[Federal Register Volume 73, Number 72 (Monday, April 14, 2008)]
[Rules and Regulations]
[Pages 19959-19960]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-7863]



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Rules and Regulations
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Federal Register / Vol. 73, No. 72 / Monday, April 14, 2008 / Rules 
and Regulations

[[Page 19959]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1150

[Docket No. AMS-DA-08-2004; DA-06-04]


National Dairy Promotion and Research Program; Section 610 Review

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Confirmation of regulations.

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SUMMARY: This document summarizes the results of an Agricultural 
Marketing Service (AMS) review of the National Dairy Promotion and 
Research Program (National Dairy Program) conducted under the Dairy 
Promotion and Research Order (Dairy Order), under the criteria 
contained in Section 610 of the Regulatory Flexibility Act (RFA). Based 
upon its review, AMS has determined that the Dairy Order should be 
continued without change.

FOR FURTHER INFORMATION CONTACT: Interested persons may obtain a copy 
of the review. Requests for copies should be sent to Whitney Rick, 
Chief, Promotion and Research Branch, Dairy Programs, 1400 Independence 
Avenue, SW., Stop 0233-Room 2958-South Building, Washington, DC 20250-
0233, (202) 720-6909, e-mail: Whitney.Rick@usda.gov or by accessing our 
Web site at http://www.ams.usda.gov/dairy/dairyrp.htm.

SUPPLEMENTARY INFORMATION: The Dairy Production Stabilization Act of 
1983 [7 U.S.C. 4501-4513] (Dairy Act) authorized the Dairy Order [7 CFR 
Part 1150], a national dairy producer program designed to develop and 
finance promotion, research, and nutrition education programs to 
maintain and expand markets and uses for milk and dairy products. 
Annual reports concerning the activities conducted under the order are 
required by statute at 7 U.S.C. 4514.
    The National Dairy Program became effective on March 23, 1984, when 
the Dairy Order was issued. The National Dairy Program is funded by a 
mandatory assessment of 15 cents per hundredweight on all milk marketed 
in the 48 contiguous states. Producers can receive a credit of up to 10 
cents a hundredweight for payments made to any State or regional dairy 
product promotion, research or nutrition education programs which is 
certified as a qualified program pursuant to the Dairy Order.
    The Dairy Order provides for the establishment of the National 
Dairy Promotion and Research Board (National Dairy Board), which is 
composed of 36 members appointed by the Secretary of Agriculture. Each 
member represents one of thirteen Regions in the 48 contiguous States. 
The members of the National Dairy Board serve 3-year terms and are 
eligible to be appointed to two consecutive terms.
    AMS published in the Federal Register its plan on February 18, 1999 
(64 FR 8014), and most recently updated its plan on March 24, 2006 (71 
FR 14827), to review certain regulations using criteria contained in 
Section 610 of the RFA (5 U.S.C. 601-612). Given that many AMS 
regulations impact small entities, AMS decided as a matter of policy to 
review certain regulations which, although they may not meet the 
threshold requirement under Section 610 of the RFA, warrant review.
    The 610 Review was undertaken to determine whether the Dairy Order 
should be continued without change, amended, or rescinded (consistent 
with the objectives of the Dairy Act) to minimize any significant 
economic impact of rules upon a substantial number of small entities. 
AMS has considered the continued need for the Dairy Order; the nature 
of complaints or comments received from the public concerning the Dairy 
Order; the complexity of the Dairy Order; the extent to which the Dairy 
Order overlaps, duplicates, or conflicts with other Federal rules, and, 
to the extent feasible, with State and local government rules; and the 
length of time since the Dairy Order has been evaluated or the degree 
to which technology, economic conditions, or other factors have changed 
in the area affected by the Dairy Order.
    A Notice of Review and Request for Written Comments was published 
in the Federal Register on February 28, 2006, (71 FR 9978). Thirty-two 
written comments were received and are discussed below.
    Of the thirty-two comments received, ten comments recommended that 
the Dairy Order be terminated or re-evaluated. Of those comments, 
several suggested that non-assessment of imported dairy products were a 
reason that the program should be discontinued because importers were 
receiving the benefit of a domestic assessment but were not required to 
pay assessments. The 2002 Farm Bill (Pub. L. 107-171) amended the Dairy 
Act to include assessment of imports. A provision also was added to 
ensure that implementation of an order was consistent with 
international trade obligations. However, the term United States 
continued to be defined as the forty-eight contiguous states in the 
continental United States. Taking into account the narrow definition of 
United States in implementing the importer provisions of the Dairy Act, 
USDA concluded that the definition of United States should be amended 
in the Dairy Act to include Alaska, Hawaii, the District of Columbia 
and Puerto Rico. Therefore, as part of USDA's 2007 Farm Bill proposal, 
we have included language that would change the definition of United 
States in the Dairy Act to include all 50 States, the District of 
Columbia, and Puerto Rico. When the Dairy Act is amended, USDA intends 
to resume implementation of the import provisions of the Dairy Act.
    Several of these commenters suggested that the assessment should be 
voluntary as opposed to mandatory. The Dairy Act provides for mandatory 
assessments. USDA has determined mandatory assessments to finance 
national generic programs benefits all parties involved. Mandatory 
assessments ensure that assessments are incurred in a fair and 
equitable manner and that activities under a program can be 
administered effectively.
    Several commenters also recommended mandatory referendums and the 
abolition of bloc-voting, whereby a cooperative votes on behalf of its 
membership in referenda. Section 4507(b) of the Dairy Act requires the

[[Page 19960]]

Secretary to hold a referendum on request of a representative group 
comprising 10 percent or more of the number of producers and importers 
subject to the Dairy Order to determine whether producers and importers 
favor the suspension or termination of the Order. We believe a 10 
percent threshold avoids unnecessary costs to the industry, while 
allowing for a referendum if sufficient interest is determined. 
Additionally, with regard to bloc-voting, Section 4508 of the Dairy Act 
authorizes cooperative bloc-voting. However, a cooperative is required 
to inform producers of procedures to follow to cast an individual 
ballot should the producer choose to do so.
    One comment suggested that the program violated the commenter's 
First Amendment right of free speech. However, in June 2005, the 
Supreme Court ruled in Johanns, Secretary of Agriculture, v. Livestock 
Marketing Association that generic commodity research and promotion 
programs are considered ``government speech'' and, therefore, are not 
subject to First Amendment challenges.
    Two comments suggested that the National Dairy Program is used to 
lobby and conduct activities that are not in the best interest of 
producers. We disagree. Section 4504(j) of the Dairy Act and Section 
1150.154 of the Dairy Order prohibit the use of assessment funds for 
the purpose of lobbying or influencing governmental action or policy. 
No funds collected pursuant to the Dairy Order are used for the purpose 
of lobbying or influencing governmental policy or action. Further, an 
annual report to Congress is required under 7 U.S.C. 4514 describing 
activities conducted under the Order and accounting for the receipt and 
disbursement of all funds received by the Board including an 
independent analysis of the effectiveness of the program.
    Several comments suggested that dairy farmers be permitted to elect 
members of the National Dairy Board and that the Board is 
representative of only large farm interests. We disagree. The Dairy Act 
provides that producer members of the Board be appointed by the 
Secretary from nominations submitted by organizations certified in 
accordance with the Act. Similar provisions concerning nominations 
appear in other generic commodity and promotion programs. The Dairy Act 
further provides that if the Secretary determines that a substantial 
number of milk producers are not members, or their interests are not 
represented by an eligible organization, the nominations may be made in 
the manner authorized by the Secretary. Additionally, the Dairy Act and 
Dairy Order require the Secretary to consider size, geography, and 
other factors when making appointments to ensure that all producers are 
represented. Similar criteria are considered in determining eligible 
organizations.
    In contrast, twenty-two comments expressed support for the Dairy 
Order, recognizing the need and advantages which the National Dairy 
Program provides to dairy farmers at a State level. Further, the same 
comments noted that the National Dairy Program invests farmer funds 
into research and promotion of dairy products, therefore, increasing 
the economic viability of the products produced and contributing to 
dairy producer profits.
    Another comment from a producer recognized that the National Dairy 
Program works effectively and cooperatively on a national, State, and 
regional level. Additionally, this producer noted that they are a small 
dairy farm (150 registered Holsteins, half which are milk cows) and 
believed that the National Dairy Program contributes effectively to 
dairy farmer profitability and has minimal impact on small producers 
and other entities.
    Several of the supporting comments noted vast producer support for 
the National Dairy Program and recognized that the National Dairy 
Program was vital to increasing dairy consumption and maintaining and 
increasing profitability for the farmer. Since the program began in 
1983, total dairy consumption has increased by more than 35 percent 
according to USDA.
    Another supporting comment noted that the National Dairy Program 
increases sales; provides greater opportunity for brands and businesses 
to compete for their share of the beverage category; protects small 
producers from being severely disadvantaged against large competitors 
that could undermine industry growth; and, in general builds a more 
favorable economic environment for farmers, processors, and everyone 
with a stake in the industry. Additionally, the same commenter wrote 
that the National Dairy Program has very little adverse impact on small 
businesses. In fact, the program helps the small producer by protecting 
the small producer from being severely disadvantaged by larger 
competition. The paperwork requirements imposed on the farmer are 
minimal and the assessment is collected as part of the milk-purchase 
transaction by the purchaser.
    One comment submitted by a Qualified Program expressed support for 
the National Dairy Program and recognized that the program was vital to 
maintaining and increasing profitability for the farmer and increasing 
dairy consumption. Additionally, the commenter referenced payments made 
to State or regional dairy checkoff programs (10 cents per 
hundredweight) and how such payments support promotion and research 
programs which directly benefit farmers at the local level. However, 
the commenter noted that program funds should be used to address pre-
harvest dairy production practices and was critical of USDA's policy 
prohibiting use of program funds for this type of research. Sections 
111(j) of the Act and Sections 1150.115 and 1150.161(a)(2) of the Dairy 
Order are clear that the program's focus is on increasing human 
consumption of milk and dairy products not on non-human consumption or 
on improving production or processing efficiencies. This is consistent 
with the statute's congressional intent.
    The Dairy Order is not unduly complex and AMS has not identified 
regulations that duplicate, overlap, or conflict with the Dairy Order. 
Over the years, changes to the Dairy Order have been made to reflect 
current industry operating practices and to solve current industry 
problems to the extent possible. The program is independently evaluated 
every year to determine the effectiveness of its programs and the 
results are reported annually to Congress.
    Based upon the review, AMS has determined that the Dairy Order 
should be continued without change. AMS plans to continue working with 
the dairy industry in maintaining an effective program.

    Dated: April 8, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-7863 Filed 4-11-08; 8:45 am]
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