[Federal Register: April 14, 2008 (Volume 73, Number 72)]
[Rules and Regulations]
[Page 19959-19960]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ap08-1]
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Rules and Regulations
Federal Register
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[[Page 19959]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1150
[Docket No. AMS-DA-08-2004; DA-06-04]
National Dairy Promotion and Research Program; Section 610 Review
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Confirmation of regulations.
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SUMMARY: This document summarizes the results of an Agricultural
Marketing Service (AMS) review of the National Dairy Promotion and
Research Program (National Dairy Program) conducted under the Dairy
Promotion and Research Order (Dairy Order), under the criteria
contained in Section 610 of the Regulatory Flexibility Act (RFA). Based
upon its review, AMS has determined that the Dairy Order should be
continued without change.
FOR FURTHER INFORMATION CONTACT: Interested persons may obtain a copy
of the review. Requests for copies should be sent to Whitney Rick,
Chief, Promotion and Research Branch, Dairy Programs, 1400 Independence
Avenue, SW., Stop 0233-Room 2958-South Building, Washington, DC 20250-
0233, (202) 720-6909, e-mail: Whitney.Rick@usda.gov or by accessing our
Web site at http://www.ams.usda.gov/dairy/dairyrp.htm.
SUPPLEMENTARY INFORMATION: The Dairy Production Stabilization Act of
1983 [7 U.S.C. 4501-4513] (Dairy Act) authorized the Dairy Order [7 CFR
Part 1150], a national dairy producer program designed to develop and
finance promotion, research, and nutrition education programs to
maintain and expand markets and uses for milk and dairy products.
Annual reports concerning the activities conducted under the order are
required by statute at 7 U.S.C. 4514.
The National Dairy Program became effective on March 23, 1984, when
the Dairy Order was issued. The National Dairy Program is funded by a
mandatory assessment of 15 cents per hundredweight on all milk marketed
in the 48 contiguous states. Producers can receive a credit of up to 10
cents a hundredweight for payments made to any State or regional dairy
product promotion, research or nutrition education programs which is
certified as a qualified program pursuant to the Dairy Order.
The Dairy Order provides for the establishment of the National
Dairy Promotion and Research Board (National Dairy Board), which is
composed of 36 members appointed by the Secretary of Agriculture. Each
member represents one of thirteen Regions in the 48 contiguous States.
The members of the National Dairy Board serve 3-year terms and are
eligible to be appointed to two consecutive terms.
AMS published in the Federal Register its plan on February 18, 1999
(64 FR 8014), and most recently updated its plan on March 24, 2006 (71
FR 14827), to review certain regulations using criteria contained in
Section 610 of the RFA (5 U.S.C. 601-612). Given that many AMS
regulations impact small entities, AMS decided as a matter of policy to
review certain regulations which, although they may not meet the
threshold requirement under Section 610 of the RFA, warrant review.
The 610 Review was undertaken to determine whether the Dairy Order
should be continued without change, amended, or rescinded (consistent
with the objectives of the Dairy Act) to minimize any significant
economic impact of rules upon a substantial number of small entities.
AMS has considered the continued need for the Dairy Order; the nature
of complaints or comments received from the public concerning the Dairy
Order; the complexity of the Dairy Order; the extent to which the Dairy
Order overlaps, duplicates, or conflicts with other Federal rules, and,
to the extent feasible, with State and local government rules; and the
length of time since the Dairy Order has been evaluated or the degree
to which technology, economic conditions, or other factors have changed
in the area affected by the Dairy Order.
A Notice of Review and Request for Written Comments was published
in the Federal Register on February 28, 2006, (71 FR 9978). Thirty-two
written comments were received and are discussed below.
Of the thirty-two comments received, ten comments recommended that
the Dairy Order be terminated or re-evaluated. Of those comments,
several suggested that non-assessment of imported dairy products were a
reason that the program should be discontinued because importers were
receiving the benefit of a domestic assessment but were not required to
pay assessments. The 2002 Farm Bill (Pub. L. 107-171) amended the Dairy
Act to include assessment of imports. A provision also was added to
ensure that implementation of an order was consistent with
international trade obligations. However, the term United States
continued to be defined as the forty-eight contiguous states in the
continental United States. Taking into account the narrow definition of
United States in implementing the importer provisions of the Dairy Act,
USDA concluded that the definition of United States should be amended
in the Dairy Act to include Alaska, Hawaii, the District of Columbia
and Puerto Rico. Therefore, as part of USDA's 2007 Farm Bill proposal,
we have included language that would change the definition of United
States in the Dairy Act to include all 50 States, the District of
Columbia, and Puerto Rico. When the Dairy Act is amended, USDA intends
to resume implementation of the import provisions of the Dairy Act.
Several of these commenters suggested that the assessment should be
voluntary as opposed to mandatory. The Dairy Act provides for mandatory
assessments. USDA has determined mandatory assessments to finance
national generic programs benefits all parties involved. Mandatory
assessments ensure that assessments are incurred in a fair and
equitable manner and that activities under a program can be
administered effectively.
Several commenters also recommended mandatory referendums and the
abolition of bloc-voting, whereby a cooperative votes on behalf of its
membership in referenda. Section 4507(b) of the Dairy Act requires the
[[Page 19960]]
Secretary to hold a referendum on request of a representative group
comprising 10 percent or more of the number of producers and importers
subject to the Dairy Order to determine whether producers and importers
favor the suspension or termination of the Order. We believe a 10
percent threshold avoids unnecessary costs to the industry, while
allowing for a referendum if sufficient interest is determined.
Additionally, with regard to bloc-voting, Section 4508 of the Dairy Act
authorizes cooperative bloc-voting. However, a cooperative is required
to inform producers of procedures to follow to cast an individual
ballot should the producer choose to do so.
One comment suggested that the program violated the commenter's
First Amendment right of free speech. However, in June 2005, the
Supreme Court ruled in Johanns, Secretary of Agriculture, v. Livestock
Marketing Association that generic commodity research and promotion
programs are considered ``government speech'' and, therefore, are not
subject to First Amendment challenges.
Two comments suggested that the National Dairy Program is used to
lobby and conduct activities that are not in the best interest of
producers. We disagree. Section 4504(j) of the Dairy Act and Section
1150.154 of the Dairy Order prohibit the use of assessment funds for
the purpose of lobbying or influencing governmental action or policy.
No funds collected pursuant to the Dairy Order are used for the purpose
of lobbying or influencing governmental policy or action. Further, an
annual report to Congress is required under 7 U.S.C. 4514 describing
activities conducted under the Order and accounting for the receipt and
disbursement of all funds received by the Board including an
independent analysis of the effectiveness of the program.
Several comments suggested that dairy farmers be permitted to elect
members of the National Dairy Board and that the Board is
representative of only large farm interests. We disagree. The Dairy Act
provides that producer members of the Board be appointed by the
Secretary from nominations submitted by organizations certified in
accordance with the Act. Similar provisions concerning nominations
appear in other generic commodity and promotion programs. The Dairy Act
further provides that if the Secretary determines that a substantial
number of milk producers are not members, or their interests are not
represented by an eligible organization, the nominations may be made in
the manner authorized by the Secretary. Additionally, the Dairy Act and
Dairy Order require the Secretary to consider size, geography, and
other factors when making appointments to ensure that all producers are
represented. Similar criteria are considered in determining eligible
organizations.
In contrast, twenty-two comments expressed support for the Dairy
Order, recognizing the need and advantages which the National Dairy
Program provides to dairy farmers at a State level. Further, the same
comments noted that the National Dairy Program invests farmer funds
into research and promotion of dairy products, therefore, increasing
the economic viability of the products produced and contributing to
dairy producer profits.
Another comment from a producer recognized that the National Dairy
Program works effectively and cooperatively on a national, State, and
regional level. Additionally, this producer noted that they are a small
dairy farm (150 registered Holsteins, half which are milk cows) and
believed that the National Dairy Program contributes effectively to
dairy farmer profitability and has minimal impact on small producers
and other entities.
Several of the supporting comments noted vast producer support for
the National Dairy Program and recognized that the National Dairy
Program was vital to increasing dairy consumption and maintaining and
increasing profitability for the farmer. Since the program began in
1983, total dairy consumption has increased by more than 35 percent
according to USDA.
Another supporting comment noted that the National Dairy Program
increases sales; provides greater opportunity for brands and businesses
to compete for their share of the beverage category; protects small
producers from being severely disadvantaged against large competitors
that could undermine industry growth; and, in general builds a more
favorable economic environment for farmers, processors, and everyone
with a stake in the industry. Additionally, the same commenter wrote
that the National Dairy Program has very little adverse impact on small
businesses. In fact, the program helps the small producer by protecting
the small producer from being severely disadvantaged by larger
competition. The paperwork requirements imposed on the farmer are
minimal and the assessment is collected as part of the milk-purchase
transaction by the purchaser.
One comment submitted by a Qualified Program expressed support for
the National Dairy Program and recognized that the program was vital to
maintaining and increasing profitability for the farmer and increasing
dairy consumption. Additionally, the commenter referenced payments made
to State or regional dairy checkoff programs (10 cents per
hundredweight) and how such payments support promotion and research
programs which directly benefit farmers at the local level. However,
the commenter noted that program funds should be used to address pre-
harvest dairy production practices and was critical of USDA's policy
prohibiting use of program funds for this type of research. Sections
111(j) of the Act and Sections 1150.115 and 1150.161(a)(2) of the Dairy
Order are clear that the program's focus is on increasing human
consumption of milk and dairy products not on non-human consumption or
on improving production or processing efficiencies. This is consistent
with the statute's congressional intent.
The Dairy Order is not unduly complex and AMS has not identified
regulations that duplicate, overlap, or conflict with the Dairy Order.
Over the years, changes to the Dairy Order have been made to reflect
current industry operating practices and to solve current industry
problems to the extent possible. The program is independently evaluated
every year to determine the effectiveness of its programs and the
results are reported annually to Congress.
Based upon the review, AMS has determined that the Dairy Order
should be continued without change. AMS plans to continue working with
the dairy industry in maintaining an effective program.
Dated: April 8, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-7863 Filed 4-11-08; 8:45 am]
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