[Federal Register Volume 62, Number 18 (Tuesday, January 28, 1997)]
[Rules and Regulations]
[Pages 3981-3984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2042]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 18 / Tuesday, January 28, 1997 / 
Rules and Regulations  

[[Page 3981]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1160

[DA-96-09]


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. 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