[Federal Register Volume 62, Number 60 (Friday, March 28, 1997)]
[Notices]
[Pages 14879-14880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7865]


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 Notices
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 This section of the FEDERAL REGISTER contains documents other than rules 
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  Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / 
Notices  

[[Page 14879]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service
[DA-96-06]


Amplified Decision Regarding the Northeast Interstate Dairy 
Compact

AGENCY: Agricultural Marketing Service.

ACTION: Notice.

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SUMMARY: This notice announces the Secretary of Agriculture's amplified 
decision concerning whether a compelling public interest exists in the 
Northeast Interstate Dairy Compact Region, and whether implementation 
of the Compact should be authorized. After review of the record, the 
Secretary finds that a compelling public interest exists in the Compact 
region and continues to authorize its implementation. The Compact 
region consists of the States of Connecticut, Maine, Massachusetts, New 
Hampshire, Rhode Island and Vermont.

EFFECTIVE DATE: March 20, 1997.

FOR FURTHER INFORMATION CONTACT: Richard M. McKee, Director, USDA/AMS/
Dairy Division, Room 2968, South Building, P.O. Box 96456, Washington, 
DC 20090-6456 (202) 720-4392.

PRIOR DOCUMENTS: Notice Requesting Comments on the Northeast Interstate 
Dairy Compact: Issued April 30, 1996; published May 3, 1996 (61 FR 
19904).
    Notice of Findings and Authority to Implement the Northeast 
Interstate Dairy Compact: Issued August 22, 1996; published August 28, 
1996 (61 FR 44290).

SUPPLEMENTARY INFORMATION: Section 147 of the 1996 Federal Agriculture 
Improvement and Reform (FAIR) Act (Pub. L. 104-127) establishes 
Congressional consent for the Northeast Interstate Dairy Compact (the 
Compact) entered into by the States of Connecticut, Maine, 
Massachusetts, New Hampshire, Rhode Island, and Vermont subject to 
several conditions. The FAIR Act provides that ``Based upon a finding 
by the Secretary of a compelling public interest in the Compact region, 
the Secretary may grant the States that have ratified the Northeast 
Interstate Dairy Compact, as of the date of enactment of this title, 
the authority to implement the Northeast Interstate Dairy Compact.'' On 
August 8, 1996, the Secretary issued a Finding of a compelling public 
interest and authorized the Northeast Interstate Diary Compact.
    In complying with a court order, the Secretary on March 20, 1997, 
issued the following amplified decision concerning his finding that a 
compelling public interest exists in the Compact Region:

Decision of Secretary Dan Glickman on the Northeast Interstate Dairy 
Compact

    On August 9, 1996, I issued a statement on the Northeast 
Interstate Dairy Compact (the Compact) in which I found a compelling 
public interest in the Compact region and authorized implementation 
of the Compact. Given my concerns about the possible adverse effects 
of the Compact, I expressed my expectation that the Compact 
Commission (the Commission) would implement and administer the 
Compact in a way that would prevent such effects. I indicated my 
intention to monitor the Commission's implementation of the Compact 
and to take such steps as necessary, including revocation of my 
authorization to implement the Compact, if conditions warranted such 
remedial action.
    That decision was challenged by the Milk Industry Foundation in 
Federal district court for the District of Columbia. In a December 
11, 1996, decision denying the plaintiff's request for a preliminary 
injunction, the court found that my decision failed to explain 
adequately the basis of the finding that a compelling public 
interest exists in the Compact region. The court also expressed its 
view that I lacked the authority to revoke my authorization to 
implement the Compact.
    The Department of Agriculture (the Department) subsequently 
requested that the court stay further proceedings in the case to 
allow me to amplify my earlier decision. On February 3, 1997, the 
court issued an order allowing me 45 days to issue a decision and 
instructed the Department not to prejudge the outcome of its review 
or be bound by any prior determinations in this matter.
    Following the court's order, the Department reevaluated the 
record, including comments received in response to a Federal 
Register notice the Department published on May 3, 1996, seeking 
public comments on the Compact from interested parties. This 
decision is the outcome of that process.
    The evidence in the record regarding the economic condition of 
dairy farmers in the Compact region is mixed. Many commenters who 
support the Compact argued that the Compact is necessary to maintain 
viable dairy industry in the Compact region. Some commenters also 
asserted that the Compact is essential to the continued health of 
the regional economy. They noted that the dairy industry annually 
contributes $1.7 billion to the region's economy, and stated that, 
in Vermont, it represents 70 percent of that state's agricultural 
economy. They also argued that dairy farmers in the Compact region 
are going out of business and that they receive lower prices than 
dairy farmers in other areas of the country.
    Commenters who opposed the Compact argued that the decline in 
the number of dairy farmers in the Compact region has been less than 
the national average. They also argued that milk prices in the 
Compact region are more favorable to dairy producers than prices in 
other regions of the country, and that the Compact is not warranted 
by supply and demand conditions or any other pertinent economic 
factors.
    The Department's analysis shows that farm-gate milk prices in 
the Compact region, adjusted for hauling, other charges, and 
premiums, as well as net returns, average below what producers in 
many other regions of the country receive. On the other hand, the 
decline in the number of dairy producers in the Compact region in 
recent years has been less than the national average. A review of 
milk production since 1990 indicates that the Compact region has 
maintained its share of U.S. milk production, even though its dairy 
producers have not grown in size as fast as producers elsewhere.
    One of the primary objectives of the Compact is to help maintain 
the viability of family-sized dairy farms in the Compact region 
during the transition period from the current milk marketing order 
regime to a reformed order system mandated by the Federal 
Agriculture Improvement and Reform Act of 1996 (1996 Farm Bill). The 
higher milk prices that would likely result from the Compact would 
increase the profitability of dairy farming and, in the short term, 
reduce some of the financial pressure on dairy producers in the 
Compact region. Thus, while these higher prices may not alter the 
long-term trend toward larger and probably fewer dairy operations, 
because all producers would benefit in direct proportion to their 
size, the higher returns would, I am convinced, provide a short-term 
benefit to small dairy producers.
    I believe that it is important to take reasonable measures to 
preserve small family farms, and I believe that most Americans, if 
asked, would agree with this goal. The ideals of family farmers, 
such as self-sufficiency, independence, and working in balance with 
nature, are deeply rooted in American history and culture. 
Regrettably, however, the number of small farms has steadily 
declined over the years.

[[Page 14880]]

    To some, the consolidation of agriculture is a benign phenomenon 
that simply reflects the efforts of farmers expanding their 
operations to become more efficient and more economically viable. To 
others, however, the decline in number and increase in size of farm 
operations reflect a disruption of rural communities and an 
undesirable concentration of economic power in the hands of fewer 
producers, presaging the eventual demise of small, independent 
family farmers.
    None of us involved in agricultural policy has at hand a set of 
easy answers to these vexing questions. During the same time that 
significant structural changes in the American agricultural system 
have occurred, the system has continued to produce the safest, most 
abundant and most affordable food supply in the world. But I do not 
believe that maintaining this food supply means that agricultural 
production should or must be dominated by large producers. America 
wants and still needs the family farm.
    This belief is obviously strongly held by the people of the 
Compact region. Numerous commenters argued that small dairy farms 
are an important part of the character and culture of their 
communities, and they have united to take steps to preserve these 
farms by approving the Compact. Commenters also noted that the 
success of the Compact would help to limit the continued conversion 
of farmland to non-farm uses which threatens the unique 
characteristics of New England rural scenery.
    I am convinced that small dairy farms are an essential part of 
the character and culture in the Compact region. These farms 
preserve open spaces, sculpt the landscape, and provide the land 
base for a wide diversity of recreational pursuits. There is clearly 
widespread support throughout the Compact region to help prevent 
additional dairy farmers from going out of business. I believe that 
the Compact represents a cooperative effort by consumers, 
processors, and government representatives that will help address 
this concern during the transition to a reform milk marketing order 
system as mandated by the 1996 Farm Bill.
    However, I also share with all Americans a commitment to helping 
those who are less fortunate. In fact, some commenters opposed the 
Compact because it could have adverse effects on low-income people 
and could increase the costs of government food assistance programs. 
Indeed, in my earlier decision, I specifically raised, concerns 
about the effect of the Compact on consumers, particularly low-
income families, in the Compact region.
    I sought to address those concerns by laying out my expectations 
regarding implementation of the Compact, particularly my insistence 
that the Commission provide assistance to offset any increased 
burden on low income families in the Compact region. I also insisted 
that the Commission exercise its authority to reimburse participants 
in the Special Supplemental Nutrition Program for Women, Infants, 
and Children (WIC) and fulfill its obligation to reimburse the 
Commodity Credit Corporation (CCC) for purchases under the dairy 
price support program, if warranted. At the time I authorized the 
Compact, I indicated clearly that I would closely monitor Compact 
implementation. More importantly, I stated that, if conditions 
indicated that a compelling public interest in the region no longer 
existed, I would revoke my authorization.
    I continue to be concerned about the potential effect that 
imprudent Compact implementation may have on low-income families in 
the Compact region and it would be wrong for me to ignore this 
issue. Assisting dairy farmers in the Compact region should not and 
need not come at the expense of low-income people in the region.
    I also expressed concerns about the potential adverse effect of 
the Compact on other dairy-producing regions, concerns which were 
shared by a number of commenters opposed to the Compact. However, 
the Department's analysis concludes that milk production in the 
Compact region is a small percentage of overall national production, 
and that potential adverse effects on milk prices outside the 
Compact region, if any, are likely to be very small. The Department 
has concluded that the Compact can be implemented so that it does 
not measurably affect milk prices in other dairy producing regions.
    Commenters opposed to the Compact also argued that it represents 
a form of regional protectionism inconsistent with the more market-
oriented direction of other Federal farm policies and inconsistent 
with the current milk marketing order structure. However, while the 
Compact may not move in the direction of some other Federal farm 
policies, it is consistent with efforts to encourage more regional 
and local responsibility for issues previously addressed at the 
Federal level.
    In addition, the Compact is a short-term measure specifically 
confined by statute to the transitional period during which the 
Department will be moving to reform and restructure milk marketing 
orders through a rulemaking process. The Department began this 
process last summer and is firmly committed to meeting the deadline 
of April 4, 1999, contained in the 1996 Farm Bill. For example, on 
March 7, 1997, the Department released for public comment several 
proposals regarding the fluid milk pricing and other key provisions 
of milk marketing orders, and additional proposals will be issued in 
the near future.
    Dairy policy is one of the most complex areas of Federal 
agricultural policy. Changes are regularly made to Federal policies 
and programs to ensure that they reflect the latest developments and 
appropriately balance all of the various factors that must be 
considered. The Compact can and should be implemented with 
flexibility and careful planning. Implementation that fails to 
reflect the changing supply, demand, price and competitive nature of 
the dairy industry would not be in the public interest.
    The Congress left to the Department's expertise and discretion 
the determination of what might constitute a compelling public 
interest in the Compact region. The Department has concluded that 
such a finding and authorization to implement the Compact cannot be 
viewed as a one time event based on a single snapshot in time. 
Rather, the Department strongly believes that the assessment of a 
compelling public interest in the Compact region may well change 
over time.
    This Compact creates a policy-setting Commission whose 
authorities are not merely ministerial. Compact implementation is a 
dynamic, on-going process, and the Commission will function in a 
constantly changing economic and sociological environment. It is 
impossible to foresee how the Commission will exercise its power 
carrying out its broad responsibilities, or to predict how 
conditions in the Compact region will evolve. Facts and 
circumstances that may currently justify authorization may 
subsequently change to the extent that a compelling public interest 
no longer exists in the Compact region.
    Given the shifting nature of the compelling public interest 
test, the Department strongly believes that the authority to 
withdraw or revoke its authorization is an essential element of any 
decision which finds that a compelling public interest exists. While 
the Department recognizes the court's view that I do not have the 
authority to revoke authorization to implement the Compact, this 
issue was neither thoroughly briefed nor argued to the court, and 
the Department respectfully disagrees.
    For the foregoing reasons, I find that there is a compelling 
public interest in the Compact region and authorize implementation 
of the Northeast Interstate Dairy Compact. In authorizing the 
Compact's implementation, I have concluded that the balance has been 
properly struck, given current conditions. The Compact is a short-
term measure that, if implemented with common-sense and sensitivity 
to the needs of all affected persons and interests, can benefit the 
dairy producers and all citizens in the Compact region without 
producing adverse side effects.
    I recognize, however, that balancing all of the factors involved 
here may not be an easy task for the Commission. Therefore, the 
Department is ready to assist the Commission in implementing the 
Compact to achieve these goals. In addition, I encourage the elected 
officials of the Compact region to work with the Commission to 
ensure that low income people, the American taxpayers, and other 
U.S. dairy producers are not adversely affected by the 
implementation of the Compact.
    To ensure successful implementation of the Compact in accordance 
with my decision, the Department will continue to monitor the 
Commission and will take all necessary steps within its authority, 
including revocation, to achieve these objectives. Additionally, as 
the court observed, the Department may raise concerns regarding the 
operation of the Commission with Congress and, if necessary, request 
that it revoke its consent to the Compact.

    Dated: March 24, 1997.
Shirley D. Watkins,
Acting Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 97-7865 Filed 3-27-97; 8:45 am]
BILLING CODE 3410-02-M