[Federal Register: December 4, 2008 (Volume 73, Number 234)]
[Rules and Regulations]
[Page 73764-73768]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de08-2]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1430
RIN 0560-AH83
Milk Income Loss Contract Program and Price Support Program for
Milk
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Final rule.
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SUMMARY: This rule amends the regulations for the Milk Income Loss
Contract (MILC) Program, as authorized by the Food, Conservation, and
Energy Act of 2008 (the 2008 Farm Bill), to extend the program from
October 1, 2007, through September 30, 2012. This rule also increases
the percentage rate for the payment calculation after fiscal year (FY)
2008 and increases the payment quantity limitation of eligible pounds
of milk per operation beginning in FY 2009. This rule also provides for
an adjustment to the MILC payment rate if feed costs increase above a
specified level. This rule is needed to extend the MILC program, which
is designed to stabilize and generally enhance milk producer revenue,
through FY 2012 and to make changes to that program authorized by the
2008 Farm Bill. This rule also adjusts the milk price support program
regulations to specify that support purchases will only be made from
manufacturers and not from third parties such as brokers.
DATES: Effective Date: December 1, 2008.
FOR FURTHER INFORMATION CONTACT: Danielle Cooke, Special Programs
Manager, Price Support Division, FSA, USDA, STOP 0512, 1400
Independence Ave., SW., Washington, DC 20250-0512; telephone: (202)
720-1919; fax: (202) 690-1536; e-mail: Danielle.Cooke@wdc.usda.gov.
Persons with disabilities who require alternative means for
communication (Braille, large print, audio tape, etc.) should contact
the USDA Target Center at (202) 720-2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Background
This final rule implements changes in the MILC program enacted in
section 1506 in Title I of the 2008 Farm Bill (Pub. L. 110-246, 7
U.S.C. 8773). It, in effect, permits new contracts to extend the old
MILC program first provided for in Section 1502 of the Food Security
and Rural Investment Act of 2002 (Pub. L. 107-171, 7 U.S.C. 7982). That
program, as amended by subsequent enactments, ended its coverage with
milk marketed in September of 2007. The 2008 Farm Bill permits coverage
starting with October 2007 marketings carrying through September 2012
marketings. The ``old'' program, regulations were codified in 7 CFR
part 1430. This rule, to provide for the ``new'' program, modifies 7
CFR part 1430 to:
Cover marketings during the new period and make changes to
the payment rate formula used to calculate payments;
Change the production limits for payments during specific
periods;
Add applicability of Adjusted Gross Income (AGI)
provisions to eligibility requirements; and
Add provisions to adjust the payment rate if feed costs
exceed a specified level.
With certain per year per operation eligibility pound limits, the
MILC program provides payments to dairy operations when milk prices
fall below a set benchmark. What constitutes an ``operation'' for
purposes of the ``new'' program, including poundage limits, will be
determined as before. All prior participants in the ``old'' program
must sign new contracts. New participants (those not in the ``old''
program) cannot be affiliated with prior participants. Also, the rule,
as required by the 2008 Farm Bill, beginning in FY 2009, sets new
eligibility limits tied to the AGI of persons or entities seeking
payment. Payees for the relevant year cannot have nonfarm income in
excess of $500,000. AGI rules will cover multi-program regulations to
be issued separately.
As indicated, there is a per-operation per year pound limit to the
MILC payment eligibility of operations. For FY 2009 (October 1, 2008,
through September 30, 2009), FY 2010 (October 1, 2009, through
September 30, 2010), FY 2011 (October 1, 2010, through September 30,
2011), and FY 2012 (October 1, 2011, through September 30, 2012), the
limit for each fiscal year is 2.985 million pounds. Further, no
payments will be made for September 2012 marketings, as specified in
the 2008 Farm Bill, if the operation's cumulative total for FY 2012 is
over 2.4 million pounds and if the operation is under that amount the
payable marketings for September will be limited to those that will not
bring the total over 2.4 million pounds. Payments are computed,
however, on a monthly basis. They are made only when the official
Federal class I milk marketing order milk price per cwt. for Boston,
Massachusetts is less than $16.94. When the Boston price is under the
target, the payment for eligible production will be, for FYs 2009
through 2012, 45 percent of the difference. Otherwise, for September
2012 marketings the percentage will be 34 percent. The pay rate can be
raised, by command of the 2008 Farm Bill; however, if the National
Average Feed Dairy Feed Ration Cost as officially computed exceeds
$7.35 per cwt. ($9.50 per cwt. for September 2012 marketings). If the
triggering feed ration amount is exceeded, the benchmark $16.94 figure
for the MILC payment rate calculation will be increased by the
percentage amount which is 45 percent of the percentage amount by which
the Feed Ration Cost exceeded its own benchmark ($7.35 or $9.50,
depending on the month involved). Feed Ration Cost is calculated using
the same procedures used to calculate the feed components of the
estimated price of 16 percent Mixed Dairy Feed per pound as reported in
the USDA Agricultural Prices publication. Entire month prices used to
calculate feed price ratios for each month will be used. As to the
calculation, if for example, the May 2009 Feed Ration Cost exceed by 14
percent the $7.35 per cwt. benchmark, then the MILC payment benchmark
for May 2009 marketings would be increased by 6.3 percent (45% of 14%)
[[Page 73765]]
and upped by $1.07 to $18.01 for May 2009 marketings only.
For purposes of applying the yearly pay limits on pounds per
operation, the rule will continue to use a start month concept for each
year. The operation must, with limitations set out in the rules, pick a
start month for each fiscal year. Once the start month is picked, any
marketing in the month and subsequent months of the fiscal year that
generate a payment will count against the operation's fiscal year
limit. (The special rule for September 2012 has been noted and will not
be repeated here.) Generally under the rule, once signup is opened
after October 1, 2008, an operation can pick any start month for FY
2008. However, this point is moot because no payments were generated
from that fiscal year. Provisions regarding FY 2008 are included in the
rule for the sake of completeness. Likewise, under the rule, if the
operation signs its new MILC contract within 30 days of the beginning
of the application period for this new FY 2008 though 2012 program it
can pick any preceding FY 2009 month as its start month for that
period. Also, whenever the operation submits its FY 2008 through 2012
contract, it can pick the month of the submission as the start month
for the current fiscal year. Otherwise, for the fiscal year in which
the contract is submitted, or for later fiscal years if the operation
wants a different start month for a subsequent fiscal year, the rule
will be that the month chosen or the start month must be chosen by the
14th of the month preceding the month chosen. Once a month is chosen
for a fiscal year, the corresponding month will be the start month for
subsequent fiscal years unless affirmatively changed by the operation.
No payment will be made for any fiscal year that has ended before the
FY 2008 through 2012 program contract is submitted.
Producers to be paid must:
(1) Sign the contract,
(2) Provide verifiable data,
(3) Be actively engaged in milk production for the relevant period,
(4) Meet the AGI test for payment, and
(5) Pick the start month for each fiscal year (as indicated, the
original start month will be the same for subsequent fiscal years
unless changed by the operation).
Dairy operations can apply at FSA county offices, via fax, or at
http://www.fsa.usda.gov/dafp/psd/.
This final rule includes changes in the dates marketed production
must be submitted. Editorial changes to the previous regulations are
made as well. While the statute in some places suggests that the
program may carry beyond FY 2012, the statute and these regulations
limit the covered marketings to those made no later than September,
2012. Also, as before in the program contract, the regulations specify
that the payment rules are subject to change, even after the contract
is signed, to reflect statutory changes. Also, as indicated, payments
are subject to the AGI limits being implemented through a separate
rulemaking.
Dairy Product Price Support Program
This rule amends Sec. 1430.2, ``Price Support Levels and Purchase
Conditions,'' to ensure that the Dairy Product Price Support Program
supports dairy producers by ensuring that manufacturers have sufficient
incentive to pay the support rate to producers. CCC will only purchase
dairy products from the manufacturer of the product. CCC will no longer
purchase eligible dairy products from nonmanufacturers, as the program
is not intended to provide a speculative market for third parties.
Notice and Comment
These regulations are exempt from the notice and comment
requirements of the Administrative Procedure Act (5 U.S.C. 553), as
specified in section 1601(c) of the 2008 Farm Bill, which requires that
the regulations be promulgated and administered without regard to those
provisions, the Statement of Policy of the Secretary of Agriculture
effective July 24, 1971 (36 FR 13804) relating to notices of proposed
rulemaking and public participation in rulemaking. Therefore, these
regulations are issued as final.
Executive Order 12866
The Office of Management and Budget (OMB) designated this final
rule as significant under Executive Order 12866 and, therefore, OMB
reviewed this rule. A cost benefit assessment of this rule is
summarized below and is available from the contact information listed
above.
Summary of Economic Impacts
The MILC program has paid about $2.5 billion to dairy operations
over the five initial years of operation. Annual expenditures during
the last two years of the program have totaled over $350 million in FY
2006 and $160 million in FY 2007. Expenditures during the period
authorized by the 2008 Farm Bill, are expected to be between $300 and
$400 million based on estimated milk prices during the period. Dairy
farm direct payments and Government expenditures will increase
commensurately. MILC program impact on milk prices will reduce benefits
to dairy farmers, which will result in consumers being able to buy
dairy products at lower prices than if the program was not operating.
Regulatory Flexibility Act
The Regulatory Flexibility Act is not applicable to this rule
because CCC is not required to publish a notice of proposed rulemaking
for this rule.
Environmental Review
The environmental impacts of this rule were considered in a manner
consistent with the provisions of the National Environmental Policy Act
(NEPA), 42 U.S.C. 4321-4347, the regulations of the Council on
Environmental Quality (40 CFR parts 1500-1508), and FSA regulations for
compliance with NEPA (7 CFR part 799). The substantive changes to the
MILC program, required by the 2008 Farm Bill that are identified in
this final rule are non-discretionary. Therefore, FSA has determined
that NEPA does not apply to this final rule and no environmental
assessment or environmental impact statement will be prepared.
Executive Order 12988
The final rule has been reviewed under Executive Order 12988. This
rule preempts State laws that are inconsistent with its provisions.
This rule is not retroactive as such, but does apply to marketings in a
period that precedes this rule. Before any judicial action may be
brought regarding this rule, all administrative remedies must be
exhausted.
Executive Order 12372
This program is not subject to Executive Order 12372, which
requires consultation with State and local officials. See the notice
related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June
24, 1983).
Executive Order 13132
The policies contained in this rule do not have any substantial
direct effect on States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and local
governments. Therefore, consultation with the States is not required.
Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does
not apply to this rule because CCC is not
[[Page 73766]]
required to publish a notice of proposed rulemaking for this rule.
Further, this rule imposes no unfunded mandates, as defined in UMRA, on
any local, State, or tribal government or on the private sector.
Federal Assistance Programs
The title and number of the Federal assistance program in the
Catalog of Federal Domestic Assistance to which this final rule applies
is 10.051--Commodity Loans and Loan Deficiency Payments.
Paperwork Reduction Act
The regulations in this rule are exempt from requirements of the
Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in section
1601 of the 2008 Farm Bill, which provides that these regulations be
promulgated and administered without regard to the Paperwork Reduction
Act.
E-Government Act Compliance
CCC 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.
List of Subjects in 7 CFR Part 1430
Dairy products, Price support programs.
0
For the reasons discussed above, 7 CFR part 1430 is amended as set
forth below.
PART 1430--DAIRY PRODUCTS
0
1. Revise the authority citation to read as follows:
Authority: 7 U.S.C. 7981, 7982, and 8773; and 15 U.S.C. 714b and
714c.
Subpart A--Price Support Program for Milk
0
2. Amend Sec. 1430.2, paragraph (a)(2), by adding a sentence at the
end to read as follows:
Sec. 1430.2 Price support levels and purchase conditions.
(a) * * *
(2) * * * Purchases may only be made from eligible offerers which
must be the manufacturer of the product offered and must meet all other
conditions set by CCC.
* * * * *
Subpart B--Milk Income Loss Contract Program
0
3. Amend Sec. 1430.202 by removing the definitions for ``Fiscal
Year,'' and ``Transition Period,'' revising the definitions of ``Dairy
operation,'' ``Eligible production,'' ``Participating State,'' and
``United States,'' and adding the definition for ``Fiscal Year or FY''
to read as follows:
Sec. 1430.202 Definitions.
* * * * *
Dairy operation means any person or group of persons who as a
single unit as determined by CCC, produce and market milk commercially
produced from cows, and whose production facilities are located in the
United States. In administering this program, for purposes of
determining what is a ``dairy operation'' and its eligibility under
this program, those determinations will be made in the same manner as
was done for the Dairy Market Loss Assistance (DMLA) contracts in the
State in which the dairy is located. New MILC operations, which is to
say those operations that did not participate in the MILC program for
marketings prior to FY 2008, must be unaffiliated with any other DMLA
or MILC operations.
* * * * *
Eligible production means milk that was produced at a time relevant
to this program by cows in the United States and marketed commercially
by a producer in a participating State.
* * * * *
Fiscal Year or FY means the year beginning October 1 and ending the
following September 30. Fiscal years will be designated for this part
by year by reference to the calendar year in which it ends. For
example, FY 2009 is from October 1, 2008, through September 30, 2009
(inclusive).
* * * * *
Participating State means each of the 50 States in the United
States of America, the District of Columbia, and the Commonwealth of
Puerto Rico, or any other territory or possession of the United States.
* * * * *
United States means the 50 States of the United Sates of America,
the District of Columbia, and the Commonwealth of Puerto Rico, or any
other territory or possession of the United States.
* * * * *
0
4. Amend Sec. 1430.203 as follows:
0
a. In paragraphs (a) and (f) remove the words ``December 1, 2001,
through September 30, 2007'' and add, in their place, the words
``October 1, 2007, through September 30, 2012;''
0
b. Amend paragraph (f) by removing the period at the end and adding a
semicolon in its place; and
0
c. Revise paragraph (g) and add paragraphs (h) and (i) to read as
follows:
Sec. 1430.203 Eligibility.
* * * * *
(g) Meet all adjusted gross income eligibility requirements of part
1400 of this chapter as regards any person or entity seeking to receive
payment under this part. No person or entity may, generally, receive
any payment for FY 2009 marketings and subsequent marketings if their
nonfarm yearly income for the relevant base period for the relevant
marketings as determined under the adjusted gross income rules (as in
effect when the payment is sought) is over $500,000 as determined under
this subpart. Further, for entities an otherwise due payment will be
reduced commensurately to the extent that any person with an interest
in the entity, as determined under the adjusted gross income rules had
such income over that limit for the relevant period;
(h) Have submitted a contract during the applicable contract period
for FYs 2008 through 2012:
(1) Except for 2009, and subject to the start month provision of
Sec. 1430.205, must have for any fiscal year or month for which
payment is sought to be paid submitted the FY 2008 through 2012
contract before the end of that fiscal year or month or
(2) For FY 2008 payments, if payments are generated under this part
for that fiscal year, must have submitted a contract for the FY 2008
through 2012 program by October 1, 2009 and for FY 2009 the contract
must have been submitted by the month for which payment is first sought
except to the extent that Sec. 1430.205 explicitly permits the
operation to pick a start month in advance of the month in which the
contract is submitted; and
(i) Must not, if it did not participate in the preceding MILC
program for fiscal years prior to FY 2008, be affiliated with any other
dairy operation.
0
5. In Sec. 1430.205 revise paragraphs (a) through (d) and (g) to read
as follows:
Sec. 1430.205 Selection of starting month.
(a) A dairy operation that enters into a MILC contract with CCC
must designate the starting month for each fiscal year for the
calculation of payments and pound limits for the operation. Once a
start month is chosen for a fiscal year the corresponding month will be
the start month for each subsequent fiscal year unless changed by an
affirmative request in writing on a form approved by CCC. The
production start month must be selected on or before the 14th of the
month
[[Page 73767]]
before the month for which payment is sought. If such date falls on a
weekend, the start month selection must be made on the last business
day preceding the weekend. A dairy operation cannot select as the start
month for payment a month which:
(1) Has already begun, except as provided in paragraph (c)(1) of
this section;
(2) Has already passed; or
(3) During which no milk production was produced by the dairy
operation.
(b) For FY 2009, if the operation signs its FY 2008 through 2012
MILC contract within 30 days of the beginning of the application period
it can pick any preceding FY 2009 month as its start month for that
period or can use the normal rule of paragraph (c) of this section to
pick the start month.
(c) Except as provided in paragraph (b) of this section, the start
month for a fiscal year may only be
(1) For the fiscal year in which the contract is submitted, the
month the contract is submitted or
(2) For a fiscal year that has not yet begun, any month, provided
that a month may not be selected after the 14th of the preceding month.
(d) Dairy operations may change the production start month on or
before the 14th day of the month previously selected.
* * * * *
(g)(1) MILC production start month selections made during the
signup period designated by CCC may be made as provided in paragraph
(b) of this section, otherwise MILC production start month selections
must be made in accordance with paragraph (c) of this section. If a
payment rate is not in effect during the production start month
selected by the dairy operation, payments to the dairy operation will
be issued based on the next consecutive month with a payment rate in
effect following the MILC production start month selected by the dairy
operation. Production in months in which the pay formula does not
produce a payment will not count against the fiscal year's poundage
limit for the operation.
(2) Dairy operations with MILC production start months that begin
with the month a MILC contract is submitted to FSA or that begin with
the first month of the fiscal year with an effective payment rate will
receive payments made by CCC consecutively on a monthly basis, if
otherwise provided for in this part, until the earlier of the
following:
(i) The maximum payment quantity for the fiscal year or month is
reached as determined in accordance with Sec. 1430.207 or
(ii) The end of the applicable fiscal year.
* * * * *
0
6. Amend Sec. 1430.207 by revising paragraph (b) and by adding
paragraph (c) to read as follows:
Sec. 1430.207 Dairy operation payment quantity.
* * * * *
(b) The maximum quantity of eligible production for which dairy
operations, per separate and distinct operation, are eligible for
payment per fiscal year under this subpart will be:
(1) 2,400,000 pounds (24,000 cwt.) for FY 2008 (October 1, 2007,
through September 30, 2008);
(2) 2,985,000 pounds (29,850 cwt.) for FY 2009 (October 1, 2008
through September 30, 2009), FY 2010 (October 1, 2009, through
September 30, 2010), FY 2011 (October 1, 2010, through September 30,
2011) and FY 2012 (October 1, 2011, through September 30, 2012),
provided further an operation may receive payment for September, 2012,
marketings only if its pre-September FY 2012 marketings did not exceed
2,400,000 pounds in which case new marketings that would not put the
operation's FY 2012 marketings over 2,400,000 pounds will be eligible
for payments otherwise permitted in this rule.
(c) In accordance with these regulations, the Deputy Administrator
will determine what is a separate and distinct operation. That decision
will be final.
0
7. In Sec. 1430.208 revise paragraphs (b) through (e) and add
paragraph (f) to read as follows:
Sec. 1430.208 Payment rate and dairy operation payment.
* * * * *
(b) A per-hundredweight payment rate will be determined for the
applicable month by:
(1) Subtracting from $16.94 the Class I milk price per cwt. in
Boston;
(2) Multiplying the difference by 34 percent for marketings during
the period beginning on October 1, 2007, and ending on September 30,
2008;
(3) Multiplying the difference by 45 percent for marketings during
the period beginning on October 1, 2008, and ending on August 31, 2012;
and
(4) Multiplying the difference by 34 percent for marketings in
September 2012.
(c) The payment rate as calculated as specified in paragraph (b) of
this section, will be adjusted to compensate for feed prices when the
National Average Dairy Feed Ration Cost for a month is greater than the
levels set in paragraphs (c)(1) and (c)(2) of this section. The
National Average Dairy Feed Ration Cost per cwt. for each month will be
calculated using the same procedures used to calculate the feed
components of the estimated price of 16 percent Mixed Dairy Feed per
pound noted on page 33 of the USDA monthly Agricultural Prices
publication (including the data and factors noted in footnote 4). The
payment rate adjustment for Entire Month feed prices will be determined
by increasing $16.94 by the percentage that is 45 percent of the
percentage by which the National Average Dairy Feed Ration Cost exceeds
$7.35 per cwt. (except that $7.35 will be $9.50 for September 2012
marketings.)
(d) Each eligible dairy operation payment will be calculated, as
determined by the Secretary, by:
(1) Converting whole pounds of milk to hundredweight and
(2) Multiplying the payment rate determined in paragraphs (b) and
(c) of this section by the quantity of eligible production marketed by
the operation during the applicable month as determined according to
Sec. 1430.205 and other provisions of this subpart.
(3) Payments to dairy operations will be based on calculated
payment rates rounded seven places to the right of the decimal.
(e) Payments under this subpart may be made to a dairy operation
only up to the maximum production limitations set in Sec. 1430.207(b)
of eligible production per applicable fiscal year.
(f) Dairy operations receiving benefits under this subpart, will
receive earned payments on a monthly basis according to the MILC
contract, to the extent practicable, not later than 60 days after the
later of production evidence and all supporting documents for the
applicable month are received by CCC or the entire month National
Average Dairy Feed Ration Cost is made available by USDA, as
applicable. Payments issued by CCC more than 60 days after the later of
all production evidence and supporting documentation are received by
CCC or the entire month National Average Dairy Feed Ration Cost is made
available by USDA, whichever is later, will be subject to prompt
payment interest as allowed by law. However, CCC will endeavor where
possible to make payments within 60 days of the end of the marketing
month.
Sec. 1430.209 [Amended]
0
8. Amend Sec. 1430.209 in paragraph (a) by removing the words
``October 1, 2005, and ending September 30, 2007'' and adding in their
place the words ``October 1, 2007, and ending September 30, 2012.''
[[Page 73768]]
Sec. 1430.211 [Amended]
0
9. Amend Sec. 1430.211 in paragraph (a) by removing the words
``September 30, 2007'' and adding, in their place, the words
``September 30, 2012.''
0
10. Amend Sec. 1430.212 by revising the section heading and adding
paragraph (c) to read as follows:
Sec. 1430.212 Contract Modifications and Statutory Changes in
Program.
* * * * *
(c) Payments otherwise due under this subpart or the program will
be adjusted or denied to the extent provided for by a statutory change
in program eligibilities or requirements of any kind irrespective of
whether the program contract preceded the statutory change. Operations
will be given the option of accepting the changes or terminating the
contract.
0
11. Amend Sec. 1430.213 by revising paragraph (a) to read as follows:
Sec. 1430.213 Reconstitutions.
(a) A dairy operation receiving MILC benefits may reorganize or
restructure such that the constitution or makeup of its operation is
reconstituted in another organizational framework. However, any
operation that reorganizes or restructures after October 1, 2007, is
subject to a review by FSA to determine if the operation was
reorganized or restructured for the sole purpose of receiving multiple
or additional MILC payments.
* * * * *
Signed in Washington, DC, on December 1, 2008.
Teresa C. Lasseter,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. E8-28710 Filed 12-1-08; 4:15 pm]
BILLING CODE 3410-05-P