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Milk Income Loss Contract Program
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[Federal Register: April 17, 2006 (Volume 71, Number 73)]
[Rules and Regulations]
[Page 19621-19624]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ap06-1]
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Rules and Regulations
Federal Register
________________________________________________________________________
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having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1430
RIN 0560-AH47
Milk Income Loss Contract Program
AGENCIES: Commodity Credit Corporation, USDA.
ACTION: Final rule.
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SUMMARY: This rule amends the regulations for the Milk Income Loss
Contract (MILC) Program as authorized by the Agriculture Reconciliation
Act of 2005 to extend the program from October 1, 2005, to September
30, 2007. This rule also decreases the percentage rate for the payment
calculation and removes the transition rule required at the beginning
of the program.
DATES: Effective Date: April 13, 2006.
FOR FURTHER INFORMATION CONTACT: Danielle Cooke, Special Programs
Manager, Price Support Division, FSA/USDA, STOP 0512, 1400 Independence
Ave., SW., Washington, DC 20250-0512; telephone (202) 720-1919;
facsimile (202) 690-1536; e-mail: Danielle.Cooke@wdc.usda.gov. Persons
with disabilities who require alternative means for communication
(Braille, large print, audiotape, etc.) should contact the USDA Target
Center at (202) 720-2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Background
This final rule implements amendments made by section 1101 of the
Deficit Reduction Act of 2005 (2005 Act) to section 1502 of the Farm
Security and Rural Investment Act of 2002 (2002 Act), which is the
authority for the Milk Income Loss Contract (MILC) Program administered
by the Commodity Credit Corporation (CCC). The MILC program was
implemented by a final rule on October 18, 2002 (67 FR 64454). The
program was in effect from December 1, 2001, through September 30, 2005
and was extended by the 2005 Act with minor amendments. Accordingly,
this rule amends 7 CFR part 1430 to: continue the MILC program until
September 30, 2007; decrease the payment rate percentage during the
extension period; and remove transition payment provisions.
The MILC Program supports the dairy industry by providing direct
counter-cyclical payments to milk producers when the Boston Milk
Marketing Order Class I price for fluid milk falls below the benchmark
of $16.94 per hundredweight (cwt). An eligible operation is determined
in each state in the same manner as under Dairy Market Loss Assistance
(DMLA) Program contracts. Any new contracts must be unaffiliated with
prior DMLA operations. Each fiscal year, eligible dairy operations can
receive a monthly payment based on monthly commercial milk marketings,
up to a maximum of 2.4 million pounds per dairy operation for the
fiscal year. A dairy operation's eligible monthly payment was based on
the quantity of milk sold in that month, up to a maximum of 2.4 million
pounds, multiplied by 45 percent of the difference between $16.94/cwt
and the Federal milk marketing order Class I milk price per cwt in
Boston, Massachusetts for that month. To facilitate the transition to
this new program from previous DMLA programs administered by FSA, a
transition period provision was implemented using a similar payment
calculation for the period from December 1, 2001, through the month
preceding the month the producer enters into a contract with CCC.
To be eligible for the MILC program producers in a dairy operation
must: (1) Produce in the United States and market milk commercially
during the period December 1, 2001, through September 30, 2005; (2)
enter into a contract with CCC to provide monthly marketing data to
receive payments; and (3) be engaged in the business of producing and
marketing agricultural products at the time of signing the MILC program
contract. MILC contracts under these program provisions expired on
September 30, 2005.
The extension of the MILC program commences October 1, 2005 and
ends September 30, 2007. Generally other program provisions remain the
same under the MILC Program extension, except that a dairy operation's
eligible monthly payment will be the quantity of milk sold in that
month, up to a maximum of 2.4 million pounds, multiplied by 34 percent
of the difference between $16.94 per cwt and the Federal milk marketing
order Class I milk price per cwt in Boston for that month. Also,
section 1101 of the 2005 Act provides: (1) As of September 1, 2007, the
percent difference in price per cwt used to calculate payments is zero
(0%); (2) the program will expire on September 30, 2007, and; (3)
transition period provisions which were necessary for the transition
from previous Dairy Market Loss Assistance programs to the new MILC
Program are deleted.
To be eligible producers must: (1) Enter into a contract with CCC
to provide monthly marketing data to receive payments during the
extended period; (2) agree to the program provisions for the extended
period; (3) be actively engaged in the business of producing and
marketing agricultural products anytime during the period of October 1,
2005, through September 30, 2007; and (4) select the MILC production
start month that the dairy operation would like to begin receiving
payment from CCC based on the selected month's commercially marketed
production. Dairy operations may apply in person at FSA county offices
during regular business hours, or via facsimile or the Internet at
http://www.fsa.usda.gov/dafp/psd/. 
Since the legislation
authorizing the extension of this program was signed after the beginning
date of the extended period and although a payment rate was not in effect
during the months of October and November 2005, payment rates have been
established for the months of December 2005 through May 2006.
Therefore, for the CCC fiscal year (FY) 2006 only, during a sign-up
period from April 13, 2006 to May 17, 2006, producers in dairy
operations will be allowed to select retroactively, with some
limitations, the MILC production start month from these months.
Producers choosing not to select from the retroactive months of October
2005 through May 2006, will be allowed, with some limitations, to
choose a month from the months remaining in the fiscal year for which
CCC will begin
[[Page 19622]]
issuing payments based on the selected month's commercial milk
marketings. Producers entering into a MILC after the designated sign-up
period ends but before the program expires on September 30, 2007, and
producers during FY 2007 are also allowed to choose the MILC production
start month for the dairy operation. Those selections, however, under
this rule must be made in advance of the announcement of the Boston
Class I milk price and establishment of the MILC payment rate for those
months. Producers submitting contracts after the designated sign-up
period will not have the option to select from retroactive months.
MILC payments will be based on the commercially-marketed milk
production from the MILC production start month selected by the dairy
operation, and continue with each subsequent month's commercial milk
production consecutively thereafter until the earlier of the maximum
payment quantity of 2.4 million pounds is reached or the end of the
applicable FY. Other policy determinations necessary to implement the
statute are reflected in the text of the rule.
Notice and Comment
Section 1601(c) of the Farm Security and Rural Investment Act of
2002 (Pub. L. 107-171) requires that the regulations necessary to
implement Title I of the 2002 Act are to be promulgated without regard
to the notice and comment provisions of 5 U.S.C. 553 or the Statement
of Policy of the Secretary of Agriculture effective July 24, 1971, (36
FR 13804) relating to notices of proposed rulemaking and public
participation in rulemaking. These regulations are thus issued as final.
Executive Order 12866
This final rule is economically significant according to Executive
Order 12866 and has been reviewed by the Office of Management and
Budget (OMB). A cost-benefit assessment of the actions this rule will
take was completed and is summarized after the background section.
Federal Assistance Programs
The title and number of the Federal assistance program in the
Catalog of Federal Domestic Assistance to which this final rule applies
is 10.051--Commodity Loans and Loan Deficiency Payments.
Regulatory Flexibility Act
The Regulatory Flexibility Act is not applicable to this rule
because the Office of the Secretary, FSA and CCC are not required by 5
U.S.C. 553 or any other law to publish a notice of proposed rulemaking
with respect to the subject matter of this rule.
Environmental Assessment
The environmental impacts of this final rule were considered in
accordance with the provisions of the National Environmental Policy Act
of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council
on Environmental Quality (40 CFR parts 1500-1508), and FSA's
regulations for compliance with NEPA, 7 CFR part 799. FSA has concluded
that the rule will have no significant impacts upon the human
environment as documented through the completion of an environmental
evaluation. A copy of the environmental evaluation is available for
inspection and review upon request.
Executive Order 12778
The final rule has been reviewed under Executive Order 12778. This
rule preempts State laws that are inconsistent with its provisions.
This rule is retroactive to September 30, 2005. Before any judicial
action may be brought regarding this rule, all administrative remedies
must be exhausted.
Executive Order 12372
This program is not subject to Executive Order 12372, which
requires consultation with State and local officials. See the notice
related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June
24, 1983).
Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does
not apply to this rule because the Office of the Secretary, FSA and CCC
are not required by 5 U.S.C. 553 or any other law to publish a notice
of proposed rulemaking about the subject matter of this rule. Further,
this rule imposes no unfunded mandates, as defined in UMRA, on any
local, state, or tribal government or the private sector.
Paperwork Reduction Act
Section 1601(c) of the 2002 Act provides that the promulgation of
regulations and the administration of Title I of the 2002 Act shall be
made without regard to chapter 5 of title 44 of the United States Code
(the Paperwork Reduction Act). Accordingly, these regulations and the
forms, and other information collection activities needed to administer
the program authorized by these regulations, are not subject to review
by the Office of Management and Budget under the Paperwork Reduction Act.
Summary of Economic Impacts
The MILC has paid about $2.0 billion to dairy operations over the
four initial years of operation. Expenditures during the extended
period, FY 2006 and FY 2007, are expected to be between $700 and $900
million based on estimated milk prices during the period. Dairy farm
income and Government expenditures will increase equally.
List of Subjects in 7 CFR Part 1430
Dairy products, Loan programs/agriculture, Price support programs,
Reporting and recordkeeping requirements.
? For the reasons set out in the preamble, 7 CFR part 1430 is amended as
set forth below.
PART 1430--DAIRY PRODUCTS
? 1. The authority citation continues to read as follows:
Authority: 7 U.S.C. 7981 and 7982; 15 U.S.C. 714b and 714c; Pub.
L. 108-324, 118 Stat. 1220.
Subpart B--Milk Income Loss Contract Program
? 2. Amend Sec. 1430.202 by revising the definition of ``Eligible
production'' to read as follows:
Sec. 1430.202 Definitions.
* * * * *
Eligible production means milk that was produced by cows in the
United States and marketed commercially during the period of December
1, 2001, through September 30, 2007, up to a maximum of 2.4 million
pounds per dairy operation per fiscal year.
* * * * *
? 3. Amend Sec. 1430.203 by revising paragraphs (a) and (f) to read as
follows:
Sec. 1430.203 Eligibility.
* * * * *
(a) Have produced milk in the United States and commercially
marketed the milk produced anytime during the period of December 1,
2001, through September 30, 2007;
* * * * *
(f) Be actively engaged in the business of producing and marketing
agricultural products anytime during the period of December 1, 2001,
through September 30, 2007.
* * * * *
? 4. Revise Sec. 1430.205 to read as follows:
[[Page 19623]]
Sec. 1430.205 Selection of starting month.
(a) A dairy operation that enters into a MILC with CCC must
designate the starting production month that it desires CCC to begin
making payments to them. The starting production month must be selected
on or before the 15th of the month before the month for which payment
is sought during fiscal year 2002 through fiscal year 2005. The
starting production month must be selected on or before the 14th of the
month before the month for which payment is sought during fiscal year
2006 and fiscal year 2007. If such date falls on a weekend, the dairy
operation production start month selection must be made on the last
business day preceding the weekend. A dairy operation cannot select a
month for payment which:
(1) Has already begun, except as provided in paragraph (c)(1) of
this section;
(2) Has already passed; or
(3) During which no milk production was produced by the dairy
operation.
(b) During fiscal year 2006 only, during April 13, 2006 to May 17,
2006, a dairy operation can select from:
(1) Any month beginning October 2005 through May 2006, in which
there was a payment rate in effect; or
(2) Any month beginning June 2006 through September 2006, for which
the payment rate is not known and in accordance with paragraph (a) of
this section.
(c) Dairy operations that submit a MILC after the CCC-designated
signup period for fiscal year 2006 set forth in paragraph (b) of this
section, but before September 30, 2007, can select the MILC production
start month from:
(1) The month the MILC is submitted to CCC by the dairy operation
or the next consecutive month with a payment rate in effect following
the month the MILC is submitted to CCC by the dairy operation, if no
payment rate is in effect in the month the MILC is submitted;
(2) The months remaining in the fiscal year in which the MILC is
submitted for which the payment rate is not known in accordance with
paragraph (a) of this section.
(d) Dairy operations may change the production starting month on or
before:
(1) The 15th day of the month previously selected during fiscal
years 2002 through 2005;
(2) The 14th day of the month previously selected during fiscal
years 2006 and 2007.
(e) If a change of the production starting month is not made by the
dates required by paragraph (d) of this section, the MILC production
starting month cannot be changed until the next fiscal year. If the
selected MILC production starting month is never modified, it will
remain the same throughout the duration of the contract.
(f) MILC payments will be made consecutively to the dairy operation
on a monthly basis after the production starting month has been
designated until the earlier of the following:
(1) Payment quantity is reached in accordance with Sec. 1430.207;
or
(2) The end of the applicable fiscal year.
(g)(1) During fiscal years 2002 through 2005, dairy operations that
did not designate the month to begin receiving payments from CCC were
issued consecutive payments on a monthly basis on marketed milk
production beginning in the first month of the fiscal year with a
payment rate in effect, unless FSA was notified that a month would be
designated at a later date. During fiscal years 2006 and 2007, dairy
operations must designate a MILC production start month to begin
receiving payments from CCC. MILC production start month selections
made during the signup period designated by CCC may be made as provided
in paragraph (b)(1) of this section, otherwise MILC production start
month selections must be made in accordance with paragraph (c) of this
section.
(2) Dairy operations with MILC production start months that begin
with the month a MILC is submitted to FSA or that begin with the first
month of the fiscal year with an effective payment rate will receive
payments made by CCC consecutively on a monthly basis until the earlier
of the following:
(i) The maximum payment quantity is reached as determined in
accordance with Sec. 1430.207; or
(ii) The end of the applicable fiscal year.
(h) All producers involved in the dairy operation must agree to the
month designated. The dairy operation assumes the risk of not reaching
the maximum payment quantity based on the month selected by the dairy
operation. Payments will not be issued for past months for the sole
purpose of reaching the maximum payment quantity.
Sec. 1430.206 [Removed]
? 5. Section 1430.206 is removed and reserved.
? 6. Amend Sec. 1430.208 by revising paragraphs (a), (b)(2), and adding
(b)(3) and (c)(3) to read as follows:
Sec. 1430.208 Payment rate and dairy operation payment.
(a) Payments under this subpart may be made to dairy operations
when the Boston Class I milk price under the applicable Federal milk
marketing order is below $16.94 per cwt. No payments will be made to
dairy operations for marketings during the months that the Boston Class
I milk price under the applicable milk marketing order is equal to or
exceeds $16.94.
(b) * * *
(2) Multiplying the difference by 34 percent during the period
beginning on October 1, 2005, and ending on August 31, 2007; and
(3) Multiplying the difference by 0 percent during the period
beginning on September 1, 2007, and ending on September 30, 2007.
(c) * * *
(3) Payments to dairy operations will be based on calculated
payment rates rounded seven places to the right of the decimal.
* * * * *
? 7. Amend Sec. 1430.209 by revising the section heading and paragraph
(a) to read as follows:
Sec. 1430.209 Proof of market loss production.
(a) A dairy operation entering into a MILC must, based on
instructions issued by the Deputy Administrator, provide adequate proof
of the dairy operation's eligible production during the months of each
fiscal year designated in the MILC. The dairy operation must also
provide proof that the eligible production was commercially marketed
during the months beginning October 1, 2005, and ending September 30,
2007. Evidence of milk production claimed for payment shall be provided
to CCC with supporting documentation under paragraph (b) of this
section. All information provided is subject to verification, spot
check and audit by FSA. Further verification information may be
obtained from the dairy operation's milk handler or marketing
cooperative if deemed necessary by CCC to verify provided information.
Refusal to allow a representative of CCC or any other agency of the
Department of Agriculture to verify any information provided will
result in a determination of ineligibility for benefits under this subpart.
* * * * *
? 8. Amend Sec. 1430.211 by revising paragraph (a) to read as follows:
Sec. 1430.211 Duration of contracts.
(a) Except as provided in Sec. Sec. 1430.205, or elsewhere in this
subpart, a MILC entered into by producers in a dairy operation shall
cover eligible production marketed by the producers
[[Page 19624]]
in the dairy operation during the period beginning with the first day
of the month the producers in the dairy operation enter into an MILC
and ending on September 30, 2007.
* * * * *
Signed in Washington, DC, on April 12, 2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 06-3669 Filed 4-13-06; 1:29 pm]
BILLING CODE 3410-05-P