to

suspend or terminate the order. The Secretary shall hold such a

referendum at the request of the Board or of any group of such

processors that marketed during a representative period, as determined

by the Secretary, 10 percent or more of the volume of fluid milk

products marketed in the United States by fluid milk

[[Page 3984]]

processors voting in the preceding referendum.

(b) * * *

(1) * * *

(2) By fluid milk processors voting in the referendum that marketed

during a representative period, as determined by the Secretary, 40

percent or more of the volume of fluid milk products marketed in the

United States by fluid milk processors voting in the referendum.

11. In Sec. 1160.604, paragraph (a) is amended by adding the phrase

``For the purpose of adjusting the rate of assessment,'' at the

beginning to the sentence.

12. Section 1160.605 is revised to read as follows:

Sec. 1160.605 Scheduling of referendum.

A referendum shall be held:

(a) Whenever prescribed by the order;

(b) For the purpose of adjusting the rate of assessment:

(1) At the direction of the Secretary; or

(2) Upon request of the Board or upon request of any group of fluid

milk processors that marketed during a representative period, as

determined by the Secretary, 10 percent or more of the volume of fluid

milk products marketed by all processors of fluid milk in the United

States during that period; or

(c) For the purpose of suspending or terminating the order:

(1) At the direction of the Secretary; or

(2) Upon request of the Board or upon request of any group of fluid

milk processors that marketed during a representative period, as

determined by the Secretary, 10 percent or more of the volume of fluid

milk products marketed by fluid milk processors voting in the preceding

referendum.

Dated: January 21, 1997.

Michael V. Dunn,

Assistant Secretary, Marketing and Regulatory Programs.

[FR Doc. 97-2042 Filed 1-27-97; 8:45 am]

BILLING CODE 3410-02-P