To require the Secretary of Agriculture to implement the Class I milk price structure known as Option 1-A as part of the implementation of the final rule to consolidate Federal milk marketing orders.

Summary: Directs the Secretary of Agriculture to implement the Class I fluid milk price structure known as Option 1A "Location-Specific Differentials Analysis" as part of the final rule to consolidate Federal milk marketing orders.  States that such option requirement shall not modify the existing (final rule) implementation schedule. States that the Option 1A requirement shall not be subject to specified requirements regarding: (1) notice and hearing; (2) referendum; (3) rulemaking notice and public participation; and (4) paperwork reduction. States that if the Secretary announces minimum milk prices under a marketing order prior to implementation of the rule under this Act, such prices shall be the applicable minimum prices for the months so covered. (Sec. 2) Expresses the congressional finding that certain Class III and IV milk pricing formulas require further emergency rulemaking because they do not adequately reflect public comment and are sufficiently different from the proposed rule.  States that the Secretary shall: (1) conduct formal rulemaking, implement a final decision not later than ten months after enactment of this Act, and collect no marketing order assessments (without reducing service levels) during any period of noncompliance with such time frame; and (2) reduce the cheese manufacturing allowance to 14.7 cents per pound pending such price implementation. (Sec. 3) Amends the Agricultural Market Transition Act to: (1) extend the milk price support program (at 1999 rates) through December 31, 2000; and (2) eliminate the processor loan recourse program. (Sec. 4) Amends the Agricultural Adjustment Act, reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, to direct the Secretary to implement a dairy forward pricing pilot program through December 31, 2004.  Applies such program to federally regulated milk that: (1) is not Class I milk or otherwise intended for fluid use; and (2) is in or directly affects interstate or foreign milk commerce. Directs the Secretary to study the impact of forward contracting on milk prices paid to U.S. producers.

SECTION 1. REQUIRED USE OF OPTION 1A AS PRICE STRUCTURE FOR CLASS I 
              MILK UNDER CONSOLIDATED FEDERAL MILK MARKETING ORDERS.

    (a) Use of Option 1A.--In implementing the final decision for the 
consolidation and reform of Federal milk marketing orders, as required 
by section 143 of the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7253), the Secretary of Agriculture shall price fluid or 
Class I milk under the orders using the Class I price differentials 
identified as Option 1A ``Location-Specific Differentials Analysis'' in 
the proposed rule published in the Federal Register on January 30, 1998 
(63 Fed. Reg. 4802, 4809), except that the Secretary shall include the 
corrections and modifications to such Class I differentials made by the 
Secretary through April 2, 1999.
    (b) Effect on Implementation Schedule.--The requirement to use 
Option 1A in subsection (a) does not modify or delay the time period 
for actual implementation of the final decision as part of Federal milk 
marketing orders specified in section 738 of the Agriculture, Rural 
Development, Food and Drug Administration, and Related Agencies 
Appropriations Act, 1999 (as contained in section 101(a) of division A 
of Public Law 105-277; 112 Stat. 2681-30).
    (c) Implementation of Requirement.--
            (1) Expedited implementation.--The Secretary of Agriculture 
        shall comply with subsection (a) as soon as practicable after 
        the date of the enactment of this Act. The requirement to use 
        the Option 1A described in such subsection shall not be subject 
        to--
                    (A) the notice and hearing requirements of section 
                8c(3) of the Agricultural Adjustment Act (7 U.S.C. 
                608c(3)), reenacted with amendments by the Agricultural 
                Marketing Agreement Act of 1937, or the notice and 
                comment provisions of section 553 of title 5, United 
                States Code;
                    (B) a referendum conducted by the Secretary of 
                Agriculture pursuant to subsections (17) or (19) of 
                such section 8c;
                    (C) the Statement of Policy of the Secretary of 
                Agriculture effective July 24, 1971 (36 Fed. Reg. 
                13804), relating to notices of proposed rulemaking and 
                public participation in rulemaking; and
                    (D) chapter 35 of title 44, United States Code 
                (commonly known as the ``Paperwork Reduction Act'').
            (2) Effect on minimum milk prices.--If the Secretary of 
        Agriculture announces minimum prices for milk under Federal 
        milk marketing orders pursuant to section 1000.50 of title 7, 
        Code of Federal Regulations, before the date on which the 
        Secretary first complies with subsection (a), the minimum 
        prices so announced before that date shall be the only 
        applicable minimum prices under Federal milk marketing orders 
        for the months for which the prices have been announced.

SEC. 2. NECESSITY OF USING FORMAL RULEMAKING TO DEVELOP PRICING METHODS 
              FOR CLASS III AND CLASS IV MILK; MODIFIED MANUFACTURING 
              ALLOWANCE FOR CHEESE.

    (a) Congressional Finding.--The Class III and Class IV pricing 
formulas included in the final decision for the consolidation and 
reform of Federal milk marketing orders, as published in the Federal 
Register on April 2, 1999 (64 Fed. Reg. 16025), do not adequately 
reflect public comment on the original proposed rule published in the 
Federal Register on January 30, 1998 (63 Fed. Reg. 4802), and are 
sufficiently different from the proposed rule and any comments 
submitted with regard to the proposed rule that further emergency 
rulemaking is merited.
    (b) Formal Rulemaking.--
            (1) Required.--The Secretary of Agriculture shall conduct 
        rulemaking, on the record after an opportunity for an agency 
        hearing, to reconsider the Class III and Class IV pricing 
        formulas included in the final decision referred to in 
        subsection (a).
            (2) Implementation.--A final decision on the formula shall 
        be implemented not later than 10 months after the date of the 
        enactment of this Act.
            (3) Effect of court order.--The actions authorized by this 
        subsection are intended to ensure the timely publication and 
        implementation of new pricing formulas for Class III and Class 
        IV milk. In the event that the Secretary is enjoined or 
        otherwise restrained by a court order from implementing the 
        final decision under paragraph (2), the length of time for 
        which that injunction or other restraining order is effective 
        shall be added to the time limitations specified in paragraph 
        (2) thereby extending those time limitations by a period of 
        time equal to the period of time for which the injunction or 
        other restraining order is effective.
    (c) Failure To Timely Complete Rulemaking.--If the Secretary of 
Agriculture fails to implement new Class III and Class IV pricing 
formulas within the time period required under subsection (b)(2) (plus 
any additional period provided under subsection (b)(3)), the Secretary 
may not assess or collect assessments from milk producers or handlers 
under section 8c of the Agricultural Adjustment Act (7 U.S.C. 608c), 
reenacted with amendments by the Agricultural Marketing Agreement Act 
of 1937, for marketing order administration and services provided under 
such section after the end of that period until the pricing formulas 
are implemented. The Secretary may not reduce the level of services 
provided under that section on account of the prohibition against 
assessments, but shall rather cover the cost of marketing order 
administration and services through funds available for the 
Agricultural Marketing Service of the Department.
    (d) Effect on Implementation Schedule.--Subject to subsection (e), 
the requirement for additional rulemaking in subsection (b) does not 
modify or delay the time period for actual implementation of the final 
decision referred to in subsection (a) as part of Federal milk 
marketing orders, as such time period is specified in section 738 of 
the Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 1999 (as contained in section 
101(a) of division A of Public Law 105-277; 112 Stat. 2681-30).
    (e) Modified Manufacturing Allowance for Cheese.--
            (1) Modification of allowance.--Pending the implementation 
        of new pricing formulas for Class III and Class IV milk as 
        required by subsection (b), the Secretary of Agriculture shall 
        modify the formula used for determining Class III prices, as 
        contained in the final decision referred to in subsection (a), 
        to replace the manufacturing allowance of 17.02 cents per pound 
        of cheese each place it appears in that formula with an amount 
        equal to 14.7 cents per pound of cheese.
            (2) Expedited implementation.--The Secretary of Agriculture 
        shall implement the modified formula as soon as practicable 
        after the date of the enactment of this Act. Implementation and 
        use of the modified formula shall not be subject to--
                    (A) the notice and hearing requirements of section 
                8c(3) of the Agricultural Adjustment Act (7 U.S.C. 
                608c(3)), reenacted with amendments by the Agricultural 
                Marketing Agreement Act of 1937, or the notice and 
                comment provisions of section 553 of title 5, United 
                States Code;
                    (B) a referendum conducted by the Secretary of 
                Agriculture pursuant to subsections (17) or (19) of 
                such section 8c;
                    (C) the Statement of Policy of the Secretary of 
                Agriculture effective July 24, 1971 (36 Fed. Reg. 
                13804), relating to notices of proposed rulemaking and 
                public participation in rulemaking; and
                    (D) chapter 35 of title 44, United States Code 
                (commonly known as the ``Paperwork Reduction Act'').
            (3) Effect on minimum milk prices.--If the Secretary of 
        Agriculture announces minimum prices for milk under Federal 
        milk marketing orders pursuant to section 1000.50 of title 7, 
        Code of Federal Regulations, before the date on which the 
        Secretary first implements the modified formula, the minimum 
        prices so announced before that date shall be the only 
        applicable minimum prices under Federal milk marketing orders 
        for the months for which the prices have been announced.

SEC. 3. ONE-YEAR EXTENSION OF CURRENT MILK PRICE SUPPORT PROGRAM.

    (a) Extension of Program.--Subsection (h) of section 141 of the 
Agricultural Market Transition Act (7 U.S.C. 7251) is amended by 
striking ``1999'' both places it appears and inserting ``2000''.
    (b) Continuation of Current Price Support Rate.--Subsection (b)(4) 
of such section is amended by striking ``year 1999'' and inserting 
``years 1999 and 2000''.
    (c) Elimination of Recourse Loan Program for Processors.--Section 
142 of the Agricultural Market Transition Act (7 U.S.C. 7252) is 
repealed.

SEC. 4. DAIRY FORWARD PRICING PROGRAM.

    The Agricultural Adjustment Act (7 U.S.C. 601 et seq.), reenacted 
with amendments by the Agricultural Marketing Agreement Act of 1937, is 
amended by adding at the end the following new section:

``SEC. 23. DAIRY FORWARD PRICING PILOT PROGRAM.

    ``(a) Pilot Program Required.--Not later than 90 days after the 
date of the enactment of this section, the Secretary of Agriculture 
shall establish a temporary pilot program under which milk producers 
and cooperatives are authorized to voluntarily enter into forward price 
contracts with milk handlers.
    ``(b) Minimum Milk Price Requirements.--Payments made by milk 
handlers to milk producers and cooperatives, and prices received by 
milk producers and cooperatives, under the forward contracts shall be 
deemed to satisfy--
            ``(1) all regulated minimum milk price requirements of 
        paragraphs (B) and (F) of subsection (5) of section 8c; and
            ``(2) the requirement of paragraph (C) of such subsection 
        regarding total payments by each handler.
    ``(c) Milk Covered by Pilot Program.--The pilot program shall apply 
only with respect to the marketing of federally regulated milk that--
            ``(1) is not classified as Class I milk or otherwise 
        intended for fluid use; and
            ``(2) is in the current of interstate or foreign commerce 
        or directly burdens, obstructs, or affects interstate or 
        foreign commerce in federally regulated milk.
    ``(d) Duration.--The authority of the Secretary of Agriculture to 
carry out the pilot program shall terminate on December 31, 2004. No 
forward price contract entered into under the program may extend beyond 
that date.
    ``(e) Study and Report on Effect of Pilot Program.--
            ``(1) Study.--The Secretary of Agriculture shall conduct a 
        study on forward contracting between milk producers and 
        cooperatives and milk handlers to determine the impact on milk 
        prices paid to producers in the United States. To obtain 
        information for the study, the Secretary may use the 
        authorities available to the Secretary under section 8d, 
        subject to the confidentiality requirements of subsection (2) 
        of such section.
            ``(2) Report.--Not later than April 30, 2002, the Secretary 
        shall submit to the Committee on Agriculture, Nutrition and 
        Forestry of the Senate and the Committee on Agriculture of the 
        House of Representatives a report containing the results of the 
        study.''.

            Passed the House of Representatives September 22, 1999.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.