[Federal Register Volume 75, Number 136 (Friday, July 16, 2010)]
[Rules and Regulations]
[Pages 41365-41368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17409]



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 Rules and Regulations
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  Federal Register / Vol. 75, No. 136 / Friday, July 16, 2010 / Rules 
and Regulations  

[[Page 41365]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 760

Commodity Credit Corporation

7 CFR Part 1430

RIN 0560-AH88


Dairy Product Price Support Program and Dairy Indemnity Payment 
Program

AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.

ACTION: Final rule.

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

SUMMARY: This rule specifies regulations for the Dairy Product Price 
Support Program (DPPSP), which has replaced the Price Support Program 
for Milk, and amends regulations for the Dairy Indemnity Payment 
Program (DIPP). The two programs are authorized by the Food, 
Conservation, and Energy Act of 2008 (the 2008 Farm Bill) through 2012. 
The DPPSP supports the price of cheddar cheese, butter, and nonfat dry 
milk by providing a standing offer from Commodity Credit Corporation 
(CCC) to purchase those products at specific support prices. This rule 
specifies the minimum price support levels for cheddar cheese, butter, 
and nonfat dry milk. This rule also specifies the minimum price at 
which CCC may sell dairy products from inventory. DIPP indemnifies 
dairy farmers and manufacturers of dairy products for losses suffered 
due to contamination of milk and milk products. This rule extends DIPP 
through 2012 and amends the method through which DIPP payments will be 
disbursed in the event that available appropriated funds are 
insufficient to pay all claims. That method is changing from a pro rata 
method to a first-come, first-paid basis.

DATES: Effective Date: July 16, 2010.

FOR FURTHER INFORMATION CONTACT: 
    For Dairy Product Price Support Program: Milton Madison, Dairy and 
Sweeteners Analysis Group, Economic Policy and Analysis Staff, Farm 
Service Agency (FSA), U.S. Department of Agriculture (USDA), Mail Stop 
0516, 1400 Independence Ave., SW., Washington, DC 20250-0516; phone: 
(202) 690-0050; fax: (202) 690-1480, or e-mail: 
[email protected].
    For Dairy Indemnity Payment Program: Danielle Cooke, Special 
Programs Manager, Price Support Division, FSA, USDA, Mail Stop 0512, 
1400 Independence Ave., SW., Washington, DC, 20250-0512; phone (202) 
720-1919; fax (202) 690-1536; or 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

    The 2008 Farm Bill (Pub. L. 110-246) requires amendments to the 
regulations for the Dairy Product Price Support Program as authorized, 
and DIPP as reauthorized and extended through 2012. The changes for 
each of the programs are explained below.

Dairy Product Price Support

    Section 1501 of the 2008 Farm Bill (7 U.S.C. 8771) authorizes the 
Dairy Product Price Support Program, completely replacing the Price 
Support Program for Milk. The 2008 Farm Bill does not fundamentally 
change the basic structure or goals of the previous program, which 
required CCC to support milk prices through the purchase of dairy 
products. The 2008 Farm Bill specifies the minimum CCC purchase prices 
for cheddar cheese, butter, and nonfat dry milk; previously only the 
support price for milk was specified. The 2008 Farm Bill also includes 
new provisions that CCC is implementing in this rule to reduce the 
dairy product purchase prices if CCC purchases exceed certain threshold 
quantities. Those threshold quantities specified in the 2008 Farm Bill 
are sufficiently large that it is unlikely the minimum support prices 
will be impacted.
    This rule in 7 CFR part 1430, subpart A, specifies rules for the 
DPPSP consistent with the 2008 Farm Bill and with current purchase 
requirements of the agency in the wake of the new and mandatory 
legislation.
    This rule provides a definition of ``net removals'' of dairy 
products from the market through the Dairy Product Price Support 
Program and the Dairy Export Incentive Program (authorized in 15 U.S.C. 
713a-14). Section 1501 of the 2008 Farm Bill, which specifies how net 
removals are calculated, is the basis for the definition. CCC uses the 
amount of net removals during a 12 month period to determine whether 
CCC purchases have exceeded the threshold quantities for reduced 
support prices. The definition is consistent with the definition USDA 
uses in the monthly World Agricultural Supply and Demand Estimates 
(WASDE) report on the milk market.
    The requirements for dairy products to be eligible for CCC 
purchase, specified in Sec.  1430.102, ``Eligible Products,'' are 
similar to the requirements in the regulations for the previous Price 
Support Program for Milk. The eligibility requirements have been 
reorganized for clarity. A definition of ``eligible offeror'' is added 
by this rule. The term ``eligible offeror'' is used in the current 
regulations but is not defined; this rule adds a definition that 
clarifies the eligible types of persons or legal entities who may sell 
dairy products to CCC. To be eligible, the offeror must be the 
manufacturer of the commodity offered or a marketing cooperative for 
the manufacturer. The definition of ``eligible offeror'' is a 
discretionary change; all other provisions in this rule for the Dairy 
Product Price Support Program are required by the 2008 Farm Bill or 
were established for the previous Price Support Program for Milk.
    This rule implements the 2008 Farm Bill dairy product purchase 
prices in Sec.  1430.103, ``Purchase Prices.'' The prices specified in 
this regulation are minimum support prices; they are specified using 
the ``not less than X cents per pound'' language from the 2008 Farm 
Bill. The minimum purchase prices are the same as the purchase prices 
CCC established under the Price Support Program for Milk, so the new 
purchase price requirements will have little effect on the extent of 
dairy price support or on program administration unless the purchase 
prices are set above the minimums.

[[Page 41366]]

    The 2008 Farm Bill requires the Secretary of Agriculture to pay 
uniform prices for dairy products across the United States. Therefore, 
the support price for each type of dairy product applies to all regions 
of the United States.
    As required by the 2008 Farm Bill, this rule specifies purchase 
threshold quantities, which, if exceeded, would decrease the minimum 
allowable CCC purchase prices for dairy products. As explained below, 
these purchase threshold quantities are very large and are unlikely to 
be exceeded, so the lower support prices are unlikely to ever be 
permitted.
    As specified in the 2008 Farm Bill and in this rule, if CCC cheddar 
cheese purchases over a 12 month period, less unrestricted sales by 
CCC, exceed 200 million pounds, but do not exceed 400 million pounds, 
then the purchase price may be reduced by 10 cents per pound during the 
immediately following month. If the cheese purchases, less unrestricted 
sales, exceed 400 million pounds, then the purchase price may be 
reduced by 20 cents per pound during the immediately following month. 
The largest CCC total fiscal year (FY) annual cheese purchase in the 
last 10 years was 42 million pounds in FY 2003. Cheese purchases by CCC 
have not exceeded 200 million pounds since FY 1988.
    If CCC butter purchases over a 12 month period, less unrestricted 
sales, exceed 450 million pounds, but not more than 650 million pounds, 
then the purchase price may be reduced 10 cents per pound during the 
immediately following month. If the butter purchases, less unrestricted 
sales, exceed 650 million pounds, then the purchase price may be 
reduced by 20 cents per pound during the immediately following month. 
The highest CCC total fiscal year butter purchase in the last 10 years 
was 12 million pounds in FY 2003. Butter purchases by CCC have not 
exceeded the minimum purchase threshold of 450 million pounds since FY 
1992.
    If CCC nonfat dry milk purchases over a 12 month period, less 
unrestricted sales, exceed 600 million pounds, but not more than 800 
million pounds, then the purchase price may be reduced 5 cents per 
pound during the immediately following month. If the nonfat dry milk 
purchases, less unrestricted sales, exceed 800 million pounds, then the 
purchase price may be reduced by 10 cents per pound during the 
immediately following month. The largest nonfat dry milk CCC purchase 
in the past 10 years was 656 million pounds in FY 2002, which slightly 
exceeded the minimum purchase threshold.
    Section 1430.103(b) provides that CCC may offer to purchase cheddar 
cheese, butter, fortified nonfat dried milk, or fortified instant 
nonfat dry milk in consumer-sized ready-to-consume packages at a 
premium to the purchase prices for cheddar cheese, butter, and nonfat 
dry milk announced in accordance with Sec.  1430.103(a). Any funds 
expended to buy products processed into such packages in excess of the 
announced price for the cheddar cheese, butter, and nonfat dry milk 
would not be considered a price support expense and would have to be 
apportioned under section 416(a) of the Agricultural Adjustment Act of 
1949.
    Section 1430.103(c) provides that CCC may offer to purchase block 
and barrel cheddar cheese with a lower moisture content than is 
specified in Sec.  1430.102(c), as evidenced by the grading 
certificate, at a higher price than is announced in accordance with 
Sec.  1430.103(a). The formula for determining the premium price for 
lower moisture cheddar cheese would be specified in the CCC purchase 
announcement. Although a similar provision did not appear in the Price 
Support Program for Milk regulations, the former regulation provided 
that CCC purchases were subject to purchase announcements and those 
announcements did allow for low moisture purchases and price 
adjustments.
    Section 1430.104, ``Sales from Inventories,'' implements the 
requirement in the 2008 Farm Bill that CCC may not sell its dairy 
product inventory for unrestricted use at less than 110 percent of 
CCC's purchase price. The CCC purchase price used in this calculation 
is the support price before the price was reduced for any purchase 
quantity thresholds. Section 1430.104 also specifies that CCC may sell 
its dairy product inventory for restricted use, which is more common 
than sales for unrestricted use, at an unspecified price. CCC conducts 
restricted use sales from time to time, such as sales for casein 
manufacturing or livestock feed use.
    In addition to the changes discussed above, this rule reorganizes 7 
CFR part 1430 for clarity, but the remaining provisions are 
substantially similar to those for the previous program.

Dairy Indemnity Payment Program

    The purpose of DIPP is to indemnify dairy farmers and manufacturers 
of dairy products who, through no fault of their own, suffer income 
losses with respect to milk or milk products that were removed from 
commercial markets because such milk or milk products contained certain 
harmful pesticide residues, chemicals, or toxic substances, or were 
contaminated by nuclear radiation or fallout.
    Section 1505 of the 2008 Farm Bill amends 7 U.S.C. 450l to extend 
DIPP authorization through 2012, without changing any provisions of the 
program. This rule amends 7 CFR part 760, subpart A, to reflect the 
extension by updating the authority citation using the U.S. Code 
citation.
    This rule is changing the method by which DIPP funds will be 
distributed if the available appropriated funds are not sufficient to 
pay all claims. This is a discretionary change; it is not required by 
the 2008 Farm Bill. This change will allow payments to be made as 
claims arise by implementing a ``first-come, first-paid'' system. This 
will provide enhanced relief over the alternative of delaying all 
claims to the end of the year to determine whether the demand will 
exceed the supply of funds, requiring pro-rated partial payments. If 
the funds are not sufficient to pay all claims, Congress would need to 
determine whether to enhance the appropriation for later years. The 
alternative method of pro-rating claims based on available funding 
would likely result in no one receiving immediate payment even though 
in most years the funds are sufficient to cover all claims. The 
adoption of a first-come, first-paid basis should be in keeping with 
the general nature and history of the program.
    Also, section 1601(c)(2) of the 2008 Farm Bill exempts this rule 
from Paperwork Reduction Act (44 U.S.C. Chapter 35) requirements, 
therefore, this rule removes Sec.  760.34 that specified the OMB 
control number for the previous information collection approval.

Notice and Comment

    These regulations are exempt from the notice and comment 
requirements of the Administrative Procedures Act (5 U.S.C. 553), as 
specified in section 1601(c) of the 2008 Farm Bill, which requires that 
the regulations be promulgated and administered 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. Therefore, these regulations are made 
effective by this rule without a prior proposed rule or prior public 
comment.

Executive Order 12866

    The Office of Management and Budget (OMB) designated this rule as 
not significant under Executive Order 12866

[[Page 41367]]

and therefore this rule has not been reviewed by OMB.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act because 
USDA is not required by 5 U.S.C. 553 or any other law to publish a 
notice of proposed rulemaking for this rule.

Environmental Review

    The environmental impacts of this rule have been considered in a 
manner consistent with the provisions of the National Environmental 
Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations 
for compliance with NEPA (7 CFR part 799). The changes required by the 
2008 Farm Bill that are identified in this rule do not change the 
structure or goals of the program and can be considered administrative 
in nature. Therefore, FSA has determined that NEPA does not apply to 
this final rule and no environment assessment or environmental impact 
statement will be prepared.

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 in the Federal 
Register on June 24, 1983 (48 FR 29115).

Executive Order 12988

    This rule has been reviewed under Executive Order 12988. This rule 
is not retroactive and it does not preempt State or local laws, 
regulations, or policies unless they present an irreconcilable conflict 
with this rule. Before any judicial action may be brought regarding the 
provisions of this rule the administrative appeal provisions of 7 CFR 
parts 11 and 780 must be exhausted.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the Federal 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

Executive Order 13175

    The policies contained in this rule do not have tribal implications 
that preempt tribal law.

Unfunded Mandates

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local, and tribal government or the private sector. 
In addition, USDA was not required to publish a notice of proposed 
rulemaking for this rule. Therefore, this rule is not subject to the 
requirements of sections 202 and 205 of UMRA.

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 10.053--Dairy Indemnity Payments.

Paperwork Reduction Act

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
section 1601(c)(2) of the 2008 Farm Bill, which provides that these 
regulations be promulgated and administered without regard to the 
Paperwork Reduction Act.

E-Government Act Compliance

    CCC and FSA are committed to complying with the E-Government Act, 
to promote the use of the Internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

List of Subjects

7 CFR Part 760

    Dairy products, Indemnity payments, Pesticides and pests.

7 CFR Part 1430

    Dairy products, Fraud, Penalties, Price support programs, Reporting 
and recordkeeping requirements.

0
For the reasons discussed above, 7 CFR parts 760 and 1430 are amended 
as follows:

PART 760--INDEMNITY PAYMENT PROGRAMS

Subpart A--Dairy Indemnity Payment Program

0
1. Revise the authority citation for 7 CFR part 760, subpart A, to read 
as follows:

    Authority: 7 U.S.C. 450j-l.


0
2. Revise Sec.  760.33 to read as follows:


Sec.  760.33  Availability of funds.

    (a) Payment of indemnity claims will be contingent upon the 
availability of FSA funds to pay such claims. Claims will be, to the 
extent practicable within funding limits, paid from available funds, on 
a first-come, first-paid basis, based on the date FSA approves the 
application, until funds available in that fiscal year have been 
expended.
    (b) DIPP claims received in a fiscal year after all available funds 
have been expended will not receive payment for such claims.


Sec.  760.34  [Removed]

0
3. Remove Sec.  760.34.

PART 1430--DAIRY PRODUCTS

0
4. Revise the authority citation for part 1430 to read as follows:

    Authority: 7 U.S.C. 7982, 8771, and 8773; and 15 U.S.C. 714b and 
714c.


0
5. Revise 7 CFR part 1430, subpart A, to read as follows:
Subpart A--Dairy Product Price Support Program
Sec.
1430.100 Applicability.
1430.101 Definitions.
1430.102 Eligible products.
1430.103 Purchase prices.
1430.104 Sales from inventories.

Subpart A--Dairy Product Price Support Program


Sec.  1430.100  Applicability.

    During the period beginning on January 1, 2008, and ending December 
31, 2012, the Secretary of Agriculture will support the price of 
cheddar cheese, butter, and nonfat dry milk by providing a standing 
offer to purchase those products from eligible offerors. The products 
must be made from cow's milk produced in the United States. Purchases 
are subject to the terms and conditions in CCC's purchase 
announcements.


Sec.  1430.101  Definitions.

    For purposes of this subpart, the following definitions apply:
    CCC means the Commodity Credit Corporation, USDA.
    Eligible offeror means the person, firm, corporation, or other 
legal entity obligated by the purchase agreement with CCC. The product 
must not have been sold before to another party and the offeror must be 
the manufacturer of the dairy product offered or a marketing 
cooperative for the manufacturer.
    Net removals means, for a given period of time, the total dairy 
product

[[Page 41368]]

purchased by CCC through the program in this subpart plus the quantity 
of the product exported through the Dairy Export Incentive Program (as 
authorized in 15 U.S.C. 713a-14), less the quantity sold by CCC for 
unrestricted use.


Sec.  1430.102  Eligible products.

    (a) To be eligible for the program in this subpart, the products 
must be manufactured from dairy cow's milk produced in the United 
States, and must not have been previously owned by CCC. Dairy cow in 
this instance means an animal of the kind that produces the majority of 
dairy products in the United States and not, for example, cows of other 
species of animals such as yaks or oxen.
    (b) Products will be purchased only from eligible offerors of the 
product, and only in carlot weights.
    (c) The products purchased must be of the following grades and 
moisture content, as evidenced by USDA-issued inspection certificates:
    (1) Block cheddar cheese must be U.S. Grade A or higher, and the 
moisture content must not exceed 38.5 percent;
    (2) Barrel cheddar cheese must be U.S. Extra Grade, and the 
moisture content must not exceed 36.5 percent;
    (3) Butter must be U.S. Grade A or higher;
    (4) Nonfat dry milk must be U.S. Extra Grade, and the moisture 
content must not exceed 3.5 percent.
    (d) CCC may require other terms and conditions of purchase, as 
specified in CCC's purchase announcement.


Sec.  1430.103  Purchase prices.

    (a) CCC will offer to purchase products at the following prices for 
all regions of the United States:
    (1) Cheddar cheese in blocks for not less than $1.13 per pound; 
unless
    (i) Net removals of cheese for a period of 12 consecutive months 
exceed 200,000,000 pounds, but do not exceed 400,000,000 pounds, in 
which case the CCC block cheese purchase price will be not less than 
$1.03 per pound, during the immediately following month, or
    (ii) Net removals of cheese for a period of 12 consecutive months 
exceed 400,000,000 pounds, in which case the CCC block cheese purchase 
price will be not less than $0.93 per pound during the immediately 
following month;
    (2) Cheddar cheese in barrels for $0.03 per pound less than the 
cheddar cheese block price;
    (3) Butter for not less than $1.05 per pound; unless
    (i) Net removals of butter for a period of 12 consecutive months 
exceed 450,000,000 pounds, but do not exceed 650,000,000 pounds, in 
which case the CCC butter purchase price will be not less than $0.95 
per pound during the immediately following month, or
    (ii) Net removals of butter for a period of 12 consecutive months 
exceed 650,000,000 pounds, in which case the CCC butter purchase price 
will be not less than $0.85 per pound during the immediately following 
month; and
    (4) Nonfat dry milk for not less than $0.80 per pound, unless
    (i) Net removals of nonfat dry milk for a period of 12 consecutive 
months exceed 600,000,000 pounds, but do not exceed 800,000,000 pounds, 
in which case the CCC nonfat dry milk purchase price will be not less 
than $0.75 per pound during the immediately following month, or,
    (ii) Net removals of nonfat dry milk for a period of 12 consecutive 
months exceed 800,000,000 pounds, in which case the CCC nonfat dry milk 
purchase price will be not less than $0.70 per pound during the 
immediately following month.
    (b) CCC may offer to purchase cheddar cheese, butter, fortified 
nonfat dry milk, or fortified instant nonfat dry milk in consumer-sized 
ready-to-consume packages at a premium to the purchase prices for 
cheddar cheese, butter and nonfat dry milk specified in paragraph (a) 
of this section. Any such offers will be made through CCC's purchase 
announcements, and such offers may be limited by quantity and to a 
specific time period.
    (c) CCC may offer to purchase cheddar cheese with a lower moisture 
content than is specified in Sec.  1430.102(c) at a premium to the 
prices specified in paragraph (a) of this section. Any such offers will 
be made through CCC's purchase announcements, and such offers may be 
limited by quantity and to a specific time period.


Sec.  1430.104  Sales from inventories.

    (a) CCC may sell any dairy product purchased as specified in this 
subpart for unrestricted use at the market price prevailing for that 
product at the time of sale, except that the sale price will not be 
less than 110 percent of the purchase price specified in Sec.  
1430.103(a), before any price reduction for the amount of CCC net 
removals of the dairy products.
    (b) CCC may sell or distribute dairy products purchased under this 
section for restricted use when such sale is determined to maximize the 
return to CCC on its purchases.

    Signed in Washington, DC, on July 8, 2010.
Jonathan W. Coppess,
Administrator, Farm Service Agency, and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 2010-17409 Filed 7-15-10; 8:45 am]
BILLING CODE 3410-05-P