[Federal Register Volume 88, Number 140 (Monday, July 24, 2023)]
[Proposed Rules]
[Pages 47396-47399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15496]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / 
Proposed Rules  

[[Page 47396]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1000

[Doc. No. 23-J-0067; AMS-DA-23-0031]


Milk in the Northeast and Other Marketing Areas; Notice of 
Hearing on Proposed Amendments to Marketing Agreements and Orders

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Notice of public hearing on proposed rulemaking.

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

SUMMARY: A national public hearing is being held to consider and take 
evidence on proposals to amend the pricing formulas in the 11 Federal 
Milk Marketing Orders (FMMOs).

DATES: The hearing will convene at 9:00 a.m. ET on Wednesday, August 
23, 2023.

ADDRESSES: The hearing will be held at the 502 East Event Centre, 502 
East Carmel Drive, Carmel, Indiana 46032. Telephone (317) 843-1234.
    Copies of this notice of hearing may be procured from the Market 
Administrator of any of the 11 marketing areas, or from the Hearing 
Clerk, United States Department of Agriculture, STOP 9200--Room 1031, 
1400 Independence Avenue SW, Washington, DC 20250-9200.
    Copies of the notice of hearing and the corresponding hearing 
record will be made available online on the Hearing website: https://www.ams.usda.gov/rules-regulations/moa/dairy/hearings/national-fmmo-pricing-hearing.

FOR FURTHER INFORMATION CONTACT: Erin Taylor, Director, Order 
Formulation and Enforcement Division, USDA/AMS/Dairy Programs, Stop 
0225--Room 2530, 1400 Independence Avenue SW, Washington, DC 20250-
0225, (202) 720-7311, email: [email protected].
    Persons requiring a sign language interpreter or other special 
accommodations should contact [email protected] a minimum of five 
days before the start of the hearing.

SUPPLEMENTARY INFORMATION: This administrative action is governed by 
the provisions of 5 U.S.C. 556 and 557 and, therefore, is excluded from 
the requirements of Executive Order 12866.
    Notice is hereby given of a public hearing to be held at the 502 
East Event Centre, 502 East Carmel Drive, Carmel, Indiana, beginning 
Wednesday, August 23, 2023, at 9:00 a.m. ET, with respect to proposed 
amendments to the orders regulating the handling of milk in the 
Northeast and other marketing areas.
    The hearing is called pursuant to the provisions of the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674) (Act), and the applicable rules of practice and procedure 
governing amendments to marketing agreements and marketing orders (7 
CFR part 900).
    The purpose of the hearing is to receive evidence with respect to 
the economic and marketing conditions related to the proposed 
amendments, hereinafter set forth, and any appropriate modifications 
thereof to the marketing orders.
    Actions under the FMMO program are subject to the Regulatory 
Flexibility Act (5 U.S.C. 601-612) (RFA). The RFA seeks to ensure that, 
within the statutory authority of a program, the regulatory and 
information collection requirements are tailored to the size and nature 
of small businesses. For the purpose of the RFA, a dairy farm is a 
``small business'' if it has an annual gross revenue of $3.75 million 
or less, and a dairy products manufacturer is a ``small business'' if 
it has no more than the number of employees listed in the chart below 
(13 CFR 121.201):

----------------------------------------------------------------------------------------------------------------
                                                                                                 Size standards
                  NAICS code                              NAICS U.S. industry title               in number of
                                                                                                    employees
----------------------------------------------------------------------------------------------------------------
311511.......................................  Fluid Milk Manufacturing.......................             1,000
311512.......................................  Creamery Butter Manufacturing..................               750
311513.......................................  Cheese Manufacturing...........................             1,250
311514.......................................  Dry, Condensed, and Evaporated Dairy Product                  750
                                                Manufacturing.
----------------------------------------------------------------------------------------------------------------

    Most parties subject to a FMMO are considered a small business. 
Accordingly, interested parties are invited to present evidence on the 
probable regulatory and informational impact of the hearing proposals 
on small businesses. Also, parties may suggest modifications of these 
proposals for the purpose of tailoring their applicability to small 
businesses.
    The amendments to the rules proposed herein have been reviewed 
under Executive Order 12988, Civil Justice Reform. They are not 
intended to have a retroactive effect.
    The Agricultural Marketing Service (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.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under sec. 8c(15)(A) of the Act, 
any handler subject to an order may request modification or exemption 
from such order by filing with the U.S. Department of Agriculture 
(USDA) 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. A handler is afforded the opportunity for a 
hearing on the petition. After a hearing, the USDA would rule on the 
petition. The Act provides that the United States District Court in any 
district in which the handler is an inhabitant or has its principal 
place of business, has jurisdiction to review USDA's ruling on the 
petition, provided an appeal is filed not later than 20 days after the 
ruling is issued.

[[Page 47397]]

Testimony Guidelines

    Each witness will have 60 minutes to present their testimony and 
have direct examination. If a witness's prepared testimony and direct 
examination would be expected to exceed 60 minutes, the witness should 
submit in advance a written prepared statement as an exhibit and 
present a summary of that statement during their allotted time. This 
summary does not need to be submitted in advance, but paper copies 
should be provided the day of submission in accordance with the exhibit 
guidelines outlined below, if the summary is in written form. The full 
written prepared statement should be submitted as an exhibit in advance 
of testifying according to the Exhibit Submission Schedule found on the 
Hearing website. There will be no time limit on cross-examination or 
re-direct.
    Dairy farmers may testify in person at any time during the hearing, 
or virtually via Zoom on Fridays. Starting Friday, September 1, 2023, 
and each Friday thereafter during the hearing, beginning at 12:00 p.m. 
ET, ten (10) time slots will be available for dairy farmers to testify 
virtually. Dairy farmers must pre-register to testify virtually, as 
outlined in the instructions provided on the Hearing website. Each 
registered dairy farmer will be allocated up to 15 minutes to present 
testimony. Additional time may be requested. There will be no time 
limit on cross-examination. Dairy farmers testifying, either in person 
or virtually, are not required to pre-submit testimony or exhibits.

Exhibit Guidelines

    Any party with a proposal noticed herein, when participating as a 
witness, must enter exhibits related to testimony in advance, according 
to an Exhibit Submission Schedule posted on the Hearing website. 
Prepared exhibits must be submitted electronically to 
[email protected]. Submitted exhibits will be posted online within 2 
business days following the submission deadline. Fifteen (15) paper 
copies of each exhibit submitted in advance should also be submitted at 
the hearing to the designated USDA official. Four of the 15 copies will 
be submitted to the Administrative Law Judge for the Official Record, 
and the remaining copies will be distributed to USDA staff.
    Interested parties entering exhibits during the hearing, not in 
advance, must provide 15 paper copies to the designated USDA official, 
plus additional paper copies for distribution to other hearing 
participants and interested parties. In order to submit exhibits into 
the record, exhibits should be sent to [email protected] by 8:00 
a.m. ET on the day of scheduled testimony.
    All exhibits should be prenumbered in the following format: 
``[Submitter Name or Acronym]--Number'' on the top righthand corner of 
each page. For example, ``USDA-1.'' Each exhibit must include a page 
number ``X of Y'' on the bottom righthand corner. For example, ``1 of 
100.'' Each exhibit will be given an Official Exhibit Number upon 
presentation.
    Individual dairy farmers are not subject to the Exhibit Guidelines.

Data Requests

    Interested parties requesting USDA data to be used at the hearing 
must submit requests via [email protected] by August 11, 2023.

Hearing Schedule

    The hearing will continue until such time as determined to have 
ended by the presiding Administrative Law Judge. The hearing will be in 
recess and will not convene on September 4, 2023, for the Labor Day 
holiday or on September 21-22, 2023. If necessary, in addition to the 
dates listed, the schedule for the next session will be announced at 
the time of adjournment. Such reconvening date and time will also be 
posted on the Hearing website.
    Testimony is invited on the following proposals or appropriate 
modifications to such proposals. Proposed regulatory text may be found 
in a supplemental document on the Hearing website.
    Testimony will be heard by subject area, in the following order:

1. Milk Composition
    Proposal 1: Submitted by the National Milk Producers Federation
    Proposal 2: Submitted by National All-Jersey Inc.
2. Surveyed Commodity Products
    Proposal 3: Submitted by the National Milk Producers Federation
    Proposal 4: Submitted by the American Farm Bureau Federation
    Proposal 5: Submitted by the American Farm Bureau Federation
    Proposal 6: Submitted by the California Dairy Campaign
3. Class III and Class IV Formula Factors
    Proposal 7: Submitted by the National Milk Producers Federation
    Proposal 8: Submitted by the Wisconsin Cheese Makers Association
    Proposal 9: Submitted by the International Dairy Foods Association
    Proposal 10: Submitted by Select Milk Producers, Inc.
    Proposal 11: Submitted by Select Milk Producers, Inc.
    Proposal 12: Submitted by Select Milk Producers, Inc.
4. Base Class I Skim Milk Price
    Proposal 13: Submitted by the National Milk Producers Federation
    Proposal 14: Submitted by the International Dairy Foods Association
    Proposal 15: Submitted by the Milk Innovation Group
    Proposal 16: Submitted by Edge Dairy Farmer Cooperative
    Proposal 17: Submitted by Edge Dairy Farmer Cooperative
    Proposal 18: Submitted by the American Farm Bureau Federation
5. Class I and Class II Differentials
    Proposal 19: Submitted by the National Milk Producers Federation
    Proposal 20: Submitted by the Milk Innovation Group
    Proposal 21: Submitted by the American Farm Bureau
6. AMS Proposal
    Proposal 22: Submitted by Dairy Programs, Agricultural Marketing 
Service

Summary of Proposals

Milk Composition

Proposal 1: Submitted by the National Milk Producers Federation
    This proposal seeks to amend the milk component factors in the 
Class III and Class IV skim milk price formulas. Specifically, the 
proposal seeks to increase the skim component factors to equal the 
weighted average nonfat solids, true protein, and other solids factors 
for milk pooled on Federal orders using data for the three years prior 
to implementation, with a 12-month implementation lag. The factors are 
proposed to be updated as follows:
     Nonfat solids: from 9.0 to 9.41 per hundredweight of Class 
IV skim milk;
     Protein: from 3.1 to 3.39 per hundredweight of Class III 
skim milk; and
     Other solids: from 5.9 to 6.02 per hundredweight of Class 
III skim milk.
    The proponent also proposes the skim component factors be updated 
no less than every three years, but only once the weighted average 
nonfat solids component for the prior three years changes by at least 
0.07 percentage points. The updated component values would be 
calculated, and, if a change is warranted, formally announced in 
February of such year, with the implementation of such changes 
occurring March 1 of the following year.
Proposal 2: Submitted by National All-Jersey Inc.
    This proposal seeks to amend the milk component factors in the 
Class III

[[Page 47398]]

and Class IV skim milk price formulas. The proposal seeks to update the 
factors annually using the previous year's weighted average 
calculations, with a 12-month implementation lag.

Surveyed Commodity Products

Proposal 3: Submitted by the National Milk Producers Federation
    This proposal seeks to eliminate the Cheddar cheese 500-pound 
barrel price series from protein price formula.
Proposal 4: Submitted by the American Farm Bureau Federation
    This proposal seeks to add 640-pound Cheddar cheese blocks to the 
protein price formula.
Proposal 5: Submitted by the American Farm Bureau Federation
    This proposal seeks to add unsalted butter to the butterfat and 
protein price formulas.
Proposal 6: Submitted by the California Dairy Campaign
    This proposal seeks to add mozzarella to the protein price formula.

Class III and Class IV Formula Factors

Proposal 7: Submitted by the National Milk Producers Federation
    This proposal seeks to amend the manufacturing cost (make) 
allowances found in the four component price formulas. The proposal 
includes the following increases:
    Butterfat: from $0.1715 to $0.2100 per pound of butter,
    Nonfat solids: from $0.1678 to $0.2100 per pound of nonfat dry milk 
(NFDM),
    Protein: from $0.2003 to $0.2400 per pound of Cheddar cheese,
    Other solids: from $0.1991 to $0.2300 per pound of dry whey.
    The requested changes are equivalent to an increase of $0.0385 per 
pound in the butter make allowance, an increase of $0.0422 per pound in 
the nonfat dry milk make allowance, an increase of $0.0397 per pound in 
the Cheddar cheese make allowance, and an increase of $0.0309 per pound 
in the dry whey make allowance.
Proposal 8: Submitted by the Wisconsin Cheese Makers Association
    This proposal seeks to update the current make allowances with a 4-
year phase-in implementation schedule.

                                         Proposed Make Allowance Levels
----------------------------------------------------------------------------------------------------------------
             Product                  Current         Year 1          Year 2          Year 3          Year 4
----------------------------------------------------------------------------------------------------------------
Cheese..........................         $0.2003         $0.2422         $0.2561         $0.2701         $0.2840
Whey............................          0.1991          0.2582          0.2778          0.2976          0.3172
NFDM............................          0.1678          0.2198          0.2370          0.2544          0.2716
Butter..........................          0.1715          0.2251          0.2428          0.2607          0.2785
----------------------------------------------------------------------------------------------------------------

    This proposal also proposes not to adopt any of the increases 
described above if, prior to January 1 of that year, USDA has been 
provided authority and funding to conduct audited dairy product cost 
studies of all manufacturers of products used to set Class III and 
Class IV prices, has promulgated regulations implementing that 
authority, and has adopted make allowances pursuant thereto.
Proposal 9: Submitted by the International Dairy Foods Association
    This proposal seeks to update the current make allowances with a 4-
year phase-in implementation schedule.

                                         Proposed Make Allowance Levels
----------------------------------------------------------------------------------------------------------------
             Product                  Current         Year 1          Year 2          Year 3          Year 4
----------------------------------------------------------------------------------------------------------------
Cheese..........................         $0.2003         $0.2422         $0.2561         $0.2701         $0.2840
Whey............................          0.1991          0.2582          0.2778          0.2976          0.3172
NFDM............................          0.1678          0.2198          0.2370          0.2544          0.2716
Butter..........................          0.1715          0.2251          0.2428          0.2607          0.2785
----------------------------------------------------------------------------------------------------------------

    This proposal also proposes not to adopt any of the increases 
described above if, prior to January 1 of that year, USDA has been 
provided authority and funding to conduct audited dairy product cost 
studies of all manufacturers of products used to set Class III and 
Class IV prices, has promulgated regulations implementing that 
authority, and has adopted make allowances pursuant thereto.
Proposal 10: Submitted by Select Milk Producers, Inc.
    This proposal seeks to increase the butterfat recovery factor in 
the Class III price formula to 93 percent, which would necessitate a 
corresponding increase in the butterfat yield in cheese to 1.624.
Proposal 11: Submitted by Select Milk Producers, Inc.
    This proposal seeks to update the specified yield factors to 
reflect actual farm-to-plant shrink. The yield factors for nonfat 
solids and other solids would remain unchanged. The proposed yield 
factors are:
    Butterfat: 1.22;
    Protein value in cheese: 1.386; and
    Butterfat value in cheese: 1.582.
Proposal 12: Submitted by Select Milk Producers, Inc.
    This proposal seeks to update the nonfat solids factor from 0.99 to 
1.03.

Base Class I Skim Milk Price

Proposal 13: Submitted by the National Milk Producers Federation
    This proposal seeks to amend the base Class I skim milk price in 
all Federal orders. Specifically, the proposal seeks to replace the 
simple average of the Class III and Class IV Advanced Skim Milk pricing 
factors with the ``higher of'' the two factors and remove the 
additional $0.74 per hundredweight.
Proposal 14: Submitted by the International Dairy Foods Association
    This proposal seeks to amend the base Class I skim milk price to 
equal the simple average of the Advanced Class III and Class IV prices, 
plus the ``higher of''

[[Page 47399]]

either $0.74 or an adjustor equal to the 24-month (August-July) rolling 
simple average difference between the Advanced Class III and Class IV 
skim milk prices.
Proposal 15: Submitted by the Milk Innovation Group
    This proposal seeks to retain the current ``average of'' formula 
for the base Class I skim milk price and proposes to update the 
adjuster monthly using a 24-month look back period with a 12-month lag, 
i.e., the preceding the 13-to-36-month period. The ``rolling'' adjuster 
calculation would be the difference between the ``higher of'' the 
advanced Class III or IV skim milk price for each month and the 
``average of'' the advanced Class III or IV skim milk price, averaged 
over the preceding 13-to-36-month period, plus the ``average of'' the 
Class III and IV advanced skim milk prices for that month.
Proposal 16: Submitted by Edge Dairy Farmer Cooperative
    This proposal seeks to change the base Class I skim milk price to 
the announced Class III skim milk price, plus an adjuster. The proposal 
seeks to amend calculation of Class I prices to use announced rather 
than advanced prices. The proposed adjuster would be a 36-month average 
(August-July) of the monthly differences between the ``higher of'' the 
advanced Class III skim milk price or advanced Class IV skim milk 
price, and the Class III skim milk price.
Proposal 17: Submitted by Edge Dairy Farmer Cooperative
    This proposal seeks to use the ``higher of'' the Class III skim 
milk price or the Class IV skim milk price to calculate the base Class 
I skim milk price. The proposal also seeks to amend calculation of 
Class I prices to use announced rather than advanced prices.
Proposal 18: Submitted by the American Farm Bureau Federation
    This proposal seeks to eliminate the advanced pricing of Class I 
milk and components, and Class II skim milk and components. As 
proposed, the Class II skim milk price would be equal to the Announced 
Class IV skim milk price plus the Class II differential; the Class II 
nonfat solids price would be equal to the Announced Class IV nonfat 
solids price plus one-hundredth of the Class II differential. The 
proponent proposes the Class I skim milk price would be the ``higher 
of'' the Announced Class III or Class IV skim milk prices plus the 
Class I differential; and the Class I butterfat price would be equal to 
the butterfat price plus one-hundredth of the Class I differential.

Class I and Class II Differentials

Proposal 19: Submitted by the National Milk Producers Federation
    This proposal seeks to update the Adjusted Class I differentials as 
referenced in all Federal orders for the 3,108 named counties, 
parishes, and independent cities in the contiguous 48 United States. 
The proposed update would increase Class I differentials at all 
locations, in varying amounts.
Proposal 20: Submitted by the Milk Innovation Group
    This proposal seeks to lower the current base Class I differential 
from $1.60 to $0.00.
Proposal 21: Submitted by the American Farm Bureau Federation
    This proposal seeks to update the Class II differential to $1.56. 
Specifically, the proposal seeks to calculate the Class II differential 
using the current nonfat dry milk make allowance multiplied by the 
current nonfat solids yield factor and updated butterfat and nonfat 
solids tests for milk in the FMMOs.
Proposal 22: Submitted by Dairy Program, Agricultural Marketing 
Service:
    Make such changes as may be necessary to make the respective 
marketing orders conform with any amendments thereto that may result 
from this hearing.
    From the time that a hearing notice is issued and until the 
issuance of a final decision in a proceeding, USDA employees involved 
in the decision-making process are prohibited from discussing the 
merits of the hearing issues on an ex parte basis with any person 
having an interest in the proceeding. For this proceeding, the 
prohibition applies to employees in the following organizational units:

Office of the Secretary of Agriculture
Office of the Administrator, Agricultural Marketing Service
Office of the General Counsel
Dairy Program, Agricultural Marketing Service (Washington, DC Office, 
and the Offices of all Market Administrators)

    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.

List of Subjects in 7 CFR Part 1000

    Milk marketing orders.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-15496 Filed 7-21-23; 8:45 am]
BILLING CODE 3410-02-P