[Federal Register Volume 89, Number 35 (Wednesday, February 21, 2024)]
[Rules and Regulations]
[Pages 12949-12951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03407]



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 Rules and Regulations
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  Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / 
Rules and Regulations  

[[Page 12949]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1145

RIN 0581-AE27
[Doc. No. AMS-DA-23-0085]


Reauthorization of Dairy Forward Pricing Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule reauthorizes the Dairy Forward Pricing Program 
(DFPP) in accordance with the Further Continuing Appropriations and 
Other Extensions Act, 2024 (Extension Act), and makes two 
administrative changes to the provisions to include the California 
Federal milk marketing order in the list of eligible orders where use 
of a forward contract is applicable. Establishing new contracts under 
the DFPP was prohibited between the expiration of the program on 
September 30, 2023, and passage of the Extension Act on November 16, 
2023. The Extension Act reauthorizes the DFPP program to allow handlers 
to enter into new contracts until September 30, 2024. Any forward 
contract entered prior to the September 30, 2024, deadline must expire 
by September 30, 2027.

DATES: This final rule is effective February 22, 2024.

FOR FURTHER INFORMATION CONTACT: Erin Taylor, USDA/AMS/Dairy Programs, 
Order Formulation and Enforcement Branch, STOP 0231--Room 2530, 1400 
Independence Avenue SW, Washington, DC 20250-0231, Telephone: (202) 
720-7183, Email: [email protected].

SUPPLEMENTARY INFORMATION: The Food, Conservation, and Energy Act of 
2008 (2008 Farm Bill) \1\ initially established the DFPP.\2\ The DFPP 
allows milk handlers, under the Agricultural Marketing Agreement Act of 
1937, (AMAA) \3\ to pay producers or cooperative associations of 
producers a negotiated price for producer milk, rather than the Federal 
order minimum blend price for non-fluid classes of milk (Classes II, 
III, and IV under the FMMO system). The DFPP does not allow for forward 
contracting of fluid or Class I milk.
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    \1\ Public Law 110-234.
    \2\ 73 FR 64868.
    \3\ 7 U.S.C. 601-614.
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    Following the initial expiration of the DFPP which prevented the 
establishment of new contracts after September 30, 2012, the ``American 
Taxpayer Relief Act of 2012,'' (ATRA) \4\ revised the program to allow 
handlers to enter into new contracts until September 30, 2013. The 
``Agricultural Act of 2014'' (2014 Farm Bill) \5\ then extended the 
program to allow new contracts until September 30, 2018. The 
Agriculture Improvement Act of 2018 (2018 Farm Bill) \6\ reauthorized 
the program to allow handlers to enter into new contracts until 
September 30, 2023. The Extension Act \7\ extends the program to allow 
handlers to enter into new contracts until September 30, 2024, subject 
to a September 30, 2027, expiration date. This final rule applies 
retroactively to November 16, 2023, in accordance with reauthorization 
of the DFPP in the Extension Act.
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    \4\ Public Law 112-240.
    \5\ Public Law 113-79.
    \6\ Public Law 115-334.
    \7\ Public Law 118-22.
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    Participation in the DFPP is voluntary for dairy farmers, dairy 
farmer cooperatives, and handlers. Handlers may not require producer 
participation in a forward pricing program as a condition for accepting 
milk. USDA, including Market Administrator personnel, does not 
determine the terms of forward contracts or enforce negotiated prices. 
This regulation also does not affect contractual arrangements between a 
cooperative association and its members.
    Under the DFPP, regulated handlers must still account to the FMMO 
pool for the classified use value of their milk. Regulated handlers 
claiming exemption from the Federal order minimum pricing provisions 
must submit to the Market Administrator a copy of each forward 
contract. The contract must contain a disclosure statement--either as 
part of the contract itself or as a supplement--to ensure producers 
understand the nature of the program as well as the basis on which they 
will be paid for their milk. Contracts that do not contain a disclosure 
statement are deemed invalid and returned to the handler. Signed 
contracts must be received by the Market Administrator before the first 
of a month, in order to be effective for the month. For example, 
contracts must be received by the Market Administrator by December 31, 
2023, in order to be effective for the month of January 2024.
    Handlers with forward contracts remain subject to all other milk 
marketing order provisions. Payments specified under a forward contract 
must be made on or before the same date as the federal order payments 
they replace. Required payment dates are specified in 7 CFR 1145.2(e).
    This final rule reauthorizes producers and cooperative associations 
of producers to enter into forward price contracts under the DFPP 
through September 30, 2024. All terms of the new forward contracts must 
expire prior to September 30, 2027. All other provisions and 
requirements of the program as provided for in the final rule \8\ 
published October 31, 2008, are still in effect. The California Federal 
milk marketing order was established ten years later, on November 1, 
2018,\9\ which also followed two separate extensions of the DFPP. Thus, 
the California Federal milk marketing order has not been specifically 
included in the regulatory text of the DFPP as is every other Federal 
milk marketing order, and that is corrected here.
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    \8\ 73 FR 64868.
    \9\ 83 FR 26547.
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Executive Orders 12866, 13563 and 14094

    USDA is issuing this rule in conformance with Executive Orders 
12866, 13563, and 14094. Executive orders 12866 and 13563 direct 
agencies to assess all costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health, and safety effects; distributive impacts; 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, reducing costs, harmonizing rules, 
and

[[Page 12950]]

promoting flexibility. Executive Order 14094 reaffirms, supplements, 
and updates Executive Order 12866 and further directs agencies to 
solicit and consider input from a wide range of affected and interested 
parties through a variety of means. 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).

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule has limited retroactive effect to November 
16, 2023, in accordance with reauthorization of the DFPP in the 
Extension Act. This rule will not preempt any State or local laws, 
regulations, or policies unless they present an irreconcilable conflict 
with this rule.

Executive Order 13175

    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have Tribal implications. AMS has determined that this proposed rule is 
unlikely to have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601 et seq.), the Agricultural Marketing Service has considered the 
economic impact of this action on small entities and has certified this 
proposed rule will not have a significant economic impact on a 
substantial number of small entities. 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. Marketing orders and amendments thereto are unique in that 
they are normally brought about through group action of essentially 
small entities for their own benefit. A small dairy farm as defined by 
the Small Business Administration (SBA) (13 CFR 121.201) is one that 
has an annual gross revenue of $3.75 million or less. The SBA's 
definition of small agricultural service firms, which includes dairy 
processors, varies based on the type of dairy product manufactured. 
Small dairy processors are defined as having between 750 and 1,250 or 
fewer employees depending on the products made.
    According to the 2017 USDA National Agricultural Statistics Service 
(NASS) Census Report, the most recent report, there were 39,303 farms 
with milk sales. AMS estimates 36,158 farms, or 92 percent, are 
considered small businesses. In 2018, 301 handler plants were regulated 
by or reported their milk receipts to be pooled and priced on a Federal 
milk marketing order. Of the total, approximately 163 handler plants, 
or 54 percent, were considered small businesses.
    Producers and handlers use the DFPP as a risk management tool. 
Under the DFPP, producers and handlers can ``lock-in'' prices, thereby 
minimizing risks associated with price volatility that are particularly 
difficult for small businesses to mitigate.
    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.
    Section 1601(c)(2)(B) of the 2014 Farm Bill provides that the 
administration of the DFPP shall be made without regard to the 
Paperwork Reduction Act (PRA), 44 U.S.C. Chapter 35. Section 1701 of 
the 2018 Farm Bill extended that Congressional direction through 
September 30, 2023, and that direction is further extended to September 
30, 2024, by the current reauthorization of the DFPP, through the 
Extension Act. Thus, any information collection conducted for the DFPP 
is not subject to the PRA.

Final Action

    In accordance with the Extension Act, this final rule extends the 
DFPP to all Federal milk marketing orders. New contracts under the 
Program may be entered into until September 30, 2024. Any forward 
contract entered into up to and until the September 30, 2024, deadline 
is subject to a September 30, 2027, expiration date.
    Section 1601(c)(2)(A) of the 2014 Farm Bill provides that the 
promulgation of the regulations to implement the reauthorization of the 
DFPP shall be made without regard to the notice and comment 
requirements of the Administrative Procedure Act, 5 U.S.C. 553. Section 
1701 of the 2018 Farm Bill extended the Congressional direction, and 
Section 102 of the Extension Act extends that direction to the current 
reauthorization of the DFPP. AMS, therefore, is issuing this final rule 
without prior notice or public comment.
    The provisions of this final rule are retroactively effective to 
November 16, 2023, when the Extension Act became law. As explained 
above, the DFPP is a voluntary program and AMS will not take action 
until forward contracts are received from handlers who choose to 
participate in this program. By making this rule effective retroactive 
to November 16, 2023, handlers will have the maximum amount of time to 
begin the contracting process with producers. Thus, it is unnecessary 
and contrary to the public interest to delay the effective date of the 
final rule.
    Additionally, this rule makes two administrative changes to the 
provisions (7 CFR 1145.1(c) and 7 CFR 1145.2 (a)) to include the 
California Federal milk marketing order in the list of eligible orders 
where use of a forward contract is applicable. The California Federal 
milk marketing order was established on November 1, 2018, and this is 
the first rulemaking directly relevant to the DFPP since that time.

List of Subjects in 7 CFR Part 1145

    Government contracts, Milk marketing orders, Price support 
programs, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service amends 7 CFR part 1145 as follows:

PART 1145--DAIRY FORWARD PRICING PROGRAM

0
1. The authority citation for 7 CFR part 1145 continues to read as 
follows:

    Authority:  7 U.S.C. 8772.


0
2. Amend Sec.  1145.1 by revising paragraph (c) to read as follows:


Sec.  1145.1   Definitions.

* * * * *
    (c) Forward contract means an agreement covering the terms and 
conditions for the sale of Class II, III or IV milk from a producer 
defined in 7 CFR 1001.12, 1005.12, 1006.12, 1007.12, 1030.12, 1032.12, 
1033.12, 1051.12, 1124.12, 1126.12, 1131.12 or a cooperative 
association of producers defined in 7 CFR 1000.18, and a handler 
defined in 7 CFR 1000.9.
* * * * *

0
3. Amend Sec.  1145.2 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1145.2   Program.

    (a) Any handler defined in 7 CFR 1000.9 may enter into forward 
contracts with producers or cooperatives

[[Page 12951]]

associations of producers for the handler's eligible volume of milk. 
Milk under forward contract in compliance with the provisions of this 
part will be exempt from the minimum payment provisions that would 
apply to such milk pursuant to 7 CFR 1001.73, 1005.73, 1006.73, 
1007.73, 1030.73, 1032.73, 1033.73, 1051.73, 1124.73, 1126.73 and 
1131.73 for the period of time covered by the contract.
    (b) No forward price contract may be entered into under the program 
after September 30, 2024, and no forward contract entered into under 
the program may extend beyond September 30, 2027.
* * * * *

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-03407 Filed 2-20-24; 8:45 am]
BILLING CODE P