Fluid Milk Promotion Order; Amendments to the Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1160

[DA-98-04]

Fluid Milk Promotion Order; Amendments to the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

Promotion Order (Order). The amendments, requested by the National

Fluid Milk Processor Promotion Board (Board), which administers the

Order, modify the membership status and term of office of Board

members. This rule also amends order language pertaining to committees

and intellectual property rights (patents, copyrights, inventions, and

publications). The amendments are necessary to maintain Board

membership continuity and should allow the Board to operate in a more

effective and efficient manner.

EFFECTIVE DATE: September 3, 1998.

FOR FURTHER INFORMATION CONTACT: David R. Jamison, Chief, USDA/AMS/

Dairy Programs, Promotion and Research Branch, 1400 Independence

Avenue, SW, Stop 0233, Room 2734 South Building, Washington, DC 20250-

0233, (202) 720-6909, e-mail address David__J[email protected].

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 Order. Most of

the parties subject to the Order are considered small entities.

The Order (7 CFR Part 1160) is authorized under the Fluid Milk

Promotion Act of 1990 (Act) (7 USC 6401-6417). This rule will modify

certain provisions of the Order concerning membership on the Board, the

term of office for Board members, the establishment of working

committees, and joint ownership of intellectual property rights. These

amendments were requested by the Board. The Board believes that the

amendments are necessary to maintain Board membership continuity and

that the changes should allow the Board to operate in a more effective

and efficient manner.

The amendments will allow a fluid milk processor to have two

members on the Board. Currently, the Order provides that a fluid milk

processor can be represented on the Board by not more than one member.

This amendment should help maintain Board continuity and provide a

consistent pool of processor representatives. The amendments also will

allow Board members whose fluid milk processor company affiliation has

changed to serve on the Board for a period of up to 60 days or until a

successor is appointed, whichever is sooner, provided that the

eligibility requirements of the Order are still met. This amendment

should help in the reduction of Board vacancies and foster continuity

in Board activities and membership.

The rule also will allow Board members who fill vacancies with a

term of 18 months or less to serve two consecutive full 3-year terms.

Currently, the Order provides that except for the initial staggered

appointments, Board members could only serve two consecutive terms.

Greater continuity on the Board will result from this amendment.

The rule also will permit the Board to establish working committees

of persons other than Board members; this change will assist the Board

with activities through access to information, knowledge, and expertise

that otherwise might not be available.

Finally, the amendments also will modify the intellectual property

provisions of the Order to specifically provide for and allow joint

ownership of intellectual property, i.e., patents, copyrights,

inventions, and publications, that is developed using joint funds. This

change recognizes that significant project funding may come from

contracting parties other than the Board.

These amendments to Order provisions will not add any burden to

regulated parties because they relate to provisions concerning

membership on the Board, the establishment of working committees, and

joint ownership for patents, copyrights, inventions, and publications.

The amendments will not impose additional reporting or collecting

requirements. No relevant Federal rules have been identified that

duplicate, overlap, or conflict with the rule.

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

Marketing Service has certified that this rule would not have a

significant economic impact on a substantial number of small entities.

[[Page 46638]]

Prior document in this proceeding: Invitation to Submit Comments on

Proposed Amendments to the Order: Issued May 18, 1998; published May

22, 1998 (63 FR 28292).

Executive Order 12866 and the Paperwork Reduction Act

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This final 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 Act authorizes the 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 the 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 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 background information sheets that were

assigned OMB No. 0505-0001.

Statement of Consideration

This final rule amends certain provisions of the Order which relate

to Board membership and term of office, establishment of working

committees, and joint ownership for intellectual property.

The amendments allow a fluid milk processor to have two members on

the Board. Currently, the Order provides that a fluid milk processor

can be represented on the Board by not more than one member. The Board

in its recommendation for rulemaking noted that it is more difficult to

maintain the single member representation; that processors are larger

in size and operate in several geographic areas; and that, to maintain

continuity and provide a consistent pool of processor representatives,

a change in Order provisions is needed to allow more than one

representative on the Board.

The amendments also will allow Board members whose fluid milk

processor company affiliation has changed to serve on the Board for a

period of up to 60 days or until a successor is appointed, whichever is

sooner, provided the eligibility requirements of the Order are still

met. Currently, except in those instances where a Board member changes

fluid milk processor affiliation and is eligible to serve on the Board

in another capacity during the same term, a Board member whose

processor affiliation has changed cannot continue to serve on the

Board.

The amendments also will allow Board members who fill vacancies

with a term of 18 months or less to serve two additional 3-year terms.

Currently, the Order states that, except for the initial staggered

Board appointments of 1-or 2-year terms, Board members may only serve

two consecutive terms. Thus, any time served with the initial term is

considered a complete term.

The amendments also permit the Board to establish working

committees of persons other than Board members to assist the Board with

activities. Currently, committees and subcommittees are selected from

Board members. This change provides information, knowledge, and

expertise that otherwise might not be available.

Finally, the amendments also will modify the section on patents,

copyrights, inventions, and publications by allowing jointly developed

intellectual property to be jointly owned. Currently, the Order does

not specifically provide for such joint ownership.

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. Seven comments were received,

representing five proprietary handlers, one cooperative association,

and the Board. Comments generally favored the proposed changes, though

several comments voiced opposition to allowing two Board members from

one fluid milk processor. Proposed changes and a summary of comments

received on those proposed changes follow:

1. Allow fluid milk processors to have two members on the National

Fluid Milk Processor Promotion Board. Three comments, from The Kroger

Co. (Kroger), Super Store Industries (SSI), and the Board, were in

support of the proposed language. These commenters contend that this

amendment would better able the Board to formulate and initiate

programs and more efficiently perform its duties and obligations,

especially with structural changes that have and are anticipated to

continue in the dairy industry.

Four comments, from Peeler Jersey Farms, Inc. (Peeler), The Stop

and Shop Supermarket Company (Stop and Shop), Tillamook County Creamery

Association, and Sunshine Dairy Foods Inc. (Sunshine), were in

opposition to this proposed change. These commenters stated that

adopting the proposed language (1) would further centralize power and

control of assessments, perhaps skewing actions to favor multiple-

representative processors; and (2) is unnecessary because an adequate

number of fluid milk processors exists, as well as enough interest to

staff a 20-member board on a six-year rotating basis. These commenters

contended that the process could be dominated by fewer processors which

might, in turn, discourage participation, input, and innovation from

small processors.

The Order provides for a 20-member Board with 15 members

representing geographic regions and five at-large members, at least

three of whom are to be fluid milk processors and at least one member

from the general public. To the extent practicable, members

representing geographic regions should represent processing operations

of differing sizes. This continuing provision recognizes the need for

diversity of Board membership, both geographically and size-wise.

As the fluid processing sector has experienced changes and will

continue to undergo consolidation of processors, it is appropriate to

allow fluid processors to have two members on the Board. As the

industry has consolidated to have processors that are larger in size

and that operate in several geographic areas, the Board has experienced

difficulty in maintaining full-Board strength with representation

limited to one per processor. To maintain continuity, help in the

reduction of Board vacancies, and provide a consistent pool of

processor representatives, a change in the Order provisions is

appropriate to allow two Board members from one processor.

The Order directs the Secretary to appoint Board members on the

basis of

[[Page 46639]]

representation discussed above (20 members representing 15 geographic

regions plus five at-large members). Through the appointment process,

the Secretary has and will continue to maintain control over the

Board's composition, including the number of multi-member processors.

2. Allow Board members whose affiliation has changed to serve on

the Board up to 60 days or until successor is approved, whichever is

sooner. Four comments, from Kroger, SSI, Stop and Shop, and Sunshine,

were in support of the proposed language for reasons of Board

continuity and full strength. One comment, from the Board, suggested

extending the 60-day limitation to six months. The Board contended that

the appointment process can take six or more months, and a six-month

limitation on member carry-over would be more realistic than 60 days.

Vacancies of Board members whose terms have not expired may be

filled either by the Secretary appointing qualified members from the

most recent list of nominations for the specific region or by Board

nominations. With these two alternatives, it is feasible that Board

vacancies could be filled in 60 days or less. Extending the time limit

serves little purpose in bringing on new Board members in a timely

fashion, but allowing a two month ``grace period'' should foster better

continuity in Board activities and membership than under current

provisions.

3. Allow Board members who fill vacancies with a term of 18 months

or less to serve two consecutive full 3-year terms. Five comments, from

Kroger, SSI, Stop and Shop, Sunshine, and the Board, were in support of

the proposed language. The comments stated that this change would

contribute to greater continuity and orderly process for the Board.

This amendment is appropriate to implement as it will allow for

greater continuity of membership.

4. Allow Board to establish working committees of persons other

than Board members to assist Board with activities by providing

information, knowledge, and expertise that otherwise might not be

available. Five comments, from Kroger, SSI, Stop and Shop, Sunshine,

and the Board, were in support of the proposed language. Knowledge and

expertise from people other than Board members can be utilized more

effectively with this change in the order provisions.

5. Modify the intellectual property provisions of the Order to

specifically provide for and allow joint ownership of intellectual

property (patents, copyrights, inventories, publications) that is

developed using joint funds. Five comments, from Kroger, SSI, Stop and

Shop, Sunshine, and the Board, were in support of the proposed

language. The comments stated that this provision allows the Board

greater flexibility concerning joint ownership of intellectual

property. By amending this provision, this greater flexibility will be

permitted.

In addition to opposing all proposed changes, Peeler proposed two

additional amendments to the Order. Neither proposal is relevant to the

other amendments being implemented in this action, and no opportunity

has been provided for interested parties to comment on the two Peeler

proposals. Therefore, the proposals are not addressed here.

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 provide the Board flexibility to more effectively

administer the Order with respect to membership status and term of

office of Board members and to clarify Order provisions with respect to

working committees and joint ownership of intellectual property. These

proposed amendments should be effective before the Secretary of the

United States Department of Agriculture makes appointments to fill

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

possible. Thus, the rule will allow the Board to fill seats in a timely

manner.

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. 1160.200, paragraph (a) is revised to read as follows:

Sec. 1160.200 Establishment and membership.

(a) There is hereby established a National Fluid Milk Processor

Promotion Board of 20 members, 15 of whom shall represent geographic

regions and five of whom shall be at-large members of the Board. To the

extent practicable, members representing geographic regions shall

represent fluid milk processing operations of differing sizes. No fluid

milk processor shall be represented on the Board by more than two

members. The at-large members shall include at least three fluid milk

processors and at least one member from the general public. Except for

the member or members from the general public, nominees appointed to

the Board must be active owners or employees of a fluid milk processor.

The failure of such a member to own or work for a fluid milk processor

or its successor fluid milk processor shall disqualify that member for

membership on the Board except that such member shall continue to serve

on the Board for a period of up to 60 days following the

disqualification or until the appointment of a successor Board member

to such position, whichever is sooner, provided that such person

continues to meet the criteria for serving on the Board as a processor

representative.

* * * * *

3. 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. Should a non-board member be appointed to fill a

vacancy on the Board with a term of 18 months or less remaining, the

appointee shall be entitled to serve two consecutive 3-year terms

following the term of the vacant position to which the person was

appointed.

4. In Sec. 1160.208, paragraph (g) is revised to read as follows:

Sec. 1160.208 Powers of the Board.

* * * * *

(g) To select committees and subcommittees, to adopt bylaws, and to

adopt such rules for the conduct of its business as it may deem

advisable; the Board may establish working committees of persons other

than Board members;

* * * * *

5. In Sec. 1160.505, the text is designated paragraph (a) and a new

paragraph (b) is added to read as follows:

Sec. 1160.505 Patents, copyrights, inventions and publications.

* * * * *

[[Page 46640]]

(b) Should patents, copyrights, inventions, and publications be

developed through the use of funds collected by the Board under this

subpart, and funds contributed by another organization or person,

ownership and related rights to such patents, copyrights, inventions,

and publications shall be determined by the agreement between the Board

and the party contributing funds towards the development of such

patent, copyright, invention, and publication in a manner consistent

with paragraph (a) of this section.

Dated: August 26, 1998.

Michael V. Dunn,

Assistant Secretary, Marketing & Regulatory Programs.

[FR Doc. 98-23517 Filed 9-1-98; 8:45 am]

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