[Federal Register Volume 84, Number 47 (Monday, March 11, 2019)]
[Rules and Regulations]
[Pages 8590-8591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04347]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1000

[Docket no. AMS-DA-18-0096]


Federal Milk Marketing Orders--Amending the Class I Skim Milk 
Price Formula

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the Class I skim milk price formula for 
milk pooled under Federal milk marketing orders (FMMO) as required by 
the Agriculture Improvement Act of 2018 (2018 Farm Bill). Under the 
amended price formula, the Class I skim milk price will be the simple 
average of the monthly advanced pricing factors for Class III and Class 
IV skim milk, plus $0.74 per cwt, plus the applicable adjusted Class I 
differential. Prior to this amendment, the Class I skim milk price was 
the higher of the two advanced pricing factors, plus the applicable 
adjusted Class I differential.

DATES: This rule becomes effective May 1, 2019.

FOR FURTHER INFORMATION CONTACT: Erin Taylor, Acting Director, Order 
Formulation and Enforcement Division, USDA/AMS/Dairy Program, STOP 
0231, Room 2963, 1400 Independence Ave. SW, Washington, DC 20250-0231; 
telephone: (202) 720-7311; or email: [email protected].

SUPPLEMENTARY INFORMATION: On December 20, 2018, the Agriculture 
Improvement Act of 2018 (Pub. L. 115-334)(2018 Farm Bill) amended the 
Agricultural Marketing Agreement Act of 1937,\1\ as amended (AMAA), by 
revising the provision related to determining the monthly Class I skim 
milk price for Class I milk regulated under each of the FMMO. Amendment 
to the AMAA requires conforming changes to the FMMO regulations that 
specify the Class I skim milk price formula. Previously, the 
regulations specified that the Class I skim milk price was the higher 
of the monthly advanced pricing factors for Class III and Class IV skim 
milk, plus the applicable adjusted Class I differential. This rule 
revises the regulations to specify that the Class I skim milk price 
will be the simple average of the two advanced pricing factors, plus 
$0.74, plus the applicable adjusted Class I differential. In accordance 
with the 2018 Farm Bill, the amendment is effective indefinitely, until 
further modified, and may not be modified earlier than two years after 
the effective date of this rule. The formula may be modified after the 
two-year period through the standard FMMO amendment process.
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    \1\ 7 U.S.C 601-674, 7253.
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Final Action

    In accordance with the 2018 Farm Bill, this final rule amends the 
Class I skim milk price formula for milk pooled under Federal milk 
marketing orders. Under the amended price formula, the Class I skim 
milk price will be the simple average of the monthly advanced pricing 
factors for Class III and Class IV skim milk, plus $0.74 per cwt, plus 
the applicable adjusted Class I differential.
    Section 1403(b)(2)(B) of the 2018 Farm Bill provides that the 
implementation of the regulations to amend the Class I skim milk price 
formula shall not be subject to the notice and comment requirements of 
the Administrative Procedure Act (5 U.S.C. 553), the notice and hearing 
requirements of section 8c(3) of the Agricultural Adjustment Act (7 
U.S.C. 608c(3)), the order amendment requirements of section 8c(17) of 
that Act (7 U.S.C. 608c(17)), nor a referendum under section 8c(19) of 
the same Act (7 U.S.C. 608c(19)). Additionally, this final rule must 
become effective on May 1, 2019, as

[[Page 8591]]

required by section 1403(b)(1) of the 2018 Farm Bill. AMS, therefore, 
is issuing this final rule without prior notice or public comment.

Executive Orders 12866 and 13771

    This rule has been determined to be not significant for purposes of 
Executive Order 12866, and therefore has not been reviewed by the 
Office of Management and Budget (OMB). In addition, because this rule 
does not meet the definition of a significant regulatory action, it 
does not trigger the requirements contained in Executive Order 13771. 
See OMB's Memorandum titled ``Interim Guidance Implementing Section 2 
of the Executive Order of January 30, 2017, titled `Reducing Regulation 
and Controlling Regulatory Costs''' (February 2, 2017).

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have a retroactive effect. The 
amendment does not preempt any state or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.

Regulatory Flexibility Act and Paperwork Reduction Act

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing 
Service (AMS) considered the economic impact of this action on small 
entities. Accordingly, AMS prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Small dairy farm businesses have 
been defined by the Small Business Administration (SBA) (13 CFR 
121.601) as those businesses having annual gross receipts of less than 
$750,000. The SBA's definition of small agricultural service firms, 
which includes handlers that are regulated under Federal milk marketing 
orders, varies depending on the product manufactured. Small fluid milk 
and ice cream manufacturers are defined as having 1,000 or fewer 
employees. Small butter and dry or condensed dairy product 
manufacturers are defined as having 750 or fewer employees. Small 
cheese manufacturers are defined as having 1,250 or fewer employees.
    Based on AMS data, the milk of 33,481 U.S. dairy farmers was pooled 
on the FMMO system for the month of May 2017. Of that total, AMS 
estimates that 32,958 dairy farmers, or 98 percent, would be considered 
small businesses. During the same month, 301 handler plants were 
regulated by or reported their milk receipts to be pooled and priced 
under a FMMO. Of the total, AMS estimates approximately 163 handler 
plants, or 54 percent, would be considered small businesses. AMS does 
not expect the change in the Class I price formula to negatively impact 
small entities or impair their ability to compete in the marketplace.
    The change in the Class I price formula applies uniformly to both 
large and small businesses. The dairy industry has calculated that 
applying the ``higher of'' provisions to skim milk prices has returned 
a price $0.74 per hundredweight above the average of the two factors 
since the pricing formulas were implemented in 2000. Thus, the 
inclusion of the $0.74 in the calculation should make the change 
roughly revenue neutral. At the same time, it is anticipated that using 
the average of the Class III and Class IV advanced pricing factors in 
the Class I skim milk price formula will allow handlers to better 
manage volatility in monthly Class I skim milk prices using Class III 
milk and Class IV milk futures and options. Until now, uncertainty 
about which Class price will end up being higher each month has made 
effective hedging difficult. Amending the Class I skim milk price 
provisions may help small businesses better utilize currently available 
risk management tools.
    AMS is 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.
    A review of reporting requirements was completed under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). This final rule 
will have no impact on reporting, recordkeeping, or compliance 
requirements under the FMMOs because there are no changes to the 
current requirements. No new forms are added, and no additional 
reporting requirements are necessary. This final rule does not require 
additional information collection beyond that currently approved by OMB 
for FMMOs (OMB Number 0581-0032--Report Forms Under the Federal Milk 
Marketing Order Program).

List of Subjects in 7 CFR Part 1000

    Milk marketing orders.

    For the reasons set forth in the preamble, 7 CFR part 1000 is 
amended as follows:

PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS

0
1. The authority citation for 7 CFR part 1000 reads as follows:

    Authority:  7 U.S.C. 601-674, and 7253

Subpart G--Class Prices

0
2. Section 1000.50 is amended by revising paragraph (b) to read as 
follows:


Sec.  1000.50   Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (b) Class I skim milk price. The Class I skim milk price per 
hundredweight shall be the adjusted Class I differential specified in 
Sec.  1000.52, plus the adjustment to Class I prices specified in 
Sec. Sec.  1000.51(b), 1006.51(b) and 1007.51(b), plus the simple 
average of the advanced pricing factors computed in paragraph (q)(1) 
and (2) of this section, plus $0.74 per hundredweight.
* * * * *

    Dated: March 6, 2019.
Bruce Summers,
Administrator.
[FR Doc. 2019-04347 Filed 3-8-19; 8:45 am]
 BILLING CODE 3410-02-P