[Federal Register Volume 63, Number 170 (Wednesday, September 2, 1998)]
[Rules and Regulations]
[Pages 46637-46640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23517]


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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]
BILLING CODE 3410-02-P