Over-Order Price Regulation

I. Public Hearing Dates, Times and Locations; Filing Dates for Written Comments

The public hearing dates and locations are: 1. December 11, 1998, 9:00 a.m. to 12:00 p.m., at the Holiday Inn at Boxborough Woods, Parade Room, 242 Adams Place, Boxborough, MA, public hearing on administrative assessment. 2. December 11, 1998, 1:00 p.m. to 4:00 p.m., at the Holiday Inn at Boxborough Woods, Parade Room, 242 Adams Place, Boxborough, MA public hearing on income distribution and supply management. 3. December 16, 1998, 9:00 to 12:00 p.m., at the Tuck Library Building, Chubb Auditorium, 30 Park Street, Concord, NH public hearing on organic milk. 4. Pre-filed testimony is encouraged and may be submitted to the Northeast Dairy Compact Commission at the address in the ADDRESSES section by 12:00 p.m. December 7, 1998. 5. Written comments and exhibits may be submitted until 5:00 p.m. December 31, 1998.

II. Background

The Northeast Dairy Compact Commission initially promulgated an Over-order Price Regulation on May 30, 1997.1 The regulation was subsequently amended generally and extended on November 25, 1997.2 Over the past year, the Commission also has amended specific provisions of the Over-order Price Regulation.3 The Commission is now seeking testimony and comment on specific subjects and issues related to (1) whether to amend the formula for distribution of monies from the producer-settlement fund, including whether to adopt a cap on the amount of milk, per producer, eligible for the Compact Over-order producer price; (2) whether additional supply management policies and provisions should be incorporated into the Over-order Price Regulation; (3) whether organic milk should be exempted from the Compact Over-order Price Regulation; and (4) whether the amount of, or method for determining, the administrative assessment should be amended. ---------------------------------------------------------------------------

\1\ 62 FR 29626 (May 30, 1997). \2\ 62 FR 62810 (November 25, 1997). \3\ 63 FR 10104 (Feb. 27, 1998); 63 FR 46385 (Sept. 1, 1998); and the most recent amendment is published elsewhere in this issue of the Federal Register. ---------------------------------------------------------------------------

III. Statement of Subjects and Issues

(1) Income Distribution From the Producer-Settlement Fund

The Massachusetts delegation to the Compact Commission petitioned the Commission to consider a policy change that would alter the income distribution provisions of the current Over-order Price Regulation by placing a cap on the amount of milk, per producer, that would be eligible to receive the Compact Over-order producer price.

(2) Supply Management Policies

Article IV, Section 9(f) of the Compact requires the Commission to ``take such action as necessary and feasible to ensure that the over- order price does not create an incentive for producers to generate additional supplies of milk.'' The Commission's Committee on Regulations and Rulemaking previously held five public meetings to receive informal public comment on various supply management proposals that are consistent with the Commission's Section 9(f) responsibilities. The Commission also recently promulgated a regulation, effective January 1, 1999, that will limit the payment of the Compact Over-order producer price to milk disposed of within the Compact regulated area, with a seasonally adjusted allowance for diverted and transferred milk.4 The Commission now seeks formal public comment on whether any additional supply management policies and provisions should be incorporated into the Over-order Price Regulation. ---------------------------------------------------------------------------

\4\ As published elsewhere in this issue of the Federal Register. ---------------------------------------------------------------------------

(3) Organic Milk

Organic milk handlers have petitioned the Commission to consider exempting organic milk from the Compact Over-order Price Regulation.

(4) Administrative Assessment

The Commission determined that it would benefit from comments and testimony regarding whether the amount of, or method for determining, the administrative assessment should be amended. The current administrative assessment regulation was promulgated with the initial price regulation on May 30, 1997.5 The November 25, 1997 extension of the price regulation

maintained the administrative assessment.6 In addition to comments on the specific proposals, discussed below, to address the identified subjects and issues, the Commission also would welcome comments, suggestions, and recommendations for other policies or methods for addressing the issues of income distribution, supply management, organic milk and the administrative assessment. ---------------------------------------------------------------------------

\5\ 62 FR 29626, codified at (7 CFR 1308.1). ---------------------------------------------------------------------------

IV. Specific Proposals

The Commission seeks comment and analysis of the following proposals. (A comparison chart of the producer payments under the current price regulation and the impact of the main income distribution proposals, discussed at sections 1 and 2 below, is provided at Table 1 to facilitate comment and analysis of the various proposals.) The Commission specifically requests comments regarding the effectiveness of each of these proposals in light of the Commission's mission to assure the continued viability of dairy farming in the northeast, and to assure consumers of an adequate, local supply of pure and wholesome milk.

1. The Massachusetts Cap Proposal

This proposal would limit the milk eligible for the Compact Over- order producer price to up to 95,000 pounds of a producer's monthly milk production, or 1.14 million pounds per year. This proposal would not provide any Compact Over-order producer price for milk produced in excess of the cap.

2. Split Pool Proposal

A split pool also would address the income distribution aspects of the Over-order Price Regulation. Under this proposal, a certain percentage of the total value of the monthly producer pool would be divided equally among all qualified farms supplying the New England market, regardless of farm size. The balance of the pool would be paid out on a per hundredweight basis, as it is under the current regulation. For example, the pool could be divided to distribute the first 55% of the pool on a per farm basis and distribute the remaining 45% of the pool on a per hundredweight basis. An alternate proposal would be to distribute the first 25% of the pool on a per farm basis and distribute the remaining 75% on a per hundredweight basis.

Table 1.--Comparison of Various Proposals [July 1998] ---------------------------------------------------------------------------------------------------------------- 55%/45% split 25%/75% split No. of cows Lbs. Actual compact 95,000 CAP (dollars) (dollars) ---------------------------------------------------------------------------------------------------------------- 12............................. 20,000 238 422 986 577 18............................. 30,000 357 633 1,037 665 29............................. 50,000 595 1,055 1,139 841 41............................. 70,000 833 1,477 1,241 1,017 56............................. 95,000 1,131 2,005 1,369 1,237 58............................. 100,000 1,190 2,005 1,394 1,281 64............................. 110,000 1,309 2,005 1,445 1,369 70............................. 120,000 1,428 2,005 1,496 1,457 76............................. 130,000 1,547 2,005 1,547 1,539 82............................. 140,000 1,666 2,005 1,598 1,633 88............................. 150,000 1,785 2,005 1,649 1,721 94............................. 160,000 1,904 2,005 1,700 1,809 99............................. 170,000 2,023 2,005 1,751 1,897 105............................. 180,000 2,142 2,005 1,802 1,985 111............................. 190,000 2,261 2,005 1,853 2,073 117............................. 200,000 2,380 2,005 1,904 2,161 123............................. 210,000 2,499 2,005 1,955 2,249 129............................. 220,000 2,618 2,005 2,006 2,337 135............................. 230,000 2,737 2,005 2,057 2,425 146............................. 250,000 2,975 2,005 2,159 2,601 175............................. 300,000 3,570 2,005 2,414 3,041 205............................. 350,000 4,165 2,005 2,669 3,481 234............................. 400,000 4,760 2,005 2,924 3,921 264............................. 450,000 5,355 2,005 3,179 4,361 292............................. 500,000 5,950 2,005 3,434 4,801 351............................. 600,000 7,140 2,005 3,944 5,681 400............................. 700,000 8,330 2,005 4,454 6,561 ----------------------------------------------------------------------------------------------------------------

3. Proposal To Cap the Largest Producers

This proposal would set a cap on the amount of milk, per producer, eligible for the Over-order producer price, but at a level much higher than under the Massachusetts proposal discussed in section 1 above. Under this proposal, the cap for all farms producing more than 600,000 pounds per month would be set at the 1998 production level. ---------------------------------------------------------------------------

\6\ 62 FR 62810 (Nov. 25, 1997). ---------------------------------------------------------------------------

4. Refund/Assessment Option

This proposal would establish an assessment on all milk during the year at some percentage of each month's producer pool. The assessment would be held in escrow and returned to eligible producers at some frequency, e.g. annually, semi-annually or quarterly. Producers would be eligible for a refund from the assessment only if they document that they did not increase production during the relevant time period. The Commission would welcome comments regarding the level to set the assessment percentage to ensure an effective supply management result.

5. Exemption of Organic Milk From the Compact Over-Order Price Regulation

This proposal would exempt organic milk handlers from the Compact Over-order Obligation and exclude organic milk producers from the producer pool.

6. Amendment of the Administrative Assessment Regulation

The current administrative assessment regulation, 7 CFR 1308.1, establishes a set rate of 3.2 cents per hundredweight of fluid milk as determined under 7 CFR 1306. This assessment is due monthly from all handlers regulated under the Over-order price regulation. The Commission seeks testimony and comments on whether the amount of the administrative assessment, or the method for determining the administrative assessment, should be amended.

Official Notice of Technical, Scientific or Other Matters

Pursuant to the Commission regulations, 7 CFR 1361.5(g)(5), the Commission hereby gives public notice that it may take official notice, at the public hearings on December 11 and December 16, 1998, or afterward, of relevant facts, statistics, data, conclusions, and other information provided by or through the United States Department of Agriculture, including, but not limited to, matters reported by the National Agricultural Statistics Service, the Market Administrators, the Economic Research Service, the Agricultural Marketing Service and information, data and statistics developed and maintained by the Departments of Agriculture of the States or Commonwealth within the Compact regulated area.

Request for Pre-filed Testimony and Written Comments

Pursuant to the Commission rules, 7 CFR 1361.4, any person may participate in the rulemaking proceeding independent of the hearing process by submitting written comments or exhibits to the Commission. Comments and exhibits may be submitted at any time before 5:00 p.m. on December 31, 1998. Comments and exhibits will be made part of the record of the rulemaking proceeding only if they identify the author's name, address and occupation, and if they include a sworn notarized statement indicating that the comment and/or exhibit is presented based upon the author's personal knowledge and belief. Facsimile copies will be accepted up until the 5:00 p.m. deadline, but the original must then be sent by ordinary mail. The Commission is requesting pre-filed testimony from any interested person. Pre-filed testimony must include the name, address and occupation of the witness and a sworn notarized statement indicating that the testimony is presented based upon the author's personal knowledge and belief. Pre-filed testimony must be received in the Commission office no later than 12:00 p.m. December 7, 1998 to ensure distribution to Commission members prior to the public hearings. Pre-filed testimony, comments and exhibits should be sent to: Northeast Dairy Compact Commission, 43 State Street, P.O. Box 1058, Montpelier, Vermont 05601 or by facsimile to (802) 229-2028.

Dated: November 19, 1998. Dixie L. Henry, General Counsel. [FR Doc. 98-31588 Filed 11-25-98; 8:45 am] BILLING CODE 1650-01-P