[Federal Register Volume 64, Number 74 (Monday, April 19, 1999)]
[Proposed Rules]
[Pages 19084-19089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9521]


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NORTHEAST DAIRY COMPACT COMMISSION

7 CFR Parts 1306 and 1309


Over-Order Price Regulation

AGENCY: Northeast Dairy Compact Commission.

ACTION: Proposed rule; notice of hearing.

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SUMMARY: The Northeast Dairy Compact Commission proposes to amend the 
over-order price regulation to establish a supply management program. 
The proposed program is an assessment/refund plan under which the 
Commission would withhold up to the sum of three million dollars per 
calendar year, at the rate of $250,000 from each Compact monthly pool. 
At the end of the Commission's fiscal (calendar) year, the Commission 
would refund the withheld funds to compact eligible producers who had 
either reduced their production or only increased production at a rate 
of one percent or less, as compared to the prior calendar year's 
production. All eligible producers would receive a flat rate refund 
amount. In addition to the flat rate refund amount, eligible producers 
who decreased production would receive a refund based on the 
hundredweight of milk that the current year's production was less than 
the prior year's production.

DATES: A public hearing will be held on May 5, 1999 to commence at 9:00 
a.m. and to conclude no later than 12:00 p.m. Sworn and notarized 
written testimony, comments and exhibits may be submitted until 5:00 
p.m. on May 19, 1999.

ADDRESSES: The public hearing will be held at Wayfarer Inn, 121 S. 
River Road, U.S. Route 3, Bedford, New Hampshire. Mail, or deliver, 
sworn and notarized testimony, comments and exhibits to: Northeast 
Dairy Compact Commission, 34 Barre Street, Suite 2, Montpelier, Vermont 
05602.

FOR FURTHER INFORMATION CONTACT: Kenneth M. Becker, Executive Director, 
Northeast Dairy Compact Commission at the above address or by telephone 
at (802) 229-1941, or by facsimile at (802) 229-2028.

SUPPLEMENTARY INFORMATION:

I. Background

    The Northeast Dairy Compact Commission (``Commission'') was 
established under authority of the Northeast Interstate Dairy Compact 
(``Compact''). The Compact was enacted into law by each of the six 
participating New England states as follows: Connecticut--Pub. L. 93-
320; Maine--Pub. L. 89-437, as amended, Pub. L. 93-274; Massachusetts--
Pub. L. 93-370; New Hampshire--Pub. L. 93-336; Rhode Island--Pub. L. 
93-106; Vermont--Pub. L. 93-57. In accordance with Article I, Section 
10 of the United States Constitution, Congress consented to the Compact 
in Pub. L. 104-127 (FAIR Act), Section 147, codified at 7 U.S.C. 7256. 
Subsequently, the United States Secretary of Agriculture, pursuant to 7 
U.S.C. 7256(1), authorized implementation of the Compact.
    Pursuant to its rulemaking authority under Article V, Section 11 of 
the Compact, the Commission concluded an informal rulemaking process 
and voted to adopt a compact over-order price regulation on May 30, 
1997. 1 The Commission subsequently amended and extended the 
compact over-order price regulation. 2 In 1998, the 
Commission further amended specific provisions of the over-order price 
regulation. 3 The current compact over-order price 
regulation is codified at 7 CFR Chapter XIII.
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    \1\ 62 FR 29626 (May 30, 1997)
    \2\ 62 FR 62810 (Nov. 25, 1997)
    \3\ 63 FR 10104 (Feb. 27, 1998); 63 FR 46385 (Sept. 1, 1998); 
and 63 FR 65517 (Nov. 27, 1998).
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    On November 27, 1998, the Commission issued a notice of proposed 
rulemaking proceedings on several subjects and issues, including 
whether additional supply management policies and provisions should be 
incorporated into the over-order price regulation. 4 The 
Commission held a public hearing to receive testimony on December 11, 
1998 in Boxborough, Massachusetts and comments were received until 5:00 
p.m. on December 31, 1998.
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    \4\ 63 FR 65563 (Nov. 27, 1998).
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    On January 13, 1999, the Commission held its deliberative meeting, 
pursuant to 7 CFR 1361.8, to consider all oral and written comments 
received at the public hearing and the additional comments received by 
the Commission's published comment deadline of December 31, 1998, and 
to deliberate and act on the proposed subjects and issues rulemaking 
regarding whether additional supply management policies and provisions 
should be incorporated into the over-order price regulation. 
5 At that meeting, the Commission referred the supply 
management issue to its Committee on Regulations and Rulemaking for 
further study. The Committee was asked to report back to the full 
Commission no later than the May 1999 meeting with recommendations for 
addressing supply management and the requirement in Article IV, Section 
9(f) of the Compact. That provision requires the Commission, when 
establishing a compact over-order price, to ``take such action as 
necessary and feasible to ensure that the over-order price does not 
create an incentive for producers to generate additional supplies of 
milk.''
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    \5\ 64 FR 533 (Jan. 5, 1999).
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    Since promulgation of the Compact Over-order Price Regulation in 
1997, the Commission has closely monitored milk production levels in 
New England. One of the main goals in initially promulgating the Over-
order Price Regulation was to at least stabilize the dairy industry 
supplying the New England consumer milk markets and to increase the 
local supply of milk. 6
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    \6\ 62 FR 23039-40 (April 28, 1997); 62 FR 29635 (May 30, 1997); 
62 FR 62814 (Nov. 25, 1997).
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    In the spring of 1998, the Commission recognized that production 
levels in New England had increased. The Commission's Committee on 
Regulations and Rulemaking held five public meetings around New 
England, to receive informal public comment on various supply 
management proposals and the Commission's responsibilities under 
Section 9(f) of the Compact. The Commission also conducted a 
comprehensive rulemaking proceeding beginning in June 1998, held public 
hearings in July and September 1998 and promulgated a rule in November 
to be effective January 1, 1999 which limits the payment of the Compact 
Over-order producer price to milk disposed of within the Compact 
regulated area, with a seasonally adjusted allowance for diverted and 
transferred milk. 7
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    \7\ 63 FR 65517 (Nov. 27, 1998).
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    Also in 1998, the Commission paid 1.762 million dollars to the 
Commodity Credit Corporation (CCC), as required by condition 5 of the 
authorization of the Compact, 7 U.S.C. 7256(5). That provision requires 
the Commission to compensate the CCC for the cost of any purchases of 
milk and milk products that result from the projected rate of increase 
in milk production in the Compact regulated area in excess of the 
national average rate of the increase in milk production. 8 
The Commission

[[Page 19085]]

began setting aside funds in an escrow account from the monthly 
producer pool in March 1998, for February milk, to meet this potential 
obligation. After the payment to the CCC was made, the CCC escrow 
account had a balance of approximately $400,000, which the Commission 
returned to those producers whose production in federal fiscal year 
1998 was less than or equal to their production during federal fiscal 
year 1997. The CCC refund payments were based on the eligible 
producer's total production for the year.
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    \8\ During federal fiscal year 1998, the Compact region enjoyed 
some of the best milk production conditions in many years, weather 
was warm and feed prices were low. Many other milk producing areas 
of the country experienced some of the worst weather and, as a 
result, the rate of production in New England exceeded that of the 
national average. The Commission notes, too, however, that in 
promulgating the Over-order Price Regulation it intended to 
stabilize or increase milk production in the region. See discussions 
at 62 FR 23039-40 (April 28, 1997); 62 FR 29635 (May 30, 1997); and 
62 FR 62814 (Nov. 25, 1997)
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    Based on the oral testimony and written comments and exhibits 
received in the December 1998 subjects and issues rulemaking 
proceeding, the informal public comment provided to the Committee on 
Regulations in the public meetings in the spring of 1998 and the 
Commission's experience with the CCC refund program, the Commission 
proposes to implement a supply management program through an assessment 
and refund payment to producers who either reduce production or 
maintain their milk production within one percent of the prior year's 
production level. The proposed program is described in detail below.

II. Proposed Supply Management Program

    The proposed supply management program is designed to meet the 
Commission's responsibilities under Article IV, Section 9(f) of the 
Compact. That provision provides that ``[w]hen establishing a compact 
over-order price, the commission shall take such action as necessary 
and feasible to ensure that the over-order price does not create an 
incentive for producers to generate additional supplies of milk.'' The 
proposed supply management program is relatively straightforward to 
administer and implement and therefore would be a feasible method of 
addressing supply management. The proposed supply management program is 
necessary to ensure that the compact over-order price does not create 
an incentive for producers to increase milk production, as required by 
section 9(f) of the Compact.
    The proposed program would require the Commission to reduce the 
producer pool by the sum of $250,000 per month, in order to accumulate 
a total of three million dollars per calendar year in the supply 
management-settlement fund. 9 By taking an equal sum from 
each producer pool, the impact on the monthly producer pay price would 
be minimized, thereby continuing to ensure a sufficient pay price to 
producers to cover their costs of production. These funds would be 
accumulated in an escrow account throughout the calendar year in a 
supply management-settlement fund.
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    \9\ If there is no producer pool in a particular month, the sum 
owed to the refund pool would be carried forward and paid from the 
next available producer pool.
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    At the conclusion of the calendar year, producers would have 45 
days to submit an application to the Commission for a refund from the 
supply management-settlement fund. There would be two categories of 
producers eligible for the refund: (1) producers who reduced their 
production as compared to their prior year's production level; and (2) 
producers who maintained their production milk level at a rate of 
increase not more than 1% compared to the prior year's production. All 
eligible producers would receive a refund based on a flat rate per 
producer. One-half of the supply management-settlement fund would be 
distributed to eligible producers on a per producer basis. The amount 
of the flat rate refund would be determined by dividing the total 
number of eligible producers into one-half the value of the supply 
management-settlement fund.
    In addition, producers who reduced their milk production, compared 
to the prior year's production, would receive a refund amount based on 
a price per hundredweight of reduced production of milk. The 
assessment/refund program would provide a reward to those producers who 
reduce their milk production and create an incentive for all producers 
to maintain a stable, local supply of milk for the New England milk 
market.
    All producers would share equally in the burden of funding this 
program through a reduction in the producer pay price. Only those 
producers who reduce or maintain their production level would be 
eligible for a refund. However, the program would not otherwise 
restrict the milk production of those producers who, for business 
reasons unrelated to the compact payments, chose to increase their milk 
production at a rate greater than 1% per year.
    The Commission would also change the regulation regarding any 
balance left in an account established to meet a potential liability to 
the Commodity Credit Corporation. The supply management program would 
be designed to meet the Commission's responsibilities under section 
9(f) of the Compact, and therefore, any balance in a CCC escrow account 
would be returned to the producer-settlement fund for distribution to 
all producers in the next producer pool.
    It is the intention and judgment of the Commission that the 
combination of the proposed supply management assessment/refund program 
and the recently promulgated rules limiting compact payments on 
diverted and transferred milk will operate in coordination to regulate 
the supply of milk in New England relative to the consumer demand and 
to ensure that the compact payments do not create an incentive to 
generate supplies of milk in excess of the tolerance levels prescribed 
for diverted and transferred milk.
    Tables 1 and 2 show how the proposed supply management program 
would be implemented using the actual figures for the May 1998 and July 
1998 compact producer pools. As Tables 1 and 2 demonstrate, setting 
aside $250,000 from each pool to fund the supply management-settlement 
fund, would have reduced the producer price by four cents.

         Table 1.--May 1998 Compact Over-Order Producer Price With Proposed Supply Management Assessment
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Compact Over-order Obligation................................  ..............           $0.89  .................
Compact Class I..............................................          43.49%     252,572,087      $2,247,891.58
Less: WIC 3%.................................................  ..............  ..............          67,436.75
Less: Supply Management Assessment...........................  ..............  ..............         250,000.00
Total Producer Milk..........................................            100%     580,786,219       1,930,454.83
Add: \1/2\ Unobligated Balance...............................  ..............  ..............         257,942.40
Adjusted Pool Value..........................................  ..............     0.376799097       2,188,397.23
Less: Reserve................................................  ..............      .046799097         271,802.14
Total Pool Value.............................................  ..............  ..............       1,916,595.09

[[Page 19086]]

 
Over-order Producer Price....................................  ..............           $0.33  .................
Announced Over-order Producer Price..........................  ..............           $0.37  .................
Reduction due to SM Assessment...............................  ..............           $0.04  .................
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        Table 2.--July 1998 Compact Over-Order Producer Price With Proposed Supply Management Assessment
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Compact Over-order Obligation................................  ..............           $2.82  .................
Compact Class I..............................................          43.70%     248,178,437      $6,998,631.91
Less: WIC 3%.................................................  ..............  ..............         209,958.96
Less: Supply Management Assessment...........................  ..............  ..............         250,000.00
Total Producer Milk..........................................            100%     567,929,595       6,538,672.95
Add: \1/2\ Unobligated Balance...............................  ..............  ..............         229,215.01
Adjusted Pool Value..........................................  ..............     1.191677281       6,767,887.96
Less: Reserve................................................  ..............      .041677281         236,697.15
Total Pool Value.............................................  ..............  ..............       6,531,190.81
Over-order Producer Price....................................  ..............           $1.15  .................
Announced Over-order Producer Price..........................  ..............           $1.19  .................
Reduction due to SM Assessment...............................  ..............           $0.04  .................
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    The Commission offers the following examples to assist interested 
persons in evaluating the proposed supply management program. Table 3 
shows the cost per producer of a reduction in the producer pay price of 
$.04 per hundredweight on a monthly and annual basis. As discussed 
above, the $.04 reduction is the cost of setting aside $250,000 per 
month from the producer pool to fund the supply management-settlement 
fund.

                      Table 3.--Cost of Supply Management Assessment to Selected Size Farms
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                                                                   Reduced rate/
                    No. cows                          Pounds            cwt       Cost per month   Cost per year
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40..............................................         700,000            .$04             $23            $280
57..............................................       1,000,000             .04              33             400
86..............................................       1,500,000             .04              50             600
286.............................................       5,000,000             .04             167           2,000
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    The examples in Tables 4 and 5 assume that each size farm reduces 
production by five percent compared to the prior year's production. The 
proposed supply management program would pay one-half of the supply 
management-settlement fund on a per producer, flat rate basis, and the 
other half on a rate per hundredweight of the producer's reduced milk 
production. The values used in the examples are determined by assuming 
that 1,000 producers are eligible for the supply management refund, and 
eligible producers reduced milk production by 91 million pounds. These 
assumptions result in a per producer refund payment of $1,500 and a per 
hundredweight rate of $1.64.
    Table 4 shows the yearly refund different size farms would receive 
under the proposed supply management program.

                                       Table 4.--Yearly Refund From Supply Management Program, Selected Size Farms
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                                                                                           Reduced rate/     Rate/cwt        Per farm
                        No. Cows                              Pounds      Reduced pounds        cwt           refund          refund       Total refund
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40......................................................         700,000          35,000           $1.64            $574          $1,500          $2,074
57......................................................       1,000,000          50,000            1.64             820           1,500           2,320
86......................................................       1,500,000          75,000            1.64           1,230           1,500           2,730
286.....................................................       5,000,000         250,000            1.64           4,100           1,500           5,600
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    Table 5 shows the yearly financial benefit to different size farms 
of the proposed supply management program.

                  Table 5.--Yearly Benefits From Supply Management Program, Selected Size Farms
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                            No. Cows                               Total refund      Less cost      Net refund
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40..............................................................          $2,074            $280          $1,794
57..............................................................           2,320             400           1,920
86..............................................................           2,730             600           2,130

[[Page 19087]]

 
286.............................................................           5,600           2,000           3,600
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    Table 6 shows the increased income a producer would have received 
in 1998, on only the volume of milk produced in excess of the prior 
year's production, due to the compact producer price. The table uses 
the assumption that the rate of increased production was 1.8%. This is 
the rate of increased production in the compact region the Commodity 
Credit Corporation used to set the amount due from the Compact 
Commission in 1998. The table also applies the average compact over-
order producer price for 1998 of $.286. The last column shows the 
compact payment to the producer for the increased milk production.

                  Table 6.--Yearly Increased Income on Average Percentage Increased Production
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            No. Cows                  Pounds        % Increase     Increase lbs.     Av. Price      Increase $
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40..............................         700,000             1.8          12,600           $.286             $36
57..............................       1,000,000             1.8          18,000            .286              51
86..............................       1,500,000             1.8          27,000            .286              77
285.............................       5,000,000             1.8          90,000            .286             257
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    Table 7 shows the comparison between the income (reduced income) a 
producer would not receive due to decreasing production by five (5) 
percent, and the financial benefit for that production decrease under 
the proposed supply management program. The table applies the average 
compact producer price of $.286 for 1998 to compute the value of 
reduced income and applies the same assumptions as used in Table 5 to 
show the effect of the proposed supply management program (SMP).

     Table 7.--Comparison of Reduced Compact Income to Supply Management Benefits for 5% Production Decrease
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                                                                                                    Net income
            No. Cows              Reduced pounds   Average price  Reduced income  Net SMP refund     increase
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40..............................          35,000           $.286            $100           $1794           $1694
57..............................          50,000            .286             143            1920            1777
86..............................          75,000            .286             214            2130            1916
285.............................         250,000            .286             715            3600            2885
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    The Commission is especially interested in comments regarding the 
level of refund payment that would best meet the purposes of the supply 
management program.

III. Proposed Technical Amendments to the Over-Order Price 
Regulation

    The Commission proposes to amend Secs. 1306.3 (c) and (e) and to 
add a new Part 1309 to provide the necessary regulations to implement 
the proposed supply management assessment/refund program. The 
Commission also proposes to make corresponding technical changes 
required by the specific amendments and additions to the current 
regulations.
    The Commission proposes to amend Sec. 1306.3(c) to delete 
subsections (1) and (2) and to specify that any surplus remaining in an 
escrow account established to meet a potential obligation to the 
Commodity Credit Corporation (CCC) would be returned to the producer-
settlement fund for distribution to all producers. These changes 
eliminate the current provisions for returning the surplus funds to 
only those producers who did not increase production in the federal 
fiscal year. The Commission proposes this change because, with the 
implementation of the supply management assessment/refund program and 
the corresponding reduction of the producer pool, the limitation on the 
CCC refund of a surplus to only those producers who did not increase 
production would no longer be appropriate.
    The Commission proposes to amend Sec. 1306.3, by first 
redesignating existing paragraphs (e) through (g) as paragraphs (f) 
through (h) and adding a new paragraph (e). The new paragraph will 
allow the Commission to withhold $250,000 from the producer pool to 
fund the supply management-settlement fund. In months when there either 
is no producer pool or the amount of the pool is insufficient, then the 
obligation will accrue to the next available pool. This provision will 
allow the Commission to fund the supply management-settlement fund at 
an amount up to three million dollars per calendar year.
    A new Part 1309 is proposed to provide the regulations to implement 
the supply management program. Section 1309.1 defines producer 
qualifications for the refund program. Section 1309.2 defines the 
procedure for computing the refund prices to be paid to qualified 
producers. Section 1309.3 would provide the authority for the 
establishment of a supply management-settlement fund. Finally, 
Sec. 1309.4 would describe the procedure for issuing payments to 
producers eligible for a refund under the supply management program.

Official Notice of Technical, Scientific or Other Matters

    Pursuant to the Commission regulations, 7 CFR 1361.5(g)(5), the 
Commission hereby gives public notice that it may take official notice, 
at the public hearing May 5, 1999, or afterward, of relevant facts, 
statistics,

[[Page 19088]]

data, conclusions, and other information provided by or through the 
United States Department of Agriculture, including, but not limited to, 
matters reported by the National Agricultural Statistics Service, the 
Market Administrators, the Economic Research Service, the Agricultural 
Marketing Service and information, data and statistics developed and 
maintained by the Departments of Agriculture of the States or 
Commonwealth within the Compact regulated area.
    The Commission will also receive into the record of this rulemaking 
proceeding the entire record, including the public hearing transcript 
and written comments and submissions, of the subjects and issues 
rulemaking proceeding regarding whether additional supply management 
policies and provisions should be incorporated into the Over-order 
Price Regulation.

Public Participation in Rulemaking Proceedings

    The Commission seeks and encourages oral and written testimony and 
comments from all interested persons regarding these proposed rules. 
The Commission continues to benefit from the valuable insights and 
active participation of all segments of the affected community 
including consumers, processors and producers in the development and 
administration of the Over-order Price Regulation.

Date, Time and Location of the Public Hearing

    The Northeast Dairy Compact Commission will hold a public hearing 
to commence at 9:00 a.m., and to conclude no later than 12:00 p.m., on 
May 5, 1999 at the Wayfarer Inn, 121 S. River Road, U.S. Route 3, 
Bedford, New Hampshire.

Request for Pre-filed Testimony and Written Comments

    Pursuant to the Commission rules, 7 CFR 1361.4, any person may 
participate in the rulemaking proceeding independent of the hearing 
process by submitting written comments or exhibits to the Commission. 
Comments and exhibits may be submitted at any time before 5:00 p.m. on 
May 19, 1999.

    Please note: Comments and exhibits will be made part of the 
record of the rulemaking proceeding only if they identify the 
author's name, address and occupation, and if they include a sworn 
and notarized statement indicating that the comment and/or exhibit 
is presented based upon the author's personal knowledge and belief. 
Facsimile copies will be accepted up until the 5:00 p.m. deadline, 
but the original must then be sent by ordinary mail.

    The Commission is requesting pre-filed testimony from any 
interested person. Pre-filed testimony must include the name, address 
and occupation of the witness and a sworn notarized statement 
indicating that the testimony is presented based upon the author's 
personal knowledge and belief. Pre-filed testimony must be received in 
the Commission office no later than 5:00 p.m. April 26, 1999 to insure 
distribution to Commission members prior to the public hearing.
    Pre-filed testimony, comments and exhibits should be sent to: 
Northeast Dairy Compact Commission, 34 Barre Street, Suite 2, 
Montpelier, Vermont 05602 or by facsimile to (802) 229-2028.

List of Subjects in 7 CFR Parts 1306 and 1309

    Milk.

Codification in Code of Federal Regulations

    For reasons set forth in the preamble, the Northeast Dairy Compact 
Commission proposes to amend 7 CFR part 1306 and to add a new part 1309 
as follows:

PART 1306--COMPACT OVER-ORDER PRODUCER PRICE

    1. The authority citation for part 1306 continues to read as 
follows:

    Authority: 7 U.S.C. 7256.

    2. In section 1306.3 revise paragraph (c), redesignate paragraphs 
(e) through (g) as paragraphs (f) through (h), and add new paragraph 
(e) to read as follows:


Sec. 1306.3  Computation of basic over-order producer price.

* * * * *
    (c) In any month when the average percentage increase in production 
in the regulated area comes within 0.25 of the average percentage 
increase in production for the nation, subtract from the total value 
computed pursuant to paragraph (a) of this section, for the purpose of 
retaining a reserve, an amount estimated by the commission in 
consultation with the USDA for anticipated cost to reimburse the 
Commodity Credit Corporation (CCC) at the end of its fiscal year for 
any surplus milk purchases. Should those funds not be needed because no 
surplus purchases were made by the CCC at the end of its fiscal year or 
there is a surplus in the fund, it is to be returned to the producer-
settlement fund.
* * * * *
    (e) Subtract $250,000 from the total value computed pursuant to 
paragraph (a) of this section and deposit that amount in the supply 
management-settlement fund, in the event there is no monthly pool 
because there is no over-order obligation or there is insufficient 
funds available, the obligation under this section will accrue to the 
next available pool;
* * * * *
    3. A new part 1309 is added to read as follows:

PART 1309--SUPPLY MANAGEMENT REFUND PROGRAM

Sec.
1309.1  Producer qualification for supply management refund program.
1309.2  Computation of supply management refund prices.
1309.3  Supply management-settlement fund.
1309.4  Payment to producers of supply management refund.

    Authority: 7 U.S.C. 7256.

Sec. 1309.1  Producer qualification for supply management refund 
program.

    A dairy farmer who is a qualified producer pursuant to Sec. 1301.11 
of this chapter for the entire refund year and the dairy farmer's milk 
production during the refund year is less than or the increase is not 
more than 1% of the milk production of the preceding calendar year.


Sec. 1309.2  Computation of supply management refund prices.

    The compact commission shall compute the supply management refund 
prices applicable to all qualified milk as follows:
    (a) Combine into one total the values, including all interest 
earned, deducted pursuant to Sec. 1306.3(e) of this chapter for the 
refund year;
    (b) Subtract 50% from the total value computed pursuant to 
paragraph (a) of this section to be used for the per farm payments to 
producers who submitted documentation pursuant to Sec. 1309.4(a);
    (c) Add the unobligated balance of the supply management-settlement 
fund;
    (d) Divide the resulting amount by the sum of all milk production 
reduction reported by producers qualified pursuant to Sec. 1309.1 and 
who submitted documentation pursuant to Sec. 1309.4(a); and
    (e) Subtract not less than one (1) cent nor more than two (2) cents 
for the purpose of retaining a cash balance in the supply management-
settlement fund. The result shall be the supply management refund price 
for the year.


Sec. 1309.3  Supply management-settlement fund.

    (a) The compact commission shall establish and maintain a separate 
fund

[[Page 19089]]

known as the supply management-settlement fund. It shall deposit into 
the fund all amounts deducted pursuant to Sec. 1306.3(e) of this 
chapter and the amount subtracted under Sec. 1309.2(e). It shall pay 
from the fund all amounts due producers pursuant to Sec. 1309.4 and the 
amount added pursuant to Sec. 1309.2(c);
    (b) All amounts subtracted under Sec. 1309.2(e), including interest 
earned thereon, shall remain in the supply management-settlement fund 
as an obligated balance until it is withdrawn for the purpose of 
effectuating Sec. 1309.2(c);
    (c) The compact commission shall place all monies subtracted under 
Sec. 1306.3(e) of this chapter and Sec. 1309.2(e) in an interest-
bearing bank account or accounts in a bank or banks duly approved as a 
Federal depository for such monies, or invest them in short-term U.S. 
Government securities.


Sec. 1309.4  Payment to producers of supply management refund.

    (a) All producers who are qualified pursuant to Sec. 1309.1 shall 
become eligible to receive payment of the supply management refund 
computed pursuant to Sec. 1309.2 by submitting to the compact 
commission documentation that the producer milk production during the 
refund year is less than or the increase is not more than 1% of the 
milk production of the preceding calendar year. Such documentation 
shall be filed with the commission not later than 45 days after the end 
of the calendar year.
    (b) The commission will make payment to all producers qualified 
pursuant to Sec. 1309.1 and eligible pursuant to paragraph (a) of this 
section in the following manner:
    (1) A per farm payment computed by dividing the amount subtracted 
pursuant to Sec. 1309.2(b) by the total eligible producers; and
    (2) The value determined by multiplying the supply management 
refund price computed pursuant to Sec. 1309.2(e) by the producer's 
reduced milk pounds.

    Date: April 12, 1999.
Kenneth M. Becker,
Executive Director.
[FR Doc. 99-9521 Filed 4-16-99; 8:45 am]
BILLING CODE 1650-01-P