[Federal Register Volume 71, Number 73 (Monday, April 17, 2006)]
[Rules and Regulations]
[Pages 19621-19624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3669]



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  Federal Register / Vol. 71, No. 73 / Monday, April 17, 2006 / Rules 
and Regulations  

[[Page 19621]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1430

RIN 0560-AH47


Milk Income Loss Contract Program

AGENCIES: Commodity Credit Corporation, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule amends the regulations for the Milk Income Loss 
Contract (MILC) Program as authorized by the Agriculture Reconciliation 
Act of 2005 to extend the program from October 1, 2005, to September 
30, 2007. This rule also decreases the percentage rate for the payment 
calculation and removes the transition rule required at the beginning 
of the program.

DATES: Effective Date: April 13, 2006.

FOR FURTHER INFORMATION CONTACT: Danielle Cooke, Special Programs 
Manager, Price Support Division, FSA/USDA, STOP 0512, 1400 Independence 
Ave., SW., Washington, DC 20250-0512; telephone (202) 720-1919; 
facsimile (202) 690-1536; e-mail: [email protected]. Persons 
with disabilities who require alternative means for communication 
(Braille, large print, audiotape, etc.) should contact the USDA Target 
Center at (202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Background

    This final rule implements amendments made by section 1101 of the 
Deficit Reduction Act of 2005 (2005 Act) to section 1502 of the Farm 
Security and Rural Investment Act of 2002 (2002 Act), which is the 
authority for the Milk Income Loss Contract (MILC) Program administered 
by the Commodity Credit Corporation (CCC). The MILC program was 
implemented by a final rule on October 18, 2002 (67 FR 64454). The 
program was in effect from December 1, 2001, through September 30, 2005 
and was extended by the 2005 Act with minor amendments. Accordingly, 
this rule amends 7 CFR part 1430 to: continue the MILC program until 
September 30, 2007; decrease the payment rate percentage during the 
extension period; and remove transition payment provisions.
    The MILC Program supports the dairy industry by providing direct 
counter-cyclical payments to milk producers when the Boston Milk 
Marketing Order Class I price for fluid milk falls below the benchmark 
of $16.94 per hundredweight (cwt). An eligible operation is determined 
in each state in the same manner as under Dairy Market Loss Assistance 
(DMLA) Program contracts. Any new contracts must be unaffiliated with 
prior DMLA operations. Each fiscal year, eligible dairy operations can 
receive a monthly payment based on monthly commercial milk marketings, 
up to a maximum of 2.4 million pounds per dairy operation for the 
fiscal year. A dairy operation's eligible monthly payment was based on 
the quantity of milk sold in that month, up to a maximum of 2.4 million 
pounds, multiplied by 45 percent of the difference between $16.94/cwt 
and the Federal milk marketing order Class I milk price per cwt in 
Boston, Massachusetts for that month. To facilitate the transition to 
this new program from previous DMLA programs administered by FSA, a 
transition period provision was implemented using a similar payment 
calculation for the period from December 1, 2001, through the month 
preceding the month the producer enters into a contract with CCC.
    To be eligible for the MILC program producers in a dairy operation 
must: (1) Produce in the United States and market milk commercially 
during the period December 1, 2001, through September 30, 2005; (2) 
enter into a contract with CCC to provide monthly marketing data to 
receive payments; and (3) be engaged in the business of producing and 
marketing agricultural products at the time of signing the MILC program 
contract. MILC contracts under these program provisions expired on 
September 30, 2005.
    The extension of the MILC program commences October 1, 2005 and 
ends September 30, 2007. Generally other program provisions remain the 
same under the MILC Program extension, except that a dairy operation's 
eligible monthly payment will be the quantity of milk sold in that 
month, up to a maximum of 2.4 million pounds, multiplied by 34 percent 
of the difference between $16.94 per cwt and the Federal milk marketing 
order Class I milk price per cwt in Boston for that month. Also, 
section 1101 of the 2005 Act provides: (1) As of September 1, 2007, the 
percent difference in price per cwt used to calculate payments is zero 
(0%); (2) the program will expire on September 30, 2007, and; (3) 
transition period provisions which were necessary for the transition 
from previous Dairy Market Loss Assistance programs to the new MILC 
Program are deleted.
    To be eligible producers must: (1) Enter into a contract with CCC 
to provide monthly marketing data to receive payments during the 
extended period; (2) agree to the program provisions for the extended 
period; (3) be actively engaged in the business of producing and 
marketing agricultural products anytime during the period of October 1, 
2005, through September 30, 2007; and (4) select the MILC production 
start month that the dairy operation would like to begin receiving 
payment from CCC based on the selected month's commercially marketed 
production. Dairy operations may apply in person at FSA county offices 
during regular business hours, or via facsimile or the Internet at 
http://www.fsa.usda.gov/dafp/psd/. Since the legislation authorizing 
the extension of this program was signed after the beginning date of 
the extended period and although a payment rate was not in effect 
during the months of October and November 2005, payment rates have been 
established for the months of December 2005 through May 2006. 
Therefore, for the CCC fiscal year (FY) 2006 only, during a sign-up 
period from April 13, 2006 to May 17, 2006, producers in dairy 
operations will be allowed to select retroactively, with some 
limitations, the MILC production start month from these months. 
Producers choosing not to select from the retroactive months of October 
2005 through May 2006, will be allowed, with some limitations, to 
choose a month from the months remaining in the fiscal year for which 
CCC will begin

[[Page 19622]]

issuing payments based on the selected month's commercial milk 
marketings. Producers entering into a MILC after the designated sign-up 
period ends but before the program expires on September 30, 2007, and 
producers during FY 2007 are also allowed to choose the MILC production 
start month for the dairy operation. Those selections, however, under 
this rule must be made in advance of the announcement of the Boston 
Class I milk price and establishment of the MILC payment rate for those 
months. Producers submitting contracts after the designated sign-up 
period will not have the option to select from retroactive months.
    MILC payments will be based on the commercially-marketed milk 
production from the MILC production start month selected by the dairy 
operation, and continue with each subsequent month's commercial milk 
production consecutively thereafter until the earlier of the maximum 
payment quantity of 2.4 million pounds is reached or the end of the 
applicable FY. Other policy determinations necessary to implement the 
statute are reflected in the text of the rule.

Notice and Comment

    Section 1601(c) of the Farm Security and Rural Investment Act of 
2002 (Pub. L. 107-171) requires that the regulations necessary to 
implement Title I of the 2002 Act are to be promulgated without regard 
to the notice and comment provisions of 5 U.S.C. 553 or the Statement 
of Policy of the Secretary of Agriculture effective July 24, 1971, (36 
FR 13804) relating to notices of proposed rulemaking and public 
participation in rulemaking. These regulations are thus issued as 
final.

Executive Order 12866

    This final rule is economically significant according to Executive 
Order 12866 and has been reviewed by the Office of Management and 
Budget (OMB). A cost-benefit assessment of the actions this rule will 
take was completed and is summarized after the background section.

Federal Assistance Programs

    The title and number of the Federal assistance program in the 
Catalog of Federal Domestic Assistance to which this final rule applies 
is 10.051--Commodity Loans and Loan Deficiency Payments.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable to this rule 
because the Office of the Secretary, FSA and CCC are not required by 5 
U.S.C. 553 or any other law to publish a notice of proposed rulemaking 
with respect to the subject matter of this rule.

Environmental Assessment

    The environmental impacts of this final rule were considered in 
accordance with the provisions of the National Environmental Policy Act 
of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA's 
regulations for compliance with NEPA, 7 CFR part 799. FSA has concluded 
that the rule will have no significant impacts upon the human 
environment as documented through the completion of an environmental 
evaluation. A copy of the environmental evaluation is available for 
inspection and review upon request.

Executive Order 12778

    The final rule has been reviewed under Executive Order 12778. This 
rule preempts State laws that are inconsistent with its provisions. 
This rule is retroactive to September 30, 2005. Before any judicial 
action may be brought regarding this rule, all administrative remedies 
must be exhausted.

Executive Order 12372

    This program is not subject to Executive Order 12372, which 
requires consultation with State and local officials. See the notice 
related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June 
24, 1983).

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does 
not apply to this rule because the Office of the Secretary, FSA and CCC 
are not required by 5 U.S.C. 553 or any other law to publish a notice 
of proposed rulemaking about the subject matter of this rule. Further, 
this rule imposes no unfunded mandates, as defined in UMRA, on any 
local, state, or tribal government or the private sector.

Paperwork Reduction Act

    Section 1601(c) of the 2002 Act provides that the promulgation of 
regulations and the administration of Title I of the 2002 Act shall be 
made without regard to chapter 5 of title 44 of the United States Code 
(the Paperwork Reduction Act). Accordingly, these regulations and the 
forms, and other information collection activities needed to administer 
the program authorized by these regulations, are not subject to review 
by the Office of Management and Budget under the Paperwork Reduction 
Act.

Summary of Economic Impacts

    The MILC has paid about $2.0 billion to dairy operations over the 
four initial years of operation. Expenditures during the extended 
period, FY 2006 and FY 2007, are expected to be between $700 and $900 
million based on estimated milk prices during the period. Dairy farm 
income and Government expenditures will increase equally.

List of Subjects in 7 CFR Part 1430

    Dairy products, Loan programs/agriculture, Price support programs, 
Reporting and recordkeeping requirements.

0
For the reasons set out in the preamble, 7 CFR part 1430 is amended as 
set forth below.

PART 1430--DAIRY PRODUCTS

0
1. The authority citation continues to read as follows:

    Authority: 7 U.S.C. 7981 and 7982; 15 U.S.C. 714b and 714c; Pub. 
L. 108-324, 118 Stat. 1220.

Subpart B--Milk Income Loss Contract Program

0
2. Amend Sec.  1430.202 by revising the definition of ``Eligible 
production'' to read as follows:


Sec.  1430.202  Definitions.

* * * * *
    Eligible production means milk that was produced by cows in the 
United States and marketed commercially during the period of December 
1, 2001, through September 30, 2007, up to a maximum of 2.4 million 
pounds per dairy operation per fiscal year.
* * * * *

0
3. Amend Sec.  1430.203 by revising paragraphs (a) and (f) to read as 
follows:


Sec.  1430.203  Eligibility.

* * * * *
    (a) Have produced milk in the United States and commercially 
marketed the milk produced anytime during the period of December 1, 
2001, through September 30, 2007;
* * * * *
    (f) Be actively engaged in the business of producing and marketing 
agricultural products anytime during the period of December 1, 2001, 
through September 30, 2007.
* * * * *

0
4. Revise Sec.  1430.205 to read as follows:

[[Page 19623]]

Sec.  1430.205  Selection of starting month.

    (a) A dairy operation that enters into a MILC with CCC must 
designate the starting production month that it desires CCC to begin 
making payments to them. The starting production month must be selected 
on or before the 15th of the month before the month for which payment 
is sought during fiscal year 2002 through fiscal year 2005. The 
starting production month must be selected on or before the 14th of the 
month before the month for which payment is sought during fiscal year 
2006 and fiscal year 2007. If such date falls on a weekend, the dairy 
operation production start month selection must be made on the last 
business day preceding the weekend. A dairy operation cannot select a 
month for payment which:
    (1) Has already begun, except as provided in paragraph (c)(1) of 
this section;
    (2) Has already passed; or
    (3) During which no milk production was produced by the dairy 
operation.
    (b) During fiscal year 2006 only, during April 13, 2006 to May 17, 
2006, a dairy operation can select from:
    (1) Any month beginning October 2005 through May 2006, in which 
there was a payment rate in effect; or
    (2) Any month beginning June 2006 through September 2006, for which 
the payment rate is not known and in accordance with paragraph (a) of 
this section.
    (c) Dairy operations that submit a MILC after the CCC-designated 
signup period for fiscal year 2006 set forth in paragraph (b) of this 
section, but before September 30, 2007, can select the MILC production 
start month from:
    (1) The month the MILC is submitted to CCC by the dairy operation 
or the next consecutive month with a payment rate in effect following 
the month the MILC is submitted to CCC by the dairy operation, if no 
payment rate is in effect in the month the MILC is submitted;
    (2) The months remaining in the fiscal year in which the MILC is 
submitted for which the payment rate is not known in accordance with 
paragraph (a) of this section.
    (d) Dairy operations may change the production starting month on or 
before:
    (1) The 15th day of the month previously selected during fiscal 
years 2002 through 2005;
    (2) The 14th day of the month previously selected during fiscal 
years 2006 and 2007.
    (e) If a change of the production starting month is not made by the 
dates required by paragraph (d) of this section, the MILC production 
starting month cannot be changed until the next fiscal year. If the 
selected MILC production starting month is never modified, it will 
remain the same throughout the duration of the contract.
    (f) MILC payments will be made consecutively to the dairy operation 
on a monthly basis after the production starting month has been 
designated until the earlier of the following:
    (1) Payment quantity is reached in accordance with Sec.  1430.207; 
or
    (2) The end of the applicable fiscal year.
    (g)(1) During fiscal years 2002 through 2005, dairy operations that 
did not designate the month to begin receiving payments from CCC were 
issued consecutive payments on a monthly basis on marketed milk 
production beginning in the first month of the fiscal year with a 
payment rate in effect, unless FSA was notified that a month would be 
designated at a later date. During fiscal years 2006 and 2007, dairy 
operations must designate a MILC production start month to begin 
receiving payments from CCC. MILC production start month selections 
made during the signup period designated by CCC may be made as provided 
in paragraph (b)(1) of this section, otherwise MILC production start 
month selections must be made in accordance with paragraph (c) of this 
section.
    (2) Dairy operations with MILC production start months that begin 
with the month a MILC is submitted to FSA or that begin with the first 
month of the fiscal year with an effective payment rate will receive 
payments made by CCC consecutively on a monthly basis until the earlier 
of the following:
    (i) The maximum payment quantity is reached as determined in 
accordance with Sec.  1430.207; or
    (ii) The end of the applicable fiscal year.
    (h) All producers involved in the dairy operation must agree to the 
month designated. The dairy operation assumes the risk of not reaching 
the maximum payment quantity based on the month selected by the dairy 
operation. Payments will not be issued for past months for the sole 
purpose of reaching the maximum payment quantity.


Sec.  1430.206  [Removed]

0
5. Section 1430.206 is removed and reserved.
0
6. Amend Sec.  1430.208 by revising paragraphs (a), (b)(2), and adding 
(b)(3) and (c)(3) to read as follows:


Sec.  1430.208  Payment rate and dairy operation payment.

    (a) Payments under this subpart may be made to dairy operations 
when the Boston Class I milk price under the applicable Federal milk 
marketing order is below $16.94 per cwt. No payments will be made to 
dairy operations for marketings during the months that the Boston Class 
I milk price under the applicable milk marketing order is equal to or 
exceeds $16.94.
    (b) * * *
    (2) Multiplying the difference by 34 percent during the period 
beginning on October 1, 2005, and ending on August 31, 2007; and
    (3) Multiplying the difference by 0 percent during the period 
beginning on September 1, 2007, and ending on September 30, 2007.
    (c) * * *
    (3) Payments to dairy operations will be based on calculated 
payment rates rounded seven places to the right of the decimal.
* * * * *

0
7. Amend Sec.  1430.209 by revising the section heading and paragraph 
(a) to read as follows:


Sec.  1430.209  Proof of market loss production.

    (a) A dairy operation entering into a MILC must, based on 
instructions issued by the Deputy Administrator, provide adequate proof 
of the dairy operation's eligible production during the months of each 
fiscal year designated in the MILC. The dairy operation must also 
provide proof that the eligible production was commercially marketed 
during the months beginning October 1, 2005, and ending September 30, 
2007. Evidence of milk production claimed for payment shall be provided 
to CCC with supporting documentation under paragraph (b) of this 
section. All information provided is subject to verification, spot 
check and audit by FSA. Further verification information may be 
obtained from the dairy operation's milk handler or marketing 
cooperative if deemed necessary by CCC to verify provided information. 
Refusal to allow a representative of CCC or any other agency of the 
Department of Agriculture to verify any information provided will 
result in a determination of ineligibility for benefits under this 
subpart.
* * * * *

0
8. Amend Sec.  1430.211 by revising paragraph (a) to read as follows:


Sec.  1430.211  Duration of contracts.

    (a) Except as provided in Sec. Sec.  1430.205, or elsewhere in this 
subpart, a MILC entered into by producers in a dairy operation shall 
cover eligible production marketed by the producers

[[Page 19624]]

in the dairy operation during the period beginning with the first day 
of the month the producers in the dairy operation enter into an MILC 
and ending on September 30, 2007.
* * * * *

    Signed in Washington, DC, on April 12, 2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 06-3669 Filed 4-13-06; 1:29 pm]
BILLING CODE 3410-05-P