95466 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 1000, 1001, 1005, 1006, 

1007, 1030, 1032, 1033, 1051, 1124, 

1126, 1131, and 1170 

[Doc. No. AMS–DA–23–0031] 

Milk in the Northeast and Other 

Marketing Areas; Final Decision on 

Proposed Amendments to Marketing 

Agreements and Orders 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule; final decision. 

SUMMARY: This proposed rule is the 

Secretary’s final decision in this 

proceeding and recommends 

amendments to the pricing provisions in 

the 11 Federal Milk Marketing Orders 

(FMMOs). AMS will determine if 

producers approve of the proposed 

amended orders, as required by 

regulation. 

DATES: The representative period for 

ascertaining producer approval is 

January 2024. 

ADDRESSES: To review the hearing 

record, please see https://

www.ams.usda.gov/rules-regulations/ 

moa/dairy/hearings/national-fmmopricing-hearing. Webinars with 

information on the proposed 

amendments and the referendum 

process are also available on the hearing 

website. 

FOR FURTHER INFORMATION CONTACT: Erin 

Taylor, USDA/AMS/Dairy Program, 

Order Formulation and Enforcement 

Branch, STOP 0231–Room 2530, 1400 

Independence Avenue SW, Washington, 

DC 20250–0231; telephone: (202) 720– 

4392; email address: Erin.Taylor@

usda.gov. 

SUPPLEMENTARY INFORMATION: This 

proposed rule, in accordance with 7 

CFR 900.13a, is the Secretary’s final 

decision in this proceeding and 

proposes the issuance of marketing 

orders as defined in 7 CFR 900.2(j). 

AMS continues to find that amendments 

to five milk pricing categories would 

provide more orderly marketing in the 

11 FMMOs. The final decision reflects 

changes to the make allowances and, to 

a very limited extent, the Class I 

differentials included in the 

recommended decision. This final 

decision recommends amendments to: 

1. Milk Composition Factors. Update 

the factors to 3.3 percent true protein, 6 

percent other solids, and 9.3 percent 

nonfat solids. 

2. Surveyed Commodity Products. 

Remove 500-pound barrel cheddar 

cheese prices from the Dairy Products 

Mandatory Reporting Program (DPMRP) 

survey and rely solely on the 40-pound 

block cheddar cheese price to determine 

the monthly average cheese price used 

in the formulas. 

3. Class III and Class IV Formula 

Factors. Update the manufacturing 

allowances to: Cheese: $0.2519; Butter: 

$0.2272; Nonfat Dry Milk (NFDM): 

$0.2393; and Dry Whey: $0.2668. This 

decision also proposes updating the 

butterfat recovery factor to 91 percent. 

4. Base Class I Skim Milk Price. 

Update the formula as follows: the base 

Class I skim milk price would be the 

higher-of the advanced Class III or Class 

IV skim milk prices for the month. In 

addition, adopt a Class I extended shelf 

life (ESL) adjustment equating to a Class 

I price for all ESL products equal to the 

average-of mover, plus a 24-month 

rolling average adjuster with a 12-month 

lag. 

5. Class I and Class II differentials. 

Keep the $1.60 base differential and 

adopt modified location specific Class I 

differential values. 

The Agricultural Marketing Service 

(AMS) will determine if producers 

approve of each proposed amended 

order, as required by regulation. If at 

least two-thirds of the producers or twothirds of the milk represented in the 

vote approve of an amended order, AMS 

will issue a final rule implementing the 

changes. If an order is not approved as 

amended, AMS will initiate steps to 

terminate the order. 

In conjunction with this final 

decision, the AMS conducted a 

Regulatory Economic Impact Analysis to 

determine the potential impact of 

amending FMMO pricing formulas on 

producer revenue and marketwide pool 

values. AMS used a static analysis 

incorporating actual data reported from 

January 2019 to December 2023 to 

determine the estimated price impacts 

of the package of amendments included 

in this final decision. The full text of the 

Regulatory Economic Impact Analysis 

may be accessed at https://

www.regulations.gov or https://

www.ams.usda.gov/rules-regulations/ 

moa/dairy/hearings/national-fmmopricing-hearing. 

Prior Documents in This Proceeding 

Notice of Hearing: Published July 24, 

2023 (88 FR 47396). 

Notice of Reconvened Hearing: 

Published November 6, 2023 (88 FR 

76143). 

Notice of Reconvened Hearing: 

Published December 29, 2023 (88 FR 

90134). 

Recommended Decision: Published 

July 15, 2024 (89 FR 57580). 

This administrative action is governed 

by sections 556 and 557 of title 5 of the 

United States Code and, therefore, is 

excluded from the requirements of 

Executive Orders 12866, 13563, and 

13175. 

The amendments to the regulations 

proposed herein have been reviewed 

under Executive Order 12988, Civil 

Justice Reform. They are not intended to 

have a retroactive effect. If adopted, the 

proposed amendments would not 

preempt any state or local laws, 

regulations, or policies, unless they 

present an irreconcilable conflict with 

this rule. 

The Agricultural Marketing 

Agreement Act of 1937 (AMAA), as 

amended (7 U.S.C. 601–674), provides 

that administrative proceedings must be 

exhausted before parties may file suit in 

court. Under section 608c(15)(A) of the 

AMAA, any handler subject to an order 

may request modification or exemption 

from such order by filing a petition with 

the USDA stating that the order, any 

provision of the order, or any obligation 

imposed in connection with the order is 

not in accordance with the law. A 

handler is afforded the opportunity for 

a hearing on the petition. After a 

hearing, USDA would rule on the 

petition. The AMAA provides that the 

district court of the United States in any 

district in which the handler is an 

inhabitant, or has its principal place of 

business, has jurisdiction in equity to 

review USDA’s ruling on the petition, 

provided a bill in equity is filed not 

later than 20 days after the date of the 

entry of the ruling. 

Civil Rights Impact Analysis 

AMS has reviewed this rulemaking in 

accordance with USDA Departmental 

Regulation 4300–004, Civil Rights 

Impact Analysis, to identify any major 

civil rights impacts the rule might have 

on FMMO participants on the basis of 

race, color, national origin, disability, 

sex, gender identity, political beliefs, 

age, marital, family/parental status, 

religion, sexual orientation, reprisal, or 

because of an individuals’ income is 

derived from any public assistance 

program. Based on the review and 

analysis of the rule and all available 

data, issuance of this proposed rule is 

not likely to negatively impact low and 

moderate-income populations, minority 

populations, women, Tribes or persons 

with disabilities, by virtue of their age, 

race, color, national origin, sex, 

disability, or marital or familial status. 

No major civil rights impact is likely to 

result from this proposed rule. 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95467 

Regulatory Flexibility Act and 

Paperwork Reduction Act 

In accordance with the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601 et 

seq.), the AMS has considered the 

economic impact of this action on small 

entities. Accordingly, AMS has 

prepared this initial regulatory 

flexibility analysis. 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) 

(NAICS Code 112120) is one that has an 

annual gross revenue of $3.75 million or 

less, and a small dairy products 

manufacturer is one that has no more 

than the number of employees listed in 

the chart below: 

NAICS code NAICS U.S. industry title Size standards in 

number of employees 

311511 ................................................................... Fluid Milk Manufacturing ................................................................. 1,150 

311512 ................................................................... Creamery Butter Manufacturing ...................................................... 750 

311513 ................................................................... Cheese Manufacturing .................................................................... 1,250 

311514 ................................................................... Dry, Condensed, and Evaporated Dairy Product Manufacturing ... 1,000 

To determine which dairy farms are 

‘‘small businesses,’’ the $3.75 million 

per year income limit was used to 

establish an annual milk marketing 

threshold of 18.3 million pounds. 

Although this threshold does not factor 

in additional monies that may be 

received by dairy producers, it should 

be an accurate standard for most 

‘‘small’’ dairy farmers. Based on the U.S. 

2023 average yield per cow and 2023 

NASS average All-Milk price, a dairy 

farm with approximately 780 cows or 

fewer would meet the definition of a 

small business. In 2022, the most recent 

year with statistics available, there were 

24,470 dairy farms with milk sales, of 

which approximately 19,576 had milk 

regulated on an FMMO for at least one 

month of the year. Based on the 2022 

Census of Agriculture, Milk Cow Herd 

Size by Inventory and Sales, an 

estimated 89 percent of operations with 

milk sales are likely to be small 

businesses. 

To determine a handler’s size, if the 

plant is part of a larger company 

operating multiple plants that 

collectively exceed the 750-employee 

limit for creamery butter manufacturing; 

the 1,000-employee limit for dry, 

condensed, and evaporated dairy 

product manufacturing; the 1,150- 

employee limit for fluid milk 

manufacturing; or the 1,250-employee 

limit for cheese manufacturing; the 

plant was considered a large business 

even if the local plant does not exceed 

the 750, 1,000, 1,150, or 1,250-employee 

limit, respectively. 

In 2022, the following number of 

plants were regulated for at least one 

month of the year in each FMMO: 66 

plants on the Northeast, 19 plants on the 

Appalachian, 9 plants on the Florida, 20 

plants on the Southeast, 58 plants on 

the Upper Midwest, 32 plants on the 

Central, 43 plants on the Mideast, 24 

plants on California, 17 plants on the 

Pacific Northwest, 26 plants on the 

Southwest, and 8 plants on Arizona. 

According to the 2022 Census of 

Agriculture, approximately 86 percent 

of fluid milk manufacturing plants, 

approximately 96 percent of cheese 

plants, approximately 82 percent of dry 

products plants, and approximately 78 

percent of butter plants met the SBA 

definition of small businesses. 

How FMMO Pricing Provisions Currently 

Operate 

The proposed amendments in this 

decision cover five milk pricing subject 

areas: Milk Composition Factors, 

Surveyed Commodity Products, Class III 

and Class IV Formula Factors, base 

Class I skim milk price (Class I mover), 

and Class I and II Differentials. This 

decision proposes to amend provisions 

in all five pricing subject areas. The 

amendments are intended to update 

formulas and factors in response to 

industry changes over time, many of 

which have not been updated since the 

provisions were adopted on January 1, 

2000, to ensure USDA is carrying out 

the purposes of the AMAA. 

Milk Composition Factors. FMMO 

milk prices are based on three primary 

components—protein, other solids, and 

nonfat solids. Skim milk composition 

factors in the current price formulas 

codified in the FMMO regulations were 

adopted in 2000: 3.1 percent protein, 5.9 

percent other solids, and 9 percent 

nonfat solids. The proposed 

amendments would increase milk 

composition factors to 3.3 percent 

protein, 6.0 percent other solids, and 9.3 

percent nonfat solids. Actual 

component tests of skim milk have 

increased since 2000, with more 

significant increases beginning in 2016. 

The amendments are intended to more 

accurately represent component levels 

in milk produced. 

Surveyed Commodity Products. Milk 

prices under FMMOs are related to 

wholesale prices for butter, cheese, 

nonfat dry milk, and dry whey. The 

formulas use USDA-surveyed average 

wholesale prices to calculate milk 

component prices (butterfat, protein, 

nonfat solids, and other solids) that are 

converted to Class III and IV milk 

prices. The protein value in cheese is a 

component of the Class III price. 

Currently, the prices of commodity 

cheddar cheese packaged in 40-lb blocks 

(‘‘blocks’’) and 500-lb barrels (‘‘barrels’’) 

are collected weekly by AMS through 

the DPMRP survey. A monthly average 

of those prices is used to represent 

commodity cheese in the Class III price 

formula. The butterfat value in 

commodity salted butter is the driver of 

the butterfat price used in all classified 

prices. The proposed amendments 

would eliminate 500-lb barrels from the 

DPMRP survey and rely solely on the 

monthly average survey price for 40-lb 

cheddar blocks. The amendment is 

intended to provide for more orderly 

marketing through a survey of only one 

product. 

Class III and IV Formulas Factors. 

Make allowances are a factor in the 

FMMO pricing formulas representing 

the cost of converting raw milk into the 

four manufactured dairy products 

surveyed by USDA (butter, cheese, 

nonfat dry milk, and dry whey). Make 

allowances were last updated in 2008 

following a rulemaking proceeding in 

2007. The proposed amendments would 

update the make allowances in the 

FMMO Class III and IV formulas to the 

following: $0.2519 for cheese; $0.2272 

for butter; $0.2393 for NFDM; and 

$0.2668 for dry whey. The proposed 

amendments would also update the 

butterfat recovery factor in the Class III 

formula to 91 percent. The amendments 

are intended to update the formula 

factors to be more representative of 

current costs and butterfat recovery 

observed in dairy product 

manufacturing. 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95468 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

Class I mover. The Class I mover is 

the base price for the skim milk portion 

of raw milk used in the production of 

Class I products. Agriculture 

Improvement Act of 2018 (2018 Farm 

Bill) amended the Class I skim milk 

price mover from the ‘‘higher of’’ Class 

III or Class IV skim prices to a simple 

average of the two classes plus $0.74, 

referred to as the ‘‘average of’’ mover. 

The proposed amendments would 

return the base Class I skim milk price 

calculation to the higher-of Class III or 

Class IV skim prices. The proposed 

amendments would also adopt a rolling 

monthly Class I ESL adjustment 

equating to a Class I price for all ESL 

products equal to the average-of the 

Class III and Class IV advance prices, 

plus a 24-month rolling average 

adjuster, with a 12-month lag. The 

monthly Class I ESL adjustment would 

be calculated as the average of the 

differences between the higher-of and 

the average-of calculations for the prior 

13 to 36 months. The amendments are 

intended to provide for more orderly 

marketing by returning to the higher-of 

mover; while the Class I ESL adjustment 

would provide better price equity for 

ESL products whose marketing 

characteristics are distinct from other 

Class I products. 

Class I and II Differentials. FMMO 

Class I prices are calculated as the 

average of the advanced Class III and 

Class IV prices, plus $0.74, plus a 

location-specific differential referred to 

as a Class I differential. As the value of 

milk varies by location, Class I 

differentials have been determined for 

every county in the continental U.S. 

Current Class I differential levels were 

implemented January 1, 2000, with 

updates to the differentials in the three 

southeastern orders taking effect May 1, 

2008. The proposed amendments would 

retain the $1.60 base differential and 

adopt modified location-specific Class I 

differential values. The amendments are 

intended to recognize the evolution of 

the dairy industry since 2000 and the 

increased cost of servicing the Class I 

market given current transportation 

costs and plant and producer locations. 

This decision continues to find these 

amendments are necessary. The 

evidentiary record reflected testimony 

from a broad range of stakeholder views 

that updates are necessary in all five 

pricing subject areas to reflect current 

market conditions. 

Impact on Small Businesses 

An economic analysis has been 

performed on impacts the proposed 

amendments will have on industry 

participants, including producers and 

handlers. It can be found on the AMS 

website at https://www.ams.usda.gov/ 

rules-regulations/moa/dairy/hearings/ 

national-fmmo-pricing-hearing. The 

proposed amendments would be 

applied identically to all proprietary 

and cooperative handlers regulated by 

FMMOs, regardless of their size. The 

proposed amendments would 

implement prices that more accurately 

reflect current market conditions, 

providing for more orderly marketing 

for both small and large producers and 

handlers. 

AMS considered alternatives to each 

of the proposed amendments. Over 49 

days of hearing, dozens of witnesses 

from 9 industry stakeholder groups 

presented testimony and evidence on 21 

proposals in the 5 pricing subject areas. 

AMS considered all evidence and 

testimony, including alternative 

proposals presented, in making its 

recommendations. 

A review of reporting requirements 

was completed under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

chapter 35). It was determined that 

these proposed amendments would 

have no impact on reporting, 

recordkeeping, or other compliance 

requirements because they would 

remain identical to the current 

requirements. No new forms are 

proposed, and no additional reporting 

requirements would be necessary. 

This proposed rule does not require 

additional information collection that 

requires clearance by the Office of 

Management and Budget (OMB) beyond 

currently approved information 

collection. The primary sources of data 

used to complete the forms are routinely 

used in most business transactions. 

Forms require only a minimal amount of 

information which can be supplied 

without data processing equipment or a 

trained statistical staff. Thus, since the 

information is already provided, no new 

information collection requirements are 

needed, and the current information 

collection and reporting burden is 

relatively small. Requiring the same 

reports for all handlers does not 

significantly disadvantage any handler 

that is smaller than the industry 

average. 

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. 

No other burdens are expected to fall 

on the dairy industry as a result of this 

rulemaking. This rulemaking does not 

duplicate, overlap, or conflict with any 

existing Federal rules. 

Preliminary Statement 

A public hearing was held upon 

proposed amendments to the marketing 

agreements and orders regulating the 

handling of milk in all 11 Federal milk 

marketing areas. The hearing was held 

pursuant to the provisions of the 

AMAA, as amended (7 U.S.C. 601–674), 

and the applicable rules of practice and 

procedure governing the formulation of 

marketing agreements and marketing 

orders (7 CFR part 900). 

The proposed amendments set forth 

below are based on the record of a 

public hearing held in Carmel, IN, from 

August 23–October 11, 2023, November 

27–December 8, 2023, January 16–19, 

2024, and January 29–31, 2024, 

pursuant to a notice of hearing 

published July 24, 2023 (88 FR 47396), 

a notice of reconvened hearing 

published November 6, 2023 (88 FR 

76143), and a second notice of 

reconvened hearing, published 

December 29, 2023 (88 FR 90134). 

The hearing was held to receive 

evidence on 21 proposals submitted by 

dairy farmers, handlers, and other 

interested parties. A total of 165 

witnesses testified over the course of the 

49-day hearing. Witnesses provided an 

overview of the complexity of the U.S. 

dairy industry and submitted 511 

exhibits containing supporting data, 

analyses, and historical information. 

The material issues, related to FMMO 

pricing formulas, presented on the 

record of hearing are as follows: 

1. Milk Composition Factors 

2. Surveyed Commodity Products 

3. Class III and Class IV Formula Factors 

4. Base Class I Skim Milk Price 

5. Class I and Class II differentials 

Summary of Testimony 

Milk Composition 

Two proposals seeking to amend the 

milk composition standards are being 

considered in this rulemaking. Proposal 

1, submitted by the National Milk 

Producers Federation (NMPF) seeks to 

increase the skim component factors, 

with a 12-month implementation lag. 

The proposed standards are as follows: 

increase the nonfat solids assumption 

from 9.0 to 9.41 per hundredweight 

(cwt) of Class IV skim milk; increase the 

protein assumption from 3.1 to 3.39 per 

cwt of Class III skim milk; and increase 

the other solids assumption from 5.9 to 

6.02 per cwt of Class III skim milk. 

Proposal 1 also contains an updating 

methodology that would automatically 

update the standards no more than once 

every three years once the nonfat solids 

component for the prior three years 

changes by at least .07 percentage 

points. 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95469 

Proposal 2, submitted on behalf of 

National All-Jersey (NAJ), is identical to 

Proposal 1, except for the automatic 

update methodology. The proposal 

would update the standards annually 

using the previous year’s weighted 

averages, with a 12-month 

implementation lag. 

A witness from NMPF, a trade 

association representing dairy farmerowned cooperative marketing 

associations throughout the United 

States, testified in support of updating 

the skim milk price milk component 

factors, as contained in Proposal 1. The 

witness explained how the U.S. dairy 

industry has undergone dynamic 

structural change since 2000, while 

FMMO product price formulas have 

generally remained static. The witness 

stated dairy farmers have responded to 

component pricing by significantly 

increasing the butterfat, protein, and 

other solid levels in their milking herds. 

According to the USDA’s National 

Agricultural Statistics Service (NASS), 

said the witness, average butterfat tests 

have increased 10.9 percent from 2000 

to 2022, and USDA’s Economic 

Research Service (ERS) reported average 

skim milk solids content of U.S. milk 

production increased 0.31 percent 

during the same period. The witness 

said average protein, other solids, and 

nonfat solids (NFS) in milk pooled on 

FMMOs in 2022 were 3.39 percent, 6.02 

percent, and 9.41 percent, respectively. 

The NMPF witness asserted the static 

component levels contained in the 

formulas result in underpayments to 

producers in all FMMOs for the value of 

their Class I skim milk. Therefore, 

NMPF proposes to increase the milk 

composition factors in skim milk to 

2022 levels. The NMPF witness 

analyzed 2013–2022 FMMO product 

prices and concluded adoption of 

Proposal 1 would have increased the 

Class III skim price by $0.80 per cwt and 

the Class IV skim milk price by $0.41 

per cwt. An increase from the 2022- 

based skim milk component factors by 

the proposed 0.07 percentage point 

threshold level, the witness added, 

would have increased the Class III and 

Class IV prices by $0.14 and $0.07 per 

cwt, respectively. 

Another NMPF witness testified the 

announced FMMO Class III and Class IV 

skim milk values do not reflect the 

current component levels of producer 

milk, resulting in announced prices 

being lower than actual market values. 

The witness said this leads to a 

misalignment of fluid and 

manufacturing milk, possibly leading to 

disorderly marketing conditions. This 

occurs because the Class I Mover skim 

milk price is calculated based on skim 

milk component levels based on 2000 

levels, narrowing the difference between 

Class I prices and manufacturing milk 

prices (Classes III and IV) and resulting 

in more instances of price inversions 

and depooling. 

Several NMPF dairy farmer witnesses 

testified in support of Proposal 1. The 

witnesses stated improved genetics and 

feed quality have caused component 

levels in the milk they market to 

increase. The witnesses stated 

component levels in the pricing 

formulas should be updated to reflect 

the additional protein produced. 

An NMPF witness testified regarding 

their work as a business consultant with 

dairy farmers. The witness said dairy 

farming costs have been consistently 

increasing due to higher feed prices, 

overall inflation, interest rate increases, 

and rising costs associated with labor 

and environmental regulations. The 

witness estimated the average margin 

per cwt of milk produced over the past 

decade was less than $1, or 

approximately 4 to 7 percent of the 

average milk price. The witness opined 

that financially sustainable margins are 

necessary to avoid further consolidation 

in the industry. 

An NMPF dairy farmer witness 

testified that monthly pay price 

volatility has increased since 2000. 

According to the witness, in 2000 their 

pay price varied $0.52, from a high of 

$12.95 to a low of $12.43. In the 12 

months prior to August 2023, the 

witness said the variance was $7.46, 

ranging from $22.50 to $15.04, while 

costs continued to rise, including the 

price of corn and soybean meal more 

than doubling. The witness said that 

during the same 12-month period their 

milk output rose over 10,000 pounds. 

The witness attributed improvements in 

cow comfort, genetics, and feed quality 

to the increases in milk output and 

component levels but opined low 

component standards were depressing 

producer price differentials (PPDs) and 

discouraging milk from supplying the 

Class I market. 

NMPF, in their post-hearing brief, 

offered additional support for Proposal 

1. The brief credited significant 

advances related to animal genetics, 

farm management, and cow nutrition as 

contributing to rising skim milk 

component levels. NMPF reiterated 

hearing testimony regarding the static 

component levels in the formulas 

leading to a narrowing of the difference 

between Class I and manufacturing milk 

prices resulting in more price 

inversions, larger volumes of depooled 

milk, and resulting in disorderly 

marketing. NMPF stated higher skim 

milk component levels have value in the 

competitive manufacturing dairy 

market, which is the basis for 

determining Class I values. NMPF stated 

that increasing the skim milk 

components in the formulas to reflect 

current levels would recognize the 

current average value of producer milk 

used for manufacturing dairy products 

and result in a Class I price that 

properly reflects base milk values. 

Additionally, NMPF argued delayed 

implementation of updated component 

level factors is necessary because of 

dairy farmers’ use of risk management 

programs. Such a delay would allow for 

the completion of most transactions 

placed prior to announcement of the 

change. 

A Dairy Farmers of America, Inc. 

(DFA) witness, appearing on behalf of 

NMPF, testified the failure to delay an 

update in skim component standards 

would cause financial harm to dairy 

farmers, milk plants, end users, and 

others who entered into riskmanagement transactions. DFA is a 

dairy farmer cooperative and owns and 

operates 14 manufacturing plants which 

produce liquid whey, Italian cheese, 

skim milk powder, whole milk powder, 

American-style cheese, condensed milk, 

cream, nonfat dry milk, milk protein 

concentrate (MPC), sweetened 

condensed milk, and dry whey. The 

witness testified that failure to delay 

implementation would affect the basis, 

or the profit margin for milk being 

hedged. The witness testified that 35 to 

45 percent of the U.S. milk supply was 

hedged by dairy farmers and there is a 

growing demand for risk management 

services among larger-sized dairies. 

A witness representing the American 

Farm Bureau Federation (AFBF), a 

farmer advocacy organization with 

approximately 6 million members 

throughout the U.S., testified in support 

of Proposal 1. The witness estimated 

that raising the skim component 

standards would increase the Class I 

price by an average of $0.70 per cwt, 

based on 2022 data. Consequently, 

raising the skim component standards 

would help bring the Class I, III, and IV 

prices in alignment, reduce the 

frequency of negative PPDs, and reduce 

the incentives for depooling, which the 

witness said undermines orderly 

marketing. The witness stated that 

raising the value of the skim milk in the 

manufacturing classes for the skim and 

butterfat markets would reduce the 

incentive of manufacturing plants in the 

multiple component pricing (MCP) 

orders to pool milk, which would lower 

the producer’s price and discourage 

milk from entering a milk deficit region. 

The witness testified that updating 

component standards would address 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95470 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

some price misalignment issues and is 

preferred to prevent handlers from 

depooling. 

AFBF offered support in their posthearing brief stating Proposal 1 would 

more accurately define the market value 

of skim milk pooled on FMMOs. The 

brief asserted the resulting increase in 

Class I prices would reduce the 

incidences of price misalignment with 

Class III and IV prices, reduce the size 

and frequency of negative PPDs, and 

reduce depooling incentives. AFBF 

supported periodic adjustments to 

component levels, as contained in 

Proposal 1, to account for the 

continuing increases in the component 

levels but specified these levels should 

only be changed in the positive 

direction. In AFBF’s opinion, more 

frequent updates, as contained in 

Proposal 2, would be disruptive. 

A witness representing NAJ, an 

organization representing the interests 

of Jersey cattle breeders, testified in 

support of Proposal 2, which proposes 

the same milk composition levels as 

Proposal 1, with automatic annual 

updates. The witness said many factors 

have contributed to increased 

component levels, including improved 

genomics, increased use of genderselected semen, and volume-based 

programs such as base/excess programs. 

The witness testified an annual update 

would provide improved accuracy 

because of the recently accelerated pace 

of component increases and would have 

better alignment with pricing between 

butterfat/skim and multiple component 

pricing FMMOs. Additionally, the 

witness stated a 1-year lag on 

implementing these updates would 

allow for greater risk management 

which is becoming increasingly more 

important to producers and processors. 

NAJ’s post-hearing brief reiterated 

their support for Proposal 2, arguing 

record evidence shows protein and 

other solids levels in producer milk 

have progressively and significantly 

increased since FMMO reform in the 

late 1990s. NAJ stated the trend of 

higher solids components in skim milk 

was expected to continue due to 

economic signals to producers from 

component values and improved 

production techniques. NAJ argued 

amendments of standard skim milk 

composition factors is necessary to help 

avoid periods of price inversions, 

depooling, undervaluing Class I milk, 

milk supply inefficiency, and 

disincentives to supply milk for Class I 

use. NAJ stated a change to the skim 

milk component levels should be 

announced at least 11 months in 

advance of implementation due to risk 

management practices used by 

producers and processors. NAJ argued 

annual updates better serve risk 

management practices because it would 

lead to smaller incremental changes and 

less adverse impact on risk management 

contracts with more than 12-months 

open interest at the time component 

changes are announced. 

A witness representing Edge Dairy 

Farmer Cooperative (Edge), a 

Wisconsin-based dairy milk test 

verification cooperative, testified in 

support of Proposals 1 and 2. The 

witness supported increasing the 

implementation lag to 15.5 months to 

support longer contract hedging. The 

witness was of the opinion the standard 

butterfat test also should be updated 

from 3.5 percent to 4.06 percent, the 

2022 average butterfat for all markets 

combined as published by the USDA’s 

AMS. According to the witness, this 

would more accurately reflect current 

butterfat levels and better align the 

butterfat to protein ratio used in the 

formula, ensuring more effective risk 

management tools, as farmers’ ability to 

manage their gross pay price risk would 

improve. 

Edge, in their post-hearing brief, 

reiterated hearing testimony that failure 

to adjust the butterfat level when 

updating skim component levels would 

cause disorderly milk marketing, as it 

undermines effective risk-management 

tools for dairy farmers. Edge argued that 

without the corresponding change, 

producers hedging milk revenue using 

risk management products based on 

Class III milk or Class IV milk prices, 

will tend to be under protected against 

the decline in butterfat prices. Edge 

added that changing the butterfat level 

would not affect handler obligations to 

the producer settlement fund, PPDs, or 

uniform producer prices. 

A witness representing the 

International Dairy Foods Association 

(IDFA) testified in opposition to 

Proposals 1 and 2, stating that updating 

the component standards would 

increase the Class I skim price by $0.60 

per cwt, a value that cannot be 

recovered in the marketplace. IDFA is a 

trade organization representing 

manufacturers of milk, cheese, ice 

cream, yogurt, cultured products, and 

dairy ingredients. The IDFA witness 

testified consumers choose finished 

Class I products based on desired fat 

level, freshness, and price, not higher 

nonfat solids levels. The witness 

estimated that updating component 

levels in the formulas would result in 

manufacturing handlers in butterfat/ 

skim FMMOs paying an additional 

$0.40 to $0.80 per cwt, even though the 

component levels of milk delivered to 

those plants was less than those 

proposed. The witness cited National 

Dairy Herd Information Association 

(DHI) data showing 2020 to 2022 

average skim protein levels in butterfat/ 

skim FMMOs below the levels 

contained in Proposals 1 and 2. The 

witness attributed the lower observed 

component levels to the fact that 

producer payments in these orders are 

made on the basis of the fat and skim 

content of their milk, leaving no 

financial incentive to produce higher 

component milk. 

A witness from Saputo Cheese USA 

(Saputo), appearing on behalf of IDFA, 

also testified in opposition of Proposals 

1 and 2. Saputo is a dairy processor and 

manufacturer operating 29 plants 

throughout the U.S. The witness said 

Saputo operates three plants located in 

the skim/fat orders, and in 2022 the 

average NFS level of milk received at 

those plants was 9.1070 percent, which 

is less than what is proposed in 

Proposals 1 and 2. The witness 

explained Saputo purchases skim solids 

to add to its skim milk in order to 

ensure the Class II products it 

manufactures contain the skim solids 

necessary to meet standard of identity 

requirements for those products. 

Updating the component levels in the 

formula would only result in Saputo 

paying for skim solids not received, but 

it would not lower the amount of skim 

solids Saputo must purchase, explained 

the witness. 

A post-hearing brief submitted by 

IDFA reiterated its opposition to 

Proposals 1 and 2, arguing that 

increased component levels have no 

financial benefit or economic value to 

Class I handlers who would be the 

primary entities impacted by adoption 

of these proposals. IDFA stated the 

current FMMO system of pricing Class 

I milk on a skim/fat basis versus Classes 

II, III, and IV milk on a component basis 

does not create disorderly marketing. 

The Milk Innovation Group (MIG) is 

a group of fluid milk processors and 

producers that market value added dairy 

based products. MIG’s members include 

Anderson Erickson Dairy (AE), Aurora 

Organic Dairy (Aurora), Crystal 

Creamery, Danone North America 

(Danone), fairlife, HP Hood LLC (HP 

Hood), Organic Valley/CROPP 

Cooperative (Organic Valley), Shamrock 

Foods Company (Shamrock), Shehadey 

Family Foods LLC (Shehadey), and 

Turner Dairy Farms (Turner Dairy). 

Crystal Creamery is a California fluid 

milk processor producing Class I, II, and 

IV conventional and organic milk 

products. Danone is a food and beverage 

company operating seven plants in the 

U.S. Fairlife is a fluid milk processor of 

ultra-filtered lactose free milk, and other 


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high protein products. Organic Valley is 

a dairy farmer-owned organic 

cooperative producing more than 30 

percent of the organic milk sold in the 

U.S. 

Seven witnesses representing MIG, 

including witnesses from HP Hood, 

Shehadey, Saputo, Shamrock, AE, 

Turner Dairy, and Aurora, testified in 

opposition to Proposals 1 and 2. HP 

Hood is a fluid milk processor operating 

five ESL plants and four hightemperature, short-time (HTST) plants 

in the Northeast and California. 

Shehadey operates four manufacturing 

plants in California, Nevada, and 

Oregon, producing Class I and Class II 

products. Shamrock is a fluid milk 

processor of HTST and ESL products 

with processing facilities in Arizona and 

Virginia, and a 20,000-head dairy farm 

located in Arizona. AE is an Iowa fluid 

milk processor producing both Class I 

and II products. Aurora is a vertically 

integrated organic milk supplier with 

four organic dairy farms located in 

Colorado and Texas. Turner Dairy is a 

small fluid milk processor with full or 

partial ownership of two fluid milk 

plants, as well as a standalone Class II 

plant, all located in western 

Pennsylvania. 

Six witnesses testified their plants 

regularly receive milk with components 

below the proposed levels. One witness 

offered that component levels received 

ranged from 3.09 to 3.63 percent 

protein, 5.83 to 6.10 percent other 

solids, and 8.92 to 9.65 percent NFS. 

MIG members testified that increasing 

the component levels in the formulas 

would increase their raw milk costs, 

requiring them to pay for milk 

components not received. One witness 

stated that adoption of Proposals 1 and 

2 would increase costs between $0.60 

and $0.75 per cwt. All MIG witnesses 

claimed that fluid milk processors, even 

if they did receive higher component 

milk, are unable to convert those higher 

components into additional market 

revenue as Class I products are sold on 

a volume, not component basis. 

Another MIG witness testified on a 

survey conducted of MIG members plus 

two additional large grocery retailers 

who own their own fluid milk 

processing plants. According to the 

witness, using component data from 32 

out of the 36 plants surveyed, these 

plants frequently received milk with 

components below the proposed levels. 

As data was confidential, no specific 

data was provided. The witness also 

noted the data showed component 

levels changed due to seasonality and 

geographics, demonstrating inconsistent 

levels received by plants. The witness 

testified the adoption of Proposals 1 or 

2 would raise Class I prices and make 

it more challenging for these plants to 

recover costs. Should USDA decide to 

change the standard component levels 

in the pricing formulas, the witness 

testified component minimums should 

be used instead of averages because 

FMMOs are meant to provide minimum 

prices. 

A post-hearing brief filed on behalf of 

MIG argued it would be disorderly for 

Class I fluid milk processors, the only 

mandatory participant of FMMOs, to be 

forced to pay for component levels 

regardless of what is actually received. 

MIG opined consumers do not value 

additional skim component levels in 

fluid milk products, therefore Class I 

processors are unable to recoup 

additional revenue out of the market. 

MIG was of the opinion no record 

evidence was provided at the hearing 

that the current skim component 

formula factors are causing disorderly 

marketing and added that although they 

oppose Proposals 1 and 2, if any part of 

these proposals are adopted there 

should be a 12-month implementation 

delay. 

A witness representing the CME 

Group (CME) testified to explain various 

dairy risk management tools offered 

through the exchange, including futures 

and options contracts. The witness 

explained the CME is a derivatives 

marketplace offering a range of futures 

exchanges to meet private risk 

management needs. The witness 

explained a futures contract is a legally 

binding agreement to buy or sell a 

standardized asset on a specific date or 

during a specific month. An option on 

a futures contract is the right, but not 

the obligation, to buy or sell the 

underlying futures contract at a 

predetermined price on or before a 

given date in the future. The witness 

stated 97.43 percent of contracts in the 

futures and options market are for 12- 

month periods, and in a previous 

change to futures contracts there was an 

18-month lag on implementation to be 

beyond open interest. The witness 

testified that Dairy Revenue Protection 

(DRP) is one of many programs that rely 

on CME markets and advocated USDA 

to consider futures and options markets 

when establishing implementation 

plans. 

In its post-hearing brief, CME 

reiterated its neutrality on all proposals 

under consideration. They stated any 

change modifying the current Class III 

and Class IV formulas would be 

considered a material change affecting 

current contracts. CME stressed the 

importance of sufficient and transparent 

notice of any changes. 

A post-hearing brief was submitted on 

behalf of Select Milk Producers (Select), 

a dairy-farmer owned cooperative which 

owns and operates eight processing 

plants in Texas, New Mexico, and 

Michigan, manufacturing ESL fluid milk 

products and a variety of cheese, butter, 

and NFDM products. Select offered 

support for Proposal 1 and took 

exception to the assertion there is no 

value in higher protein levels in Class 

I products, as it is belied by the success 

of specialty fluid milk products such as 

fairlife, and the higher milk solids 

required for California fluid milk. 

Although Select supported adoption of 

Proposal 1, they do not support a delay 

in implementation, nor the annual 

update as contained in Proposal 2. 

Lamers Dairy Inc. (Lamers), a 

Wisconsin based HTST fluid milk 

processor, submitted a post-hearing 

brief in opposition to Proposals 1 and 2. 

Lamers stated component levels can 

vary both regionally and from farm to 

farm. Lamers opined that USDA is 

statutorily required to conduct a study 

of component levels before any change 

could be made and argued adoption of 

Proposals 1 and 2 should not be 

considered. 

New Dairy OPCO LLC (New Dairy), a 

fluid milk processor operating four fully 

regulated distributing plants (three of 

which are located in the southeastern 

U.S.), submitted a post-hearing brief in 

opposition to Proposals 1 and 2. New 

Dairy offered support for arguments 

made by IDFA and MIG that fluid milk 

processors would be unable to recoup 

the additional cost of components 

should Proposals 1 or 2 be adopted. 

They purport that charging fluid milk 

processors for components not actually 

received would be disorderly. New 

Dairy said raising component levels in 

the formulas would harm its 

southeastern plants as they pay on a 

skim/fat basis which provides no 

incentive to producer to increase 

components to match the national 

average. 

In its post-hearing brief, NMPF 

opposed the annual updating feature 

contained in Proposal 2. NMPF stated 

that by limiting changes to the standard 

component levels to a periodic basis 

and relying on 3-year weighted average, 

Proposal 1 is more likely to produce 

accurate component values and avoid 

disruption from more frequent changes. 

Surveyed Commodity Products 

This rulemaking proceeding considers 

four proposals, and a modified proposal 

submitted during the hearing, that 

would add or remove a variety of 

products in the DPMRP survey, which 

are then reported in the National Dairy 


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95472 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

Product Sales Report (NDPSR) and used 

to establish FMMO classified prices. 

The proposals are as follows: 

Proposal 3, submitted by NMPF, seeks 

to eliminate the Cheddar cheese barrel 

price from the cheese price formula. 

Proposal 4, submitted by AFBF, seeks 

to add Cheddar cheese 640-pound block 

price series to the cheese price formula. 

Proposal 5, submitted by AFBF, seeks 

to add unsalted butter to the butterfat 

and cheese price formulas. 

Proposal 6, submitted by the 

California Dairy Campaign (CDC), seeks 

to add a price series for mozzarella to 

the cheese price formula. 

Edge offered a proposal modification 

during the hearing to adopt different 

weighting methodology which would 

reweigh 40-pound blocks and 500- 

pound barrels in the DPMRP survey by 

all U.S. cheddar block and barrel 

production volumes. 

NMPF witnesses from Foremost 

Farms USA (Foremost), Ellsworth 

Cooperative Creamery (Ellsworth), Land 

O’Lakes (LOL), and DFA testified in 

support of Proposal 3. Foremost is a 

cooperative with 850 members located 

in Wisconsin, Michigan, Iowa, 

Minnesota, Indiana, Ohio, and Illinois, 

and operating eight manufacturing 

plants producing cheese and butter. 

Ellsworth is a Wisconsin-based cheese 

manufacturer producing a significant 

volume of barrel cheese and a variety of 

specialized cheeses and cheese curds 

from 250 dairy-farmer members. LOL is 

a dairy farmer-owned cooperative with 

more than 1,000 dairy farmer members, 

primarily producing butter and cheese. 

The witnesses explained the current 

cheese price formula includes both 

block and barrel cheese in the 

computation. They asserted the cheese 

price formula provides for orderly 

marketing if the difference, known as 

the ‘‘spread,’’ in the respective market 

prices of blocks and barrels remains 

close to the assumed $0.03 per pound 

cost difference, which occurred from 

2000 to 2016. However, since 2017 the 

spread between the block and barrel 

prices has been volatile. One witness 

stated the weighted average spread 

published in the weekly NDPSR during 

January 2017 through July 2023 was 

$0.120 per pound, with a much wider 

and more volatile range per pound. The 

LOL witness opined that the DPMRP 

survey could continue to include and 

publish prices of 500-pound barrel 

cheese without necessitating its 

inclusion in the Class III protein price 

calculation. 

An NMPF witness testified the CME 

block cheddar price is used as a pricing 

index for most cheese produced in the 

U.S., including cheddar, 40-pound 

block, 640-pound block, mozzarella, 

other American-type cheese, and other 

cheese including cream cheese, and 

Hispanic cheese. They estimated 90 

percent of natural cheese produced in 

the U.S. is sold using the CME 40-pound 

block cheddar price as a pricing index. 

The witness estimated the CME barrel 

cheese price is used to price only about 

9 percent of total domestically produced 

natural cheeses, including barrels 

themselves. They said DPMRP survey 

volumes of barrel cheese between 2013 

and 2022 ranged from 44 to 52 percent, 

resulting in an overrepresentation of 

500-pound barrels compared to the 

actual volume of cheese that is priced 

off of barrels. The witness testified that 

since 2017, the significantly wider and 

increasingly volatile block-barrel spread 

has caused instability in the cheese 

market. Consequently, the witness said, 

dairy farmer revenue has been reduced 

as the over representation of 500-pound 

barrels lowered the Class III price. The 

Foremost witness estimated the 

undervaluation represented $2 billion 

since 2017, claiming the value would 

have been greater if not for the large 

volume of Class III milk not pooled in 

2020 and 2021. 

The NMPF witness testified 

eliminating 500-pound barrel prices 

from the Class III price would create 

more orderly marketing in FMMOs by 

reducing the financial uncertainty for 

dairy producers and manufacturers and 

ensuring the cheese price in the protein 

component formula represents the 

single commodity cheddar cheese 

product. The witness described how 

barrel cheese manufacturers are harmed 

when they must account to the pool at 

an FMMO cheese price higher than the 

revenue generated from barrel cheese 

product. The witness said eliminating 

the 500-pound barrels would have 

increased the Class III price by $0.41 per 

cwt, using average product prices for 

2017 to 2022. 

An NMPF witness testified that 

removing 500-pound barrels had been 

addressed in prior rulemakings but 

denied by USDA in the rulemaking. 

However, current market conditions 

have significantly changed, 

necessitating a re-evaluation. The 

witness attributed the increased 

volatility in the block-barrel price 

spread since 2017 to a variety of factors, 

including increased 500-pound barrel 

production capacity that may be due to 

increasing values of its white whey byproduct. 

NMPF witnesses testified eliminating 

500-pound barrel cheese from the 

protein component price (PCP) formula 

would still provide adequate volume of 

cheddar cheese for price discovery 

purposes as 40-pound block cheese 

surveyed represents approximately 16 

percent of total U.S. natural cheddar 

cheese production. The witness also 

said this methodology change would 

bring the cheese price into conformity 

with the price for butter, NFDM, and 

dry whey, which utilize only one 

surveyed product for price discovery 

purposes. 

The witness testifying on behalf of 

Ellsworth stated 40-pound blocks and 

500-pound barrels are not 

interchangeable products. The witness 

said while 40-pound block cheddar has 

many markets and uses, 500-pound 

barrel cheddar is used for processed 

cheese, a market driven by few 

processors and purchasers. As a result, 

the witness said, surveying barrel 

cheese prices skews the FMMO cheese 

price towards a smaller market that is 

not representative of the rest of the 

cheese market. The witness estimated 

the volatility in the block-barrel spread 

since 2017 cost Ellsworth producers 

$0.84 per cwt. The witness said barrel 

cheese manufacturers would adjust to 

the elimination of barrel prices from the 

survey and eventually transition to 

prices based on the 40-pound block 

cheese price. 

Witnesses representing IDFA, Leprino 

Foods Company (Leprino), and 

Associated Milk Producers, Inc. (AMPI) 

testified in opposition to Proposal 3. 

Leprino operates nine plants in the U.S., 

manufacturing mozzarella cheese, whey 

products, and NFDM. AMPI owns and 

operates eight manufacturing plants 

processing cheese, butter and powdered 

dairy products from member farms in 

Wisconsin, Minnesota, Iowa, Nebraska, 

South Dakota, and North Dakota. 

The witnesses said sales of both block 

and barrel cheddar cheese are robust 

and each play a significant role in 

setting the market value of cheddar 

cheese. They argued eliminating 500- 

pound barrels would reduce by more 

than half the cheese market price 

contained in the survey and would 

result in a distorted picture of the total 

commodity cheddar market. The 

witness said opposition to removing 

barrels was not related to the presumed 

effect on the Class III price as the 

NDPSR weighted average cheese price 

(reflecting block and barrel cheese) was 

higher than the 40-pound block price in 

9 of 14 years from 2009 to 2022. One 

witness opined additional cheddar 

block plant capacity is coming on-line 

in the next couple of years, increasing 

40-pound block volumes, and would 

reduce the block-barrel spread to 

historical levels under normal supplydemand behavior. 


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The IDFA witness speculated cheddar 

barrel manufacturers may opt not to 

pool milk if the barrel price is no longer 

surveyed because they would be unable 

to garner sufficient market revenue in 

order to account to the pool and the 

Class III price. 

Two Leprino witnesses testified 

eliminating 500-pound barrels from the 

Class III price formula removes the 

product most closely capturing the 

supply and demand balance. They 

opined that removing 500-pound barrels 

would both shrink the survey volume 

and likely result in greater cheddar 

block production to clear the market. 

The witnesses testified this would add 

volatility to the block market, cause 

unnecessary stress to the U.S. 

marketplace, and make U.S. cheese less 

attractive to global buyers. 

The Leprino witnesses said dropping 

500-pound barrels from the survey 

would create a presumption within the 

Class III formula that all cheese, 

including barrels, would then be priced 

off blocks. The witnesses asserted 

barrels and blocks have different supply 

and demand functions and eliminating 

barrels from the Class III formula would 

force barrels to be priced off blocks, 

adding dysfunction to the barrel market. 

The witnesses argued barrels are the 

market-clearing cheese, and instead 40- 

pound blocks should be eliminated from 

the price formula to be more consistent 

with the minimum pricing provisions. 

In its post-hearing brief, NMPF 

reiterated testimony regarding price 

differences between 40-pound blocks 

and 500-pound barrels becoming more 

volatile since 2017. Historically, NMPF 

wrote, using both block and barrel 

prices in the Class III pricing formula 

increased the volume of cheddar cheese 

reported in the NDPSR. However, the 

increased price spread has caused 

instability in the cheese market, 

reducing revenue for dairy farmers as 

the barrel price is a disproportionately 

large share of the cheese price compared 

to its volume sold. NMPF estimated 90 

percent of the natural cheese produced 

in the U.S. is priced using the CME 40- 

pound block price, while the remaining 

is priced off the CME barrel cheese 

price. As a result, NMPF wrote, the 

Class III milk price has been 

undervalued and lowered producer 

revenue. 

Leprino submitted a post-hearing brief 

reiterating the important balancing 

function barrels provide and opined 

removing them would push 40-pound 

blocks into the balancing role and 

would increase price volatility for 

cheddar blocks. 

Select submitted a post-hearing brief 

in support of Proposal 3, arguing 500- 

pound barrels no longer represent the 

commodity cheddar market and 40- 

pound blocks are an appropriate 

commodity to establish the protein 

price. According to Select’s brief, 

current formulas dramatically 

overweight the barrel price relative to 

the market’s actual barrel use. 

The AFBF submitted a post-hearing 

brief in support of Proposal 3 reiterating 

hearing testimony that barrels represent 

roughly 50 percent of the NDPSR 

volume but are used to set prices for 

only 10 percent of U.S. cheese. The 

AFBF stressed use of barrels in the 

cheddar cheese price formula creates a 

price not representative of the value of 

90 percent of cheddar cheese produced. 

In their post-hearing brief, IDFA 

opposed Proposal 3, arguing its 

adoption would make 500-pound barrel 

production uneconomical. This, they 

explained, would result in barrelmakers going out of business or 

switching to block production, which 

would destabilize the block market. 

IDFA wrote that 40-pound blocks and 

500-pound barrels serve materially 

different functions in the market and the 

failure to include both in the survey 

would distort the commodity cheddar 

cheese market. 

NAJ submitted a post-hearing brief in 

opposition to Proposal 3. NAJ cited 

hearing evidence showing the market 

price of block and barrel cheese has 

diverged significantly since 2017, with 

barrel cheese priced about $0.11 per 

pound less than block cheese from 

2017–2022. NAJ stated blocks and 

barrels have different uses, different 

buyer markets, and limited 

substitutability. With an expected 

increase in block production in the 

coming years, NAJ wrote, there may be 

many months in which barrels are more 

per pound and should remain part of 

the cheese price formula. 

A witness representing the AFBF 

testified in support of adding 640-pound 

cheddar blocks to the Class III formula, 

as contained in Proposal 4. The witness 

said adding 640-pound blocks would 

expand the volume of cheese surveyed 

and better reflect U.S. block and barrel 

production volumes. The witness was of 

the opinion there has been a 

pronounced production shift from 40- 

pound blocks to 640-pound blocks and 

adding 640-pound blocks would 

provide more survey volume to avoid 

future rulemaking to address the 

dwindling 40-pound block survey 

volume. The witness testified that 40- 

pound and 640-pound blocks are largely 

interchangeable in price, use, and 

storage, and therefore it is appropriate 

those prices be reflected in the Class III 

price. 

A witness representing IDFA testified 

in opposition to Proposal 4. The witness 

said the DPMRP cheese survey 

encompassed more than 1.34 billion 

pounds of sales in 2022, divided almost 

evenly between 40-pound blocks and 

500-pound barrels. The witness testified 

the data set is sufficient to determine 

prices in the market and, since 640- 

pound blocks typically trade off the 40- 

pound block price, its addition would 

provide little additional price discovery 

information. The witness opined that 

only a small percentage of the 640- 

pound block market would meet survey 

specifications because of the nature of 

how the product is manufactured and 

sold. 

The two Leprino witnesses argued it 

would be inappropriate to add 640- 

pound blocks as the market is largely 

make-to-order and the lack of 

equipment to handle 640-pound blocks 

limits sales to a narrow group of buyers. 

The witnesses noted the 640-pound 

block market is balanced through the 

cutting down of 640-pound blocks into 

40-pound blocks, so the 40-pound block 

cheddar market is already reflected in 

its pricing. 

A witness representing Glanbia PLC 

(Glanbia), testified in opposition to 

Proposal 4. Glanbia owns four dairy 

plants in Idaho and partially owns two 

joint venture plants in New Mexico and 

Michigan, processing 34 million pounds 

of milk daily into barrel cheese, block 

cheese, whey protein concentrates, 

proprietary protein blends, and lactose. 

The witness testified Glanbia plants 

manufacture 40-pound and 640-poundblocks, both priced off the CME 40- 

pound block price and opined that 

adding 640-pound blocks would not add 

new information to the survey. 

A witness representing the Wisconsin 

Cheese Makers Association (WCMA), 

whose 81 members include cheese 

manufacturers making 40-pound blocks, 

640-pound blocks, and 500-pound 

barrels, testified in opposition to 

Proposal 4. The witness testified the 

industry uses the 40-pound block price 

to price 640-pound blocks, and since 40- 

pounds blocks are already used in the 

protein formula, adding 640-pound 

blocks would add no new price 

information. 

A DFA witness representing NMPF, 

testifying in opposition to Proposal 4, 

said the 40-pound block volume 

provides an adequate data set and the 

sole inclusion of 40-pound blocks is 

sufficient for cheese price discovery, 

making adoption of Proposal 4 

unnecessary. The witness stated the 

daily CME cash block cheese market is 

widely recognized by market 

participants as heavily influencing the 


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95474 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

price of cheese. The witness concluded 

that because annual CME block cheese 

traded volumes are not as large as 

NDPSR block survey volumes, the 

volume of 40-pound blocks reported in 

the NDPSR is more than adequate to 

determine the FMMO cheese price. The 

witness testified that incorporating 640- 

pound blocks into the NDPSR data set 

could promote the same disorderly 

market conditions currently observed 

with the inclusion of 500-pound barrels. 

The AFBF reiterated their support of 

Proposal 4 in their post-hearing brief. 

The AFBF indicated 640-pound blocks 

are priced identically, or nearly 

identically, to 40-pound blocks, and are 

a standardized commodity cheddar 

cheese product. Including the 640- 

pound blocks in the NDPSR survey, 

they argued, would help make the 

survey more robust. 

Select, in their post-hearing brief, 

expressed support for Proposal 4 

agreeing with proponents that its 

inclusion would increase DPMRP 

survey volume. Select mentioned that, 

with new cheese processing capacity 

starting in upcoming years in 

Minnesota, New Mexico, Michigan, and 

Texas, 640-pound blocks would become 

a larger proportion of the commodity 

cheddar market, and it would be 

prudent to incorporate their prices and 

volume in the survey. 

IDFA reiterated opposition to 

Proposal 4 in its post-hearing brief. 

IDFA highlighted evidence describing 

how 640-pound blocks are typically 

made to customer order as there is only 

a small number of cheese buyers who 

are able to purchase and process them. 

Since manufacturers of 640-pound 

blocks often balance the 640-pound 

block market by cutting them down to 

40-pound blocks, IDFA said no new 

price information would be gained from 

including 640-pound blocks in the 

survey. 

WCMA also expressed opposition to 

Proposal 4 in their post-hearing brief 

and wrote that because 640-pound 

blocks do not have a unique price 

discovery mechanism, they would add 

no new price information to the 

formulas. 

A witness representing the AFBF 

testified in support of Proposal 5, 

seeking to add unsalted butter to the 

DPMRP butter survey. The witness said 

because of the growing volume of 

unsalted butter production and use in 

the U.S., the DPMRP salted-only butter 

price collection increasingly 

underrepresents the value of U.S. butter. 

According to the witness, the amount of 

butter captured by the NDPSR as a 

percentage of total butter production has 

been declining, from 16 percent in 1999 

to 9.4 percent in 2022. The witness 

expected this trend to continue without 

the addition of unsalted butter. 

Citing USDA voluntarily graded 

salted and unsalted butter volumes, the 

AFBF witness said one reason for 

declining butter survey volumes is the 

increase in U.S. unsalted butter 

production. The AFBF witness testified 

the exclusion of unsalted butter is 

unnecessarily restrictive for the 

purposes of the DPMRP survey. The 

witness cited U.S. butter export data 

showing 2,000 metric tons exported in 

2000, to over 65,000 metric tons in 

2022, estimating almost all the exports 

were unsalted. The witness said 

incorporating unsalted butter prices into 

the FMMO butterfat formula would 

make the survey more representative of 

the evolving butter market, allow for 

better market transparency, and provide 

for more orderly marketing of butter and 

milk. The witness claimed salted and 

unsalted butter are production 

substitutes, as the same production line 

can be used for both without substantial 

interruption. The witness clarified 

Proposal 5 is not intended to change the 

current 80 percent butterfat reporting 

standard for butter, and therefore 

exported unsalted butter at 82 percent 

butterfat would continue to be 

excluded. 

A witness representing CDC 

expressed support for Proposal 5, 

without additional testimony. The CDC 

represents dairy farmers throughout 

California and is a state chapter of the 

National Farmers Union. 

A witness representing IDFA testified 

in opposition to Proposal 5. The witness 

testified there is no uniform 

specification for unsalted butter, so it is 

impossible to derive a uniform price for 

purposes of an FMMO pricing formula. 

The witness explained unsalted butter 

does not store as well compared to 

salted butter, rendering unsalted butter 

less capable of providing useful uniform 

price information. The witness also 

testified unsalted butter tends to be 

priced off the CME Grade AA salted 

butter price, and therefore does not 

bring any new pricing information. As 

substantial quantities of unsalted butter 

are exported through premium-assisted 

sales, which would not be included in 

the DPMRP survey, emphasizing 

unsalted butter should not be relied on 

for determining the market price of 

butter. Moreover, the witness 

considered the current volume of salted 

butter reported in the DPMRP to be a 

robust quantity of butter sales. 

A witness representing the Dairy 

Institute of California (DIC) testified in 

opposition to Proposal 5. The DIC is a 

trade association, representing fluid 

milk and dairy product processing 

plants in California. The witness 

asserted most unsalted butter is 82 

percent butterfat and exported and 

should be considered substantively 

different from domestically consumed 

butter which contains 80 percent 

butterfat. The witness referenced a lack 

of clarity on how subsidies on exported 

butter would be handled in the product 

price reporting as another reason for 

their opposition. 

A California Dairies, Inc. (CDI) 

witness, representing NMPF, testified in 

opposition to Proposal 5. CDI is a 

California dairy farmer-owned 

cooperative with 258 members 

producing and marketing 41 percent of 

California’s total milk production and 

operating six butter and milk powder 

manufacturing facilities in the state. The 

witness disagreed with the assertion 

that salted butter at 80 percent butterfat 

no longer represents an adequate survey 

volume. The witness testified CDI 

manufactures both types of butter, and 

unlike salted butter, unsalted butter is 

manufactured exclusively for customer 

order. The witness argued sales of the 

two types of butter are not 

interchangeable. The witness stressed 

the addition of salt allows salted butter 

to be stored for long periods, making it 

a market clearing product, whereas the 

nature of unsalted butter requires it to 

be sold and consumed in a significantly 

shorter period of time. The witness was 

of the opinion introducing unsalted 

butter into the survey may result in 

volatility in the relationship between 

salted and unsalted butter similar to the 

current volatile relationship between 

40-pound block and 500-pound cheddar 

barrels. The witness said it was 

preferable to have one product generate 

the singular commodity reference price 

for purposes of calculating the 

minimum FMMO prices. 

In post-hearing briefs, the AFBF 

offered additional support for Proposal 

5, stating the growing volume of 

unsalted butter production and use in 

the U.S. markets results in a salted-only 

butter price collection in the NDPSR 

survey which increasingly 

underrepresents the value of U.S. butter. 

The AFBF argued the declining trend in 

butter survey volume as a percent of 

actual production would continue, as 

butter survey volume has fallen from 16 

percent of total production in the 1999 

to 9.4 percent in 2022. 

Select expressed opposition to 

Proposal 5 in its post-hearing brief. 

Select argued that despite the growth of 

unsalted butter products, it should not 

be included in the survey because it 

lacks a uniform specification, is 

typically produced for special orders, 


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has no active commodity market, is 

often made with 82 percent butterfat 

versus 80 percent, and is viewed as a 

higher-value product. 

IDFA’s post-hearing brief reiterated 

their opposition to Proposal 5 stating 

the Grade AA salted butter survey 

volume is robust and the product is 

traded on the CME. IDFA wrote that a 

majority of unsalted butter is exported 

through government or private assisted 

sales, such as Dairy Export Incentive 

Program or Cooperatives Working 

Together, which would disqualify such 

sales from being reported. IDFA also 

stated unsalted butter does not store as 

well as salted butter, making it more 

likely to be made to order to a particular 

buyer’s specifications. 

A witness representing the CDC 

testified in support of adding mozzarella 

prices to the FMMO cheese price, as 

contained in Proposal 6. The witness 

was of the opinion that adding 

mozzarella would make the FMMO 

Class III price more reflective of all U.S. 

cheese production. The witness asserted 

that because the volume of mozzarella 

production significantly exceeds 

cheddar production it should be 

reflected in the FMMO cheese price to 

improve price transparency and 

increase dairy farmer revenue. The CDC 

witness also stated mozzarella 

production is the largest category of 

cheese produced today and deserves a 

standard specification determined by 

the volume of mozzarella produced 

today. 

The CDC witness proposed adding 

mozzarella to the FMMO protein price 

based on the Van Slyke cheese yield 

formula, a formula for predicting 

cheddar cheese yields from milk on the 

basis of its fat and casein content. The 

witness submitted numerous USDA 

Specifications of Mozzarella Cheese for 

the Department to consider when 

determining an acceptable moisture and 

fat content of mozzarella cheese to be 

surveyed. The specification detailed 

requirements for six variations of 

mozzarella types in four forms (loaf, 

sliced, shredded, or diced). The witness 

testified that 5 to 6-pound loaves of 

mozzarella would be representative of a 

wholesale commodity mozzarella 

product and reasonable for inclusion in 

the survey. 

A California dairy farmer testified in 

support of Proposal 6. The witness said 

including mozzarella in the survey 

would create a Class III price that more 

accurately reflects the value of the 

current cheese market. The witness 

attributed the ongoing decline in the 

number of California dairy farms to 

negative margins and price volatility 

and stressed the urgency in capturing 

the additional value of mozzarella. A 

Wisconsin dairy farmer also supported 

inclusion of mozzarella for similar 

reasons. 

A witness representing IDFA testified 

in opposition to Proposal 6. The witness 

described the difficulty in selecting 

appropriate mozzarella product 

specifications, yield assumptions, and 

manufacturing costs to include in the 

formulas whose factors currently reflect 

only cheddar production. The witness 

also testified the commercial mozzarella 

cheese market contains wide product 

variability, including varying fat and 

moisture parameters demanded by 

mozzarella customers. The witness 

testified that unlike bulk cheddar 

products, mozzarella is not a marketclearing product, is often sold to meet 

the customer specifications, is not 

traded on the CME, and is not storable 

for extended periods. 

Witnesses from Leprino and Glanbia 

testified in opposition to Proposal 6, 

asserting the proposal lacked critical 

details making it difficult to interpret 

and evaluate. The witnesses explained 

the equipment, production, and yield 

difference between mozzarella and 

commodity cheddar. The witnesses said 

Proposal 6 does not define the type of 

mozzarella to be surveyed or how USDA 

should address the diversity of 

mozzarella cheese types and packages. 

The witnesses stated significant 

volumes of mozzarella are manufactured 

into value-added forms, whether as 

shred, string, or smaller retail or 

foodservice loaves by the primary 

manufacturer. The witnesses also noted 

most mozzarella is not market-clearing 

and is stored in refrigerated form with 

limited shelf life reducing its role as a 

market clearing product. The witnesses 

added that the volume of mozzarella 

production sold by the primary 

manufacturer in bulk format is 

comparatively small, in contrast to 

cheddar, in which most shredding, 

processing into consumer packaging, 

and conversion to other forms is 

performed by different companies rather 

than the original manufacturer. The 

witnesses opined cheddar remains the 

most appropriate Class III cheese 

product. 

Leprino reiterated their opposition to 

Proposal 6 in their post-hearing brief. 

Leprino argued mozzarella cheese is a 

grouping or collection of similar 

products with diverse specifications, 

and that the assumption mozzarella 

production volume represents a single 

defined bulk product is incorrect. 

Leprino further stated mozzarella has 

different manufacturing processes, 

costs, and product yields. Therefore, if 

mozzarella was added to the Class III 

pricing formula, the formula would 

become substantially more complicated 

with little incremental benefit. 

A Foremost witness, testifying on 

behalf of NMPF, testified in opposition 

to Proposal 6, urging USDA to only 

utilize one commodity price series to 

represent each of the four dairy prices: 

cheese, butter, NFDM, and dry whey, to 

ensure orderly marketing. The witness 

noted the many mozzarella composition 

types, and purported deriving a 40- 

pound block cheddar equivalent price 

would be difficult. The witness added 

mozzarella manufacturing costs are 

different and no data exists to determine 

how those costs should be reflected in 

the cheese make allowance. The witness 

said including mozzarella pricing into 

the protein price calculation would not 

enhance price discovery as mozzarella 

prices already move with the 40-pound 

cheddar market. Other NMPF witnesses 

testified to the appropriateness of 

limiting the cheese price to one survey 

product, cheddar. Witnesses 

representing the AFBF and WCMA 

opposed the inclusion of mozzarella due 

to the lack of standard format that could 

be surveyed. 

Select’s post-hearing brief opposed 

Proposal 6 because no workable 

framework for incorporating mozzarella 

into the price formula was provided on 

the record. 

IDFA’s post-hearing brief reiterated 

their opposition of Proposal 6 as 

mozzarella lacks uniformity in 

compositional specifications and yields 

and is not traded on the CME. IDFA 

wrote the U.S. Food and Drug 

Administration (FDA) Standards of 

Identity provide four different variants 

of mozzarella cheese, with a wide 

variety of fat and moisture levels. IDFA 

also stated that while proponents 

advocated use of the Van Slyke formula 

to determine yields, the record lacked 

evidence as to how the formula should 

be revised to incorporate mozzarella 

cheese. 

WCMA opposed Proposal 6 in their 

post-hearing brief. WCMA members 

argued that there is no FDA Standard of 

Identity for mozzarella and are 

concerned over the vast variety of forms 

and functionality of each mozzarella 

manufacturer. 

A witness testifying on behalf of the 

CME offered information regarding its 

dairy futures and options markets which 

utilize FMMO prices. The witness did 

not appear in support or in opposition 

to any proposal under consideration. 

The witness testified that the CME dairy 

product portfolio, which began in 1996, 

includes Class III and Class IV milk 

futures and options, cash-settled cheese, 

40-pound block cheese, cash-settled 


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butter, NFDM, and dry whey. The 

witness said the relationship between 

Class III and Class IV milk futures can 

serve as a mechanism to manage both 

input and output costs and provide the 

dairy trading community with an 

opportunity to provide liquidity to the 

market while managing risk. The 

witness testified any changes to FMMO 

formulas, or underlying DPMRP survey 

methodology could result in a material 

change to the valuation of the contracts. 

A post-hearing brief filed by CME 

reiterated its hearing testimony and 

stressed that the Department consider 

the impact to futures and options 

markets when determining the 

implementation timeframe for any 

FMMO price formula changes. 

A witness representing Edge offered 

the modified proposal that would 

reweight 40-pound blocks and 500- 

pound barrels by U.S. production 

volumes, not DPMRP survey volumes. 

The witness said this alternative 

weighting methodology would reduce 

the weight of barrel cheese as most 

cheddar cheese is manufactured into 

blocks. The witness explained that since 

a significant volume of block cheddar 

cheese does not qualify for inclusion in 

the NDPSR, barrels have a weight 

disproportionate to their true market 

share of the cheddar market. The 

witness was of the opinion the protein 

price should primarily reflect the block 

cheddar cheese market as it is estimated 

70 to 75 percent of all cheddar cheese 

is produced into 40-pound or 640- 

pound blocks. 

The Edge witness predicted that the 

block-barrel spread could invert in 2025 

due to the growth of block cheese 

production. The witness expects cheese 

manufacturers who can make either 

blocks or barrels will react to profitable 

opportunities, thus reducing the spread 

between block and barrel prices by 

altering their production schedules. The 

witness argued that, given the 

anticipated trends over the next 3 to 5 

years, it would be more prudent to 

reduce the weight of barrels today and 

revisit the topic of removing barrels in 

5 years. 

Edge reiterated their support for the 

weighting methodology in its posthearing brief, as an alternative to 

eliminating barrel cheese or adding 640- 

pound blocks to the survey. Edge 

explained that, in practice, the 

Department would survey all barrel 

cheese production volume on an annual 

basis, including forward contracted 

cheese volumes, to determine the 

percentage of barrel cheese produced in 

relation to the NASS total U.S. cheddar 

cheese production estimates. Edge 

proposed the percentage be rounded to 

the nearest 5 percent, and the inverse 

would be assumed to represent block 

production. This calculated weight 

would be announced by September 15 

and be applicable for the following 

calendar year. Survey prices would then 

be weighted by these percentages to 

determine weighted average cheese 

prices. 

IDFA, in their post-hearing brief, 

opposed Edge’s modified proposal, 

arguing that it ignores market clearing, 

minimum pricing principles. IDFA 

opposed the idea of Class III prices 

being predominantly determined 

through a 40-pound block cheddar 

price. 

A post-hearing brief submitted by 

NMPF opposed Proposals 4, 5, 6, and 

Edge’s modified proposal on the 

grounds the proposals perpetuate the 

problem Proposal 3 seeks to fix, which 

is to have only one product surveyed to 

determine a wholesale commodity 

price. 

Class III and Class IV Formula Factors 

a. Make Allowances 

Proponents submitted three proposals 

to amend the make allowances in the 

Class III and IV formulas. Proposal 7, 

submitted by NMPF, seeks to update 

make allowances to the following: 

cheese, $0.2400; dry whey, $0.2300; 

NFDM, $0.2100; butter, $0.0210. WCMA 

and IDFA submitted Proposal 8 and 

identical Proposal 9, respectively, to 

update make allowances as described in 

the below table. The proposals contain 

a four-year implementation schedule 

with 50 percent of the increase 

implemented in year 1 and the 

remaining 50 percent implemented 

evenly across the following 3 years. 

IDFA/WCMA PROPOSED MAKE ALLOWANCES

Product Year 1 Year 2 Year 3 Year 4 

Cheese ............................................................................................................. $0.2422 $0.2561 $0.2701 $0.2840 

Dry Whey ......................................................................................................... 0.2582 0.2778 0.2976 0.3172 

NFDM ............................................................................................................... 0.2198 0.2370 0.2544 0.2716 

Butter ............................................................................................................... 0.2251 0.2428 0.2607 0.2785 

A former University of Wisconsin 

economics professor testified regarding 

separate manufacturing cost surveys 

they conducted on behalf of USDA and 

IDFA in 2021 and 2023, respectively. 

Each survey collected data submitted 

voluntarily from plants producing 

commodity cheddar cheese, dry whey, 

butter, and NFDM. The witness 

previously conducted similar surveys 

used by the Department in determining 

make allowance levels. The witness did 

not testify in support or opposition to 

any manufacturing allowance proposals 

under consideration. 

The witness explained that only 

plants manufacturing commodity 

products meeting DPMRP product 

specifications were eligible to 

participate. As plant participation was 

voluntary, the sample of plants and 

respective volumes varied by product 

and between surveys, with increasing 

cost variation between plants over time. 

The witness noted more observed cost 

variation across plants can occur due to 

newer automation technology employed 

in some plants, varying utility costs over 

time, and economies of scale achieved 

by some plants who negotiate input 

costs. The witness explained that dairybased raw product costs, such as raw 

milk or purchased cream, are excluded, 

while costs of non-dairy ingredients 

needed to transform the raw milk into 

a manufactured product, such as salt 

and enzymes, are collected and 

included in the survey results. 

According to the witness, costs, such as 

labor and utility, through the productpackaging stage are incorporated, but 

post-packaging costs, such as long-term 

storage or distribution and sales costs, 

are not. The witness explained an 

economic depreciation factor, not 

consistent with taxable depreciation, is 

incorporated to cover consumed capital, 

and the asset’s return on investment is 

included to capture opportunity costs. 

The witness explained two different 

methodologies used for allocating costs 

in multi-product plants that could not 

be associated with a specific product 

(unallocated costs). The witness said the 

2021 survey utilized a degree-oftransformation factor to allocate costs 

based on degree of transformation raw 

milk must undergo to be manufactured 

into the wholesale product. 

Transformation factors were assigned 


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subjectively, based on knowledge of 

manufacturing processes. As a result, 

the witness said, unallocated costs were 

weighted towards heavily transformed 

products, such as NFDM, while 

products undergoing less 

transformation, for example, butter, 

were assigned a lower portion of the 

unallocated costs. Due to questions from 

the industry regarding this 

methodology, the witness said the 2023 

survey reverted to allocating costs on a 

solids basis, a methodology more 

familiar to industry stakeholders. The 

witness said the 2021 survey showed 

more variation of costs when compared 

to current make allowance levels, 

ranging from an 18 percent decrease in 

butter costs to a 75 percent increase in 

NFDM costs. The 2023 survey results 

revealed a more consistent cost change 

when compared to current FMMO 

levels, ranging from a 65 percent 

increase in NFDM costs to a 72 percent 

increase in butter costs. 

The witness attributed much of the 

survey result differences to the plant 

samples. For NFDM, the 2021 survey 

had 27 participating plants, whereas the 

2023 survey had 15, with larger average 

volume per plant, according to the 

witness. For cheese, the 2023 survey 

included 18 plants compared to 10 in 

the 2021 survey. Further, the witness 

elaborated that the cheese plants 

surveyed were much larger on average 

and represented a significant proportion 

of the NDPSR volume when compared 

to the 2021 survey. 

The witness testified the data on 

butter highlighted the importance of 

sample composition. Both surveys 

sampled a similar numbers of butter 

plants, 13 in 2023 and 12 in 2021, and 

represented roughly the same total 

volume. However, the witness stated the 

2023 survey had more variation in 

production volumes whereas in the 

2021 survey, butter plants were more 

similarly sized. Finally, the witness 

testified the dry whey surveys had 

similar numbers of participating plants, 

9 in 2023 and 8 in 2021, but the 

surveyed volume in the 2023 survey 

was nearly 50 percent more than that 

contained in the 2021 survey. 

NMPF offered Proposal 7 as one 

option for amending FMMO make 

allowance levels. Eleven NMPF 

witnesses representing the 

manufacturing interests of cooperatives 

testified in support of Proposal 7. The 

witnesses testified the current FMMO 

make allowances do not resemble 

manufacturing costs currently 

experienced in their plants. The 

witnesses provided detailed testimony 

on the impact of inadequate make 

allowances, which consisted of similar 

themes. First, they opined inadequate 

make allowances cause the FMMOs to 

overvalue raw milk. Consequently, the 

witnesses said many cooperatives have 

reblended cooperative revenues to 

members as a way of recouping 

manufacturing costs not covered by 

current FMMO make allowances. 

Second, the witnesses said insufficient 

make allowances disincentivize plant 

investment, whether it be in current or 

potential new plants. 

The NMPF witnesses testified the 

industry lacks consensus on reliable 

data to determine make allowances due 

to inconsistencies in cost allocation and 

reporting across operations. The 

witnesses were of the opinion the 

available manufacturing cost surveys are 

not comprehensive or reliable enough to 

justify large make allowance increases. 

The witnesses all stressed increasing 

make allowances to levels above actual 

costs could cause untenable financial 

harm to producers, putting many out of 

business and jeopardizing the milk 

supply. One NMPF witness described 

how an informal manufacturing cost 

survey of some NMPF members was 

used in the development of Proposal 7. 

A CDI witness testified regarding the 

impact insufficient make allowances 

have had on their member farms and six 

butter and milk powder manufacturing 

facilities. According to the CDI witness, 

the NFDM and butter make allowances 

in Proposal 7 are transformations of the 

2021 survey results, using the combined 

costs and yields of the two products. An 

LOL witness testified inadequate make 

allowances have led to disorderly 

market conditions, including lack of 

investment in manufacturing plants to 

process and balance milk supplies and 

inequitable producer pay prices 

between producers of different 

cooperatives and between cooperative 

and nonmember producers. 

A witness from Agri-Mark, a dairy 

farmer-owned cooperative with over 550 

members, 3 cheese manufacturing 

plants and 1 butter-powder plant in the 

Northeast, said current make allowances 

overvalue producer milk and make it 

difficult for cooperatives with 

manufacturing facilities to remain 

profitable and pay the FMMO blend 

price. Consequently, the witness said, 

cooperatives must re-blend proceeds to 

recoup manufacturing costs, resulting in 

producer pay prices often less than 

FMMO blend prices. 

A Foremost witness attributed higher 

operating costs seen in their plants to 

inflation since 2008, adding that in the 

last 2 years, they have experienced 

particularly acute price increases in all 

categories. A witness representing 

FarmFirst Dairy Cooperative 

(FarmFirst), a cooperative operating in 

the Upper Midwest with 2,600 dairy 

farmer members, testified negotiated 

over-order premiums have diminished 

by 24 percent since 2020 due to their 

processor’s compressed margins, partly 

a result of inadequate make allowance 

levels. In addition to reducing 

premiums, the FarmFirst witness 

attested the current make allowances 

overvalue producer milk and have 

contributed to an oversupply of milk in 

the Upper Midwest, resulting in milk 

dumping, negative PPDs, depooling, and 

milk selling at below Class III prices. 

A Northwest Dairy Association (NDA) 

witness testified in support of Proposal 

7. NDA is a dairy farmer-owned 

cooperative located in the Pacific 

Northwest with approximately 295 

members, whose subsidiary (Darigold) 

operates 5 fluid milk bottling plants and 

7 manufacturing plants making butter, 

cheese, dry whey, and dry milk 

products. The witness testified 

Darigold’s manufacturing costs 

increased 80 percent between 2008 and 

2022. The witness said inadequate or 

delayed investment in manufacturing 

plant capacity increases transportation 

costs, which are borne by producers, 

since milk must be shipped farther 

distances to find an available 

manufacturing market. A witness 

representing Maryland and Virginia 

Milk Producers Cooperative, Inc. 

(MDVA), a dairy farmer-owned 

cooperative located in the Mid-Atlantic 

that operates three pool distributing 

plants and two pool supply plants 

manufacturing bulk butter and NFDM, 

testified costs had increased compared 

to 2008 levels, with NFDM conversion 

costs increasing 64 percent over the 

period. According to the MDVA 

witness, Proposal 7 would reduce, but 

not eliminate, the manufacturing losses 

incurred in balancing their milk supply. 

A witness representing Lone Star Milk 

Producers (Lone Star), a dairy-farmer 

owned cooperative marketing milk on 

the Appalachian, Southeast, Central, 

and Southwest FMMOs, testified that 

manufacturing costs at their butter and 

NFDM plant have risen since 

commencing operation in 2017. A 

witness representing Ellsworth testified 

to the increasing costs of production at 

their cheese and dry whey operation. 

Lastly, a DFA witness testified in 

support of Proposal 7 and provided 

dairy farm cost of production data, 

arguing this data should be considered 

when determining make allowances. 

A dairy economist from the 

University of Missouri, appearing on 

behalf of NMPF, testified on the 

estimated economic impact of Proposal 

7. Using an econometric model, the 


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witness estimated the proposed make 

allowances would lead to a $0.30 

decline in the All-Milk Price and a 200- 

million-pound milk production decline 

in the first year of implementation, with 

a further milk production decline of 400 

million pounds in the second year. In 

the long run, the witness forecasted the 

decline in the All-Milk Price would 

moderate to $0.04 as markets adjusted to 

lowered milk production. 

A dairy farm accountant, testifying on 

behalf of NMPF, presented various 

statistics related to their dairy farmer 

clientele. The witness testified average 

total income from their clients’ 

operations was $5.50 per cwt in 2022, 

with a break-even milk price of $19.78 

per cwt. According to the witness, the 

average net income from 2006 to 2023 

was $1.23 per cwt, on an average milk 

production of 995,115 cwt, yielding an 

average net income of approximately 

$1.2 million. The witness later stated 

that a 3,300-milking cow herd would 

require an investment of approximately 

$40 million. 

An economist from Cornell 

University, on behalf of NMPF, testified 

on the topics of dairy farm profitability, 

cost of production measures, and farm 

data from the Cornell Dairy Farm 

Business Summary, Michigan State 

University, and the University of 

Wisconsin. The witness warned that 

setting make allowances ‘‘too high’’ 

would lead to unwarranted investments 

in processing facilities while setting 

make allowances ‘‘too low’’ would lead 

to insufficient plant investments and 

cooperative deductions on member milk 

checks. 

Numerous dairy farmers testified in 

support of Proposal 7, recognizing the 

need for increased make allowances 

despite what they acknowledge would 

be a decrease in FMMO producer prices. 

These witnesses testified to recent 

decreased farm margins due to a 

declining All-Milk Price, falling net pay 

prices, higher feed costs, and increasing 

production costs, leading to near 

negative operating incomes. While make 

allowance increases would hasten this 

trend, the witnesses said, Proposal 7 

accounts for these factors, balancing 

producer and processor needs. Multiple 

witnesses expressed doubt in the 

available manufacturing cost survey 

data due to its voluntary and unaudited 

nature, as well as observations of cheese 

manufacturing profitability and 

continued investment. 

Dairy farmer witnesses testified that 

inadequate make allowances have 

disadvantaged dairy farmer-members of 

cooperatives who own manufacturing 

plants compared to dairy farmermembers of cooperatives who own no 

plants. Several dairy farmer witnesses 

said that the prevalence of market 

adjustment deductions from their 

member milk check signifies negative 

returns on the cooperatives 

manufacturing assets due to inadequate 

make allowances. Another dairy farmer 

testified processing costs for AgriMark’s four manufacturing plants 

producing cheese, butter, NFDM, and 

whey have increased by an average of 20 

percent since 2008, and insufficient 

make allowances have resulted in 

deductions to member milk checks to 

cover processing costs. According to the 

Agri-Mark witness, this has led to 

disorderly market conditions, which 

impair plant investment and 

disadvantage cooperative members. A 

CDI dairy farmer witness testified to the 

financial difficulties of operating CDI’s 

balancing plants given current make 

allowance levels. 

A witness from the Milk Producers 

Council (MPC), an organization 

representing California dairy farms, 

testified Proposal 7’s proposed make 

allowances balance producer and 

processor needs. The witness said the 

cost survey information entered into 

evidence is of limited value due to its 

voluntary, unaudited nature and the 

lack of transparency in cost allocation 

for multi-product plants. The witness 

argued differences between the All-Milk 

Price and the Mailbox Price indicate a 

need for increased make allowances and 

a guideline to the resulting impact on 

producer pay prices, currently estimated 

at $0.75 per cwt. 

In its post-hearing brief, NMPF 

reiterated its arguments for adopting the 

make allowance levels contained in 

Proposal 7, writing it is the only option 

accounting for an increased cost in 

manufacturing while protecting 

producer pay prices. NMPF stated there 

has never been a make allowance 

adjustment greater than $0.35 per cwt, 

and the changes contained in Proposal 

7 would decrease farmer milk prices by 

approximately $0.50 per cwt. 

NMPF presented in its brief the 

aggregated costs cooperatives with 

manufacturing capacity shared on the 

record, emphasizing the increases across 

cost categories since make allowances 

were last updated. While the need to 

update make allowances to reflect 

higher costs is necessary, NMPF stated, 

the data on the record is not sufficiently 

comprehensive, verifiable, or 

unambiguous to determine make 

allowances above those offered in 

Proposal 7. In its post-hearing brief, 

Agri-Mark reiterated support for 

Proposal 7 as the most balanced 

approach to updating make allowances, 

despite acknowledging the proposed 

levels are not sufficient to cover all 

manufacturing costs. 

Opponents to Proposal 7, primarily 

representatives for IDFA or WCMA, 

echoed similar concerns from 

cooperative manufacturers regarding 

inadequate make allowances, claiming 

the inability to recover manufacturing 

costs on wholesale commodity products 

has led to a lack of investment in 

manufacturing capacity. These 

witnesses testified on the importance of 

make allowances fully covering 

manufacturing costs, rather than a 

portion of costs as proposed in Proposal 

7. Witnesses testified that continued 

capital investment in plant yield and 

efficiency gains have not fully 

countered the effects of insufficient 

make allowances as costs have 

continued to increase. Without make 

allowances accurately reflecting costs, 

the witness said, manufacturers receive 

inaccurate financial signals, which 

impact investments, capital distribution, 

and FMMO pooling decisions. 

Additionally, they argued the 

competitive advantage gained by 

manufacturing plants not regulated by 

an FMMO leads to more investments 

into operations unaffiliated with the 

FMMO system. Only make allowance 

increases that reasonably cover 

commodity product manufacturing 

costs, according to these witnesses, can 

counteract these effects. 

In its post-hearing brief, IDFA 

reiterated opposition for Proposal 7, 

writing that the proposed make 

allowance levels are inadequate and not 

grounded in observed data. IDFA 

stressed that make allowances are 

defined as covering the entire cost of 

converting raw milk to a given dairy 

product, not a portion. In its brief, IDFA 

pointed to NMPF’s recognition that 

Proposal 7’s make allowances do not 

fully cover actual costs but instead 

represent a balance dairy farmers can 

withstand. IDFA objected to the 

consideration of farm production costs 

when determining make allowance 

levels. IDFA reiterated FMMOs are not 

a price support or income support 

program, and the prices must reflect the 

market price of end-dairy products. 

IDFA explained manufacturers cannot 

raise the prices of commodity dairy 

products to offset higher manufacturing 

costs because the wholesale prices are 

captured in the NDPSR and would raise 

the reference price by the same amount. 

In its post-hearing brief, AMPI reiterated 

opposition for Proposal 7 as failing to 

reflect 2022 manufacturing costs. AMPI 

argued that USDA should not delay 

increasing make allowances on the 

possibility that legislation will give 


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USDA the authority to conduct a 

mandatory audited survey. 

A witness from DIC testified in 

support of Proposals 8 and 9. The 

witness testified that setting minimum 

prices too high incentivizes excess milk 

production, while a low minimum price 

through higher make allowances allows 

for over-order premiums to set a 

competitive market price. The witness 

argued Class III and IV prices should 

allow manufacturing plants to clear the 

market and operate profitably. 

The DIC witness entered data 

concerning its 2022 California dairy 

manufacturing cost forecast (2022 CA 

Forecast). The witness testified the 2022 

CA Forecast used a combination of 

2003–2016 California Department of 

Food and Agriculture (CDFA) data, state 

and national indices, and market 

developments to measure how changes 

in labor, utility, and other costs 

historically moved the actual CDFA cost 

data. The model then used that 

information to forecast Californiaspecific 2017–2022 manufacturing costs, 

according to the witness. According to 

the witness, while the model forecasts 

costs, the range of actual costs around 

those forecasts could be relatively wide 

given the relatively few observations (14 

years) used to estimate the model. For 

example, the expert witness elaborated, 

CDFA only collected dry whey costs 

until 2006, when they surveyed fewer 

than three dry whey plants, which is 

why the CA analysis did not forecast 

dry whey costs. The DIC witness opined 

the best approach to determine 

manufacturing allowance levels is using 

observed cost data but offered the 2022 

CA Forecast as another methodology for 

use with the other cost surveys and 

testimony presented. 

An IDFA witness testified in support 

of Proposals 8 and 9, stating make 

allowances should be updated to reflect 

increased costs in manufacturing dairy 

products. While end-product-prices 

change monthly to reflect the current 

market, the witness said, make 

allowances are fixed at 2006 cost levels, 

forcing dairy manufacturers to lose 

money or stop production. The witness 

stressed the need for relief from the 

current inadequate make allowances 

that do not reflect rising industry costs, 

adding losses are not sustainable for 

plants or dairy farmers who depend on 

these manufacturing outlets for their 

milk. The witness explained IDFA’s 

proposed make allowances are simple 

averages of the 2023 survey and 2022 

CA Forecast plus a $0.0015 marketing 

cost. 

The IDFA and WCMA witnesses 

asserted accurate make allowances need 

to be adopted quickly as current make 

allowances are based on 2005/2006 cost 

data. The IDFA witness clarified their 

staggered implementation proposal, 

which would implement proposed year 

1 levels shortly after the final decision 

is published. According to both IDFA 

and WCMA witnesses, the staggered 

implementation is designed to recognize 

the impact significant make allowance 

increases would have on producer 

prices. However, if there is any delay in 

implementing changes, both witnesses 

stressed the staggered implementation 

approach should be abandoned and the 

proposed year 4 levels should be 

implemented. 

The WCMA witness stated the use of 

audited California manufacturing cost 

data in the 2022 CA Forecast should 

alleviate any data validity concerns; 

further, the 2023 survey methodology 

follows precedent used to determine the 

current make allowance levels. The 

witness noted the risk of using a simple 

average of the 2022 CA Forecast and the 

2023 survey to determine proposed 

make allowances is the potential of the 

result being skewed towards California 

costs, since California plants are 

represented in both surveys. 

A dairy farmer witness, who is a 

member of AMPI, testified on behalf of 

IDFA and expressed support of 

Proposals 8 and 9. The witness testified 

that AMPI, who participated in the 2023 

survey, experienced cheese 

manufacturing costs close to the study 

average despite plant sizes that were 

smaller than the survey average plant 

size. According to the witness, their 

manufacturing costs of bulk cheese 

products are 47 percent higher and 

general plant expenses are up 62 

percent in 2022, compared to 2008. 

Several dairy manufacturer witnesses 

representing Hilmar Cheese Company 

(Hilmar), Glanbia, Saputo, and Leprino 

testified in support of Proposals 8 and 

9. Hilmar is a cheese and whey 

manufacturer with processing locations 

in California and Texas. According to 

these witnesses, dairy processing costs 

have increased, particularly of late 

because of inflation, noting Hilmar’s 

natural gas costs were 45.1 percent 

above the 20-year average. The Saputo 

witness echoed testimony on increasing 

costs, citing the St. Louis Federal 

Reserve data series for labor, energy, 

packaging, and maintenance costs. The 

witness said these costs, comprising 20 

percent of the total cost to manufacture 

a finished cheese product, rose 60 

percent, on average since 2006. 

According to the Saputo witness, its 

manufacturing costs align with the 2021 

and 2023 survey results. The Hilmar 

witness testified their manufacturing 

cost increases correlate with the results 

of the 2022 CA Forecast. The Leprino 

witness stated the 2021 survey and 2023 

survey had robust participation, and the 

2022 CA Forecast, which used CDFA 

audited mandatory data, leveraged a 

widely accepted statistical modeling 

approach. All four witnesses stressed 

the urgency of updating make 

allowances. The manufacturer witnesses 

generally agreed that inaccurate make 

allowances distort pricing signals for 

farmers, processors, and ultimately 

consumers. 

Witnesses representing Nasonville 

Dairy and Cedar Grove Cheese, two 

proprietary specialty and commodity 

cheese manufacturer members of 

WCMA, testified to rising 

manufacturing costs by outlining costs 

in a similar manner to the 2021 and 

2023 surveys. According to the 

witnesses, their costs have risen $0.3226 

and $0.77 per pound, respectively, far 

beyond the fully implemented Proposal 

8 levels. The witnesses testified that 

insufficient make allowances negatively 

impact cheese processing investments 

and increase the production of highercost specialty products unable to play 

the same balancing or foodservice roles 

as commodity products. They added 

current make allowance levels impair 

the ability of proprietary manufacturers 

to participate in the FMMO pool and 

deprives producers the benefits of 

having their milk pooled. 

In their post-hearing briefs, WCMA 

and IDFA reiterated their support for 

Proposals 8 and 9. IDFA wrote that 

USDA has consistently set make 

allowances to reflect the most recent 

and reliable actual cost data, using 

multiple surveys, as in Proposals 8 and 

9. Further, IDFA stressed in its brief, the 

2023 survey is the most robust of all of 

the author’s previous surveys used to set 

make allowances. IDFA refuted the 

notion the 2022 CA Forecast is 

inappropriate to use for determining 

make allowances, explaining the 

underlying data is robust audited 

California manufacturing data and the 

econometric techniques are widely 

accepted. IDFA contended that the 2022 

CA Forecast and 2023 survey averages 

are lower than the cooperative 

manufacturing costs shared on the 

record. Even if inflation has subsided 

since 2022, IDFA added in its brief, 

there would have to be deflation to 

arrive below pre-2022 levels. 

IDFA clarified in its brief the 

proposed schedule for phasing in make 

allowance changes, which is designed to 

accommodate farmers. When addressing 

implementation timing, IDFA refuted 

the CME’s points about incorporating 

risk management in the timing of 

implementation, arguing that CME’s 


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interests do not necessarily align with 

those of the broader dairy industry 

because of the fee revenue they 

generate. 

In its brief, IDFA emphasized the 

destabilizing effect of current make 

allowances on processors and farmers. 

IDFA shared charts from the hearing, 

showing how the Mailbox Price is in 

close proximity to FMMO blend price, 

which it says indicates FMMO prices 

are too high. IDFA refuted NMPF’s 

argument that Proposals 8 and 9 will 

result in a $1.42 per cwt decrease in the 

All-Milk Price because FMMO prices 

are minimum prices and don’t reflect 

premiums received. Further, IDFA 

wrote in its brief that dairy farmers 

whose cooperatives own processing 

facilities are receiving depressed prices 

when make allowances are too low. 

IDFA said the best method to update 

make allowances is through a 

mandatory and audited USDA survey; 

however, USDA does not currently have 

the authority and IDFA estimates it 

would take approximately five years 

before new make allowances could be 

adopted once the authority was granted. 

IDFA reiterated arguments that make 

allowances under-representing actual 

costs harm both dairy farmers and 

manufacturers. 

In its post-hearing brief, AMPI 

reiterated support for the make 

allowance levels in Proposals 8 and 9, 

contending they accurately reflect the 

changes in costs. AMPI added it 

supports immediate implementation, 

rather than the phased 4-year approach. 

AMPI wrote the 2023 survey had the 

largest product volumes of any previous 

surveys and highlighted other 

manufacturing cooperative testimony 

describing increased manufacturing 

costs. AMPI opined continued high 

manufacturing costs and farm bill 

delays have made make allowance 

updates more urgent. 

Leprino’s post-hearing brief reiterated 

its support of Proposals 8 and 9, 

emphasizing the importance of 

implementing make allowance changes 

immediately. Leprino stressed 2023 cost 

levels have continued to climb and 

offered its own updated cost increases, 

compared to 2022: 11 percent for labor, 

17 percent for property insurance, and 

9 percent for liability insurance. 

A witness representing the AFBF 

testified in opposition to Proposals 8 

and 9, opining the 2021 and 2023 

survey data may be biased due to its 

unaudited nature and the known 

potential to be used for rulemaking, 

stating the incentive to overestimate 

reported costs for commodity goods 

disqualifies this voluntary data. The 

witness testified only the 2016 CDFA 

survey results can be verified as 

accurate enough to be used for 

determining make allowances. 

According to the witness, the relatively 

complicated 2022 CA Forecast model 

using a small number of observations 

(14 years) to forecast 2022 costs (6 years 

out from the actual data) could be 

overfitted to the 2000–2016 data and 

unreliable to predict future costs. 

Numerous dairy farmer witnesses 

testified in opposition to Proposals 8 

and 9, focusing on the negative effect 

significant make allowance increases 

would have on producer pay prices. A 

DFA farmer witness from New Mexico 

testified the make allowance increases 

contained in Proposals 8 and 9 would 

result in negative operating income over 

the next 10 years, making continued 

operation of their farm unsustainable. 

The witness said any make allowance 

increases would severely and 

disproportionally impact producers in 

the southwest due to the share of milk 

going into manufacturing products. A 

LOL dairy farmer testified significant 

increases in make allowances would be 

difficult for farms in California to 

absorb, where water scarcity has led to 

high forage costs. According to the 

witness, large make allowance increases 

would put adequate milk supply at risk, 

all the while guaranteeing profit for 

commodity manufacturers and leading 

to over production of manufactured 

dairy products. 

Two dairy farmer witnesses, a 

member of the CDC and a small 

Maryland dairy farmer, testified against 

increases in make allowances due to the 

impact on producer pay prices and lack 

of accounting for dairy farm production 

costs. According to the witnesses, while 

processors can pass on costs to 

customers up the supply chain, 

producer margins are too thin to sustain 

substantial price decreases from 

increased make allowances. The 

witnesses testified that further declines 

to producer margins will cause more 

producer exits and disruption to the 

milk supply. According to a dairy 

farmer witness representing Edge, any 

change in make allowances should 

require a 15.5-month delay, be 

restrained by the impact on producer 

pay prices, and cover only the most 

efficient plants. 

In its post-hearing brief, NMPF 

reiterated its arguments in opposition to 

Proposals 8 and 9. NMPF argued that 

these proposed changes would decrease 

dairy farmer milk prices by 

approximately $1.45 per cwt, further 

narrowing producer margins and 

causing disorderly marketing. 

NMPF cited ongoing plant investment 

as an indication current make 

allowances are not too low as portrayed 

by proprietary manufacturers. NMPF 

emphasized proprietary manufacturers 

are not required to be regulated and, 

thus, can choose not to participate in 

the FMMO and avoid paying minimum 

prices they contend are too high because 

of inadequate make allowance levels. 

NMPF opined about the lack of 

evidence to merit raising make 

allowances to levels contained in 

Proposals 8 and 9. 

In its brief, NMPF refuted the studies 

used as a basis for Proposals 8 and 9. 

NMPF cited hearing testimony regarding 

the insufficiency of some plant sample 

sizes in the 2023 survey. Further, NMPF 

argued the 2023 survey does not capture 

how manufacturing costs are skewed by 

plants that serve a balancing role. NMPF 

stated if make allowances are set too 

high, balancing plants would be 

incentivized to run at maximum 

capacity, rather than running at less 

than full capacity to provide critical 

balancing services to the market. NMPF 

voiced concerns with the 2022 CA 

Forecast, noting the proposed make 

allowances in Proposals 8 and 9 are 

duplicative since the 2023 survey 

included California data. Further, NMPF 

opined that the 2022 CA Forecast is of 

little utility as it did not account for 

basic changes to the California dairy 

manufacturing sector since 2016, such 

as plant openings and closings and 

productivity improvements. 

In its post-hearing brief, Select also 

opposed Proposals 8 and 9, on the basis 

of the 2022 CA Forecast being 

inappropriate to use in determining 

make allowances. Select echoed NMPF’s 

argument that use of the forecast would 

be duplicative of California data. 

Further, Select argued indexing does not 

account for improvements to plant 

efficiencies and the Department has not 

previously used indexing to determine 

make allowances. 

In its brief, the AFBF opposed any 

increase to make allowances, instead 

advocating they only be increased once 

a mandatory, audited cost survey was 

administered by the Department. The 

AFBF opined that both the 2021 and 

2023 surveys were biased because there 

was a clear intention the surveys would 

be used in a rulemaking proceeding. 

The AFBF opposed the use of indexing 

to set make allowances, as was done in 

the 2022 CA Forecast, because it fails to 

recognize productivity improvements 

over time. The AFBF echoed other brief 

arguments that continued processor 

investment is evidence that make 

allowances are not too low. 

The Midwest Dairy Coalition (MDC), 

an alliance of six dairy farmer-owned 

cooperatives operating in the Midwest, 


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filed a post-hearing brief stating make 

allowance updates are long overdue, but 

took the position the Department should 

be granted legislative authority to 

conduct a mandatory and audited cost 

survey. MDC did not offer support or 

opposition to any make allowance 

related proposals. In its post-hearing 

brief, Edge also did not support or 

oppose any make allowance related 

proposals but cautioned against setting 

make allowances too high. Until there is 

a mandatory and audited USDAadministered survey, Edge stated, the 

Department should err on the side of 

caution to not subsidize commodity 

manufacturing. 

In its post-hearing brief, Select offered 

an alternative methodology for 

determining the make allowance levels 

using what Select argued was the most 

reliable record data. Select suggested 

taking the average of the 2021 survey 

and 2023 survey, subtracting the current 

make allowance level, and taking half 

that difference to add to current make 

allowance levels. As a result, Select 

proposed the following: cheddar cheese, 

$0.2281; butter, $0.2004; NFDM, 

$0.2260; and dry whey, $0.2498. 

In its post-hearing brief, CME noted 

any make allowance changes would be 

considered material changes, and USDA 

should consider an implementation 

timeframe that mitigates risks to those 

involved in futures and options trading. 

b. Yield Factors 

Submitted by Select, Proposal 10 

seeks to amend the cheese price formula 

by increasing the butterfat recovery rate 

in the cheese yield, from 90 to 93 

percent. A Select witness testified in 

support of Proposal 10 and clarified a 

butterfat recovery rate of 93 percent 

would also necessitate an increase in 

the butterfat yield factor in the protein 

price formula from 1.572 to 1.624. 

According to the witness, these changes 

would result in a modest increase in the 

Class III price, estimated at $0.04 per 

cwt. The witness stressed USDA should 

not be guided by price impacts but 

rather by achieving formulas to better 

reflect manufacturing realities and the 

actual value of raw milk. Select 

reiterated support for this proposal in its 

post-hearing brief. 

An independent expert witness, 

retained by Select, testified 

advancements in vat technology, 

coagulants, and curd handling have 

enabled manufacturers to achieve 

recovery rates higher than the currently 

assumed 90 percent. The witness 

described how modern, horizontal vats 

attain butterfat recoveries far exceeding 

both open and enclosed horizontal vats, 

and how most commodity cheddar 

manufacturers use advancements in 

coagulants and curd handling to attain 

greater than 93 percent butterfat 

recovery. Additionally, the witness said, 

whey cream can be reintroduced into 

the cheesemaking vat to increase cheese 

yield and revenue, ultimately increasing 

butterfat recovery. 

In its post-hearing brief, the AFBF 

wrote in support of Proposal 10 to 

increase the butterfat recovery factor. 

The AFBF pointed to evidence on the 

record of increasing plant efficiencies, 

justifying updating the butterfat 

recovery factor to the level in Proposal 

10. 

Six witnesses, representing Glanbia, 

Leprino, IDFA, CDI, DIC, and MPC, 

testified in opposition to Proposal 10. 

The Glanbia witness described a broad 

range of industry fat recovery based on 

plant age and processing techniques, 

and acknowledged many modern plants, 

including Glanbia plants, can achieve 

93 percent cheddar fat recovery. The 

witness testified Proposal 10 is being 

offered to enhance prices while ignoring 

other parts of the formula that overvalue 

milk. The witness contended lost solids 

within the manufacturing plant and the 

discounted price of whey cream, should 

they be considered, outweigh the effects 

of Proposal 10 on milk prices. The 

Leprino witness testified any changes to 

the yield factor should only occur after 

a comprehensive review of all yield 

assumptions. The witness agreed 93 

percent butterfat retention is achievable 

in some plants but does not believe it 

is possible across the entire industry. 

The IDFA witness contended Proposal 

10 takes a piecemeal approach to 

changes in the yield formula and 

selectively focuses on dairy farmer 

revenue enhancements only. The 

witness opined whey cream is 

overvalued in the current formula, as 

butterfat not going into cheese is 

currently valued as Grade AA butter 

despite regulation that whey cream 

cannot be used in Grade AA butter. 

According to the witness, whey cream is 

discounted 20 percent or more 

compared to fresh cream. In addition, 

the witness claimed, in-plant milkfat 

losses are not recognized in the current 

formula, something that should be 

considered when evaluating yield factor 

changes. The witness testified any 

decreases in the Class III prices that 

result from accurately accounting for 

both processing losses and whey cream 

values would more than offset the 

increases in Class III prices proposed by 

Select. 

A witness from the Center for Dairy 

Research (CDR), appearing on behalf of 

IDFA, testified to observing 

improvements in butterfat retentions 

over the past 40 years, mostly due to 

improved vat design and technology. 

The CDR, with a dairy plant on the 

University of Wisconsin-Madison 

campus, supports the U.S. dairy 

industry with expertise in cheese, dairy 

ingredients, cultured products, dairy 

beverages, quality/safety, and dairy 

processing. The witness noted a range of 

butterfat losses at the cutting stage 

including 9 to 10 percent fat loss in 

open vats, 7 percent fat loss in Double 

O vats, 6 percent fat loss in horizontal 

vats, and 5 percent fat loss in modern 

vats. While large modern plants are 

installing newer, more efficient vats, the 

witness claimed, old, less efficient vats 

are not leaving production, and are 

being repurposed and installed in 

medium and small plants throughout 

the country. The witness noted there is 

still a large variety of vats being using 

in the industry and stressed the latest 

vat design does not ensure optimal 

butterfat retention, as the experience of 

the cheesemaker and product handling 

practices could also lower butterfat 

recovery. 

Based on current observations and 

work within the industry, the CDR 

witness provided best estimates for fat 

recoveries in cheddar cheesemaking as 

91 to 93 percent retention in well-run 

factories with modern vats, 90 to 92 

percent retention in well-run factories 

with vertical Double O vats, and 88 to 

91 percent retention in factories with 

open vats. The witness said, based on 

their experience, 91 percent could be 

considered the industry average 

butterfat recovery for cheddar cheese 

plants. 

A CDI witness, appearing on behalf of 

NMPF, testified to the lack of yield data 

available to support the proposed 

recovery rate contained in Proposal 10. 

The witness supported a tempered 

update to the cheese make allowance 

that does not include an update to the 

yield factor. A witness representing DIC 

testified the current 90 percent butterfat 

recovery rate is reasonable because, 

despite some newer, more efficient 

plants achieving higher fat recovery, 

older plants may not be able to achieve 

the higher rates. The DIC witness stated 

fat recovery data is lacking across the 

industry and further asserted the current 

90 percent butterfat recovery should be 

retained. The witness representing MPC 

testified the current formula should 

remain in place until the industry 

tackles the mechanics of the Class III 

formula, and the big issue is how 

butterfat not being retained in the 

cheesemaking process is valued. 

A witness representing AMPI 

provided testimony supporting the 

improvement seen in butterfat recovery 


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due to new vat technology. According to 

the witness, AMPI installed 

cheesemaking equipment that facilitates 

the recovery of fat; however, they did 

not provide specific data. 

Submitted by Select, Proposal 11 

seeks to eliminate farm-to-plant 

shrinkage from the yield factors in the 

FMMO Class III and IV price formulas. 

A witness appearing on behalf of Select 

testified USDA’s decision to include 

shrinkage in the formula was premised 

on the concept that such losses were not 

in the handler’s control and are 

unavoidable and common. The Select 

witness opined that producers, 

cooperatives, and handlers do have the 

ability to address and stem losses in the 

transportation of milk from the farm to 

the plant. The witness said, historically, 

as the number of farms on a milk route 

increased, the probability for 

discrepancies between farm weights and 

plant weights also increased, as each 

stop offered potential for spillage, loss 

within piping, and errors in 

measurement. The witness shared 

statistics on the increasing size of U.S. 

dairy farms, stating that in 2016, threequarters of all U.S. milk production 

came from farms that could fill a full 

tanker, whereas in 2000, less than half 

of U.S. production came from farms 

filling a full tanker. The witness 

estimated 80 percent of the current milk 

volume in the U.S. comes from farms 

able to fill full tankers on every-otherday pickup schedules. Consequently, 

the witness said, the occurrence of 

shrinkage is decreasing. As an example, 

the witness explained, Select’s members 

are large enough to ship full tanker 

loads of milk, meaning Select does not 

experience the same risks of milk loss 

which occur on multi-stop routes. 

Other than milk losses occurring with 

hoses, the Select witness was unaware 

of any inherent, unavoidable, farm-toplant losses that could occur within the 

pick-up process. The witness said even 

farms without the ability to fill a tanker 

can adopt farm scales, flow 

measurement, and other technologies to 

minimize imprecision and inaccuracy. 

The witness testified the cost of 

implementing these improvements 

would be offset by the anticipated price 

impacts of adopting Proposal 11, which 

the witness estimated to be $0.07 per 

cwt. 

A second Select witness presented an 

analysis of Select plant data from 

August 2022 to July 2023, representing 

171,240 milk shipments and a total of 

9.8 billion pounds. The witness stated 

approximately half of their customers 

do not report plant weights back to 

Select. For those plants who do report, 

the witness said reported plant weights 

exceeded farm weights about half of the 

time. The witness stated non-shrink 

factors, such as scale calibration or 

weather, typically cause the large 

discrepancy between farm and plant 

weights. The witness concluded that for 

the subset of loads where differences 

occurred between farm and plant 

weights, the net variance across all 

loads was less than 0.1 percent. 

A witness testifying on behalf of 

Continental Dairy Facilities (CDF) and 

Continental Dairy Facilities Southwest 

(CDF SW), two wholly owned 

subsidiary plants of Select in Michigan 

and Texas, manufacturing NFDM, 

butter, and buttermilk powder, 

presented farm-to-plant loss data to 

support Proposal 11. The witness 

analyzed farm-to-plant losses in milk 

deliveries to the two CDF facilities from 

August 2022 through July 2023, 

comprised of both single and multi-farm 

pickups. The witness stated that in total, 

plant weights averaged 0.15 percent 

lower than farm weights for CDF and 

0.10 percent lower for CDF SW. The 

discrepancies ranged from a negative 

0.32 percent (plant weights were 0.32 

percent lower than farm weights) to 0.67 

percent (plants weights were 0.67 

percent lower than farm weights). Since 

many of the non-Select shipments to 

CDF are multi-farm pickups, the witness 

said management for farm-to-plant 

shrink is not unique to Select or larger 

farms, generally. The witness described 

improperly calibrated scales, input or 

transposition errors by milk haulers, 

changes in equipment or personnel 

when weighing loads, or snow settled 

on scales or tanks when weighing, as 

reasons for weight discrepancies. The 

witness testified these variances are not 

inherent and can be addressed. Select 

reiterated its arguments supporting 

Proposal 11 in its post-hearing brief. 

The AFBF expressed support for 

Proposal 11 in its post-hearing brief. 

The AFBF contended that data on farmto-plant shrinkage contained in 

evidence is similar to what was used to 

determine the original farm-to-plant 

shrinkage factor. The AFBF argued that 

this issue does not merit a formal data 

collection, but a one-time adjustment to 

reflect that farm-to-plant shrinkage is 

much less significant than it used to be. 

Five witnesses representing IDFA, 

Leprino, CDI, DIC, and MPC testified in 

opposition to Proposal 11. The 

witnesses asserted Select’s minimal 

farm-to-plant shrinkage is not the reality 

for much of the dairy industry, noting 

the lack of industry-wide data on farmto-plant shrinkage and the differing 

nature of measuring components at the 

farm, rather than at the plant, are 

reasons Proposal 11 should not be 

adopted. The witnesses further testified 

FMMO yield factors should not be based 

on one company’s experience, 

especially one, they argued, that was an 

industry leader in this area. 

The Leprino witness testified that 

while Select has been able to limit their 

own farm-to-plant loss through 

increasing herd sizes and improvements 

in milk weighing and sampling, this is 

not a representation of the nationwide 

dairy industry. Additionally, the 

witness argued that the scientific 

characteristic of milk fat clinging to the 

walls of stainless steel has not changed; 

as such, volume and fat loss still occur, 

even at the most innovative plants. The 

IDFA witness claimed less than 10 

percent of all farms produce enough 

milk to fill entire tanker loads, so it is 

reasonable to conclude the losses 

experienced when the formulas were 

adopted are still happening today. 

According to the witness, failure to 

account for the diversity of farm size 

may further incentivize manufacturers 

to prefer larger farms over smaller farms. 

Submitted by Select, Proposal 12 

recommends amending the nonfat solids 

price formula by increasing the NFDM 

yield factor from 0.99 to 1.03. A Select 

witness, testifying in support of 

Proposal 12, said it would correct the 

NFS yield factor by including the value 

of milk solids utilized in buttermilk 

powder, as they said producers are not 

currently paid accurately from a price 

calculated on NFDM prices alone. 

According to the witness, a proper yield 

factor for NFDM should account for all 

milk solids, including the milk solids 

remaining in cream after separation and 

used in butter or buttermilk. The 

witness stressed the initial NFS formula, 

correctly adopted in 2000, included 

buttermilk powder. 

A witness for CDF and CDF SW 

testified on price alignment and 

processing differences between NFDM 

and buttermilk powder. The witness 

stated sales and regional prices observed 

at the two plants for buttermilk powder 

and low-heat NFDM are closely aligned, 

as well as consistent with prices 

reported by AMS’ Dairy Market News 

(DMN) from January 2023 through June 

2023. Further, according to the witness, 

the process of drying buttermilk utilizes 

the same equipment as that of drying 

skim milk but requires a thorough 

cleaning of equipment when changing 

product lines, higher temperature, and 

additional drying time due to 

buttermilk’s higher butterfat content. 

The witness said this leads to increased 

utility costs of approximately $0.02. The 

witness testified the NFS yield factor 

should consider all powder products, 

including buttermilk powder whose 


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yield is lower than NFDM. Select 

reiterated its arguments in support of 

Proposal 12 in its post-hearing brief. 

In its post-hearing brief, the AFBF 

expressed support for Proposal 12 as it 

believes it reflects the long-term market 

shift toward valuing buttermilk near the 

NFDM price. The AFBF stated that a 

formal extensive data collection is not 

necessary for this proposal to be 

adopted because there is a clear record 

of buttermilk values. 

Two witnesses, representing Leprino 

and IDFA, testified in opposition to 

Proposal 12. The witnesses testified 

Proposal 12 is based upon a theoretical 

yield approach which assumes a perfect 

system with no in-plant component 

losses in the conversion of NFS to 

NFDM. The witness said in-plant losses 

exist even in the most modern and 

efficient manufacturing facilities and 

should be recognized in the price 

formulas. The witnesses gave an 

example of the portion of NFS 

remaining in cream after separation, 

which cannot be processed into NFDM. 

The Leprino witness argued the FMMO 

system is predicated on the notion 

processors should pay for milk based on 

the revenue they can derive from selling 

products manufactured from that milk. 

The witness said milk routinely lost in 

processing does not end up in finished 

products, which should continue to be 

accounted for in the formulas. The IDFA 

witness testified product yields should 

incorporate manufacturing losses, and 

overestimating the quantity of NFDM 

manufactured from NFS by accounting 

for buttermilk powder would overvalue 

the market-clearing of NFDM and 

contribute to disorderly marketing. 

A witness from CDI testified on behalf 

of NMPF in opposition to Proposal 12. 

The witness testified CDI supports 

evaluating all factors in the Class III and 

IV formulas, and yield factors should 

only be updated once industry-wide 

data on product yields are available. 

The witness stated the NFS price 

formula is based on NFDM and the yield 

factor correctly reflects the yield of 

NFDM only, without an adjustment for 

buttermilk powder. The witness said 

Proposal 12 would adjust the NFDM 

yield factor to represent a composite 

yield for multiple products which differ 

in terms of component composition, 

uses, cost of manufacture, and market 

prices. While acknowledging buttermilk 

powder’s processing costs are likely 

higher than NFDM’s, the CDI witness 

testified there was not enough data to 

quantify the difference in processing 

costs; further, data presented from DMN 

and by Select witnesses are not 

sufficient to determine the alignment of 

prices between buttermilk powder and 

NFDM. The witness clarified that buyers 

of butterfat and NFS must account for 

all solids utilized at the minimum 

component prices, regardless of whether 

the solids are used in the surveyed 

products of butter and NFDM or in other 

Class IV products such as buttermilk 

powder. 

A witness from the DIC testified in 

opposition to Proposal 12. According to 

the witness, while NFDM yields are 

likely higher than the current yield 

factor of 0.99, not all NFS in producer 

milk end up in NFDM, with some NFS 

from cream remaining in buttermilk. 

The DIC witness claimed the lower 

yield factor is to compensate for 

generally lower buttermilk powder 

prices compared to NFDM but 

acknowledged DMN data suggested a 

buttermilk powder price discount 

relative to NFDM narrowing in recent 

years. A witness from MPC testified in 

opposition to Proposal 12, stating they 

were opposed largely due to a lack of 

adequate data. 

In their post-hearing briefs, IDFA and 

NMPF opposed Proposals 10, 11, and 

12. IDFA argued the three proposals are 

not representative of industry-wide 

experience, but rather on what is 

possible given modern technology and 

equipment. NMPF echoed IDFA’s 

opposition in its brief, citing insufficient 

data to justify the proposed changes. 

IDFA specifically objected to Proposal 

11, stating it would place an unfair 

burden on small farms that cannot fill 

a tanker and, thus, continue to 

experience shrinkage. Proposal 11 was 

also opposed by WCMA in its posthearing brief. Lastly, IDFA contended 

Proposal 12 should be rejected because 

it overvalues buttermilk powder. 

Base Class I Skim Milk Price 

Six proposals to amend the base Class 

I skim milk price were considered in 

this proceeding. Proposal 13, submitted 

by NMPF, seeks to return the base Class 

I skim milk price to the higher-of the 

Class III or Class IV advanced skim milk 

price, referred to as the ‘‘higher-of’’ 

mover. Proposal 14, submitted by IDFA, 

would use an average of the advanced 

Class III and Class IV skim milk prices, 

plus an adjuster that resets every 

January. The adjuster would be the 

higher of either: (1) $0.74; or (2) the 24- 

month average difference between the 

higher-of and the average-of the 

advanced Class III and Class IV skim 

milk pricing factors. The 24-month 

calculation would run from August of 

the three years prior to July of the 

previous year. Proposal 15, submitted 

by MIG, would amend the current 

average-of mover from a $0.74 adjuster 

to a monthly rolling average adjuster 

calculated as the difference between the 

higher-of and the average-of, for 24 

months, with a 12-month lag. 

Proposal 16, referred to as ‘‘Class III 

plus,’’ submitted by Edge, would start 

with the announced Class III price and 

incorporate a 36-month rolling adjuster 

averaging the monthly differences 

between the higher-of the advanced 

Class III or advanced Class IV skim milk 

prices, and the Class III skim milk price. 

The proposal would eliminate advanced 

prices. Proposal 17, also submitted by 

Edge, would return to the higher-of 

mover but would use announced rather 

than advanced prices. Proposal 18, 

submitted by the AFBF, would return to 

the higher-of mover and would 

eliminate the advanced pricing of Class 

I skim milk, Class I butterfat and Class 

II skim milk. 

An NMPF witness testified in support 

of Proposal 13. The witness reviewed 

the 2000 Federal Order Reform (Order 

Reform) rulemaking and summarized 

the higher-of methodology as accurately 

reflecting the value of the different milk 

use categories and ensuring shifts in 

demand for any one manufactured 

product does not lower Class I prices. 

The witness said the Department 

determined during Order Reform that 

the higher-of mover addresses 

disorderly marketing by reducing 

volatility in milk prices, reducing class 

price inversions and depooling, and 

assisting Class I handlers in competing 

for a milk supply. 

The NMPF witness testified the 2019 

change to the average-of was designed to 

facilitate price risk management 

strategies for fluid milk processors, 

which, the witness stated, is not an 

objective of FMMOs. The witness said 

the intent of the change was to be 

roughly revenue neutral, while allowing 

handlers to better manage volatility in 

monthly Class I skim milk prices using 

Class III and Class IV milk futures and 

options contracts. The witness claimed 

the 2019 change has not functioned as 

intended or anticipated by NMPF, has 

exacerbated disorderly marketing 

conditions, has not been revenue 

neutral, and will continue to have 

deleterious effects on the dairy industry. 

The witness described the asymmetrical 

risk to producers which was not 

anticipated when the mover change 

occurred. The witness explained the 

higher-of exceeds the average-of 

calculation whenever the Class III and 

IV advanced skim milk pricing factors 

differ by more than $1.48 per cwt, 

regardless of which factor is higher. The 

witness noted the reverse is true when 

the advanced skim pricing factors differ 

by less than $1.48 per cwt. 


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A witness from Southeast Milk, Inc. 

(SMI), an NMPF cooperative member 

with 114 dairy farmer members, 

testified that when the two advanced 

skim milk pricing factors are equal, the 

maximum amount by which the 

average-of can exceed the higher-of 

Class I mover is $0.74 per cwt, but there 

is no limit by which the average-of can 

fall below the higher-of Class I mover. 

The NMPF witness testified that in 2020 

and 2022, there were instances when 

the average-of mover fell below what the 

higher-of mover would have been, in 

which the difference was at times 

significant. The witnesses testified the 

maximum divergence recorded between 

the current average-of mover and the 

higher-of mover was a $5.19 lower 

average-of mover in December 2020, 

when Classes II, III, and IV skim prices 

differed by approximately $11 per cwt. 

In comparison, the witness said, the 

maximum gain during that time was 

capped at $0.74. The SMI witness said 

because the upside is capped, but the 

downside is not, it is difficult to ever 

return to revenue neutrality under the 

average-of mover. 

The SMI witness testified the averageof mover has lowered dairy farmer 

revenue compared to what they would 

have received under the higher-of 

mover, with estimated cumulative 

market losses totaling $998.3 million 

from May 2019 through August 2023. 

The witness said that for the same 

period, the average-of mover decreased 

revenue to the southeastern FMMO 

producers by more than $192 million. 

The NMPF witness reviewed data 

during periods of relative price stability, 

revealing the average-of mover 

generated modest gains over the higherof mover. However, in periods of price 

volatility, there were substantial 

revenue losses in months when the 

average-of mover was less than the 

calculated higher-of mover, which 

resulted in significant cumulative losses 

to producers over time. 

The NMPF witness claimed the 

change to the average-of mover 

increased disorderly marketing by 

reducing Class I prices relative to the 

other classes and creating greater 

incentives for handlers to depool milk. 

The witness said that in 2020, the 

enhanced demand for cheese relative to 

the demand for butter and NFDM 

widened the spread between Classes III 

and IV well beyond $1.48, substantially 

lowering Class I prices compared to 

what they would have been under the 

higher-of mover. The SMI witness 

testified that between May 2019 and 

June 2023, the Class III skim value 

exceeded the Class IV skim value by 

over $1.48 per cwt in 16 months, and 

the Class IV skim value exceed Class III 

skim value by $1.48 or more per cwt in 

11 months. In 2023, according to the 

SMI witness, the average-of continued 

to be lower than the higher-of in some 

months, which had a more significant 

impact to dairy farmers because it 

occurred during a time of extremely low 

dairy farm margins. The witness said 

they expect to see more volatility and 

larger spreads between Class III and 

Class IV prices in the future because of 

anticipated higher butterfat prices 

which will lower the Class III skim 

value. 

The NMPF witness testified that 

adoption of the average-of mover 

created class price inversions and 

resulted in significant volumes of 

depooled Class III milk during the 

second half of 2020. Class price 

inversions occurred again in 2022 and 

2023, said the witness, resulting in price 

volatility and substantial depooling of 

Class IV milk. The witness opined a 

wide variety of market conditions have 

proven capable of generating market 

volatility, driving a wedge between 

Class III and IV skim milk prices, and 

resulting in an average-of mover of more 

than $1 per cwt below what the higherof mover calculation would have been. 

The NMPF witness said the averageof mover has not resulted in increased 

risk management activity at a value to 

handlers anywhere near the losses 

experienced by dairy farmers. 

Numerous witnesses testified their fluid 

milk customers have shown very little 

interest in hedging milk since the 

average-of mover was implemented. 

NMPF witnesses testified other Class 

I mover proposals under consideration 

in this proceeding use the higher-of 

mover calculation as the benchmark for 

determining adequate Class I skim milk 

price revenue. They testified those 

proposals provide producers revenue in 

an after-the-fact-manner that fails to 

maintain the maximum monthly 

separation between advanced Class I 

prices and the manufacturing class 

prices, a goal expressed by the 

Department when it recommended the 

higher-of mover during Order Reform. 

The SMI witness testified that because 

of the change to the average-of mover, 

the southeastern FMMOs experienced 

disproportionately large reductions in 

blend prices due to the higher Class I 

utilization in the region, making it 

harder to attract supplemental milk the 

region requires to meet fluid demand. 

The witness noted that using an 

average-of mover to establish a Class I 

skim price makes it more difficult for 

Class I handlers to procure milk from 

plants with higher-value manufactured 

products because the price difference is 

not large enough to draw milk away 

from manufacturing. The witness 

opined a Class I skim mover should 

provide for orderly marketing by 

ensuring an adequate supply of raw 

milk for fluid plants, producer price 

equity including prompt and uniform 

payments to farmers and cooperatives, 

and stability for dairy farms. The 

witness argued the current average-of 

mover makes it more difficult for 

FMMOs to achieve those purposes. 

An NMPF consultant witness testified 

the higher-of mover is necessary to 

transmit market signals in real time. The 

witness said a higher Class I milk price 

relative to other class prices sends 

market signals to move milk from 

surplus to deficit regions to ensure 

adequate fluid milk supplies. 

Additionally, the witness continued, 

disorderly marketing caused by 

prolonged depooling occurs when the 

Class I price is lower than Class II, III, 

or IV prices. The witness asserted 

prolonged periods of depooling create 

market disorder. Since the change in 

2019, claimed the witness, the Class I 

mover has facilitated persistent longterm periods of depooling because there 

is no guarantee Class I prices will 

exceed the other class prices over time. 

In contrast, the witness asserted that 

under the higher-of mover, if Class III 

and IV advance skim prices increased, 

the Class I price would remain higher 

and depooling would moderate. 

The NMPF witness presented data to 

demonstrate the objective of adopting 

the average-of mover, to allow for 

greater risk management, has not been 

accomplished, and prolonged periods of 

depooling have made it difficult for 

producers to hedge their farm margins. 

The witness stated that when milk is not 

pooled, producer hedging losses cannot 

be offset by gains on milk checks 

because revenue from the higher valued 

manufacturing milk is not shared with 

the marketwide pool. The witness 

asserted risk-management performance 

is relatively similar under the higher-of 

and average-of movers, entering data 

they believed showed how Class III 

futures contracts would similarly 

mitigate risk. The witness contended 

other proposals do not adequately 

replicate the higher-of price in future 

periods; nor do they share equally 

among dairy producers and others, 

necessitating periodic recalibration. 

Rather than recognize the average-of 

limitations, the witness said, other 

proposals seek to align the average-of 

and higher-of performance. The witness 

testified an average-of mover with an 

adjuster causes past market conditions 

to influence current prices, sending 

pricing misinformation to the market 


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and causing disorderly marketing. The 

witness concluded that without 

immediate market signals from the 

advanced Class III and IV milk prices, 

any of the average-of or Class III plus 

movers would struggle to replicate the 

higher-of mover performance. 

An NMPF witness representing 

Prairie Farms testified producer revenue 

has been significantly reduced, without 

recovery, since the change to the 

average-of mover. Prairie Farms is an 

Illinois based farmer-owned milk 

cooperative with over 600 dairy farmer 

members operating fluid milk 

processing and manufacturing facilities 

that produce a variety of fluid and 

manufactured dairy products. Increased 

depooling in the last few years because 

of the average-of mover has resulted in 

increased price volatility, the witness 

said. The witness testified that with the 

average-of mover either Class III or Class 

IV milk is not pooled, depending on 

which class is higher, because the 

manufacturer is able to keep the 

additional market revenue instead of 

sharing it among pooled producers. 

The Prairie Farms witness testified 

dairy producers want a pricing system 

that gives real-time market signals, 

which is accomplished with the higherof mover. The witness testified Prairie 

Farms supported the change to the 

average-of mover believing it would 

facilitate their customers’ ability to 

hedge Class I milk. However, Class I 

processors have generally not increased 

their use of hedging, said the witness, 

while dairy producers have taken on 

additional risk by giving up a higher 

Class I price. The witness stated one 

reason they believe their customers do 

not utilize hedging is because of fear of 

incurring a price disadvantage 

compared to their competitor. The 

witness added that of the Prairie Farms 

dairy farmer members engaged in risk 

management, there has been a decrease 

in the use of forward contracting since 

the implementation of the average-of 

mover because of negative PPDs, as they 

create a negative basis dairy producers 

are unable to account for in their risk 

management decisions. The witness 

presented data showing negative PPDs 

have become larger and more frequent 

under the average-of mover, which has 

increased the volume of depooled milk 

and significantly reduced revenue to 

farmers. 

Another NMPF witness representing 

Upstate Niagara Cooperative (Upstate 

Niagara) testified the average-of mover 

has not operated as intended, has 

negatively impacted producer revenue, 

and has exacerbated disorderly 

conditions. Upstate Niagara is a dairy 

farmer-owned cooperative marketing the 

milk of approximately 250 members and 

operating eight fluid processing and 

manufacturing plants in New York and 

Pennsylvania. According to the witness, 

under the average-of mover, producers 

pooled on FMMOs with higher Class I 

utilization were most severely impacted 

due to the depressed Class I milk prices 

and no ability to benefit from the higher 

priced manufacturing milk. Similar to 

other witnesses, the Upstate Niagara 

witness described the asymmetric price 

risk of the average-of mover. 

From interactions with fluid milk 

customers, the Upstate Niagara witness 

said there is widespread acceptance of 

prices based on FMMO monthly price 

announcements by their conventional 

customers. The witness said 

conventional customers have been less 

interested in pursuing a fixed price if 

there was any chance it could result in 

a competitive disadvantage in any given 

month. The witness recognized there 

may be some processors or end users in 

specialized Class I product channels 

that may utilize hedging but contended 

it is a relatively small portion of total 

Class I sales. 

A University of Missouri professor 

testifying on behalf of NMPF presented 

results of an analysis conducted to 

evaluate the impact of adopting 

Proposal 13. The witness testified, 

under the higher-of mover, Class I prices 

would increase every year between 

$0.32 and $0.50 per cwt; the Class II 

price would be between $0.08 and $0.12 

per cwt less annually; the Class III price 

would be between $0.06 and $0.13 per 

cwt less annually; the Class IV price 

would be between $0.08 and $0.12 per 

cwt less annually; and the all-milk price 

would be between $0.01 or $0.02 per 

cwt higher annually, except for a more 

significant increase of $0.06 per cwt in 

the first year. The witness said the 

model forecasted the effect on the allmilk price to moderate over time as 

production expands. 

Twenty dairy farmers testified in 

support of Proposal 13. Many dairy 

farmers testified blend prices have been 

lower and their milk prices have been 

reduced since the average-of mover was 

implemented. They said only when 

Class III and Class IV prices are within 

a narrow range of each other is the 

average-of mover equal to or 

outperforming the higher-of mover. The 

witnesses said their experience supports 

NMPF’s assertion that farmers’ milk 

prices have been reduced by $950 

million, and the reduction is not just a 

COVID-era anomaly. Dairy farmer 

witnesses said the losses demonstrate 

the goal of revenue neutrality with the 

change to the average-of has not been 

achieved. One witness asserted that in 

29 of the 52 months since the averageof was adopted, Class I prices averaged 

$1.30 per cwt less than what the price 

would have been under the higher-of 

mover. In comparison, said the witness, 

in the remaining 23 of the 52 months 

the average-of returned a price only 

$0.42 higher per cwt. The witnesses 

testified to near-universal support by 

dairy farmers for a return to either the 

higher-of or, under the average-of, a 

mechanism to be equal to the higher-of 

over a period of time, such as 24 

months. 

Several dairy farmers urged a return 

to the higher-of mover, claiming a need 

for financial relief as dramatic shifts in 

milk markets since implementation of 

the average-of mover have caused 

significant financial losses to dairy 

farmers. Dairy farmers reiterated the 

average-of mover change affects 100 

percent of pooled producer milk while 

it is unlikely fluid milk processors are 

covering 100 percent of their products 

with risk management tools. A dairy 

farmer testified they were assured the 

change to the average-of would be net 

neutral or net positive, but it has not 

been. Many dairy farmer witnesses 

described losses to dairy farmers under 

the average-of compared to what the 

Class I mover would have been under 

the higher-of and testified to receiving 

lower blend prices. The dairy farmers 

were concerned about receiving a 

delayed value of milk from a Class I 

mover with a rolling average 

methodology because they believe they 

cannot afford to wait months or years 

for the added revenue. They testified 

restoring the higher-of mover through 

adoption of Proposal 13 would help to 

reduce the volatility in monthly milk 

prices, bringing more stability and 

predictability to farmer income. 

Dairy farmers of all sizes testified to 

relying on risk-management tools, such 

as Dairy Margin Coverage (DMC), Dairy 

Revenue Protection (DRP), and CME 

futures and options markets because it 

is difficult to manage their farms 

through periods of significant price 

volatility. Dairy farmers’ testimonies 

described a range of contract periods, 

anywhere from 3–18 months, depending 

on the individual farmers’ riskmanagement strategy and risk tolerance. 

In its post-hearing brief, NMPF 

reiterated hearing testimony arguing the 

average-of mover does not meet the 

standards set forth in Order Reform, and 

the change has not been revenue neutral 

as originally assumed. NMPF restated 

that under the average-of mover, price 

inversions, volatility, and depooling 

have increased, and Class I prices have 

been less effective at incenting milk to 

fluid processors relative to 


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manufacturing. NMPF reiterated the 

asymmetrical risk borne by dairy 

farmers with the average-of mover and 

the frequency of which the difference 

between Class III and IV prices 

exceeded $1.48 per cwt, effectuating 

that risk. 

NMPF reiterated the average-of mover 

failed to send appropriate market 

signals to participants because the fixed 

adjuster could not maintain the 

maximum monthly separation between 

the advanced Class I and the 

manufacturing class prices. NMPF wrote 

this increased the likelihood 

manufacturing classes would have a 

higher value than milk used in Class I 

and resulted in increased volumes of 

depooled milk. Under the higher-of 

mover on the other hand, NMPF argued, 

when a particular manufacturing class 

price is rising, the Class I price also rises 

and tends to maintain Class I as the 

highest priced class. To dampen the 

effect volatility in the manufacturing 

classes has on Class I, the highest priced 

manufacturing class should provide the 

foundation for ensuring the Class I price 

remains above the manufacturing 

classes almost every month, reducing 

the incentive to depool, which is 

disorderly. 

The demand for Class I hedging is not 

clear, NMPF asserted in its brief, and no 

evidence was presented to suggest more 

than a small minority of the overall 

fluid market utilizes hedging, especially 

beyond ESL handlers. NMPF argued in 

its brief that while facilitating risk 

management for fluid processors may 

have merit, it is not an objective of 

FMMOs. In regulating processors, the 

AMAA only considers price uniformity 

to processors, NMPF asserted. Finally, 

NMPF restated in its brief the 

widespread support of producers for a 

return to the higher-of mover. 

The Dairy Cooperative Marketing 

Association, Inc. (DCMA), a CapperVolstead Marketing Agency in Common 

with nine cooperative members in the 

southeastern U.S., submitted a posthearing brief in support of Proposal 13. 

In its brief, DCMA argued the change to 

the average-of mover has not been 

revenue neutral to dairy farmers, nor 

provided benefits to the industry as 

originally intended. According to 

DCMA, the hearing record demonstrates 

that little Class I hedging occurs, 

especially on HTST milk, and includes 

no evidence that the use of hedging is 

more prevalent now than prior to the 

change. DCMA stated most testimony 

demonstrated HTST milk is sold based 

on FMMO announced prices each 

month plus a fixed margin. Because 

revenue on packaged milk sales flows 

back to the processor in step with the 

monthly changes in the FMMO 

announced prices, there is no price risk 

to the Class I processor under this 

system, according to DCMA. In its brief, 

DCMA described the pronounced losses 

in the southeastern region as a result of 

the change to the average-of mover. 

The MDC submitted a post-hearing 

brief in support of Proposal 13, 

expressing the importance of making the 

changes as part of the FMMO reform 

process underway. MDC conveyed in its 

brief the importance of ensuring all 

reforms are considered in concert since 

all changes have ripple effects 

throughout the entire system and across 

all classes of milk. 

In its post-hearing brief in support of 

Proposal 13, Select reiterated the 

proposal would support the priorities 

expressed by the Department in Order 

Reform, the rationales of which remain 

true today. Select cited billions of 

dollars lost to producers, an increase in 

depooling, and a lack of Class I handlers 

hedging their milk costs as reasons the 

average-of has failed. 

In both witness testimony and briefs, 

IDFA and MIG strongly opposed a 

return to a higher-of mover. A majority 

of their opposition was contained in 

supporting testimony and evidence for 

Proposals 14 and 15, as detailed below. 

A witness representing IDFA testified 

in support of Proposal 14. The witness 

said the goal of Proposal 14 is to keep 

producer Class I revenue consistent 

with what would be experienced under 

the previous higher-of mover, while 

allowing for effective and affordable 

Class I risk- management strategies. 

The IDFA witness claimed that in the 

long-run, the proposed Class I mover 

would never fall below what the Class 

I skim milk price would have been 

under the higher-of mover. According to 

the witness, Proposal 14 would have 

paid more than the higher-of mover in 

13 of the past 21 years. The witness 

asserted dairy farmers are ‘‘made 

whole’’ as compared to the higher-of 

mover over time through the annual 

adjuster calculation. The witness 

presented data from 2003 through 2019 

showing Proposal 14 would have 

yielded a Class I price $0.08 greater than 

the higher-of mover. For 2004 through 

2023, the witness said Proposal 14 

would have yielded a Class I price $0.05 

higher, due to the $0.74 floor. 

The IDFA witness entered data and 

analysis to show the volume of milk not 

pooled would be slightly less under 

Proposal 14 than Proposal 13, and the 

Class I price would be lower than Class 

III or Class IV prices in nearly the same 

number of months under both 

proposals. The IDFA witness presented 

an analysis showing Proposal 14 would 

have reduced price volatility with the 

only exception of very high cheese 

prices in 2020. According to the 

witness, volatility equates to greater 

price risk, which increases hedging 

costs, and ultimately higher consumer 

prices. 

The IDFA witness countered claims 

the higher-of mover sends important 

price signals to dairy farmers through 

the Class I price, instead claiming the 

blend price sends more important price 

signals because it is the price farmers 

receive. The witness alleged there is 

little difference between signals sent by 

the blend price under Proposals 13 and 

14, arguing that from 2012 to 2022, 

Proposal 13 would average 31.9 percent 

of the Class I value in the blend price 

while Proposal 14 would average 31.8 

percent. As the impact on the blend 

prices is very similar, over time there is 

little difference in price signals between 

the proposals, the witness said. 

Regarding the delay incorporated by 

the rolling adjuster and farmers possibly 

not receiving the make-up payments, 

the IDFA witness noted farmers go out 

of business for many reasons, and some 

may go into the business or expand and 

benefit from higher payments. The 

witness said this issue is no different 

than handlers going out of business 

before the make allowances are raised. 

The IDFA witness testified hedging is 

a critical tool for the subset of 

innovation and value-added milk 

manufacturers to remain competitive 

with alternative beverages. In the few 

growing segments of the milk market, 

especially ESL and higher value-added 

products, retailers are demanding 

processors provide long-term fixed price 

contracts, rather than contracts with 

fluctuating monthly prices, the witness 

said. Since processors cannot enter into 

a fixed purchase price for raw milk with 

their milk suppliers, hedging allows 

processors to take on the risk of entering 

into a fixed sales price for its finished 

products and cover the risk of raw milk 

prices rising during the contract period, 

the witness testified. 

The IDFA witness noted several ESL 

processors formed and quickly 

implemented risk management plans in 

anticipation of the change to the 

average-of mover. The witness noted 

ESL processors are interested in hedging 

because of the longer product shelf-life. 

According to the witness, a risk 

management plan allows a processor to 

level out what could otherwise be very 

different costs of milk products that 

could have been produced at 

significantly different times but are 

being sold to the customer at the same 

point in time. The witness noted more 

hedging of HTST products is done by 


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end users, such as foodservice 

customers, not processors. The witness 

testified that while risk management is 

not a stated objective of the AMAA, a 

stable price, promotion, and growth of 

the sale of milk are, and the ability to 

use risk management tools results in 

stable prices and increased sales. 

The witness testified IDFA would 

support a rolling average longer or 

shorter than 24 months, but the 12- 

month implementation lag is essential 

to allow for hedging. The witness 

testified Proposal 14 calculates the 

adjuster from August through July 

because long term Class I sales contracts 

between processors and retailers are 

often negotiated and entered into during 

the final months of the calendar year. To 

allow for effective hedging for those 

contracts, Class I processors would need 

to know at the time of the contract 

negotiations what the adjuster would be 

for the next calendar year. The witness 

supported Proposal 15 as an acceptable 

alternative to Proposal 14. 

A dairy processor witness 

representing Schreiber Foods 

(Schreiber) testified in support of 

Proposal 14 or 15. Schreiber is a fluid 

milk processor primarily manufacturing 

Class II and Class III products, with 

approximately 5 percent of their 

products sold as ESL Class I products. 

The witness testified that over the past 

20 years risk management has become a 

necessary tool for companies with 

exposure to dairy market volatility. The 

witness said that only since the change 

to the average-of mover in 2019 have 

milk processors had a viable way to 

manage risk. The witness testified that, 

in response to requests from foodservice 

and retail customers to manage Class I 

costs, Schreiber has offered Class I 

forward contracts since 2019. Prior to 

2019, the witness said creating an 

effective hedge for Class I milk was 

challenging as it was unknown whether 

Class III or Class IV would be the mover. 

The witness stressed the change to the 

average-of allows purchasers to use a 

combination of Class III and Class IV 

hedge positions, which gives everyone 

in the supply chain the ability to control 

their market risk in a way that was not 

previously possible under the higher-of. 

According to the witness, Schreiber 

hedges price risk for its ESL production 

through a combination of Class III and 

IV futures and swaps, and Class I swaps, 

which typically go out 12 to 18 months. 

Under Proposal 14, the witness 

explained, market participants will 

know the fixed adjuster in advance of 

the calendar year in order to conduct 

their hedging analyses for the coming 

year. If the Class I mover were to revert 

to the higher-of, the witness testified 

they would have to either find a 

different way to hedge or cease offering 

forward contracts on their ESL products. 

A witness representing Nestle ́ USA 

(Nestle ́) testified in support of Proposal 

14. Nestle ́ is a fluid milk processor 

operating one plant regulated by the 

FMMO system. The witness testified 

that Nestle ́ procures milk from 

cooperatives using contract agreements 

and offers its customers an annual fixed 

price contract for their primary Class I 

product, an ESL product. The witness 

stressed the importance of hedging to 

manage risk and compete in the market 

against nondairy beverages. The witness 

stated Nestle ́ did not use hedging for 

Class I under the higher-of mover 

because not knowing which class price 

would be higher caused uncertainty. 

The witness testified Nestle ́ currently 

hedges all its Class I milk purchases 

using Classes III and IV futures 

contracts, and while they have an 18- 

month outlook they typically hedge 

Class I milk 6 months out. If USDA 

returns to the higher-of mover, the 

witness testified, Nestle ́ would not be 

able to continue hedging its Class I milk. 

The witness testified price volatility has 

specific impacts on ESL products, as it 

is challenging for retailers to set 

different prices due to monthly milk 

price fluctuations for two identical 

products sold at the same time but 

produced in different months. 

A witness representing Lamers 

testified in support of Proposals 14 and 

15 stating those proposals would help 

smooth out the volatility in the pricing 

of Class III and Class IV. 

In its post-hearing brief, IDFA 

reiterated the importance of hedging to 

processors for managing price risk and 

volatility and claimed effective hedging 

could only be achieved with an averageof mover. IDFA noted that when price 

uncertainty does not allow fluid milk 

processors to manage risk 6 to 12 

months out, they risk losing shelf space 

to plant-based and other alternative 

beverage products that can offer fixed 

prices. IDFA argued that the choice for 

a fluid milk processor, especially with 

respect to ESL products, higher valueadded products, and foodservice, is 

increasingly between offering stable 

pricing and long-term contracts 

demanded by customers or losing shelf 

space to competing beverages. Pricing 

stability and long-term contracting are 

facilitated by hedging, according to 

IDFA. IDFA stressed the growing need 

for Class I hedging because of increased 

volatility between the manufacturing 

classes. 

In response to criticism of Proposal 

14, IDFA wrote the average-of mover 

does not create price inversions or lead 

to milk not being pooled, arguing 

depooling occurs because of the price 

relationships between classes, and is 

caused by negative PPDs and pooling 

requirements. IDFA also wrote that the 

average-of mover does not increase price 

volatility, unlike a higher-of mover 

which routinely and unpredictably 

switches between Class III and Class IV. 

Finally, IDFA asserted the value of Class 

I products is not necessarily related to 

the value of Class III or IV products, 

thus, the higher-of does not better reflect 

the value of milk than the average-of 

mover. 

NAJ submitted a post-hearing brief in 

support of Proposal 14, arguing it better 

protects long-term producer milk 

revenue, provides less Class I price 

volatility, and preserves equitable riskmanagement opportunities for Class I 

handlers who are required to participate 

in the FMMO system. NAJ noted the 

perception a return to the higher-of 

mover would produce higher producer 

Class I revenues is based on highly 

divergent Class III and IV price movers 

and an expectation this will continue in 

the future. However, NAJ argued in its 

brief this price divergence analysis does 

not account for composition factor 

amendments nor potential Class I 

differential amendments. With revised 

composition factors, NAJ asserted, a 

restored manufacturing to Class I price 

spread would mitigate price inversion 

and depooling. 

A MIG witness testified in support of 

Proposal 15 seeking to amend the 

average-of mover from a $0.74 adjuster 

to a rolling 24-month adjuster with a 12- 

month lag. The witness claimed the 

movers contained in Proposals 14 and 

15 provide similar base Class I skim 

milk prices and have similar effects on 

producer prices. The witness explained 

in certain years Proposal 15 would 

return more money to farmers than the 

higher-of, and even if farmers do not 

experience the benefits of a high 

manufacturing price immediately, they 

will over time through the lagged 

adjuster. The witness presented data 

comparing the monthly average base 

Class I skim milk price calculated under 

the current mover, the higher-of mover, 

and Proposal 15 from 2003 to 2022 to 

show Proposal 15 would be revenue 

neutral in the long run. 

The MIG witness testified Proposal 15 

preserves risk-management 

opportunities for both producers and 

Class I processors, which is part of 

orderly marketing. The ability to hedge 

Class I milk became effective in 2019, 

followed by the pandemic and 

regulatory uncertainty as to whether the 

average-of would remain, and time, 

resources, and lack of knowledge 


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slowed the adoption of Class I riskmanagement strategies, the witness 

testified. 

Five MIG member witnesses 

representing fairlife, HP Hood, Turner 

Dairy, Shehadey, and Crystal Creamery 

testified on the importance of hedging 

Class I milk. The fairlife and HP Hood 

witnesses said they primarily process 

ESL products, which they hedge using 

CME Class III and IV component and 

commodity futures. The HP Hood 

witness stated they do not hedge HTST 

milk because it is primarily sold 

through direct store delivery where the 

standard business practice is monthly 

pricing. However, ESL products are 

distributed primarily through grocery 

warehouses and buyers expect 60 to 90 

days’ notice for any price changes, the 

witness said. The HP Hood witness 

stated the ability to hedge has not 

changed their ESL pricing strategy but 

has allowed for fewer price increases. In 

earlier testimony a witness representing 

Shamrock, also a MIG member, said 

they manufacture both HTST and ESL 

products and hedge milk used in their 

ESL products. 

A processor witness representing 

Shehadey testified contracts with 

retailers such as grocery stores use a 

fixed formula that changes monthly, 

quarterly, or semi-annually, and are 

based on FMMO prices. The witness 

testified Shehadey has only HTST Class 

I milk products and they do not use any 

form of risk-management tools to hedge 

their risk. The Turner Dairy and Crystal 

Creamery witnesses said their 

companies primarily process HTST 

Class I milk products which they 

currently do not hedge. Both witnesses 

expressed value in hedging HTST milk 

sold to foodservice, as foodservice 

customers prefer to know prices months 

to years in advance. The fairlife and HP 

Hood witnesses testified hedging under 

the higher-of mover was difficult due to 

price volatility and uncertainty, but the 

average-of mover allows them to offset 

the risk. The witnesses also testified it 

takes time to develop a robust hedging 

program. The HP Hood witness stated 

Class I hedging is primarily used by 

more sophisticated operators, but as 

Class I hedging becomes more accepted, 

the market should become more liquid, 

and more processors will likely use this 

risk-management tool. The fairlife 

witness said fairlife typically hedges its 

ESL Class I products, mainly 0 to 6 

months out, but contracts could extend 

up to 12 months. 

A MIG witness explained that the 

adoption of Proposal 15 would allow for 

less price volatility throughout the 

market and support industry growth by 

stabilizing the cost of milk for retailers 

and consumers. Hedging, the witness 

said, is important to offering customers 

and consumers a more stable price, 

which could stem the declines in fluid 

milk as fluid milk competes with many 

beverages in the market. The fairlife 

witness testified that price certainty 

translates to price stability for both the 

retailer and the consumer. The HP Hood 

witness testified the goal of hedging is 

not to make a higher return, but instead 

to act as price risk insurance by 

removing some input price volatility 

and increasing margin certainty for endproduct sales. The Turner Dairy witness 

testified the average-of mover results in 

more price stability which is beneficial 

to the Class I market. The witness said 

under the higher-of formula, the Class I 

price went up with every spike in 

butter, cheese, or powder markets, even 

though short-term changes in those 

product prices have no direct effect on 

the actual Class I market. The witness 

argued the price spikes necessitated 

raising prices to cover cost, without a 

market-based explanation to provide to 

customers. 

The MIG and fairlife witnesses 

testified in support of the 12-month 

lagged adjuster contained in Proposal 

15, stating it is critical to allow Class I 

processors to mitigate risk and hedge 

successfully. Knowing the adjuster 12 

months in advance allows companies 

who hedge to reduce or eliminate basis 

risk, the witness said, while the 24- 

month rolling adjuster updates and 

provides dynamic market signals. The 

witnesses said Proposal 15 would 

stabilize prices by moving gradually and 

make fluid milk products a more 

reliable and steady purchase for 

customers. Proposal 15 has no floor or 

ceiling, as the witness testified MIG 

members believe floors and ceilings can 

create price distortions. The witnesses 

testified a lookback of less than 24 

months would create more volatility, 

while a longer lookback does not 

transfer market signals well over time. 

The fairlife witness testified the 12- 

month lag is necessary to be able to buy 

futures 12 months out. The 24-month 

rolling average adjuster allows the 

system to recognize the difference 

between Class III and Class IV prices 

and what the higher-of mover would 

have been, the witness said, allowing 

the industry to know definitively what 

the premium structure is going to look 

like associated with the adjuster 12 

months into the future. 

In its post-hearing brief in support of 

Proposal 15, MIG argued USDA should 

first assess whether the current averageof formula has resulted in disorderly 

marketing. MIG wrote the current 

average-of mover ensures the market has 

sufficient milk for both fluid and 

manufacturing uses and there is not 

disorderly competition for fluid market 

access. MIG argued a return to the 

higher-of under Proposal 13 would not 

provide higher returns to farmers, 

estimating a minimal impact of a $0.01 

to $0.02 per cwt increase in the long 

term. However, MIG argued in its brief, 

the return to the higher-of mover would 

have significant negative impacts on the 

Class I market and the entire dairy 

industry. There is no asymmetrical risk 

inherent in Proposal 15, MIG argued in 

its brief, unlike the present average-of 

mover formula. 

According to MIG, the use of risk 

management developed primarily after 

the average-of formula was adopted and 

is likely to grow in the future. MIG 

stated Class I processors do currently 

use risk-management tools to hedge ESL 

products, as this sector has historically 

utilized more fixed pricing, meaning 

hedging can be more easily adopted. 

MIG stated many HTST customers, such 

as grocery stores, have become 

accustomed to the monthly fluctuations 

of pass-through pricing, but HTST 

customers, such as school lunch 

programs or USDA feeding programs, 

would benefit from the increased price 

certainty that comes with an average-of 

calculated mover. The industry has not 

yet had time to widely adopt risk 

management, MIG reiterated in its brief, 

and regulatory uncertainty due to this 

proceeding has caused processors to 

hesitate further use of risk-management 

tools. 

MIG noted in its brief that even 

though the AMAA does not specifically 

provide for hedging, a Class I formula 

that supports hedging helps serve the 

enumerated purpose of the AMAA of 

avoiding unreasonable price 

fluctuations and reducing milk price 

volatility. When Class I processors can 

better manage risk, they can offer more 

stable prices to customers and 

consumers, MIG argued in its brief. 

In its brief, MIG reiterated hearing 

testimony that use of an average-of 

mover best ensures an orderly market, 

and sufficient supply of milk for fluid 

use, including the most accurate pricing 

signals for dairy farmers in a longer, and 

more appropriate, time. MIG took 

exception to arguments that the Class I 

price be used to address price 

inversions and depooling. Using a 

California pool example, MIG argued 

that record evidence shows the 

Department would have to increase the 

Class I price an impractical amount to 

incentivize both manufacturing classes 

to remain pooled. MIG reiterated many 

factors cause depooling and negative 

PPDs, and neither the Class I price nor 


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use of an average-of mover drive those 

results. Rather, according to MIG, the 

main drivers of depooling in the months 

reviewed in testimony were the Class 

III/IV spread and advanced pricing. 

In its brief, MIG argued a return to the 

higher-of mover will not help Class I 

handlers in competing for milk supply 

as a higher pool obligation detracts from 

the incentive to service Class I plants. 

MIG reiterated hearing testimony that 

the current marketplace is sufficiently 

served using an average-of formula. 

Lamers submitted a post-hearing brief 

in support of retaining an average-of 

mover. Lamers argued that because of 

the small percentage of Class IV use in 

the market, Class IV prices should not 

be a main driver for setting the Class I 

price, as an average-of mover is more 

representative of the entire 

manufacturing market. Lamers preferred 

the lower of the Class III and IV prices 

should be used when setting the mover 

as they believe the higher-of artificially 

raises Class I prices to consumers. 

NMPF presented numerous witnesses 

who testified in opposition to the 

continuation of the average-of mover, 

embedded in the summary of their 

testimony and post-hearing brief 

presented above. An SMI witness 

opposed a modified average-of mover, 

testifying it would result in revenue 

losses to dairy farmers because the Class 

I price is paid back to dairy farmers over 

time and would not compensate dairy 

farmers that have exited the business. 

Select expressed opposition to 

Proposals 14, 15, and 16 in its posthearing brief. Select wrote that the 

higher-of more accurately reflects the 

value of milk in manufacturing classes, 

better manages shifts in demand for any 

one manufactured product, helps reduce 

milk price volatility, better addresses 

class price inversions and depooling, 

and makes it more difficult to draw milk 

away from Class I uses for 

manufacturing. Select noted most Class 

I handlers have not engaged in milk 

hedging under the average-of mover, 

and the average-of mover creates and 

exacerbates opportunistic depooling 

when Class III and IV prices diverge 

significantly. Select opined the averageof mover results in market disorder 

which they believe would continue 

until the higher-of mover is restored. 

In its post-hearing brief, the AFBF 

opposed Proposals 14 and 15, arguing 

they do not address the key issue of 

class price misalignment. The AFBF 

believes handlers of all sizes can find 

alternative methods of managing risk 

under a higher-of mover. 

A witness representing Edge testified 

in support of Proposals 16 and 17. The 

witness advocated for the adoption of 

Proposal 16, referred to as a Class III 

plus proposal, because the Class III 

price is typically higher than the Class 

IV milk price. In times of rapidly 

declining dairy prices brought on by a 

decrease in demand, the witness said, 

government recovery efforts typically 

prioritize more perishable products, 

usually Class III. The witness said this 

would result in higher Class III prices in 

relation to Class IV, and consequently a 

base Class I skim price under Proposal 

16 approximately equal to the higher-of 

mover. According to the witness, in 

situations where the Class IV skim milk 

price is higher than the Class III skim 

milk price, any lost revenue would be 

redistributed to producers over the next 

three years through the adjuster and 

would better support dairy farmers 

during years of lower profitability. The 

witness testified risk management under 

Proposal 16 is easy to implement and 

less expensive due to high liquidity of 

Class III milk futures, creating more 

predictable prices and making fluid 

milk products competitive with plantbased beverages. The witness testified 

Edge would support a monthly rolling 

adjuster in place of an annual adjuster. 

The Edge witness testified that as 

Class I utilization rates continue to fall, 

advanced pricing would continue to 

cause disorderly marketing conditions 

such as opportunistic depooling. The 

witness said advanced prices are 

antiquated and anti-competitive and 

their elimination would encourage fluid 

plants to use risk management. The 

Edge witness entered data showing the 

contribution of various factors to 

negative PPDs. The witness testified that 

while the change to the average-of 

mover tended to make PPDs more 

negative, advanced prices and the 

spread between Class III and IV 

influenced pooling decisions, not the 

adoption of the average-of mover. The 

witness testified that if the Class I price 

was announced at the same time as the 

Class III and Class IV prices, it would 

prevent a for-profit Class I trading 

relationship between Class III and Class 

IV, and the CME group would be more 

likely to create a Class I futures contract. 

The witness expressed a strong 

preference for Proposal 16, which they 

argue balances producer, processor, and 

consumer needs and supports risk 

management which they said was 

critical for the success of the nation’s 

dairy farmers, particularly fluid sector 

innovators. 

The Edge witness also testified in 

support of Proposal 17, returning to the 

higher-of mover without advanced 

pricing. The witness said the proposal 

would allow the Class I futures price to 

be equal to the greater of the Class III 

futures price and the Class IV futures 

price. Risk management players would 

have minimal risk in providing liquidity 

to Class I hedgers by spreading their 

position between Class I and the higherof Class III or IV futures. The witness 

testified dairy producers may prefer the 

higher-of mover without advanced 

pricing, such as Proposal 17, as it 

provides real-time maximum income for 

Class I milk, whereas Proposal 16 is 

more of a compromise. 

The Edge witness stated that since 

2010, total fluid milk sales have been 

steadily declining, adding more 

instability and difficulties hedging 

under the higher-of mover. The witness 

entered data showing how much more 

risk and costs were involved to hedge 

under the higher-of mover than the 

average-of mover. The witness 

concluded a person hedging with 

futures contracts under the higher-of 

mover would have significant 

difficulties, but hedging under the 

average-of mover meets effectiveness 

standards required for hedge 

accounting. 

Nine dairy farmer witnesses, located 

in Wisconsin, Minnesota, Iowa, and 

South Dakota, testified in support of 

Proposals 16 and 17. The dairy farmers 

opined Proposals 16 and 17 would 

decrease the frequency of negative PPDs 

and depooling and enhance their ability 

to manage price risk through hedging 

and other risk-management programs. 

One witness said using only the Class III 

skim price to set the Class I skim price 

is the best option because Class III milk 

futures carry more liquidity than Class 

IV and better represent Class I prices. 

The witnesses testified Proposal 16 

would help keep prices steady, 

benefitting both plants and customers. 

In its post-hearing brief, Edge objected 

to what it believes are goals of some 

proponents to maximize FMMO Class I 

handler obligations in order for the 

additional revenue to be used to offset 

the negative producer impact of 

increasing make allowances. Edge 

argued the Department should consider 

the following factors in its decision: 

there have not been any significant 

shortages in the supply of beverage milk 

to retail stores; Congress’ reason for 

changing to the average-of mover to 

facilitate risk management by fluid milk 

processors which fluid milk processors 

testified is still relevant; advanced 

pricing is outdated and no longer 

necessary to facilitate supply chain 

coordination but instead facilitates 

opportunistic depooling; a mover 

resulting in the highest fluid milk price 

when the Class IV price substantially 

exceeds Class III is not in the best 

interest of consumers; and a mover 


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resulting in the highest fluid milk price 

when the Class IV price substantially 

exceeds Class III is not in the best 

interest of all dairy farmers. Edge argued 

dairy farmers located where Class I 

utilization is low may be worse off 

under a higher-of mover than an 

average-of or Class III-based pricing as 

proposed by Edge. 

Edge reiterated Proposal 16 would 

facilitate risk management by fluid milk 

manufacturers and large commercial 

buyers, eliminate outdated advanced 

pricing and reduce the incidence and 

magnitude of opportunistic depooling, 

and best serve both producer and 

consumer interests. 

A witness representing the AFBF 

testified in support of Proposal 18. The 

witness said the AFBF believes orderly 

pooling is the key to orderly marketing, 

and this is best accomplished by the 

proper alignment of the four class 

prices. The witness claimed advanced 

Class I pricing leads to increased Class 

III component values, a common factor 

contributing to negative PPDs. The 

witness said advanced prices reflect 

market conditions that are 25 to 40 days 

older than final prices, which are 

announced after the close of the month. 

When a market rally occurs between the 

announcement of advanced and final 

prices, the witness said it leads to low 

or negative PPDs and creates incentives 

for handlers to depool milk. The witness 

stated depooling results in elevated 

component prices not being shared with 

the pool, further depressing the PPD and 

undermining the FMMO principle of 

uniform producer prices. The witness 

testified advanced pricing may also 

cause price inversions when 

manufacturing prices are rising rapidly, 

making it difficult for Class I handlers 

to attract adequate milk supplies. The 

witness entered data showing the effects 

of advanced pricing on class price 

alignment from May 2019 to May 2023 

under the current average-of, and under 

Proposals 13, 17, and 18. The witness 

said this data showed many months 

under the current average-of mover and 

Proposal 13 in which the manufacturing 

class prices exceeded the Class I price, 

testifying this created disorderly 

marketing conditions. On the other 

hand, according to the witness, the data 

showed elimination of advanced pricing 

under Proposals 17 and 18 resulted in 

more consistent alignment of class 

prices. 

The AFBF witness testified the 

frequency of published commodity data 

allows handlers to estimate price 

changes regardless of when prices are 

announced, and as more products are 

available on the CME or other 

exchanges, processors and 

manufacturers will have information 

needed to hedge and manage risk. The 

witness opined that the elimination of 

advanced pricing would allow for the 

introduction of Class III and IV spread 

options, providing an additional way to 

hedge Class I milk when both are used 

in combination. Three dairy farmers 

testified in support of Proposal 18, 

stating the proposal would reduce the 

incentive to depool brought on by low 

and negative PPDs. 

The AFBF witness also testified that 

while they support the elimination of 

advanced pricing, they oppose Proposal 

16 because it would delink Class I 

prices from Class IV prices, which they 

anticipate being higher than Class III in 

the future due to better export markets. 

The witness said tying the Class I price 

to only the Class III price could operate 

more like a ‘‘lower-of’’ formula. The 

witness stated the AFBF supports 

Proposal 17 because it is identical to 

Proposal 18 if combined with Proposal 

13. 

In its post-hearing brief, the AFBF 

reiterated its support for a return to the 

higher-of mover, which it argued would 

support class price alignment and 

substantially decrease negative PPDs 

and depooling. 

The AFBF reiterated its hearing 

testimony that volatility has and 

continues to increase, contributing to 

price inversions and rapidly changing 

markets, resulting in competitive 

inequalities among dairy farmers. The 

AFBF said the CME has indicated a 

willingness to provide contracts catering 

to industry demand, and the fact that 

the industry is used to advanced pricing 

should not be a driving reason for its 

retention. The AFBF argued disorderly 

marketing conditions are present when 

producers do not receive uniform prices 

because of frequent depooling, and its 

proposals lead to the realignment of 

class prices, which encourage consistent 

pooling and uniform pricing. 

An SMI witness, appearing on behalf 

of NMPF, testified in opposition to 

elimination of advanced pricing as 

contained in Proposals 16, 17, and 18. 

The witness said 90 percent of packaged 

fluid milk is highly perishable HTST 

milk which is processed, packaged, 

distributed, and sold in a relatively 

short period. The witness said these 

marketing characteristics require the 

price of the product to be known at the 

time of purchase, which advanced 

pricing of Class I milk provides. 

According to the witness, most HTST 

packaged fluid milk is priced monthly 

by fluid processors to their customers 

based on monthly FMMO Class I prices. 

This is materially different from cheese 

and butter products, the witness said, 

the prices of which are typically based 

on CME daily cash prices. According to 

the witness, advanced pricing enables 

retailers to set store milk prices at the 

beginning of a month, allowing the fluid 

processor to know the price the plant 

would receive for the packaged fluid 

milk prior to the raw milk being 

processed, packaged, and sold. 

The SMI witness also testified that if 

advanced pricing was eliminated, 

retailers would not know their fluid 

milk costs until the end of the month 

when FMMO Class I prices are 

announced. This would mean most 

fluid milk purchased by retailers would 

be sold during the month without 

knowing its minimum regulated price 

which, the witness said, from a retailer’s 

perspective is not orderly marketing. 

The witness claimed that if there were 

significant month-to-month increases in 

the Class I price, retailers could seek 

price relief from the processor, and 

ultimately, cooperative suppliers, 

opening the potential for fluid milk 

processors in the same marketing area to 

have inequitable raw milk costs and 

non-uniform payments to producers. In 

its post-hearing brief, NMPF reiterated 

its opposition to the elimination of 

advanced pricing. 

A witness representing IDFA opposed 

Proposals 16, 17 and 18. The witness 

objected to the elimination of advanced 

pricing as it would result in Class I 

handlers pricing milk products to their 

customer before knowing the minimum 

regulated milk price and impact a 

handler’s ability to hedge. In its posthearing brief, IDFA supported the 

feature of Proposal 16 that would create 

a predictable Class I price that could be 

hedged based off a hedged Class III price 

plus a known adjuster. However, IDFA 

maintained its opposition to the 

elimination of advanced pricing, 

arguing it is essential for non-hedging 

Class I handlers to know their milk cost 

before the start of the month. It is also 

an important part of planning for fluid 

milk retail customers to market milk, 

IDFA stated. IDFA noted in its brief that 

traditional fluid milk retail customers 

are not yet using hedging sufficiently to 

permit a regulatory change eliminating 

advanced pricing. IDFA reiterated their 

total opposition to Proposals 17 and 18 

in that they would return to a higher-of 

mover and, according to the brief, 

eliminate any practical ability to hedge. 

A MIG witness testified in opposition 

to eliminating advanced pricing. The 

witness said the industry is not yet 

using hedging sufficiently to permit this 

regulatory change, as advanced pricing 

remains critical for the dominant share 

of the fluid market as retailers expect to 

know the price in advance. The witness 


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also opposed Proposal 16, which would 

price Class I milk solely off the Class III 

price. The witness said the proposal 

would delink the fluid milk supply and 

demand from Class IV which MIG 

believes is critical for balancing. The 

witness opposed Proposals 17 and 18 as 

they limit risk-management 

opportunities for Class I processors. In 

its post-hearing brief, MIG reiterated its 

opposition to any proposal (Proposals 

16, 17, and 18) seeking to eliminate 

advanced pricing, which MIG claimed is 

critical to Class I processors. MIG 

further argued that eliminating 

advanced pricing would negatively 

impact those market segments. With 

respect to Proposal 16, MIG expressed 

concern with pricing Class I milk solely 

off Class III prices as it would be a 

significant departure from the current 

practice and completely divorce fluid 

milk supply and demand from the Class 

IV market. According to MIG, the record 

contains testimony from cooperatives 

that Class IV remains the ultimate 

balancing utilization. 

In testimony and in its post-hearing 

brief, MIG opposed a return to the 

higher-of mover under Proposals 13, 17, 

and 18 as it would severely limit riskmanagement opportunities. MIG argued 

in its brief that a return to the higherof is unnecessary and not supported by 

the facts as the industry has 

acknowledged the higher-of does not 

work. Dairy farmers’ concerns are not 

about the average-of, MIG asserted, but 

rather the fixed $0.74 addition. USDA 

should support moving the industry 

forward, not revert to an outdated policy 

because it is familiar, MIG stated. 

MIG argued NMPF introduced no 

evidence the average-of mover hinders a 

sufficient supply of milk for fluid uses. 

Rather, MIG wrote, a return to the 

higher-of mover would result in 

disorderly marketing as larger spreads 

between Classes III and IV would lead 

to higher prices under the higher-of 

mover and raise the uniform price, 

incentivizing the lower-priced 

manufacturing milk to remain pooled. 

In that situation, MIG argued, FMMOs 

should not be raising the uniform price 

paid out to the lower-priced 

manufacturing class, thus, encouraging 

it to remain pooled. This compensation, 

argued MIG, overvalues the lowerpriced manufacturing milk in the 

marketplace and incentivizes milk to 

move to the lower manufacturing class 

instead of to a higher performing class. 

According to MIG, the average-of mover 

would better move milk between the 

manufacturing classes as the market 

needs. MIG argued the FMMOs are 

designed to ensure processors have 

sufficient milk supplies for fluid use, 

but FMMOs should not be drawing milk 

away from Class III or IV when a 

manufacturing use would be the highest 

and best value for the milk. According 

to MIG, Class I does not need more milk, 

and FMMOs should not be disrupting 

the market to pull milk for fluid 

utilization. MIG argued in its brief that 

revenue neutrality is not a valid policy 

consideration without evidence to 

establish revenue neutrality is necessary 

to ensure a sufficient supply of fluid 

milk. 

A witness representing Lamers 

testified in opposition to the elimination 

of advanced pricing in Proposals 16, 17, 

and 18. The witness stated Class I 

handlers need to know prices in 

advance so they can set wholesale 

pricing with their retail customers. 

In its post-hearing brief, Select 

opposed the elimination of advanced 

pricing set forth in Proposals 17 and 18, 

arguing that testimony at the hearing 

made clear that the majority of 

producers prefer using the higher-of, 

and the majority of handlers prefer to 

maintain advanced pricing which Select 

believes is in the best interest of 

stability in the Class I market. 

Class I and Class II Differentials 

Numerous witnesses appeared on 

behalf of NMPF testifying in support of 

increasing the Class I differentials as 

provided for in Proposal 19. Witness 

testimony centered around the themes 

of increased hauling costs, changes in 

milk supply and demand locations, 

changes in supply patterns resulting in 

longer hauls, and insufficient over-order 

premiums to cover the full cost of 

servicing the Class I market. The 

witnesses said the outdated 

assumptions embedded in the current 

Class I differentials threaten the 

willingness of milk suppliers to serve 

the Class I market. 

An NMPF witness argued current 

differentials are antiquated, since, other 

than the three southeast FMMOs, they 

have not been updated in almost 25 

years. In that time, they said, fuel costs 

and hauling distances have increased 

due to changes in supply and demand 

locations. The witness stressed overorder premiums should not be 

considered an effective substitute for 

FMMO prices because they are very 

difficult to obtain and maintain at levels 

adequate to cover the cost of servicing 

the Class I market. The witness argued 

inadequate Class I differentials 

contribute to price inversions and 

incentives to depool, which further 

jeopardize the availability of milk to 

meet Class I demand. 

The NMPF witness described the 

methodology used to arrive at the 

proposed differential levels. According 

to the witness, NMPF requested an 

update of the U.S. Dairy Sector 

Simulator Model (USDSS) which was 

used during Order Reform as a basis for 

the differential levels adopted on 

January 1, 2000. 

The USDSS model owners testified on 

the methodology, the updated data and 

parameters, and explained the results. 

They explained the USDSS model 

evaluates the geographic value of milk 

at fluid milk processing plants across 

the U.S. by finding the lowest cost 

solution of assembling milk at farms and 

delivering it to plants. They said the 

model accounts for approximately 90 

percent of the U.S. dairy processing and 

manufacturing plant capacity, and 

considers such factors as milk supply 

locations, transportation costs (both 

variable and fixed) associated with raw 

milk assembly, final and intermediate 

product distribution, per capita demand 

by county population, and road weight 

limits. In the model, plant capacity, 

products produced, and milk 

components demanded at each plant are 

constrained by a variety of government 

and private sources. The resulting 

values, said the witnesses, represent the 

value of an additional load of milk at a 

specific plant location (otherwise 

known as the ‘‘marginal value’’). 

The witnesses said two sets of USDSS 

model results were provided to NMPF, 

May and October 2021, to provide 

marginal values for both flush and 

deficit months. According to the 

witnesses, the results suggest 

considerable differences between the 

values of milk at fluid plants derived 

from spatial economic modeling and 

current Class I differential values, with 

differences as large as $3.00 per cwt in 

some locations. The witnesses attributed 

these differences to changes in the 

location of milk production, the 

composition of dairy product demand, 

changes in the location of dairy product 

demand from regional population shifts, 

and the cost of transportation. Both 

witnesses discussed how modeling, 

even though complex, is a 

simplification of reality and that there 

may be unaccounted factors in some 

areas that would justify deviations from 

the model results, including local traffic 

congestion, geography, infrastructure 

restrictions, and price alignment across 

orders. The witnesses said the model 

does not account for other factors, such 

as existing business relationships and 

FMMO regulations, because they could 

cause a departure from a market 

efficient solution. Lastly, the witnesses 

noted the USDSS model does not 

produce a base differential value; it 

merely provides the additional value 


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needed to move milk to a particular 

location. 

While NMPF cooperative member 

witnesses testified on how they used the 

USDSS model results to arrive at the 

proposed differentials, NMPF witnesses 

stated they followed the same iterative 

process applied during Order Reform, 

starting with the model results and 

adjusting for milk movements, plant 

locations and historic price 

relationships. 

One witness explained that NMPF 

started with a base differential 

assumption of $1.60 per cwt, as 

currently contained in the Class I 

differentials. The witness said the costs 

embedded in the base differential 

(Grade A maintenance, balancing, and a 

competitive factor) are still applicable 

and those costs have not decreased over 

the past 25 years. The witness said the 

base differential should also serve to 

limit class price inversions, incentivize 

Class I milk deliveries, and ensure class 

price alignment. To accomplish these 

goals, the witness said that in some 

parts of the country the base differential 

is recommended to increase to $2.20 per 

cwt. 

One NMPF witness testified regarding 

the cost to dairy farmers to maintain 

Grade A status. The witness said that in 

order to participate in the FMMO 

program, dairy farmers incur costs 

associated with obtaining and 

maintaining Grade A licenses. The 

witness was of the opinion partial cost 

reimbursement for maintaining a Grade 

A license, which currently represent 

$0.40 per cwt in the base differential, 

should continue to be provided. The 

witness detailed standards for 

maintaining Grade A status, which 

include various infrastructure 

maintenance and sanitation 

requirements, and estimated a total 

current cost of $1.30 per cwt to meet 

those requirements. 

A series of NMPF witnesses testified 

on the regional considerations factored 

into the proposed Class I differentials 

contained in Proposal 19. During their 

testimony they also touched on 

balancing costs faced by NMPF 

cooperative members and the continued 

need to include a competitive factor in 

the base differential. One witness 

described how the average of the May 

and October 2021 results was used as a 

starting point. From there, NMPF 

formed regional committees to evaluate 

the USDSS model’s average results and 

use their local market knowledge to 

derive the final proposed differential 

values. According to the witness, a 

series of 19 anchor cities were selected 

for their proximity near the border of 

where two regions abutted. The regional 

committees used these anchor cities as 

common starting points to design a final 

Class I differential surface that ensured 

price alignment between orders. Each 

committee looked at current price 

relationships between plant locations 

and consumer demand areas, compared 

those to the USDSS model’s averages, 

and designed a Class I differential 

structure that accounted for factors 

NMPF members thought were not 

adequately addressed in the model’s 

results. 

Northeast 

A DFA witness testifying on behalf of 

NMPF discussed the changes in the 

northeast marketing area, including 

increased hauling costs, changes in the 

milk production and location of farm 

and fluid processing plants, and an 

overall increase in production costs. 

The witness said milk production in 11 

of the 12 northeast states declined from 

2000 to 2022, except for New York 

which saw a 31.4 percent increase, 

resulting in a small overall increase in 

the region’s milk production of 2.2 

percent. During this time, the witness 

said the resident population increased 

by 9.1 percent. The witness noted the 

geographic shift in where milk is 

processed due to the closure of fluid 

plants in urban areas since 2000. The 

witness surmised local milk supplies in 

the northeast are used to meet 

increasing Class II and Class III needs, 

necessitating milk to travel farther 

distances to meet fluid demand. The 

witness estimated transportation costs 

paid by producers in the region have 

increased $0.70 per cwt. 

An Agri-Mark witness also testified 

regarding the changing marketing 

conditions in the northeast region and 

described some of the proposed 

differential differences from the USDSS 

model. The witness opined that if the 

USDSS model’s averages were adopted 

for Maine, it would incentivize 

producers in Maine to supply 

Massachusetts, instead of remaining 

available to meet local demand. 

Therefore, the witness said NMPF 

proposed to flatten the differentials in 

Maine to maintain current competitive 

relationships. NMPF also proposed 

lower differentials in northern Vermont 

and New York in order to incentivize 

milk movements south and east. The 

witness said these changes from the 

USDSS model’s average results are 

needed to preserve current milk 

movements and to maintain competitive 

relationships. 

Mid-Atlantic 

An MDVA witness representing 

NMPF testified regarding the proposed 

differentials in the Mid-Atlantic region. 

The witness said MDVA operates two 

balancing plants in the region that help 

balance the market’s reserves in both the 

Northeast and Appalachian FMMOs. 

According to the witness, there are large 

seasonal swings in milk delivered to 

those balancing plants, which result in 

significant costs to the cooperative and 

its members. The witness was of the 

opinion the base Class I differential 

should provide some balancing cost 

reimbursement to its members through 

its distribution through the marketwide 

pool. Transportation costs have also 

increased significantly, the witness said, 

to a point where Class I differentials are 

less effective in attracting milk from 

reserve supply areas to Class I plants. In 

order to meet fluid demand, the witness 

said cooperative members must pay for 

the additional cost through milk check 

deductions without any additional 

compensation through the Class I 

differential. 

The MDVA witness compared current 

and USDSS model average values for 

multiple plant locations in the region. 

According to the witness, the regional 

committee focused on the need to cover 

additional transportation costs of 

servicing the fluid market and 

maintaining current price relationships 

as principles when determining 

deviations from the USDSS model’s 

average results. One example cited two 

plants in Landover, Maryland and 

Frederick, Maryland, located 

approximately 55 miles apart with a 

current difference in differential values 

of $0.10. The witness said the USDSS 

model’s average values would have 

resulted in a $0.35 difference and 

created an artificial regulated cost 

advantage for the lower zoned plant in 

Frederick, Maryland. Another example 

was in the southeastern region where 

two Virginia plants located 15 miles 

apart and currently in the same 

differential zone would have seen a 

$0.10 differential difference under the 

USDSS model’s average scenario. In this 

case, said the witness, the committee 

decided to propose the same differential 

value for the two plants in order to 

preserve their competitive relationship. 

Southeast 

A DFA witness representing NMPF 

testified on the proposed differentials in 

the southeast region. Similar to other 

witnesses, their testimony centered on 

the decline in dairy farmers and the 

closure of fluid processing plants which 

necessitate longer milk hauls at a greater 

expense to dairy farmers, particularly 

cooperative members. The witness 

spoke to the unique marketing 

conditions in the southeast region, with 


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a growing population, local fluid 

demand, and a significant milk supply 

deficit requiring supplemental milk 

supplies to be acquired from outside the 

region. The witness said the 

supplemental milk supplies are 

obtained at great expense to DFA 

cooperative members. The witness 

stated it is typical for supplemental 

loads to travel between 500–650 miles 

or more, and while the transportation 

credits in the Southeast FMMO provide 

partial reimbursement, the fund is 

inadequate to cover the full cost. The 

witness said the proposed differentials 

contained in Proposal 19 would assist in 

covering transportation costs and 

support dairy farmers who supply the 

region. 

Florida 

An SMI witness representing NMPF 

testified on the proposed differential for 

the Florida FMMO. The witness said 

there is an inadequate milk supply 

available in Florida to meet its Class I 

needs, necessitating significant volumes 

of milk deliveries from outside the 

marketing area from Georgia, for 

example. According to the witness, 

Florida milk production is quickly 

shrinking, declining more than 10.9 

percent in 2022, and necessitating more 

than 24 percent of its milk needs to 

come from other states. 

The witness discussed Florida’s 

significant population increase and high 

Class I utilization, which has averaged 

greater than 82 percent since 2000. The 

witness described significant seasonal 

swings in fluid milk needs and SMI’s 

efforts to balance those needs through 

purchasing additional milk tankers, 

marketing milk to non-pool plants at 

below FMMO values when needed and 

buying supplemental loads at above 

FMMO values during other times of the 

year. The witness said weather and the 

seasonal population influxes also 

complicate the region’s milk balancing 

efforts. These dynamics make supplying 

the Florida region particularly 

expensive, estimating that SMI 

balancing costs for the first half of 2023 

were $1.33 per cwt. 

The SMI witness testified the 

proposed Florida differentials maintain 

the historical differential slope while 

more adequately reimbursing for 

transportation costs, which the witness 

estimated has more than doubled in the 

past 20 years, from $2.31 in 2002 to 

$5.98 in May 2023. The witness said the 

Florida differentials contained in 

Proposal 19 are similar to the averages 

of the May and October 2021 USDSS 

model results but were adjusted to 

preserve current competitive 

relationships. As a result, the witness 

concluded the region would be assured 

an adequate supply of milk for fluid use 

and fluid milk buyers would be better 

assured of equal raw product costs. 

The SMI witness was of the opinion 

the differentials should not be adjusted 

to reflect recently enacted Distributing 

Plant Delivery Credits in the Florida 

FMMO, as both are needed to ensure 

adequate supplies of fluid milk for the 

region. 

Southeast/Southwest 

A Lone Star witness representing 

NMPF testified regarding the 

differentials between the southwest and 

southeast regions. The witness said the 

eastern portion of the Southwest FMMO 

and the three southeastern FMMOs are 

milk deficit regions. The witness 

emphasized the differential 

recommendations are designed to 

provide proper financial incentives 

through a steeper differential slope to 

move milk into and within those 

regions. The witness said other factors 

considered included keeping current 

city-to-city price relationships as well as 

competitive relationships between 

plants often clustered around 

metropolitan areas. While differentials 

in some areas were increased relative to 

the USDSS model’s average to reflect 

NMPF member knowledge of milk 

movements and related transportation 

costs in the region, other differentials 

were lowered. The witness noted NMPF 

members believe the model 

overestimated balancing costs for parts 

of Virginia and the Carolinas, and 

subsequently is proposing muted 

differential increases for those regions. 

Regarding Florida, the witness said 

the NMPF members accepted the 

USDSS model average output of $7.90 

as the differential for Miami, Florida. 

They then worked up through the state 

with a priority of maintaining 

competitive relationships between 

plants. The only deviation the witness 

noted was Myakka City, Florida, whose 

current differential is $0.40 higher than 

plants in the Tampa-Orlando corridor. 

The witness was of the opinion the 

spread was too large, and, consequently, 

Proposal 19 recommended the spread be 

reduced to $0.20. 

In the southwest region, the Lone Star 

witness said, milk must move 

significant distances from the supply 

region in the Texas panhandle and 

eastern New Mexico to the demand 

centers in east Texas. The witness said 

milk routinely travels anywhere from 

400–650 miles to service the fluid needs 

of the state and stressed the current 

differentials in the region are inadequate 

in covering transportation costs for 

these routine milk movements. 

Consequently, Proposal 19 generally 

contained higher proposed differentials 

than the USDSS model average, with 

greater increases moving northwest to 

southeast to incentivize milk to move 

where needed. The witness added there 

is a single differential level proposed for 

New Mexico, reflecting what the 

witness described as primarily a captive 

in-state market for milk. 

Mideast 

A DFA witness representing NMPF 

testified in detail on hauling assembly 

costs associated with the Mideast 

marketing area. The witness described 

the region’s principal supply areas as 

central and northeast Michigan, 

northern Indiana and northwestern 

Ohio, and fluid demand areas centering 

around the region’s large cities of 

Detroit, Grand Rapids, Indianapolis, 

Columbus, and Pittsburgh. The fluid 

plants compete for a milk supply with 

the numerous small to medium-sized 

cheese plants in northeast Ohio, two 

large cheese plants in central and 

western Michigan and one large cheese 

plant in western Pennsylvania, 

explained the witness. 

The DFA witness testified the Mideast 

region has increased milk production 20 

percent over the last 23 years, while 

simultaneously seeing a 66 percent 

reduction in dairy farms. The region’s 

Class I utilization was 37 percent in 

2022, supplied by approximately 33 

distributing plants, down from 57 in 

2000. The consolidation in both the 

supply and demand sectors, increased 

hauling distances to fluid plants, along 

with a robust manufacturing sector, has 

created challenges in encouraging milk 

to meet fluid demand. 

The DFA witness estimated that Ohio 

assembly and delivery costs have 

increased approximately 69 percent 

from 2006 to 2023, attributing most of 

the increase to fuel, labor and 

equipment costs. The witness said 

current differentials do not provide 

enough financial incentive to move milk 

from supply regions to Class I plants. As 

a result, said the witness, the cost of 

supplying fluid milk needs is largely 

borne by cooperatives and their 

members. 

For the Mideast area, the DFA witness 

said the committee concentrated on a 

select group of larger cities in the region 

to analyze the relative value differences. 

The overall objective was to determine 

the value needed to encourage milk to 

move from milk supply areas in the 

north and west to areas of demand. The 

committee started with Chicago, Illinois, 

and determined that even though no 

fluid plants operated in the Chicago 

region, its differential should align with 


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prices of locations that supply packaged 

milk, which are Grand Rapids, 

Michigan, Cedarburg Wisconsin, 

Rockford, Illinois, and Dubuque, Iowa. 

The committee ultimately determined a 

$3.10 differential appropriate for 

Chicago (Cook County). From there, the 

witness reviewed a series of city pairs 

and provided justification for why the 

proposed differentials were adjusted 

from the USDSS model average. Reasons 

given for the changes centered on 

distance from larger population centers 

and/or milk supply areas and providing 

enough financial incentive, in the 

committee’s opinion, to encourage milk 

to move where needed. The witness 

mentioned another consideration was 

the willingness of milk haulers to 

deliver, referring to resistance of milk 

haulers to make the long hauls needed 

to deliver milk to central Ohio, for 

example. 

The DFA witness also detailed 

considerations for proposed differentials 

in western Pennsylvania, centering 

around plants in the Pittsburgh area, 

and plants in southwest Ohio and 

eastern Indiana. They said differentials 

were adjusted in those areas to account 

for what the committee believed were 

current competitive relationships. The 

witness said that, ultimately, the 

committee recommended more slope 

than the USDSS model by reducing the 

differential increases in the milk surplus 

areas of Michigan and increasing the 

slope when moving to the south and 

east. 

Another DFA witness spoke to 

increased hauling costs in the Mideast 

area. The witness said that as the 

number of dairy farms in the area has 

declined, so has the number of available 

milk haulers. Compounding the issue is 

competition with other industries who 

also rely on commercial haulers. As a 

result, milk hauling rates have increased 

as the fewer number of milk haulers 

must travel farther distances to assemble 

and deliver milk loads. The witness 

presented data on various factors that 

contribute to overall transportation 

costs, such as wages, diesel fuel prices, 

and equipment purchase costs. 

A witness from the Michigan Milk 

Producers Association (MMPA) testified 

on the unique Michigan marketing 

conditions that resulted in deviations 

from the USDSS model output. The 

witness said Michigan has experienced 

significant milk production growth, 

accounting for 68 percent of the region’s 

growth. Michigan milk production 

serves as a reserve supply for states 

south and east, which are considerably 

longer routes than when the 

differentials were adopted in 2000, said 

the witness. They testified current 

differentials are no longer adequate to 

cover current transportation costs and 

highlighted how the large flat 

differential zone in Michigan, covering 

525 miles, makes it difficult to 

encourage milk to travel farther 

distances to supply fluid demand 

instead of satisfying local manufacturing 

plant demand. Therefore, NMPF 

proposed more, smaller pricing zones 

within the state to better reflect the cost 

to move milk. The witness estimated 

MMPA’s hauling cost for transporting 

milk from mid-Michigan to eastern 

Ohio, approximately 287 miles, was 

$1.06 per cwt per 100 miles. 

The MMPA witness testified that is 

has been more difficult to obtain overorder premiums to cover increased costs 

because national retailers with more 

bargaining power have replaced local 

independent stores. Consequently, the 

witness said, national retailers with a 

wider geographic footprint and higher 

milk volume needs have put downward 

pressure on premiums. The witness 

concluded that increasing Class I 

differentials to better reflect the cost of 

supplying the fluid market would be 

more equitable than an increasing 

reliance on a dairy farmer’s ability to 

negotiate over-order premiums in a 

magnitude large enough to fully cover 

costs. 

Upper Midwest 

A Prairie Farms witness representing 

NMPF discussed the proposed 

Minnesota and Wisconsin differentials. 

The witness said the USDSS model 

results had too much slope between the 

states that would have created too much 

financial incentive to move milk out of 

Minnesota, creating difficulties for 

Minnesota plants to compete for a milk 

supply. Consequently, the witness said 

NMPF is proposing fewer differential 

zones in the Upper Midwest FMMO 

region to ensure a local supply could be 

maintained. Further, in that region, 

NMPF was cognizant to propose 

differential levels that would minimize 

negative impacts on producer blend 

prices. This witness opined the 

differentials contained in Proposal 19 

would not fully cover the cost of moving 

milk the long distances required to 

service the fluid market in regions 

where they operate. However, they said, 

the proposed differentials would 

encourage the availability of adequate 

milk supplies to support milk demand 

in distant markets. 

Central 

The Prairie Farms witness also 

testified on the proposed Class I 

differentials in the Illinois, Iowa, 

Missouri, and Nebraska areas. The 

witness said that in the last 20 years the 

cooperative has become more 

dependent on supplemental milk 

supplies to serve markets in Illinois and 

Missouri, while Iowa has lost milk 

processing capacity in the eastern half 

of the state due to plant closures. In 

addition, the decline of milk production 

in southeast Iowa has made it more 

difficult for Prairie Farms to supply 

milk into the Appalachian and 

Southeast FMMOs to meets its 

supplemental milk needs. All these 

factors have contributed to changes in 

the region’s milk movements and 

increased producer hauling costs, 

stressed the witness. The witness 

reviewed several equidistant Prairie 

Farms hauling routes and highlighted 

the disparity in differential gains. For 

example, some routes traveling 

approximately 300 miles may see a 

differential gain of $0.90, while other 

routes traveling a similar distance may 

only see a gain of $0.25. The witness 

stated the region’s differentials need to 

be adjusted to remove some of the 

disparity and provide adequate financial 

incentive to supply fluid plants located 

in the south and east. The Prairie Farms 

witness said their cost to move milk to 

its four southern and southeastern fluid 

plants was approximately $5.25 to $5.50 

per loaded mile, and costs to supply 

plants in central Illinois was similar. 

A DFA witness also testified to 

differentials proposed for the Central 

FMMO region. The witness echoed 

other testimony regarding decreased 

farm numbers, longer distances traveled, 

and increased hauling expenses. The 

witness estimated DFA hauling costs in 

the region have increased 151 percent 

from 2005 to 2022. The witness spoke 

to the proposed differential increases in 

the region and explained that Proposal 

19 would increase the current 

differential values by $1.35 in Kansas 

City, $1.15 in Omaha and $1.65 in 

Wichita. The witness elaborated that the 

higher increase in Wichita reflects the 

area’s lack of an adequate local milk 

supply. More specifically, the witness 

stated that only 27 percent of Wichita’s 

demand is delivered from within a 150- 

mile radius, while in Kansas City and 

Omaha, 47 percent and 55 percent, 

respectively, comes from within 150 

miles. 

Numerous NMPF witnesses testified 

about the proposed Colorado 

differentials. One DFA witness testified 

the USDSS model overestimated the 

amount of milk in Colorado available to 

meet the State’s fluid needs because of 

private contractual relationships with 

manufacturing plants. Consequently, 

NMPF recommends deviations from the 

model to recognize current competitive 


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relationships, said the witness. The 

witness also discussed population, milk 

production, and fluid demand 

similarities between Denver and other 

regional cities to justify increasing the 

Denver area differentials to more closely 

align with differentials in those cities. 

The witness said adoption of the USDSS 

model output for Colorado, without 

adjustments, when combined with other 

changes that could result from this 

rulemaking would result in significant, 

unsustainable decreases in producer pay 

prices and, thus, blend price equity 

must be considered when making 

differential adjustments. 

Other DFA witnesses spoke in more 

detail on the potential producer price 

impact on Colorado dairy farmers. The 

witnesses testified hauling and feed 

costs in Colorado are higher than other 

parts of the region, which they believe 

were not properly accounted for in the 

USDSS model. One witness said 

producer prices in Colorado currently 

exceed those of the FMMO’s base zone, 

however, if the USDSS model average 

were adopted, it would result in 

producer blend prices lower than prices 

announced at the base zone, causing 

significant financial harm to Colorado 

dairy farmers. 

Arizona 

A United Dairymen of Arizona (UDA) 

witness representing NMPF testified in 

support of Proposal 19. UDA is a dairy 

farmer-owned cooperative association, 

with 36 cooperative members and a 

manufacturing plant located in Arizona. 

The witness cited many factors, such as 

weather, climate, transportation, fuel, 

and increased costs of producing Grade 

A milk as challenges for Arizona dairy 

farmers. The witness stressed the costs 

of maintaining Grade A status in the 

state exceeded $2.35 per cwt. According 

to the UDA witness, the proposed 

Arizona Class I differentials: generally 

follow the USDSS model, with 

deviations made to reflect local market 

conditions; maintain current price 

relationships between handlers within 

Arizona and the surrounding states; and 

establish a smooth differential transition 

from surrounding areas. 

The witness noted UDA operates a 

plant in Tempe, Arizona, that serves as 

a balancing plant for the market. The 

witness said the cost of operating the 

plant does increase in the summer 

months as less milk volume is run 

through the plant when milk supplies 

are lower. 

California 

A CDI witness testified on the process 

for determining the proposed California 

differentials. The witness said the goal 

of the California differentials was to 

recognize regional cost drivers and local 

market conditions unique to servicing 

California urban areas, and to maintain 

price relationships with surrounding 

states. In the witness’ opinion, the 

USDSS model did not account for the 

impact on producer prices, which could 

alter pool stability and incentives to 

supply the Class I market, and regionspecific cost drivers such as geography 

or traffic. Those considerations form the 

basis for the deviations from the USDSS 

model output NMPF proposed. 

The CDI witness provided an 

overview of the similarities between the 

California Central Valley and Upper 

Midwest milksheds to justify the 

position that the lowest differential in 

both regions should remain similar. For 

that reason, said the witness, NMPF 

proposes a minimum differential zone 

of $2.50 in California, which is similar 

to the lowest Upper Midwest FMMO 

differential zone of $2.55. The witness 

also discussed dwindling milk supplies, 

increased population, pervasive traffic 

congestion, and the closure of 

manufacturing plants in southern 

California as reasons for making offmodel adjustments. The witness 

described changes made in three 

California regions (Central Valley, Bay 

Area, and Southern California) to 

provide incentives for dairy farmers to 

serve the Class I market in urban areas. 

A DFA witness also testified on the 

proposed Class I differentials for 

California and northern Nevada. The 

witness advocated the maintenance of 

competitive equity between Class I and 

manufacturing plants in northern 

Nevada and California counties. The 

witness was of the opinion the USDSS 

model fell short in adequately capturing 

the cost of producing milk in California. 

The witness said the current $0.10 

difference in zones is not sufficient as 

it does not reflect the actual movements 

of milk or unique California State 

regulations, taxes, geography, and high 

milk production costs. The witness 

stated the current differentials do not 

cover the hauling costs in a state with 

high gas prices, heavy traffic, and road 

weight limits. The witness supported 

testimony from the CDI witness 

justifying the proposed California 

differentials. The DFA witness also 

expressed northern Nevada counties 

have a historic competitive relationship 

with northern California, which should 

be preserved. The witness noted that 

Proposal 19 recognizes this dynamic by 

proposing a $2.90 differential for the 

region. 

Pacific Northwest 

A witness representing Northwest 

Dairy Association (NDA) testified on 

behalf of NMPF regarding the proposed 

differentials in the Pacific Northwest 

region, which includes the States of 

Washington, Oregon, Idaho and 

Montana. NDA is a dairy farmer-owned 

cooperative that markets the milk of 

approximately 295 dairy farmers in 

Washington, Oregon, Idaho, and 

Montana, and conducts all processing 

and marketing operations through the 

wholly owned subsidiary Darigold. The 

witness described regional 

competitiveness at the farm level, 

ensuring incentives to supply Class I 

markets, and geographic and 

population-influenced cost factors were 

the primary reasons the proposed 

differentials deviate from the USDSS 

model’s averages. The witness was of 

the opinion proposed differentials in the 

Pacific Northwest FMMO urban areas 

should mirror those of the Central 

FMMO, as the urban areas of the two 

regions operate similarly. To ensure 

competitive equity and the balancing 

needs of distinct areas within the 

region, the witness said Proposal 19 

recommended fewer pricing zones than 

produced by the USDSS model. 

The NDA witness also described 

market changes similar to those of other 

witnesses: declining milk production, 

increased population, longer haul 

distances, and increased transportation 

costs. The witness estimated NDA 

transportation costs for servicing Pacific 

Northwest Class I plants has increased 

$1.10 per cwt in the last 15 years. 

Regarding the unregulated areas of the 

northwest, the witness used King 

County, Washington, as the base at 

$3.00 per cwt, and kept the zones the 

same as they currently exist. In counties 

with little to no milk production, the 

differential was reduced to as low as 

$2.20 in Idaho. For areas with higher 

milk production, the differentials were 

proposed at $2.55, reflecting the same 

level of differentials in South Dakota. 

In its post-hearing brief, NMPF 

emphasized adoption of Proposal 19 

was necessary to ensure Class I 

differentials would be more reflective of 

the current costs of supplying the Class 

I market. NMPF maintained that the 

proposal would result in Class I 

differentials below actual costs, keeping 

with the FMMO principle of minimum 

pricing. NMPF reiterated testimony 

given at the hearing regarding the 

continued relevancy of the costs 

associated with the base differential and 

stressed that costs have increased since 

it was first adopted in 2000. NMPF 

reviewed its own testimony at the 


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hearing on what it believed were the 

appropriate regional considerations 

used to propose deviations from the 

USDSS model results. According to 

NMPF, adoption of Proposal 19 would 

only raise the regulated cost of Class I 

milk under FMMOs by slightly less than 

8 percent. 

NMPF reiterated the importance of 

Class I prices remaining the highest 

priced class to ensure producers move 

surplus milk to deficit regions to meet 

Class I demand. Without such pricing 

hierarchy, NMPF stated, milk in the 

higher-valued use class would not be 

pooled and it would result in nonuniform prices to producers. 

A witness representing the AFBF 

testified in support of Proposal 19. The 

witness concurred with NMPF 

testimony on the increased costs of 

servicing the market since the 

differentials were adopted in 2000. In 

offering support for the differential 

adjustments, the witness said the 

purpose of the USDSS model was to 

mimic an ideal market solution, so it 

would be expected that actual market 

costs are higher. The witness mentioned 

that given the seasonality of milk 

demand, it could be considered more 

appropriate to start with the USDSS 

model’s October 2021 results, rather 

than the average of May and October. In 

its post-hearing brief, the AFBF stressed 

that regulated Class I differentials 

provide for long-term stability; 

something that cannot be assured if a 

larger portion of milk prices is 

negotiated through over-order 

premiums. 

A witness representing IDFA testified 

in opposition to Proposal 19. The 

witness was of the opinion NMPF did 

not use a consistent methodology when 

determining differential level 

adjustments from the USDSS model 

results. Additionally, stressed the 

witness, some of the factors NMPF 

considered were not relevant and/or 

were unevenly applied (dairy farm 

production costs, private business 

relationships, blend price impacts, and 

regional dairy farm competitiveness), or 

were already factored into the USDSS 

model (transportation costs and 

maintaining handler equity). The 

witness was of the opinion that if milk 

suppliers and cooperatives experienced 

transportation costs higher than those 

provided for in the differentials, the 

additional cost reimbursement should 

be negotiated through over-order 

premiums with milk buyers. The 

witness also took issue with what they 

deemed an undefined base differential, 

proposed at $1.60 in some areas and 

$2.20 in other areas, because they 

opined, there was no cost justification 

for the difference. 

The IDFA witness argued the purpose 

of Class I differentials is to bring forth 

an adequate supply of milk for fluid use. 

According to the witness, with an 

FMMO Class I utilization of 27 percent, 

the current milk supply is more than 

adequate to serve Class I needs and 

there is no justification for increasing 

Class I differentials. The IDFA witness 

cited a recent retail milk demand study 

that found milk demand is elastic and, 

thus, the quantity demanded is sensitive 

to price changes. The witness argued 

any increase in price would not only 

hurt Class I sales, but also increase 

government purchase costs for milk 

used in nutrition and feeding programs. 

The witness stressed retail fluid milk 

sales are declining and USDA should 

not hasten the decline by increasing 

Class I prices. The witness also added 

that eliminating or reducing the 

depooling of milk should not be a 

consideration when evaluating Class I 

differential levels. The witness said 

depooling is a necessary tool for 

manufacturing handlers when the Class 

III or Class IV price exceeds the blend 

price. They estimated that in some 

FMMO areas the Class I differential 

would have to increase to $41.32 per 

cwt in order to disincentivize 

depooling. 

The IDFA witness was of the opinion 

that if USDA recommends differential 

increases, they should not be increased 

in the three southeastern FMMOs as 

those provisions already require fluid 

milk handlers to pay transportation 

credits and distributing plant delivery 

credit assessments to encourage 

producers to service Class I demand in 

those deficit markets. The witness 

estimated those assessments already 

account for approximately 42 to 46 

percent of the differential increases 

contained in Proposal 19. 

The IDFA witness also argued the 

$0.40 portion of the base differential 

attributed to maintaining Grade A status 

is no longer relevant given over 99 

percent of all milk currently produced 

is Grade A. Consequently, said the 

witness, there is no longer a need to 

incentivize farms to become Grade A in 

order to service the Class I market and 

the base differential should be lowered 

to $1.20 per cwt. 

Two witnesses representing IDFA, 

Saputo and Plains Dairy, testified in 

opposition to Proposal 19 and offered 

support for the arguments put forth by 

the IDFA witness. The Saputo witness 

said increasing fluid milk prices may 

reduce the retail price spread between 

fluid milk and plant-based products, 

further depress fluid milk sales, and 

ultimately force fluid plants to switch 

from HTST to ESL processing. The 

witness speculated a further decline in 

HTST facilities will force cultured 

products to be made elsewhere and 

increase costs to consumers. In regard to 

obtaining milk supplies, the witness 

said Saputo pays over-order premiums 

when necessary. The witness also 

opposed any increases in minimum 

regulated prices on the grounds that 

nonuniform increases would put some 

of its plants at a cost disadvantage. The 

Plains Dairy witness stated the increase 

from the model average results would 

impact consumer prices by $0.07 per 

gallon. Plains Dairy is a fluid milk 

processing facility in Texas. 

A witness representing MIG also 

testified in opposition to Proposal 19 for 

many of the same reasons articulated by 

the IDFA witness. The MIG witness said 

NMPF failed to cost-justify any elements 

of the base differential, either at the 

$1.60 or $2.20 level, to support why it 

should be maintained. In echoing 

IDFA’s arguments, the MIG witness also 

objected to NMPF’s use of the USDSS 

model’s averages as a starting point. As 

the FMMO system provides for 

minimum prices, the witness was of the 

opinion any evaluation of differential 

changes should start with the USDSS 

model’s May results, which represent 

the flush season for milk production. 

The witness said Proposal 19’s problems 

are compounded because NMPF failed 

to use a consistent set of principles to 

justify its deviations from the USDSS 

model results. In addition, many of the 

factors used to justify deviations, the 

witness said, were already factors 

considered by the model and, thus, are 

being double counted. 

The MIG witness characterized the 

NMPF deviations as substantial and 

presented a series of maps to visualize 

the magnitude of the disparate changes. 

The witness also pointed to areas where 

price changes are more dramatic 

between neighboring counties and 

suggested such price disparities could 

create incentives for disorderly 

marketing. The witness deemed the 

Proposal 19 differentials to be 

significantly different from current 

differentials and argued the increases 

were proposed despite a lack of 

evidence from NMPF that there is a 

shortage of milk available to meet Class 

I demand. Class I differentials should 

reflect the minimum cost of supplying 

Class I milk, stressed the witness. If 

there are additional transportation costs 

not provided for under the current 

differential, as alleged by NMPF, the 

witness testified, those would be 

reflected in negotiated over-order 

premiums in the market. Instead, many 


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areas of the country have no over-order 

premiums, which the MIG witness 

interpreted as an indication that FMMO 

prices are not minimums, but price 

enhancing. Similar to the IDFA witness, 

the MIG witness was of the opinion no 

changes should be made to the 

differentials in the three southeastern 

FMMOs until the full impact of the 

recent amendments to the transportation 

credits and establishment of the 

distributing plant delivery credits are 

known. 

Three witnesses representing Organic 

Valley testified in opposition to 

Proposal 19. Organic Valley consists of 

1,600 farmer-owners who produce 

certified organic milk, three dairy 

manufacturing facilities which make 

Class III and IV products and a network 

of co-packers to process and distribute 

Class I products. The witnesses opposed 

the NMPF proposed differentials as they 

would increase Organic Valley’s 

obligation to FMMO marketwide pools. 

The Organic Valley witnesses 

described the differences between the 

organic and conventional milk markets 

(both at the producer and processor 

levels). They were of the opinion 

Proposal 19 failed to account for these 

differences and would result in 

inefficient milk movements if adopted. 

The witnesses countered arguments that 

the conventional market balances the 

organic market, claiming only around 2 

percent of organic milk finds its way 

into conventional products. 

A witness from Aurora testified in 

opposition to Proposal 19. Aurora is a 

vertically integrated organic milk 

supplier with four organic dairy farms 

located in Colorado and Texas. The 

witness was of the opinion no 

justification exists to increase Class I 

differentials as the areas surrounding 

the Aurora plants have adequate organic 

milk supplies, something that was not 

accounted for in the USDSS model. The 

witness described the organic milk 

market and argued its structural 

differences from the conventional milk 

market make any change to the Class I 

differentials as applied to organic milk 

unwarranted. Similar arguments were 

made by a MIG witness on behalf of 

Danone and Crystal Creamery. 

A witness for Maple Hill Creamery 

(Maple Hill) testified in opposition to 

Proposal 19. Maple Hill purchases grassfed organic milk for processing and 

national distribution but does not own 

a fluid milk plant. The witness opposed 

the proposed Class I differentials and 

estimated their Class I marketwide pool 

obligation could increase up to 80 

percent as a result. The witness made 

arguments similar to other organic 

processors and concluded that 

increasing Class I differentials would 

result in a choice between paying a 

lower organic fixed price to its dairy 

farm suppliers and jeopardizing supply 

or raising retail prices and jeopardizing 

sales. 

A witness representing Shamrock, a 

member of MIG, testified in opposition 

to Proposal 19. The witness said 

adoption of Proposal 19 would increase 

their raw milk costs anywhere from 29 

to 62 percent. The witness testified 

Shamrock pays over-order premiums 

which they believed cover any 

additional costs associated with 

servicing their plants in excess of the 

Class I differential value. The witness 

noted an inconsistency in NMPF 

methodology, as the differential for their 

Virginia plant is proposed at the USDSS 

model average, while the differential at 

their Arizona plant is $0.65 greater than 

the average. 

A witness for AE, a MIG member, also 

testified in opposition to Proposal 19. 

The witness was of the opinion NMPF 

had not provided justification for the 

Class I differential increases. They 

specifically objected to the Class I 

differential changes that would, in the 

witness’ opinion, give its nearest 

competitor a $0.15 greater advantage 

than currently exists. 

A MIG member witness for HP Hood 

testified in opposition to Proposal 19. 

HP Hood also operates four standalone 

Class II plants in the northeast. Similar 

to the AE witness, the HP Hood witness 

testified the proposed Class I 

differentials would create competitive 

disadvantages for their plants in relation 

to nearby cooperative owned plants. 

The witness criticized what they 

believed was the lack of uniformity used 

by NMPF in developing differentials 

that deviated from USDSS model 

results. The witness said there were 

ample milk supplies to meet Class I 

needs and any increase in the Class I 

price would only serve to decrease fluid 

milk sales. 

A witness from Turner Dairy, a MIG 

member, testified in opposition of 

Proposal 19. The witness objected to the 

continued relevance of the three base 

differential components. The witness 

said Turner Dairy had not had difficulty 

finding adequate milk supplies through 

its independent dairy farm supply. The 

witness said any Class I differential 

increases would be paid into the FMMO 

marketwide pool, not to its direct 

suppliers. The witness said this would 

make it harder to compete for dairy farm 

suppliers, particularly with competitors 

in the unregulated area to their east. 

Similar to other witnesses, the Turner 

Dairy witness detailed how the 

proposed Class I differentials created 

competitive disadvantages for their 

plants relative to nearby cooperative 

plants and would decrease fluid milk 

consumption. 

A MIG witness testifying on behalf of 

fairlife opposed Proposal 19. The 

witness argued that if more money is 

needed to attract fluid milk supplies, it 

should be negotiated in the marketplace, 

not mandated in FMMO pricing 

provisions. The witness said fairlife 

regularly pays over-order premiums for 

even day receiving, transportation costs, 

and quality attributes. In the witness’ 

opinion, there were ample fluid milk 

supplies and any increase in differential 

would only serve to create market 

winners and losers. 

A witness from Shehadey, testified in 

opposition to Proposal 19. Shehadey 

operates four manufacturing plants in 

California, Nevada, and Oregon, 

producing Class I and Class II products. 

The witness argued the Class I 

differentials proposed for their plant 

locations should not be increased as the 

local milk supply was adequate to meet 

their fluid needs. The witness took 

particular objection with the 

disproportionate increase by the Fresno, 

California, plant in relation to their 

competitors located farther from the 

state’s primary milk supply in the 

Central Valley. The witness added that 

their Oregon plant has a more distant 

milk supply relative to their other 

plants, and over-order premiums are 

used to compensate dairy farmers for 

the additional costs of servicing the 

plant. 

A witness representing United Dairy, 

Inc. (United) testified in opposition to 

Proposal 19. United is a fluid milk 

processor operating three plants in West 

Virgina, Ohio, and Pennsylvania, which 

are primarily supplied by independent 

dairy farms. The witness testified their 

plants received adequate milk supplies 

and pay over-order premiums when 

needed to ensure their milk needs are 

met. The witness opined the market 

should depend on over-order premiums, 

not unduly high regulated prices, to 

direct milk where needed. Similar to 

other witnesses, the United witness 

argued FMMO prices should not be 

increased because it would negatively 

impact Class I sales. The witness 

objected to the uneven application of 

differential increases, highlighting the 

differential increases for the United 

plants are higher than every other plant 

in the region, even when United has had 

no milk supply shortages. A West 

Virginia independent dairy farm 

supplier of United also testified in 

opposition to Proposal 19. The witness 

expressed concern the proposed 

differential increases would ultimately 


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lead to the closure of the independent 

fluid milk processors in the State, 

leaving local dairy farmers with few, if 

any, local market outlets, and would 

widen the nutritional gap that already 

exists in the Appalachian area as higher 

prices would reduce fluid milk 

consumption. 

A witness representing Lamer’s 

testified in opposition to Proposal 19. 

The witness said increasing Class I 

differentials would not benefit 

consumers or processors as higher 

prices would lead to a decline in fluid 

milk consumption and the closure of 

more fluid milk plants. The witness was 

of the opinion that limiting or 

disallowing the depooling of 

manufacturing milk would be a more 

beneficial change for all dairy 

stakeholders. A post-hearing brief filed 

by Lamers contended the hearing record 

contained no evidence of Class I 

demand not being fulfilled, thus, any 

increase in Class I prices was not 

justified. The brief argued that if 

additional transportation costs of 

moving milk to Class I plants exist, they 

should be negotiated through over-order 

premiums. 

A series of academic researchers 

testified regarding milk price elasticity. 

One researcher testified on behalf of 

NMPF regarding the potential impact to 

fluid milk demand as a result of 

regulated price changes. The witness 

referred to this as price elasticity, which 

estimates the percentage change in 

demand (quantity) due to a 1 percent 

change in price. The witness said any 

price elasticity less than the absolute 

value of 1 is considered price inelastic— 

a 1 percent change in price would result 

in less than a 1 percent change in 

demand—implying increased revenue 

due to the price change would more 

than offset the decreased revenue from 

fewer sales. 

The NMPF witness reviewed 38 

empirical studies, conducted between 

1964 and 2022, measuring milk price 

elasticity at the retail level. The witness 

found the study average elasticity of 

0.35 percent, and a median of 0.2 

percent, concluding milk demand is 

inelastic. The witness said consumers 

remain price insensitive because milk 

continues to be considered a staple 

food. To illustrate its price inelasticity, 

the witness elaborated the real price of 

milk relative to all goods and services 

has declined 7 percent since 2013, 

during which time milk demand has 

decreased 18.3 percent. If milk was 

elastic, said the witness, a decline in 

price should have resulted in an 

increase in demand. The witness 

reviewed other factors which they 

believed were driving decreased milk 

consumption, including increased 

competition in the beverage market from 

new products and alternative beverages, 

an increase in the amount of food 

consumed away from home, and the 

lower proportion of young kids in the 

population. 

The NMPF witness evaluated the 

average increase in differentials 

contained in Proposal 19, $1.49 or an 

8.6 percent Class I price increase, to 

estimate the impact on demand. 

Assuming a 55 percent retail price 

transmission rate (1 percent change in 

the Class I price would cause a 0.55 

percent change in the retail price), the 

witness estimated Proposal 19 would 

lead to a 1.6 percent decrease in 

demand. The witness concluded the 

decrease in demand would be lower 

than the increase in Class I revenue, 

resulting in a net increase of dairy 

farmer revenue. 

Another researcher testified on behalf 

of IDFA. The witness presented the 

results of a study evaluating the impact 

milk price changes have on the 

consumption of milk (in five 

disaggregated varieties) and various 

alternatives, including soft drinks, 

bottled, water, juices, and for the first 

time considered plant-based 

alternatives. The witness utilized 

weekly scanner data from 2017 through 

August 2023 to evaluate three distinct 

time periods (pre-COVID, COVID and 

post-COVID). The witness estimated the 

data represented approximately 84 

percent of the milk volume sold at retail 

outlets, or 64 percent of overall milk 

volume. The witness attributed the 

remaining 36 percent to milk sales 

through untracked retail, foodservice, 

schools, and shrinkage. The witness 

noted it is likely the elasticity for the 

unaccounted milk volume was highly 

inelastic. 

The IDFA witness said the study 

found the own-price elasticities for 

traditional white, flavored, and lactosefree milk to be elastic, and when all five 

categories of milk were combined, it had 

an elasticity of ¥1.26 in the post-COVID 

time period. Utilizing some of the 

NMPF researcher’s assumptions (8.6 

percent increase in Class I prices and a 

retail price transmission rate of .55 

percent), the witness estimated adoption 

of Proposal 19 would result in an 

overall 5.98 percent decrease in fluid 

milk sales and a 2.1 percent increase in 

gross dairy farmer revenue. The witness 

concluded this study revealed retail 

fluid milk sales are more sensitive to 

price changes than previously thought. 

The witness also noted other demand 

studies that utilize AMS estimated fluid 

milk sales, not weekly scanner data, do 

not reflect the current retail marketplace 

because they incorporate highly 

inelastic sales to schools, colleges and 

universities, long-term care and senior 

living facilities, hospitals, and 

correctional institutions. 

A third academic researcher, also 

testifying on behalf of IDFA, provided 

results of a study evaluating the market 

effects of Proposal 19. Looking at milk 

production, fluid milk consumption, 

and producer price statistics since 2000, 

the witness concluded there are 

sufficient milk supplies nationally to 

meet Class I demands. The witness was 

also of the opinion sufficient milk 

supplies, at reasonable prices, exist for 

the high Class I utilization FMMOs (the 

Appalachian, Southeast, and Florida), 

because retail prices in the three 

markets were below those of a 30-city 

average retail milk price when 

compared to other regions of the 

country. The witness commented that 

elasticity studies not accounting for 

non-dairy alternatives were not 

representative of the current retail 

market. The witness reviewed recent 

fluid demand studies and concluded 

adoption of Proposal 19 would increase 

fluid milk prices, decrease 

consumption, and result in more milk 

use in manufactured products. 

A post-hearing brief submitted on 

behalf of Select supported increasing 

Class I differentials, but not to the levels 

contained in Proposal 19. Select 

contended deviations from the USDSS 

model results made by NMPF may be 

appropriate but disagreed with the type 

and extent of those included in Proposal 

19. Select took exception to the 

proposed adjustments in the mideast 

and southwest regions where they have 

member farms. Select noted reasons for 

making deviations were not applied 

uniformly, especially in areas that have 

similar supply and demand 

environments. Select stated increased 

transportation costs and shifts in milk 

production and processing locations 

justify increasing Class I differentials 

and offered support for using the 

average of the May and October 2021 

USDSS results, with minor adjustments 

and smoothing of the surface as 

appropriate. 

A post-hearing brief submitted on 

behalf of MIG opposed adoption of 

Proposal 19, arguing hearing evidence 

supported lowering, not raising, Class I 

differentials. MIG cites the abundance of 

milk available to serve the Class I 

market and FMMO adjustments to 

shipping percentages as evidence to 

deny Proposal 19. MIG reiterated its 

objection to the methodology used and 

deviations made by NMPF in 

developing the proposed differentials. 

The brief contended raising Class I 


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differentials would be disorderly 

because it would lower Class I demand 

and aggravate challenges already faced 

by fluid milk processors. MIG also noted 

Class I differential changes should not 

be considered until the impact of recent 

changes to transportation cost-related 

provisions in the Appalachian, Florida, 

and Southeast FMMOs were known. 

A post-hearing brief submitted on 

behalf of IDFA opposed Proposal 19 on 

the grounds its adoption would cause 

market disorder by raising fluid milk 

prices, decreasing fluid milk 

consumption, harm consumers, and 

divert milk into manufacturing uses. 

IDFA reiterated hearing testimony in its 

brief regarding the price elasticity of 

fluid milk and concluded adopting 

Proposal 19 would reduce fluid milk 

consumption by 5.98 percent, resulting 

in over 2.2 billion pounds of milk being 

diverted to manufacturing uses. 

Similarly, IDFA objected to NMPF’s 

methodology in determining the 

differential levels offered in Proposal 

19. IDFA objected to NMPF’s use of 

dairy farm production costs to justify 

increases to the Class I differentials and 

referenced existing milk production as 

more than adequate to meet fluid milk 

demand. IDFA maintained Class I 

differentials should instead be lowered 

by $0.40 per cwt because the Grade A 

maintenance cost consideration is 

obsolete and inaccurate. 

A MIG witness testified in support of 

Proposal 20, seeking to reduce the base 

differential to $0.00. The witness’ 

testimony centered around the 

continued relevance of the cost 

components currently provided for in 

the base differential: Grade A 

maintenance, balancing, and Class I 

incentive costs. The witness was of the 

opinion the base differential results in 

market enhancing prices that induce 

overproduction and reduce fluid milk 

consumption. The witness said that 

since almost all U.S. produced milk 

meets Grade A standards, it is no longer 

necessary to provide compensation 

through Class I differentials for those 

costs as they are not unique to 

producers supplying the Class I market. 

They argued these costs are already 

provided for in market-clearing Class III 

and IV prices where most of the U.S. 

milk supply is utilized. 

The MIG witness said the balancing 

cost factor is no longer justified as fluid 

milk processors have either invested in 

infrastructure to balance their own milk 

supply or pay over-order premiums to 

their suppliers for balancing services. 

The witness was of the opinion 

incorporating balancing costs within the 

Class I price results in processors paying 

for balancing services they do not 

receive or paying twice for such 

services—once through the Class I price 

and again in an over-order premium. 

Lastly, the MIG witness argued the 

$0.60 Class I incentive cost factor was 

no longer necessary to attract adequate 

supplies of fluid milk given the low, 

and continually declining Class I 

utilization. 

Witnesses from MIG member 

companies testified in support of 

Proposal 20. MIG’s members echoed the 

previous MIG testimony challenging the 

relevance of the base differential cost 

factors in the current market 

environment. In particular, the MIG 

witnesses argued that through plant 

investments, particularly ESL 

processing or additional milk silos, 

combined with over-order premiums 

paid to their milk suppliers, they were 

directly paying for their individual milk 

balancing needs. The witnesses all 

opined that through the base differential 

they were being double charged for such 

services. All MIG members testified that 

if additional monies are needed for 

balancing services or to obtain adequate 

milk supplies, it is more appropriate for 

those costs to be negotiated in the 

marketplace and paid directly to their 

milk suppliers, rather than as part of a 

regulated minimum price shared with 

all pooled producers. 

Another MIG witness testified 

regarding the relevancy of the base 

differential in the current marketplace. 

The witness was of the opinion the base 

differential should be reduced to $0.00, 

and if cost recovery is needed by 

producers, it can be negotiated with 

milk buyers. The witness utilized the 

USDSS model to compare the value of 

Class I and Class III milk at the county 

level. The witness presented the results 

and explained in some parts of the 

country, where Class III milk is more 

valuable, it would take additional 

incentives to service a Class I plant 

rather than remain at the higher valued 

manufacturing plant. In other areas of 

the country, namely the southeast, 

northeast, and California, the value of 

Class I is higher, representing the cost 

to balance the region’s Class I demand. 

The witness said the national average 

value of the differences was negative 

$0.38, indicating nationally, it is more 

valuable for milk to service Class III 

plants. The witness drew the conclusion 

this analysis supports the argument for 

lowering the base differential to $0.00 

and allowing fluid plants to negotiate 

and pay premiums directly to their milk 

suppliers. 

A post-hearing brief submitted on 

behalf of MIG reiterated its witnesses’ 

testimony that the base differential is no 

longer economically justified. MIG 

argued the current oversupply of Class 

I milk is caused, in part, from high 

FMMO blend prices. According to MIG, 

adoption of Proposal 20 would correct 

this disorder by allowing a greater 

proportion of fluid milk costs to be 

negotiated and paid directly to 

suppliers. The brief reviewed MIG 

witness testimony on the relevancy of 

the costs associated with the base 

differential and the steps taken by its 

fluid milk processor members to balance 

and obtain a milk supply. 

A Lone Star witness, appearing on 

behalf of NMPF, testified in opposition 

to Proposal 20. The witness argued a 

base differential of $0.00 would result in 

the elimination of any Class I 

differential for large portions of the U.S., 

amounting to approximately $650 

million annually, with no guarantee the 

money could be recovered through overorder premiums. Additionally, said the 

witness, the lower differentials would 

lead to disorderly marketing conditions 

through increased occurrences of 

negative PPDs, higher volumes of 

depooled milk, and reduced or 

eliminated incentives to supply the 

Class I market. The witness stressed that 

costs to maintain Grade A status and 

balance the market’s milk supply are 

real and significant. The witness said 

adoption of Proposal 20 would be akin 

to adopting individual handler pools in 

much of the country, an idea which they 

said has been found to cause disorderly 

marketing conditions. 

The NMPF witness maintained that 

milk has an inelastic demand, so any 

reduction in Class I prices will not have 

a significant impact on Class I sales. The 

witness also said that despite opposition 

testimony regarding the perils of setting 

regulated prices too high, there are also 

negative consequences for setting the 

regulated price too low. In the witness’s 

opinion, dairy farmers face a market 

power imbalance when negotiating 

prices above FMMO minimums, 

reiterating previous testimony on the 

difficulty cooperatives faced when 

negotiating and maintaining over-order 

premiums. 

The NMPF witness concluded by 

emphasizing the objective of the FMMO 

system is to set prices to ensure a 

sufficient quantity of milk for fluid use. 

The witness stressed providing for 

prices that reflect the current costs of 

supplying the market as demonstrated 

through NMPF testimony should be a 

priority of this proceeding. 

In their post-hearing brief, NMPF 

argued Proposal 20 incorrectly assumes 

the cost of servicing Class I demand has 

not increased and reiterated witness 

testimony on the continued relevancy 

and need for the base differential. NMPF 


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stressed that costs recognized in the 

base differential continued to be 

incurred by dairy farmers in servicing 

the Class I market and took exception 

with the position such costs could be 

adequately recovered through overorder premiums. NMPF maintained 

Class I demand is inelastic and 

reiterated the need for Class I prices to 

continue to be the highest priced class 

in order to ensure an adequate supply. 

The AFBF witness also expressed 

opposition to Proposal 20. The witness 

testified the cost factors provided for in 

the base differential are still relevant 

and in fact higher than when the 

differential was adopted. The witness 

suggested the Department consider 

raising the base differential and 

provided current cost estimates for each 

of the three factors, which resulted in a 

base differential increase of 

approximately $0.60 per cwt. The 

witness stressed the importance of the 

base differential in contributing to the 

proper alignment of classified prices 

which they considered a critical 

element of orderly marketing. The 

AFBF’s post-hearing brief reiterated its 

witnesses’ hearing testimony and 

concluded adoption of Proposal 20 

would lead to disorderly marketing 

conditions. 

A post-hearing brief filed by Lamers 

offered support for Proposal 20. Lamers 

stated its adoption would better reflect 

the real value of milk and all four 

classes would have a closer price 

relationship. Lamers asserted high Class 

I differentials were no longer needed to 

supply the fluid market given that 98 

percent of milk produced is Grade A. A 

post-hearing brief submitted by New 

Dairy also offered support for Proposal 

20. 

Select’s post-hearing brief expressed 

opposition to Proposal 20 and asserted 

a base differential of $1.60 should be 

maintained. Select opined the cost of 

maintaining Grade A status still exists 

and has increased, as have the costs 

associated with balancing and 

competing for a milk supply. 

A post-hearing brief submitted by 

Edge, while not offering support or 

opposition to Proposals 19 or 20, did 

contend Class I milk prices should not 

be raised beyond necessary levels and 

not be raised merely to offset the 

negative producer impact of increasing 

make allowances. 

The AFBF witness also testified in 

support of Proposal 21, seeking to 

increase the Class II differential from 

$0.70 to $1.56 per cwt. The witness 

explained the proposed differential 

reflects updated drying costs based on 

the current NFDM make allowance. The 

witness did not believe the proposed 

increase would lead to the substitution 

of Class IV powders in lieu of Class II 

fresh milk. The witness estimated that 

adoption of Proposal 21 would increase 

annual FMMO marketwide pool values 

by $122 million and reduce the 

likelihood of negative PPDs and 

depooling. These views were reiterated 

in AFBF’s post-hearing brief. 

Several witnesses representing MIG 

including Turner Dairy; HP Hood; AE; 

Shamrock; CROPP; Aurora; Shehadey; 

Crystal Creamery; and fairlife testified 

in opposition to Proposal 21. The MIG 

witnesses indicated adoption of 

Proposal 21 would result in Class II 

standalone plants choosing not to 

participate in the FMMO system, 

putting fully regulated Class I plants 

with Class II production at a 

competitive disadvantage. This 

sentiment was emphasized by witnesses 

from Turner Dairy and Shehadey, whose 

fully regulated Class I plants also 

produced notable volumes of Class II 

products. The witness from Crystal 

Creamery provided an analysis of CME 

NFDM and Class II nonfat solids prices, 

projecting an increase of 20 to 50 

percent in the use of Class IV nonfat 

solids if Proposal 21 was adopted. 

Lastly, a witness from fairlife predicted 

adoption of Proposal 21 would cause 

some manufacturers to reformulate 

products in order to avoid paying the 

higher Class II price. 

In its post-hearing brief, MIG 

reiterated hearing testimony and added 

that cream, a Class II product, must be 

made with fluid milk in accordance 

with the standards of identity 

established by the U.S. Food and Drug 

Administration. As such, according to 

MIG, a pooled Class II manufacturer of 

cream could not reformulate and, 

further, would experience an estimated 

3.5 percent increase in its FMMO 

marketwide pool obligations. 

Several witnesses representing IDFA, 

including Saputo, Galloway, and 

Lakeview Farms, also testified in 

opposition to Proposal 21. The witness 

for Saputo indicated the demand for 

Class II skim solids is likely to decrease 

if Proposal 21 is adopted, as alternative 

milk solids would have a greater 

substitution value. Further, according to 

the witness, costs to consumers for 

cream would likely increase. 

The witness for Galloway testified 

that adoption of Proposal 21 would not 

increase blend prices or limit depooling 

and negative PPDs, as alleged, because 

Class II manufacturers would instead 

utilize more Class IV powder 

ingredients in lieu of fresh milk. In the 

witness’ opinion, increasing the Class II 

differential would only serve to promote 

disorderly marketing through the 

displacement of the local milk supply 

and permanent investment in 

equipment to enable the use of Class IV 

ingredients. The witness said once a 

manufacturer makes the costly capital 

investment decision, they do not switch 

back to use fresh milk in the future. The 

witness estimated adoption of Proposal 

21 would result in a $99.4 million loss 

to producers through the use of lower 

valued Class IV ingredients. A witness 

from Lakeview Farms supported the 

statements of other witnesses, 

emphasizing the likely increase in costs 

to the customer. This witness added that 

innovation of more oil-based 

formulations to offset the price volatility 

of dairy fat would lead to a disruption 

in the dairy supply chain. 

In its post-hearing brief, IDFA 

reiterated testimony from the hearing 

which stressed that there is already an 

adequate supply of milk for Class I and 

Class II needs and opined the current 

Class II price formula is working well as 

is. As such, according to IDFA, there is 

no evidence that suggests a need to 

increase the Class II differential. IDFA 

argued further that farmers are likely to 

receive lower net prices as a result of 

Proposal 21 due to the anticipated 

substitution of lower cost Class IV 

NFDM for Class II nonfat solids. Lastly, 

IDFA focused on the likely 

disproportionate impact of Proposal 21 

on Class I handlers that also 

manufacture Class II products. Without 

the ability to depool, these handlers 

could not take advantage of lower 

NFDM prices, IDFA wrote. 

An MMPA witness appearing on 

behalf of NMPF also testified in 

opposition to Proposal 21. The witness’ 

testimony mirrored other witnesses 

cautioning that adoption could cause 

substitution with Class IV powder 

ingredients. The witness said not only 

does the Class II and Class IV price 

difference need to be considered, but so 

does the significantly lower 

transportation cost of powder versus 

fresh milk. Under the current Class II 

differential, Class II milk already has an 

incentive not to be pooled, said the 

witness. Increasing the differential 

would only heighten the incentive and 

create competitive disadvantages for 

Class I plants making Class II products, 

while simultaneously lowering 

marketwide pool values. In its posthearing brief, NMPF added that 

adoption of Proposal 21 may incentivize 

the practice of substituting less 

expensive milk powder for fresh milk to 

make Class II products. NMPF also 

elaborated on its members’ concerns 

regarding the likely increase in 

depooling of Class II milk if Proposal 21 

was adopted. 


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1Official Notice is taken of the Notice of 

Equivalent Price Series: 77 FR 22282 (April 18, 

2012). The National Dairy Product Sales Report was 

deemed as equivalent to the price series previously 

released by the National Agricultural Statistics 

Service. 

USDA received post-hearing briefs 

related to Proposal 21 from three 

additional stakeholders: New Dairy, 

Select, and Lamers. New Dairy 

expressed its opposition to the AFBF’s 

Proposal 21, emphasizing that the 

current milk supply is sufficient, and it 

shared the concerns of other hearing 

participants regarding the potential 

competitive disadvantages for Class I 

handlers manufacturing Class II 

products. Select explained that the 

AFBF’s proposal deviates from the 

rationale and methodology USDA 

utilized to establish the Class II 

differential during Order Reform and, 

thus, according to Select, Proposal 21 

likely overstates an appropriate Class II 

differential. Further, Select was of the 

opinion increasing the Class II 

differential would discourage the use of 

fresh milk and cream in lieu of Class IV 

ingredients. Lastly, Lamers expressed its 

concern that the adoption of Proposal 21 

would lead to disorderly marketing and 

stated no evidence was presented to 

suggest a need to increase the Class II 

differential. 

Discussion and Findings 

An FMMO (or ‘‘order’’) is a regulation 

issued by the Secretary of Agriculture 

(Secretary) that places certain 

requirements on the handling of milk in 

a defined geographic marketing area. 

FMMOs are authorized by the AMAA. 

The declared policy of the AMAA is to 

‘‘. . . establish and maintain such 

orderly marketing conditions for 

agricultural commodities in interstate 

commerce . . .’’ 7 U.S.C. 602(1). As 

specified by the AMAA, the principal 

means of meeting the objectives of the 

FMMO program are through classified 

milk pricing and the marketwide 

pooling of returns. This rulemaking 

concerns and is limited to classified 

milk pricing. 

FMMOs announce prices each month 

for milk received by plants during that 

month, according to its use 

classification. Since 2000, the FMMO 

program has used product price 

formulas that rely on the wholesale 

price of bulk products to determine the 

minimum classified prices handlers pay 

for raw milk in the four classes of 

utilization. Class III and Class IV prices 

are announced on or before the 5th day 

of the following month to which they 

apply. The Class III and Class IV price 

formulas form the base, also known as 

the mover, from which Class I and Class 

II prices are determined. 

The Class I price is announced in 

advance of the applicable month. It is 

determined by adding the Class I 

differential assigned to the plant’s 

location, plus the average of advanced 

Class III and Class IV prices (computed 

by using the most recent two weeks’ 

DPMRP data released on or before the 

23rd of the preceding month), plus 

$0.74. The Class II skim milk price, 

announced at the same time as the Class 

I price, is determined by adding $0.70 

per cwt to the advanced Class IV skim 

milk price. Thus, the advanced prices 

pertaining to milk marketed in a 

particular month use the same formulae 

as the calculation of Class III and IV 

prices for milk marketed in that same 

month, but the specific data are from 

different time periods. The Class II 

butterfat price is announced at the end 

of the month, at the same time as the 

Class III and Class IV prices, by adding 

$0.007 per pound to the Class IV 

butterfat price. 

Component prices are based on prices 

for the selected bulk products collected 

through the AMS-administered DPMRP, 

which collects weekly wholesale prices 

for four manufactured dairy products in 

various bulk package sizes (cheese, 

butter, NFDM, and dry whey powder). 

Weekly average prices for cheddar 

cheese (the weighted average of block 

and barrel prices), butter, NFDM, and 

dry whey are reported in the NDPSR.1

Butterfat prices for milk used in 

products in each of the four classes is 

determined through surveyed butter 

prices. Protein and other solids prices 

for milk used in Class III products are 

derived from surveyed cheese and dry 

whey prices, respectively. The nonfat 

solids price for milk used in Class II and 

Class IV products is calculated from 

surveyed NFDM product prices. 

The butterfat, protein, other solids, 

and nonfat solids prices are derived 

through the weighted average monthly 

NDPSR survey prices of each 

corresponding commodity, minus a 

manufacturing (make) allowance, 

multiplied by a yield factor. The make 

allowance factor represents the fixed 

and variable processing costs 

manufacturers incur in making raw milk 

into one pound of product. The yield 

factor represents the approximate 

quantity of product that can be made 

from a cwt of milk received at the plant, 

assuming a certain component 

composition of the milk and the final 

products. Among other factors used to 

determine yield, the milk received at a 

plant is adjusted to reflect farm-to-plant 

shrinkage compared to farm weights. 

This relates to the basic question of how 

much milk is required to make a pound 

of product. 

This product pricing system was 

implemented as a part of Order Reform 

on January 1, 2000. 64 FR 70868 (Dec. 

17, 1999). While individual pieces of 

the price formulas have been updated 

occasionally since that time, this 

proceeding is the first time since their 

adoption that the Department is 

considering a comprehensive update to 

all four classified price formulas. 68 FR 

7063 (Feb. 12, 2003); 71 FR 78333 (Dec. 

29, 2006); 78 FR 24334 (Apr. 25, 2013). 

The objective of this proceeding is to 

evaluate whether market or other 

economic conditions have changed and 

if the price formulas need to be updated 

to reflect current conditions, including 

economic and technological factors 

related to processing, transportation, 

and other relevant market functions or 

services. Twenty-one proposals, divided 

into five main topic areas, were 

considered: milk composition factors— 

two proposals; surveyed commodity 

products—four proposals; Class III and 

Class IV formula factors—six proposals; 

base Class I skim milk price (often 

referred to as the ‘‘higher of’’)—six 

proposals; and Class I and Class II 

differentials—three proposals. 

The record supports the findings that 

some price formula factors should be 

amended to reflect current market 

conditions that were evidenced in this 

proceeding. The proposed changes, 

which are discussed in detail below, 

include: 

1. Milk Composition Factors: Update 

the factors to 3.3 percent true protein, 

6.0 percent other solids, and 9.3 percent 

nonfat solids. 

2. Surveyed Commodity Products: 

Remove 500-pound barrel cheddar 

cheese prices from the DPMRP survey 

and rely solely on the 40-pound block 

cheddar cheese price to determine the 

monthly average cheese price used in 

the formulas. 

3. Class III and Class IV Formula 

Factors: 

a. Update the manufacturing 

allowances as follows: 

i. Cheese: $0.2519; 

ii. Butter: $0.2272; 

iii. NFDM: $0.2393; and 

iv. Dry Whey: $0.2668. 

b. Update the butterfat recovery factor 

to 91 percent. 

4. Base Class I Skim Milk Price: 

updating the formula as follows: 

a. Class I milk used in ESL products: 

The average of the advanced Class III 

and Class IV skim milk prices, plus a 

rolling monthly adjuster. The rolling 

monthly adjuster would be equal to the 

average of the difference between the 


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higher-of and the average-of, for 24 

months, with a 12-month lag. 

b. Milk used in all other Class I 

products: the higher-of the advanced 

Class III or Class IV skim milk prices for 

the month. 

5. Class I and Class II differentials: 

Update the Class I differentials to 

generally reflect the United States Dairy 

Sector Simulator May results contained 

in evidence. 

Milk Composition Factors 

Milk composition factors contained in 

the product price formulas represent 

assumed component levels of skim milk 

on a cwt basis. These factors were 

adopted on January 1, 2000. Currently, 

the formulas assume 3.1 pounds of true 

protein, 5.9 pounds of other solids, and 

9 pounds of nonfat solids in 100 pounds 

of skim milk. 

The level of assumed components in 

milk ultimately impacts minimum 

regulated prices paid by handlers, 

although the impact varies since there 

are variations in how components are 

used to value milk between FMMOs. All 

handlers regulated by the Arizona, 

Southeast, Florida, and Appalachian 

FMMOs pay for milk used in all four 

classes on a volume (cwt) basis, 

regardless of the components contained 

in the skim milk they receive (referred 

to as skim/fat pricing). Simply put, 

handlers pay for the pounds of skim and 

pounds of butterfat in milk they 

purchase from dairy farmers, where the 

butterfat payment is calculated 

according to actual pounds of butterfat 

received but the skim milk is specified 

at a standardized composition. In the 

remaining seven FMMOs, handlers pay 

for manufacturing milk based on the 

actual pounds of components in milk 

they purchase (referred to as multiple 

component pricing). Milk used in fluid 

milk products (Class I) is paid on skim/ 

fat basis as described above. Because of 

these pricing differences, changing the 

milk component factors primarily 

impacts Class I minimum prices paid by 

fluid milk processors in all 11 FMMOs, 

and to a lesser extent manufacturing 

handlers purchasing milk for Class II, 

III, and IV uses on skim/fat FMMOs. 

Proponents of changing the milk 

component factors argue actual average 

milk component levels in farm milk 

have increased since January 1, 2000, 

and milk should be priced to buyers to 

reflect the value of those components. 

NMPF proposes (Proposal 1) component 

levels at observed 2022 levels (3.39 true 

protein, 6.02 other solids, and 9.41 

pounds of nonfat solids). NMPF also 

proposes an updated methodology 

whereby components could be updated 

once every three years, without a 

rulemaking proceeding, if the nonfat 

solids levels in FMMO producer skim 

milk changed by 0.07 percentage points 

or more from the level stated in 

regulation. In its proposal, NAJ seeks an 

automatic annual update, with no 

change threshold to be met (Proposal 2). 

Both NMPF and NAJ argue that 

because component levels in producer 

milk have risen but are still accounted 

for in the price formulas at 2000 levels, 

the difference between Class I prices 

and manufacturing milk prices (Class III 

and IV) has narrowed. Put another way, 

milk used in manufacturing in the 

multiple component FMMOs is paid 

based on actual component levels, so 

producers are paid for all component 

pounds delivered to manufacturing 

plants (approximately 85 percent of 

FMMO manufacturing milk is pooled on 

the 7 multiple component orders). 

Consequently, payments for milk 

delivered to manufacturing plants 

increase as component levels delivered 

to those plants increase. However, milk 

delivered to Class I plants is paid on a 

skim/fat basis whose formulas contain 

component levels that are fixed and do 

not change either over time or across 

producer milk receipts. Thus, as milk 

component levels have risen, Class I 

plants have continued to pay for milk 

based on the static component levels 

contained in the formulas. Proponents 

argue the result has been a narrowing 

between fluid and manufacturing prices, 

thereby creating marketing challenges, 

one of which is a preference of suppliers 

to sell higher component milk to 

manufacturing handlers. They argue this 

is especially problematic in the milk 

deficit skim/fat markets in the 

southeastern region that must compete 

with manufacturing milk demands in 

multiple component orders to procure a 

supplemental Class I milk supply. 

Proponents also alleged the narrowing 

of the difference between Class I and 

manufacturing milk prices increases the 

occurrence of price inversions and 

depooling. 

The record of this proceeding reveals 

FMMO component levels in raw milk 

have increased since January 1, 2000, 

most notably since the mid-2010s. 

National FMMO average component 

data before 2000 is not part of this 

hearing record. The Order Reform 

decision did not address specifically 

why the current assumptions were 

adopted, other than stating they were 

based on prevailing protein tests as 

reported by AMS/USDA, as correctly 

cited by NAJ in its brief and public 

comment. While a preliminary Basic 

Formula Price report does purport to 

provide average protein levels, none of 

the Reform related reports in evidence 

in this proceeding provide an adequate 

level of detail as to what exactly the 

data used represented. However, given 

the data in evidence in this rulemaking 

shows component levels observed in 

FMMO skim milk in 2000 were 3.1 

percent true protein, 5.9 percent other 

solids, and 9.0 percent nonfat solids, it 

is reasonable to assume they were set at 

those levels because at the time they 

were representative of all pooled milk in 

the FMMO system. Evidence from this 

proceeding reveals that from 2000, 

component levels were relatively flat 

with only a slight increase through the 

mid-2010s. Beginning in 2016, observed 

data shows a marked increase in 

component levels. The data also clearly 

shows component levels throughout the 

country vary by season, with levels 

lower in the spring and summer, and 

higher in the fall and winter. Hearing 

testimony revealed numerous reasons 

for the recently observed milk 

component increases, including 

genomics in dairy cattle selection and 

breeding, higher cull rates of less 

productive cattle, and improvements in 

cattle nutrition and animal husbandry. 

Opponents of increasing component 

levels, primarily fluid milk handlers, 

argued three general reasons an increase 

is not justified. First, fluid milk 

handlers, who would be primarily 

impacted by these proposals, do not 

receive producer milk at the proposed 

component levels. They contend higher 

component milk is delivered to 

manufacturing plants, leaving the lower 

component milk for fluid milk handlers. 

Second, fluid milk handlers testified 

they receive no additional market 

revenue for higher components in milk 

because their customers purchase on a 

volume basis (e.g., gallons) not on the 

skim component levels in their fluid 

milk products. Therefore, they argued, 

they could not recover an increased cost 

for their raw material from a higher 

finished product price. Third, 

opponents argued updating component 

levels also would unduly harm 

manufacturing handlers in the skim/fat 

orders who pay for milk based on a 

skim/fat basis. They argued the 

proposed component levels are higher 

than those delivered to plants, both 

fluid and manufacturing, in the four 

skim/fat orders. An evaluation of the 

record evidence for each of these claims 

follows. 

First, regarding the composition of 

producer milk received by Class I 

handlers, testimony from fluid milk 

handlers during the hearing was 

incomplete and mixed. Some fluid milk 

handlers would not reveal component 

levels for the Department to consider, 

citing confidentiality concerns. Other 


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fluid handlers offered data that showed 

a range of average component levels in 

skim milk received: true protein ranged 

from 3.09 to 3.63 and other solids 

ranged from 5.83 to 6.10. Many 

producers who testified also discussed 

the rise in their farm component levels 

because of the decisions and 

investments made at the farm. While 

some producers could cite data, for 

example true protein tests ranged from 

3.12 to 3.83, many who could not cite 

specifics did contend a general increase 

in their component levels. The 

testimony supported an increase in skim 

milk component levels since 2000, but 

precise increases that apply to all milk 

or all Class I milk was not presented. 

Second, regarding market 

compensation for higher skim 

components in finished Class I 

products, the record clearly shows fluid 

milk handlers sell fluid milk products 

based on volume. Proponents of 

changing the composition levels 

provided anecdotal evidence, such as 

marketing claims and product 

description, to assert that some fluid 

milk products can garner additional 

market revenue for higher component 

levels. However, no data was provided 

to prove there is a general industryaccepted norm or practice that allows 

handlers to recover a value for nonfat 

milk solids in excess of the nutrition 

label claim. 

Finally, concerning the claim that the 

level of components assigned to skim 

milk can create disorder in the 

procurement of milk for manufacturing 

versus Class I uses, the record contains 

actual component tests of producer milk 

in the multiple component pricing 

orders. However, component data for 

the four skim/fat orders could only be 

estimated as producers in those orders 

are paid based on the volume of skim 

milk and butterfat produced, not 

component levels. Record evidence 

contains USDA estimated data showing 

component levels in milk have 

consistently been above the current 

assumptions in all four skim/fat orders. 

Estimated protein and other solids 

levels of skim milk pooled in the three 

southeastern orders have been above the 

assumed levels in most months since 

January 2018, and below the levels 

contained in Proposal 1 in all months. 

Estimated protein and other solids 

levels of skim milk pooled in the 

Arizona Order have been above the 

assumed levels in all months since 

January 2018, and above the levels 

contained in Proposal 1 some months. 

Dairy Herd Improvement Association 

(DHIA) component data was offered at 

the hearing. This data is from farms who 

elected to use DHIA services and are 

neither a proper statistical sampling of 

the US nor a census of the US; however, 

it is a large data set that covers many 

farms of different sizes and locations. 

The DHIA data is consistent with 

estimated data provided by USDA. In 

the four skim/fat orders, average protein 

levels from 2020–2022 were above the 

current formula assumptions but below 

those contained in Proposal 1. 

This decision is considering how the 

price formulas should be updated to 

reflect current market conditions. Milk 

composition levels are one piece of the 

formulas being addressed. However, as 

with all the factors adopted at the time 

of Order Reform and updated through 

subsequent rulemakings, the question 

before the Department is what level is 

representative of current supply and 

demand conditions, as required by the 

AMAA. Some parties argued milk 

composition factors should not be 

changed because not all milk would 

meet the levels proposed by NMPF. 

Price formulas in the FMMO system 

have never had factors that assumed all 

milk was identical, just as it has not 

been assumed that each plant has the 

same cost of manufacturing or yields. 

Because FMMOs utilize a national 

pricing system, price formulas have 

always relied on benchmarks to set 

levels representative of market 

conditions. The nature of any 

representative number is that some milk 

will fall above or below the specified 

level. This was true with the milk 

composition levels that were adopted in 

2000, and similar to other factors used 

in the formulas such as make 

allowances, survey commodity prices, 

and butterfat recovery percentages. 

While the record does not contain a 

comprehensive data set of milk 

component levels received at all fluid 

milk plants, it does contain data on milk 

component levels of all milk pooled on 

the FMMOs, as well as evidence 

submitted by some producers on the 

component levels in their milk, and 

information from some fluid milk 

handlers on the component levels they 

receive. Importantly, fluid plant 

operators testified the milk components 

received at their respective plants are 

higher than currently assumed in the 

formulas, but less than what was 

proposed by NMPF and NAJ. 

The record clearly supports that 

producer milk now contains higher 

levels of skim milk components 

compared to when the current 

composition factors were established in 

2000. As FMMO provisions should 

reflect current market conditions to 

ensure orderly marketing, the question 

becomes what specific composition 

standards best reflect the current market 

and are consistent with the practice of 

specifying levels that ensure minimum 

prices are most consistent with supply 

and demand conditions. The review of 

record evidence described earlier 

reveals many factors should be 

considered: the component levels of 

pooled producer milk, the variability in 

milk components regionally and 

seasonally, the discrepancy in milk 

component levels received by fluid milk 

handlers compared to manufacturing 

handlers, and the variability of 

component levels from farm to farm. 

These factors were not specifically 

mentioned as being considered in the 

Order Reform decision when the current 

levels were set. However, given the 

evolution of the dairy industry in the 

past 24 years, milk composition 

benchmarks are relevant for 

consideration in this proceeding. 

The record indicates milk 

composition levels should be increased, 

but the levels in Proposal 1 are not 

justified. Given the variability and 

seasonality of component level 

information contained in the record, 

this decision continues to find the 

average component levels in the 

FMMOs from 2016–2022 to be the most 

appropriate benchmark to represent 

producer skim milk components, and 

result in a valuation of skim milk 

reflecting current market conditions. 

Accordingly, this decision continues to 

recommend the following: 3.3 percent 

true protein, 6.0 percent other solids, 

and 9.3 percent nonfat solids. 

Estimated data for the three 

southeastern orders shows component 

levels exceeding these proposed levels 

in recent months, thus addressing 

opponents’ claims that manufacturing 

handlers in the southeastern orders 

receive lower component milk than 

other FMMOs. 

In its comment on the recommended 

decision, NMPF suggested the 2018– 

2022 time period would be more 

appropriate. However, this decision 

continues to find the 2016–2022 time 

period the most appropriate as it 

maintains a proper balance between 

sellers’ and buyers’ concerns expressed 

in this rulemaking and would provide 

for more orderly marketing. 

In public comments submitted on the 

recommended decision, IDFA and MIG 

reiterated previous arguments offered 

that fluid milk handlers do not receive 

milk with higher nonfat solids levels 

and, even if they did, cannot recover a 

higher value for them in traditional 

fluid milk products (e.g., gallons and 

half gallons) which encompass a vast 

majority of Class I sales. They presented 

a number of arguments: (1) the 

Department failed to justify a policy 


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change as it had previously stated Class 

I prices should not be priced on 

components because there is no 

additional value in Class I products; (2) 

the Department failed to address why 

updated milk composition levels 

support orderly marketing and therefore 

meet the objective of the AMAA; and (3) 

the Department ignored fluid milk 

handler testimony regarding the 

components levels they receive. 

On the other hand, NAJ’s public 

comment argued that by not increasing 

composition standards to the levels 

proposed by NMPF and NAJ, the 

Department is artificially constraining 

the manufacturing and Class I milk 

price relationship and failing to address 

the resulting instances of disorderly 

price inversions and depooling. 

This final decision is not 

recommending a Class I policy change, 

as some commenters suggest. This 

decision continues the Class I pricing 

policy adopted as part of Order Reform. 

Prior to Order Reform, FMMO prices 

were based on prices determined by the 

competition for Grade B milk supplies 

updated by a product price formula 

(referred to as the Basic Formula Price 

(BFP)). During Order Reform, the 

Department sought to find a 

replacement that would: (1) meet the 

supply and demand criteria set forth in 

the AMAA; (2) not deviate greatly from 

the general level of the current BFP; and 

(3) demonstrate the ability to change in 

response to changes in supply and 

demand. 64 FR 16026, 16091 (Apr. 2, 

1999). 

The BFP, and its predecessor 

Minnesota-Wisconsin price (M–W 

price), represented a competitive cost of 

Grade B milk in the Minnesota and 

Wisconsin area as it was the value for 

milk at the farm sold into manufacturing 

uses in those areas. A butterfat 

differential, reflecting the value of 

milkfat, was subtracted to determine the 

value of milk having no fat—i.e., skim 

milk. Class I skim prices at the time 

were determined by adding a location 

differential to the BFP skim price. As it 

was a survey of prices paid for raw milk 

in manufacturing, updated by the value 

of commodity products, the BFP met the 

objective of the AMAA to reflect market 

supply and demand conditions. The 

BFP had the ability to change in 

response to changes in milk component 

levels and their value to the 

manufacturer. By the same token, 

changes in a manufacturer’s costs of 

manufacturing or yields could also be 

demand factors that could move the 

BFP. A change in the BFP due to any of 

these underlying factors, including milk 

composition, could be passed through to 

the Class I price which was based off the 

BFP. 

With the adoption of product price 

formulas to replace the BFP in 2000, 

Class prices became determined, in part, 

from the value of commodity dairy 

products in wholesale markets whose 

values were translated to an implied 

value for farm milk used in each Class. 

The Class I skim price became 

determined through the higher of the 

Class III or Class IV skim price. The new 

pricing system also required a new 

method for determining these Class III 

and Class IV skim milk values. Under 

the new system, a value of skim milk 

had to be built up from its underlying 

milk components as there was no farm 

milk price to start with, only product 

prices. Hence, specifying underlying 

composition levels of skim milk based 

on either a skim solids standard or 

protein plus other solids standards was 

necessary. At the time of the transition 

from BFP to product price formulas, the 

Class I price reflected the supply and 

demand conditions for all milk 

products, as the BFP replacement was 

designed to not deviate greatly from the 

BFP price levels at the time of Reform. 

As highlighted in the decision, ‘‘The 

supply and demand for Grade A milk is 

not limited to one category of products. 

The same milk may be used for fluid or 

soft manufactured products as well as 

the Class III and Class IV products used 

to determine the BFP. As a result, the 

minimum prices established for Class III 

and Class IV reflect supply and demand 

for the milk used in all products’’ (64 FR 

16026, 16095). 

The record of this current proceeding 

has highlighted that under the current 

product price formulas, the standard 

component assumptions in the Class III 

and Class IV formulas are not able to 

automatically adjust to reflect the value 

of milk used in all products. Data 

reveals the current formulas reflect the 

value of very few products in the market 

as current average FMMO milk 

composition levels are consistently 

exceeding the assumed standard levels. 

Further, as highlighted earlier, fluid 

milk handlers testified to routinely 

receiving milk at composition levels 

greater than the current assumptions. 

USDA data on MCP orders show market 

average components consistently above 

the current standard components since 

Order Reform, with a noticeable 

increase in the rate of change since 

2016. When combining MCP order data 

with USDA estimated data for the fat/ 

skim markets, market averages have 

exceeded the assumed standard 

component levels since 2021. 

Some commenters claimed data 

entered by fluid milk plants was ignored 

and that, instead, USDA relied on less 

relevant FMMO data. This decision 

rejects the claim that FMMO data is less 

relevant to the determination of skim 

milk composition standards in the 

formulas than the evidence presented by 

the plants in question. The current 

assumptions reflect FMMO data from 

when the standards were first adopted, 

and such consideration remains relevant 

as a change is being considered. As 

described earlier, the objective of the 

product price formulas is to represent 

the value of milk used in all products. 

Milk composition standards are part of 

that valuation, and as such, it remains 

valid to consider FMMO data that 

reflects the composition of milk used in 

all products. 

As described earlier, aggregated data 

supplied by MIG through a survey of 

members of its fluid milk plants 

regulated by MCP Orders show 

components levels consistently 

exceeding current assumed levels but 

below those proposed by NMPF and 

NAJ. This information was specifically 

listed as a factor in determining the 

proposed skim milk composition levels. 

This decision finds updating the skim 

milk composition standards will 

provide for more orderly marketing as 

they will better reflect the supply and 

demand conditions for milk used in all 

products, as was one of the stated 

objectives when the product price 

formulas were first adopted. As is the 

nature of fixed factors such as milk 

composition standards, much like make 

allowances, are changed through 

rulemaking. This decision continues to 

find updating milk composition, as 

described earlier, will ensure prices 

paid by handlers and received by 

producers reflect the supply and 

demand of milk, a tenet of the AMAA. 

NAJ argued the decision ignored 

testimony presented on the impact of 

price inversion and depooling and 

insisted adoption of the proposed levels 

maintains a narrow spread between 

Class I and manufacturing prices. Much 

testimony was given on the impact of 

price inversions and depooling and 

attributed at least some cause to 

inadequate skim milk composition 

levels. While record evidence 

demonstrated the occurrence and 

magnitude of price inversions and 

depooling, such outcomes are not a 

reason for changing milk composition 

levels. This decision finds that milk 

composition levels should be increased 

to better reflect current market 

conditions. While this change may 

decrease the occurrence and/or 

magnitude of price inversions and 

depooling, this was not a determinant in 

proposing the change as this decision 


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does not find it an appropriate reason 

for updating the valuation of skim milk. 

A comment filed by Crystal Creamery 

stated the proposed levels will cause a 

disproportionate burden for fluid milk 

handlers in California that must fortify 

Class I products to meet the State nonfat 

solids standard. As required by the 

AMAA, FMMO class prices are applied 

uniformly across all handlers regulated 

by a FMMO. Any additional costs a 

handler might incur due to State 

requirements are outside the purview of 

USDA, and outside the scope of this 

proceeding. 

During the hearing and in its posthearing brief, Edge proposed, in 

addition to updating skim component 

levels, that the assumed butterfat level 

of 3.5 percent should also be updated to 

facilitate risk management. This idea 

was not proposed by USDA in the 

recommended decision. 

Edge’s public comments on the 

recommended decision reiterated its 

request to update the butterfat standard, 

citing hearing testimony but providing 

no new arguments. A comment by 

Sabrosura Foods made the same request. 

Some commenters indicated not 

changing the butterfat standard would 

cause issues related to their risk 

management positions. 

This decision continues to find 

changing the butterfat standard is not 

needed to maintain orderly marketing of 

milk within the FMMO system. Risk 

management programs, which often 

utilize FMMO prices, are maintained in 

the private sector. These programs can 

adapt as necessary to facilitate the use 

of updated FMMO price formulas. 

Additionally, the butterfat standard 

does not impact FMMO prices paid by 

handlers, both fluid and manufacturing, 

because in all orders handlers pay for 

the actual pounds of butterfat received. 

Therefore, the request to amend the 

butterfat standard continues to be 

denied. 

The NMPF and NAJ proposals 

contained alternative updating and 

implementation schedules for the skim 

milk composition levels. NMPF 

proposed the composition levels be 

updated once every three years, but only 

if there was a 0.07 percent or greater 

change in nonfat solids levels, 

compared to what was in regulation. For 

example, if Proposal 1 was adopted, 

milk composition factors could only be 

updated three years later if the average 

nonfat solids levels in pooled FMMO 

milk was 9.48 percent (9.41 × 1.007). 

NAJ proposed the levels be updated 

annually, regardless of the magnitude of 

increase. Both proponents requested a 

12-month implementation lag because 

of the implications such a change could 

have on producer risk management 

positions. Edge proposed a longer 

implementation lag of 151⁄2 months 

because of risk management positions 

tied to the DRP. 

The development and use of dairy 

risk management tools is relatively new, 

and the Department has never before 

been asked to delay implementation of 

FMMO changes in consideration of risk 

management. However, testimony made 

clear producers’ concern regarding the 

negative financial impact that could 

occur if regulatory changes did not 

account for the growing use of risk 

management tools. 

Producers testified to the use of 

numerous market-based risk 

management tools, including the CME 

futures and options, and the two USDARisk Management Agency approved 

insurance products, DRP and Livestock 

Gross Margin—Dairy (LGM-Dairy). Use 

of risk management tools by producers 

testifying at the hearing varied, with 

some not using any tools, some only 

enrolling in the DMC program which 

does not involve futures prices, and 

fewer using DRP insurance or the CME 

hedging tools. The record reflects 32 

percent of U.S. milk production was 

covered in 2022 under DRP, and with a 

much smaller use of LGM-Dairy. 

Producers testifying were particularly 

concerned with the implementation 

schedule for the initial change, as risk 

management positions could be as far 

out as 18 to 24 months. Evidence shows 

that from 2018 through 2022, almost all 

CME contracts, 97.34 percent, expired 

within 12 months. According to 

producers, any change to the milk 

composition level assumptions during 

the contract period could result in basis 

risk to producers not covered by the 

hedge. A CME witness testified they saw 

a 54 percent drop in contracts with 

expiration dates over 360 days in 2022 

as compared to 2018, which the CME 

attributed to the industry already 

anticipating a regulatory change based 

on the outcome of this hearing. 

Record evidence depicted the concern 

regulatory changes could have on risk 

management tools, particularly the 

impact on the usability of these tools 

during a transition period. However, 

producer equity requires that risk 

management usage be considered 

against the interest of other producers 

who do not use risk management tools, 

because it would delay recognition of 

the higher components in producer 

milk. 

Risk management issues are not an 

appropriate consideration in whether 

milk composition standards should be 

changed or to what level they should be 

changed. However, this decision finds 

the timing of a regulatory change could 

impact producer hedging decisions 

made before a regulatory pricing change. 

This decision continues to find it 

appropriate to consider an 

implementation timeframe in an attempt 

to mitigate potential financial harm to 

producers who utilize risk management 

tools. 

The recommended decision proposed 

a 12-month implementation lag, 

beginning when other changes from this 

proceeding become effective. The 12- 

month lag was selected to cover hedge 

positions for the vast majority of 

producers utilizing these tools There 

was considerable public comment from 

six dairy farmers, five State Farm 

Bureaus, and four producer-led 

organizations opposing the 12-month 

implementation delay on the proposed 

skim milk composition levels. The 

producers and producer organizations 

requested the standards be implemented 

immediately so producers would be 

properly compensated for the 

components in their milk without delay. 

Some producers questioned why an 

implementation delay was proposed for 

skim milk composition standards but 

not for other factors such as make 

allowances that also impact Class III and 

Class IV prices. As noted in the 

summary of testimony, proponents of 

the delay explained they assume 

additional basis risk if a change in a 

price formula factor results in a price 

higher than what was locked in when 

they placed a hedge. As described in 

testimony, additional basis risk is not 

assumed if a price formula change 

results in a lower price. 

Record testimony from the CME, as 

described earlier in the summary of 

testimony, indicated a decrease in the 

number of contracts with expiration 

dates over 12 months due to the 

regulatory uncertainty created by the 

unknown implementation timeline of 

this rulemaking proceeding. A comment 

submitted by the CME in response to the 

recommended decision noted a 

continuing decline in the volume of 

contracts over 12 months. This indicates 

the market is already adjusting to 

potential FMMO changes. 

Accordingly, while this decision 

continues to find it appropriate to offer 

an implementation lag for the skim milk 

composition standards because of the 

impact to producer hedging positions, 

the record evidence indicates that 

shortening the implementation lag to 6 

months is appropriate. When combined 

with the additional rulemaking steps 

still needed to determine producer 

approval and issuance of a final rule if 

approved by producers, this 

implementation timeframe still offers 


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adequate notice to the vast majority of 

producers utilizing risk management 

tools, while also allowing Class I skim 

milk prices to more quickly reflect milk 

supply and demand conditions. The 

implementation lag would still begin 

when the other changes from this 

rulemaking became effective. 

Lastly, this decision does not support 

an automatic update of the milk 

composition levels, as contained in 

Proposal 1 or Proposal 2. It is clear from 

the record that many factors, as 

described earlier, should be considered 

when making a change. Those factors 

can only be considered through the 

course of a rulemaking. This is the same 

rationale for changes to make 

allowances and yield factors, the other 

two sets of fixed parameters in the 

pricing formulas, which data shows 

tend to change over the long term rather 

than short term (i.e., monthly), but 

outside of the normal, predictable 

seasonal swings in milk components. 

The nature of all of these fixed 

parameters, including skim milk 

components, involve complexities that 

are difficult to anticipate, as discussed 

throughout this final decision, and 

therefore demand robust consideration 

through a rulemaking proceeding. 

Surveyed Commodity Products 

USDA administers the Dairy Product 

Mandatory Reporting Program to gather 

weekly wholesale prices of four 

manufactured dairy products. Average 

survey prices are released weekly in the 

National Dairy Product Sales Report, 

and monthly average commodity prices 

are released by AMS on or before the 

5th of the following month. The 

monthly product prices are then used in 

the FMMO price formulas to determine 

component values in raw milk. The 

same four commodities have been 

surveyed since 2000. The National 

Agricultural Statistics Service 

administered the survey from 2000 to 

2012; submitting data was voluntary 

until 2008, and then mandatory and 

verified from 2008 to 2012. AMS has 

administered the survey since 2012 with 

the data being mandatory and audited 

73 FR 34175 (June 17, 2008). 

This proceeding is considering four 

proposals that would add or remove a 

variety of products in the DPMRP 

survey. Because FMMOs enforce 

minimum raw milk pricing, the 

overarching question for the Department 

in this decision is whether the current 

surveyed commodities are an 

appropriate representation of market 

clearing, wholesale commodity products 

whose prices provide an accurate 

reflection of the minimum value of raw 

milk. DPMRP currently surveys cheddar 

cheese, butter, nonfat dry milk, and dry 

whey. Proposals submitted in this 

proceeding offer changes to the cheese 

survey (Proposals 3, 4, and 6) and 

changes to the butter survey (Proposal 

5). No proposals seek changes to the 

NFDM or dry whey surveys. 

Cheese Survey 

Currently, FMMOs utilize a weighted 

average DPMRP survey price of 40-lb 

cheddar cheese blocks and 500-lb 

cheddar cheese barrels to determine the 

protein price used in the Class III price 

formula. Although both products meet 

the definition of cheddar cheese, the 

different package styles reflect that their 

intended uses are different. Cheddar 

cheese barrels are intended to be further 

processed into processed cheeses. 

Cheddar cheese blocks can also be used 

for that purpose, but they are produced 

with the intention of use in a natural 

cheese with minimal further processing 

(for example cutting into consumer 

packages or shredding.) DPMRP weights 

the cheese price by the volume of 

surveyed blocks and barrels, which 

according to record evidence, is 

typically around 50 percent blocks and 

50 percent barrels. 

Proposal 3 seeks to drop barrels from 

the survey and solely rely on a survey 

of 40-lb blocks. Proponents offered a 

few reasons for dropping barrels. First, 

they believe barrels are overrepresented 

in the survey because the weighting 

methodology is based on the production 

percentages included in the survey and 

not actual production across the entire 

cheddar cheese market. Proponents 

believe the percentage of cheddar 

cheese manufactured and priced off 40- 

pound block prices is significantly 

higher than 50 percent of the U.S. 

natural cheese market. Second, 

proponents argue that having what 

amounts to two products in the survey 

results in an average price that is not 

representative of either blocks or 

barrels. They say this has been 

particularly evident since 2017, when 

market prices between blocks and 

barrels began to significantly diverge, 

both in magnitude and direction, from 

the historical average difference of 

$0.03. Barrel prices were even 

occasionally higher than blocks 

(historically, block prices have been 

higher than barrel prices). Proponents 

argued that when barrel prices have 

been well below the assumed $0.03 

difference, the current weighting 

methodology results in a lower average 

cheddar price than would have been if 

the two prices were weighted in 

accordance with actual, total production 

of each product. Members of NMPF 

testified a block-only survey would 

contain adequate survey volume to be 

representative of the cheese market. 

Opponents of dropping barrels 

asserted: (1) it is not appropriate to 

eliminate approximately half of the 

current cheese survey volume; (2) 

barrels are a market-clearing product 

and should continue to be included in 

the survey; and (3) blocks and barrels 

together represent the national cheese 

market as they are both commodity 

products with different commercial 

uses. Opponents also disputed the claim 

that most cheese is priced off the block 

market. 

During the hearing, Edge offered an 

alternative that would reweight the 

survey average price based on the U.S. 

production volume of blocks and barrels 

as determined by NASS, instead of 

volume from respondents to the AMS 

survey. They opined barrels should not 

be removed from the survey because in 

months where the barrel price exceeded 

blocks, the Class III price would have 

been lower than it otherwise was, and 

consequently producer revenue would 

be less. Instead, Edge argued a better 

solution to the issue of overweighting 

barrels was to use a weighting 

methodology reflective of actual U.S. 

cheddar cheese production. 

Proposal 4, submitted by AFBF, seeks 

to add 640-lb blocks of cheddar cheese 

to the survey. This type of cheddar 

cheese is made using the same process 

as 40-lb blocks and differs only in the 

final container for the cheese curd. Both 

sizes represent an intermediate product 

requiring further processing before it 

can be consumed. The proponent’s 

primary justification is the additional 

survey volume that would be added. 

The AFBF agreed with NMPF that 

barrels are overrepresented in the 

survey, and their proposed solution is to 

add survey volume through the addition 

of 640-lb blocks. This argument 

implicitly assumes the accuracy of milk 

valuation is improved when a larger 

volume of cheese is surveyed. 

Opponents to adding 640-lb blocks 

argued: (1) most 640-lb blocks are 

already priced off 40-lb blocks, so their 

inclusion would not enhance price 

discovery; and (2) 640-lb blocks are 

typically customer-specific which 

would exclude those blocks from the 

survey. The opposition is premised on 

the additional survey volume not 

adding new price information either 

because the prices are already reflected 

in the 40-pound block price, or because 

the customized products are valueadded and should not be included for 

minimum pricing. 

Proposal 6, offered by CDC, seeks to 

add mozzarella cheese to the survey. 

Proponents argue mozzarella is the 


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largest volume of cheese produced in 

the U.S., and revenue from mozzarella 

products should be captured in the 

survey and ultimately reflected in prices 

paid by Class III handlers. Further, 

proponents argued a higher Class III 

price should be reflected in producer 

prices to offset increasing farm 

production costs. 

Opponents argued there is no one 

standard of identity for mozzarella 

cheese, making it difficult to delineate 

what mozzarella product would have a 

substantial volume of reportable sales to 

represent the market value of mozzarella 

cheese. In addition, opponents stated no 

manufacturing cost data is available to 

be evaluated for inclusion in the 

manufacturing allowance calculation for 

cheese. Lastly, opponents asserted 

mozzarella is not a market-clearing 

product and therefore should not be 

considered when determining minimum 

prices. 

While there were three proposals 

offering changes to the cheese survey, 

two of them lack data and evidence to 

support adoption. First, the addition of 

mozzarella is not supported by the 

record. The record reveals multiple 

standards for different mozzarella 

cheese products, but no evidence was 

presented to show which of those would 

be appropriate to survey as an 

improvement in finding a minimum 

value for milk. Furthermore, no 

evidence was presented on what would 

define a commodity mozzarella product, 

rather than a value-added product, 

which is a general rule for inclusion in 

the DPMRP. Proponents offered 

information on mozzarella in consumer 

sized packages (e.g. mozzarella sticks), 

but little to no evidence on what should 

be considered a commodity mozzarella 

product. Evidence shows that a majority 

of what is considered mozzarella 

production is driven by customer 

specification and would not meet any of 

the standards of identities offered, 

indicating it would be considered a 

value-added product and excluded from 

the survey. Lastly, the record indicates 

mozzarella products are already 

typically priced based on the 40-pound 

cheddar cheese block price. Therefore, 

adoption of Proposal 6 would only 

result in significant costs associated 

with determining a commodity 

mozzarella product to be surveyed and 

the ongoing cost of surveying said 

product, without adding measurable 

new price information to the DPMRP 

cheese survey. 

Most public comments submitted 

regarding changes to the surveyed 

commodity products supported the 

continued exclusion of mozzarella 

cheese. A public comment submitted by 

Leprino stated that continued exclusion 

of mozzarella cheese from the Class III 

price formula would limit complexity 

and more accurately reflect a standard 

market price. Two individual dairy 

farmers also submitted comments in 

support of excluding mozzarella cheese. 

In its comments, CDC requested 

reevaluation of the decision, reiterating 

arguments expressed at the hearing that 

more products should be included in 

the DPMRP survey and inclusion of 

mozzarella would raise producer 

revenue. Similar comments were also 

submitted by the National Family Farm 

Coalition. 

Ten dairy farmers from California and 

Wisconsin submitted public comments 

supporting the inclusion of mozzarella 

cheese. The farmers generally expressed 

that mozzarella should be included 

because it is a key milk price indicator, 

and its higher value should be reflected 

in their milk check. A Wisconsin dairy 

farmer was of the opinion the cheese 

value should not be determined from 

only one type of cheese. 

This decision continues to find 

exclusion of mozzarella cheese 

appropriate. Hearing testimony and 

public comments made in support of 

including mozzarella primarily centered 

around generating additional revenue 

for producers as mozzarella garners a 

higher price in the market. FMMO 

prices represent minimum prices paid 

by handlers for milk used in marketclearing commodity products. The 

DPMRP survey specifically excludes 

value added products, and the record 

contains no evidence that mozzarella is 

considered a market-clearing 

commodity product. Consequently, 

Proposal 6 continues to be denied. 

The record lacks evidence to support 

adoption of Proposal 4, adding 640-lb 

blocks. The record reflects widespread 

industry consensus that 640-lb blocks 

are typically priced off 40-lb blocks. 

Because of this price relationship, 

numerous industry witnesses testified 

that no new price information would be 

captured by including 640-lb blocks. In 

addition, several witnesses testified 640- 

lb blocks are largely made-to-order on 

long-term price contracts which would 

exclude the sales from the survey 

because of these marketing 

characteristics. No data was presented 

to evaluate whether any additional price 

information gained through inclusion of 

640-lb blocks would offset the burden 

(lack of efficiency) to both the industry 

and USDA for their inclusion. 

One individual dairy farmer and the 

AFBF submitted comments on the 

recommended decision taking exception 

with the continued exclusion of 640-lb 

blocks. The AFBF reiterated its 

testimony that inclusion of 640-lb 

blocks would add volume to the survey 

to ensure more accurate and 

representative pricing. Similar 

comments were submitted by the New 

York, Michigan, Wisconsin, Minnesota, 

and Arizona Farm Bureaus. AFBF 

further claimed that without inclusion 

of 640-lb blocks, manufacturers switch 

between 40-lb and 640-lb block 

production to avoid reporting prices to 

the DPMRP survey. There is no 

evidence on the record to support that 

such price manipulation would or does 

happen given that 640-lb blocks are 

currently not reported. This decision 

continues to exclude 640-lb blocks as 

the record does not demonstrate price 

discovery is aided by its inclusion. In 

addition, this decision continues to find 

it appropriate that more orderly 

marketing conditions are best 

maintained through price discovery of a 

single commodity product, as further 

discussed below. Accordingly, Proposal 

4 continues to be denied. 

The Department considered the idea 

presented by Edge to reweight blocks 

and barrels in the survey to reflect total 

U.S. cheddar cheese production 

volumes by packaging type, instead of 

survey volumes. However, the record 

lacks evidence regarding the market 

dynamics of barrel production to 

analyze how this idea would be 

implemented, or the impact it may have 

on prices, to evaluate whether it would 

result in a more appropriate cheese 

price. In addition, as is made clear 

below, this final decision continues to 

find that surveying two cheese products 

is no longer an appropriate method for 

providing orderly marketing in today’s 

marketplace, rendering further 

discussion of a more proper weighting 

methodology unnecessary. 

A comment submitted by Edge in 

response to the recommended decision 

maintained reweighting blocks and 

barrels was a more appropriate 

alternative to removing 500-lb barrels 

from the survey. However, the comment 

did not address a methodology to 

determine how such a proposal would 

be implemented. This decision 

maintains that surveying two cheese 

products, regardless of how they were 

weighted in the survey, results in a 

cheese price that does not represent a 

single product. 

What is left to consider is whether 

500-lb barrels should remain in the 

survey. When determining which 

products are appropriate to be included 

in surveys, the Order Reform Final 

Decision is instructive. As described in 

the decision, ‘‘The importance of using 

minimum prices that are marketclearing for milk used to make cheese 


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and butter/nonfat dry milk cannot be 

overstated. The prices for milk used in 

these products must reflect supply and 

demand and must not exceed a level 

that would require handlers to pay more 

for milk than needed to clear the market 

and make a profit.’’ 64 FR 16026, 16094 

(Apr. 2, 1999). To effectuate that 

objective, FMMOs use survey prices of 

market-clearing commodity products. 

In the Order Reform decision, both 

block and barrel cheese were included 

in the survey to increase the sample size 

and give a better representation of the 

cheese market. Since Order Reform was 

implemented, an evaluation of which 

products should be included in the 

cheese survey has occurred twice. In 

2000, shortly after implementation of 

Order Reform, the Department 

considered both the addition and 

subtraction of cheese products into the 

survey, which at that time was 

administered by the NASS. 65 FR 20094 

(April 14, 2000). In 2007, the 

Department again considered changing 

the products in the cheese survey, 

including the removal of 500-lb cheddar 

cheese barrels. 72 FR 6179 (Feb. 9, 

2007). In both proceedings, the 

Department maintained that inclusion 

of both 40-lb blocks and 500-lb barrels 

was representative of the cheese market 

at the time. 

While not contained in the hearing 

notice of the 2000 proceeding, there was 

testimony at the hearing for 

incorporation of other cheeses in 

addition to cheddar. The idea was 

denied because ‘‘If the survey included 

other descriptions of cheddar and other 

types of cheese, such as mozzarella, it 

would not be possible to consider the 

reported price as representative of the 

value of any particular product.’’ 67 FR 

67906, 67926 (Nov. 7, 2002). This 

reasoning illustrates an important 

consideration of which products should 

be contained in the survey; products 

whose resulting prices are 

representative of a distinct product. 

For all other product pricing formulas 

(butter, nonfat dry milk, and dry whey), 

DPMRP only surveys one product. The 

butter survey collects prices of 80 

percent salted Grade AA butter, the 

NFDM survey collects prices of USDA 

Extra Grade NFDM, and the dry whey 

survey collects prices for USDA Extra 

Grade dry whey. While all three of these 

products can be in varying bulk 

packaging sizes as specified in 

regulation, the product itself is 

essentially the same. 7 CFR 1170.8 

Consequently, the resulting survey 

prices represent single, distinct 

products. 

The same cannot be said of the two 

cheddar cheese products surveyed. 

Forty-pound block cheddar cheese is 

typically colored, and primarily sent for 

further processing into consumer type 

packages such as ‘‘cut and wrap’’ and 

shredded products. Barrel cheese, on 

the other hand, is typically white 

(uncolored) and used primarily for 

processed cheese and cheese-flavored 

products. The hearing record 

demonstrates the two products are not 

interchangeable but rather are produced 

for two distinctly different uses which 

have their own supply and demand 

factors. These fundamental qualities 

have not significantly changed since 

Order Reform. At the time of Order 

Reform, and during the subsequent two 

rulemakings considering changes to the 

cheese survey, the prices of blocks and 

barrels were relatively close, and it was 

determined the additional volume 

added with the inclusion of barrels was 

a benefit to orderly marketing as it 

ensured a robust survey sample. 

Testimony and evidence presented 

showed the historical price alignment of 

the two products, estimated at $0.03 per 

pound, until 2017. Proponents argued 

the market changed significantly in 

2017 when there was a dramatic 

increase in price volatility both within 

each product and in the relationship 

between the two products. To determine 

statistical validity of that claim, the 

differences in the monthly average block 

and barrel prices from 2001–2023 were 

analyzed to identify breaks in the 

structure of the block-barrel spread. The 

analysis found December 2016 to be a 

statistically significant month, 

indicating the period between 2001 to 

2016 and 2017 to 2023 were statistically 

different in terms of the block-barrel 

spread volatility. Historically, prices for 

blocks and barrels were similarly 

priced. From 2001–2016, the blockbarrel spread averaged $0.01 per pound, 

while from 2017–2023 the spread 

significantly increased to $0.115 per 

pound. 

When surveying prices of two 

products that recently are so divergent, 

the resulting average cheese price does 

not represent either of the products 

surveyed. For example, in October 2020, 

cheddar block prices averaged $2.5692 

per pound and cheddar barrel prices 

averaged $0.6052 per pound lower at 

$1.9640 per pound. The weighted 

average cheese price for October used to 

compute FMMO component prices was 

$2.2921, a price reflecting neither of the 

two survey products. Accordingly, after 

careful analysis of the record, this final 

decision continues to find the DPMRP 

cheese survey should only include 40- 

lb cheddar cheese blocks. Evidence 

reveals a clear and statistically 

significant shift in the cheddar markets 

occurred in 2017, which witness 

testimony attributed to a number of 

market factors including plant 

investments and increased production 

of white whey. As a result, inclusion of 

both blocks and barrels in the cheese 

survey has resulted in average cheese 

prices used in FMMO formulas that are 

not representative of any one cheese 

product. Therefore, this decision 

continues to recommend adoption of 

Proposal 3. 

Comments submitted by NMPF, 

Select, and DFA in response to the 

recommended decision supported the 

exclusion of 500-lb barrels to provide 

for an appropriate market clearing 

cheese price representative of a single 

product. Comments submitted by two 

individual dairy farmers and state Farm 

Bureaus from Arizona, Wisconsin, 

Minnesota, Michigan, and New York 

expressed concern that the exclusion of 

500-lb barrels could affect market 

transparency and price accuracy. Prices 

used in the FMMO system are collected 

through the DPMRP, which has a robust 

reporting and auditing component to 

ensure reporting handlers are complying 

with program regulations and reporting 

all qualifiable products. In addition, 

Annual Validation surveys are 

conducted with all current and 

potentially qualifying plants (any entity 

marketing and selling one million 

pounds or more of product) to verify 

current reporters know and understand 

all reporting requirements and if 

potentially qualifying plants are still 

exempt from reporting. Consequently, 

given the safeguards described, this 

decision does not find price accuracy 

and market transparency will be 

negatively impacted by the exclusion of 

500-lb barrels. 

There was significant testimony 

regarding how cheddar barrel makers 

would be impacted if 500-lb barrels 

were no longer surveyed. It was clear 

there was no industry consensus, not 

even between barrel makers, on the 

impact. What is paramount to any 

rulemaking is to ensure FMMO 

provisions provide for orderly 

marketing conditions, as required by the 

AMAA. The ultimate consideration is 

which set of bulk, market-clearing, 

commodity type dairy products provide 

the most accurate and efficient means of 

determining the minimum value of milk 

components. One facet of this is to 

ensure prices used in the formula best 

represent the fundamental products 

selected for their purpose. As described 

above, that goal is not being met by 

using both blocks and barrels in the 

survey. 

One concern expressed by some barrel 

cheese manufacturers is that the Class 


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III price resulting from a block-only 

calculation would often be too high to 

ensure a profitable return to barrel 

cheese makers. Multiple considerations 

are worth noting. One, there are 

numerous styles of cheese represented 

in Class III. Manufacturers of each have 

no guarantees on their net returns, and, 

hence, manage their business by taking 

minimum pricing into account. To that 

end, there are many steps remaining in 

this rulemaking process, including 

publication of a final decision, producer 

referendum, and if passed, an 

implementation period. These steps 

should allow barrel manufacturers 

ample time to determine if changes are 

needed in their business practices to 

adjust to the prices that would result 

from this recommended price survey. 

As FMMOs only enforce minimum 

regulated prices on pooled milk, it 

should not be overlooked that barrel 

manufacturers choose whether to pool 

milk subject to minimum prices. 

Since this decision proposes to 

remove 500-lb barrels from the DPMRP 

survey, this decision also proposes a 

conforming change to the cheese pricing 

reporting specifications in the Dairy 

Product Mandatory Reporting Program 

regulations (7 CFR 1170.8). 

Butter Survey 

Currently, FMMOs utilize the 

monthly average DPMRP survey price of 

80 percent salted Grade AA butter in 25- 

kilogram and 68-pound boxes to 

determine the butterfat price used in all 

4 classified pricing formulas. Proposal 5 

seeks to add unsalted butter to the 

survey. Proponents argue the volume of 

U.S. butter production captured by the 

survey has been decreasing, and adding 

unsalted butter would increase the 

sample size and yield more robust 

survey results. 

Testimony in opposition to Proposal 5 

asserted the production of unsalted 

butter is mostly manufactured to a 

particular customer order. Because the 

lack of salt results in a shorter shelf life, 

unsalted butter is generally not 

manufactured unless its sale is 

imminent. On the other hand, because 

salted butter can be stored, when milk 

needs to clear the market and butter 

manufacturers lack a buyer, they will 

make salted butter to store and sell later. 

Opponents also noted unsalted butter is 

typically exported, often facilitated 

through premium-assisted sales, 

rendering those sales unreportable. 

The record lacks evidence to support 

adoption of Proposal 5. Although data 

was entered showing the amount of 

unsalted butter graded by the USDA 

Dairy Grading Program tripled between 

2005 and 2022, the USDA butter grading 

program is voluntary; hence, the data 

does not give a complete picture of the 

U.S. butter market. Furthermore, there 

was no indication regarding what 

percentage of the graded butter volume 

would be reportable given testimony 

noting the structure of the unsalted 

butter market would likely make a large 

share of it nonreportable. No data was 

presented to evaluate whether any 

additional price information gained 

through inclusion of unsalted butter 

would outweigh the burden to both the 

industry and USDA for its inclusion. In 

fact, the record demonstrates that 

unsalted butter is not a market clearing 

product given its shorter shelf-life and 

on-demand production. 

The record evidence supports salted 

butter as the market clearing butter 

product and continuation as the only 

butter product in the survey. In 

addition, as discussed in evaluating the 

cheese survey, having two commodity 

products surveyed (such as blocks and 

barrels) can have the unintended 

consequence of resulting in a 

component price that does not represent 

either product produced. As no price 

information was entered into evidence 

to evaluate how salted and unsalted 

butter prices compare, the Department 

could not determine if a similar 

situation might occur by adding 

unsalted butter to the survey. 

A comment submitted by CDC in 

response to the recommended decision 

advocated for increasing the number of 

products surveyed, including unsalted 

butter, but provided no additional 

arguments for why unsalted butter 

should be considered a market clearing 

product. Accordingly, Proposal 5 

continues to be denied. 

Class III and Class IV Formula Factors 

The Class III and IV formula factors 

include four distinct elements— 

manufacturing (make) allowance, 

butterfat recovery, farm-to-plant 

shrinkage, and nonfat solids yield. 

a. Make Allowances 

Make allowances represent the costs 

of converting raw milk into the four 

manufactured dairy products surveyed 

by USDA. The current make allowance 

levels were determined through a 2007 

rulemaking that became effective 

October 1, 2008, and are as follows ($/ 

per pound): cheese—0.2003; butter— 

0.1715; NFDM—0.1678; and dry whey— 

0.1991. The 2007 rulemaking used an 

average of two surveys: a voluntary, 

unaudited 2006 nationwide cost survey 

conducted by the Cornell Program on 

Dairy Markets and Policy (CPDMP), and 

a mandatory, audited 2006 cost survey 

of plants located in California 

conducted by the CDFA. This 

proceeding must determine whether 

manufacturing costs have increased 

such that a change from the current 

levels is warranted, and if so, what are 

appropriate levels. 

Four manufacturing cost data sets 

were entered into the record for 

consideration in this proceeding. The 

first was conducted by the University of 

Wisconsin, on behalf of USDA, and was 

a voluntary survey of manufacturing 

plants throughout the U.S. (2021 

survey). This survey was similar to the 

2006 CPDMP survey used to determine 

current make allowances, as the primary 

researcher authored both. The 2021 

survey collected cost information 

provided from manufacturing plants of 

cheese (10 plants), butter (12 plants), 

NFDM (27 plants) and dry whey (8 

plants). Annual data submitted by 

plants primarily represented calendar 

year 2019, and included labor, utilities, 

non-labor processing, packaging, general 

and administrative, and return on 

investment cost categories. The 2021 

survey results were presented as total 

averages, and high and low-cost plant 

averages. 

The 2021 survey methodology was 

similar to the 2006 study, except for the 

allocation of non-allocated costs. Some 

fixed or overhead costs could not be 

allocated directly. Some costs were 

inherently direct costs but were not 

collected in a manner that allowed them 

to be assigned to a particular processing 

activity or product. When that occurred 

in previous studies, unallocated costs 

were allocated on a solids basis, which 

testimony revealed to be a common 

practice, according to some 

manufacturers. In some facilities making 

multiple products, such as butter and 

powder plants, not all plant operators 

had the infrastructure to allocate costs 

to the different products. A common 

example was plant utilities wherein the 

plant only had a single electric meter. If 

an operator utilized 70 percent of the 

solids received at the plant in butter, 

then 70 percent of the unallocated costs 

(e.g. electricity) were allocated to butter 

production, and the remaining 30 

percent were allocated to NFDM 

production. This allocation method was 

referred to by the study author as the 

‘‘non-transformation’’ method. 

In the 2021 survey, the author used 

what they believed to be a better method 

for addressing costs the manufacturer 

could not directly allocate. Unallocated 

costs were allocated based on an 

estimation of the degree of processing 

transformation the raw milk underwent 

to transform into a manufactured 

product. On a scale from 1 to 10, 

products with minimum processing 


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(liquid whey) were assigned a 1, while 

products with a high degree of 

transformation (whey protein 

concentrate) were assigned a 10. The 

survey author argued this somewhat 

subjective and ordinal measure of costs 

could provide a more logical allocation 

of certain costs that were inarguably not 

properly attributed through the nontransformation cost allocation method. 

The most obvious example was the 

highly energy consuming process of 

drying for NFDM powders. For example, 

operating a milk dryer requires 

significant energy, resulting in an 

assumption that it was more appropriate 

for a higher percentage of the plant’s 

energy costs to be attributed to its 

powder production. 

A second data set was a survey 

conducted by the same author, 

administered on behalf of IDFA, seeking 

to capture more current costs and 

increase the number of respondents. 

This survey, referred to as the 2023 

survey, was similar to the 2021 survey, 

except for two elements. First, the 

plants that voluntarily submitted data 

were different in number and type: 18 

cheese, 13 butter, 15 NFDM, and 9 dry 

whey plants participated. The survey 

author explained that while the number 

of participating plants were similar for 

butter and whey across both surveys, 

the structure of the plants was 

noticeably different. Consequently, most 

of the variability in average costs 

between the 2021 and 2023 surveys is 

attributed to the plant sample, rather 

than actual cost increases over time. For 

example, the 2021 butter plants 

surveyed tended to be larger than the 

2023 butter plants surveyed, accounting 

for a significant portion of the cost 

difference between the two surveys. 

Some witnesses at hearing also noted 

the 2023 survey captured 2022 costs, a 

time of historically high inflation which 

has since moderated. 

The second notable difference was the 

2023 survey used the nontransformation methodology of 

allocating unallocated costs on a solids 

basis. The survey author indicated 

mixed industry feedback on the 

transformation allocation methodology 

used in the 2021 survey, as many 

participants stated allocating costs on a 

solids basis is standard practice. To 

facilitate comparison of the two surveys 

the author also presented updated 2021 

survey results using the nontransformation allocation methodology. 

In support of a separate data set, 

mandatory and audited 2004–2016 

California manufacturing cost survey 

results, conducted by the CDFA, were 

entered. These surveys formed the 

historical data used to forecast current 

costs in the CA Forecast described 

below. The 2006 CDFA study was used 

by USDA when determining the current 

FMMO make allowances. 

The fourth data set, entered on behalf 

of IDFA, was a result of a statistical 

model that used data from the 2004– 

2016 California manufacturing cost 

surveys and other known input prices 

and productivity data (for example, the 

producer price index) to project future 

California manufacturing costs, referred 

to hereinafter as the CA Forecast. The 

study author testified the model 

predictions were a better estimate of 

costs than a simple trend analysis since 

they accounted for the impacts of other 

factors, such as accelerating inflation, 

that are known to describe changes in 

manufacturing costs in California. 

Unlike the 2021 and 2023 surveys 

which evaluated six cost categories 

(processing labor, utilities, packaging, 

non-labor or utilities processing, general 

and administrative, and return on 

investment), the CA Forecast only 

estimated three cost categories (labor, 

utility, and other). Other costs were 

defined as the remaining costs after 

labor and utility costs were deducted. 

Inasmuch as the CDFA results were 

used by USDA when previously 

amending make allowances, proponents 

argued this statistical estimation of what 

CA manufacturing costs might have 

been for 2022 would be a helpful 

indicator to validate other 

manufacturing cost data entered into the 

record. 

These data sets were the basis of the 

manufacturing allowance levels 

proposed by stakeholders at the hearing. 

Two sets of make allowance levels were 

offered ($/pound): 

Product 

Proposal 7 Proposals 8 and 9 

NMPF IDFA/WCMA 

year 1 

IDFA/WCMA 

year 2 

IDFA/WCMA 

year 3 

IDFA/WCMA 

year 4 

Cheese ................................................................................. 0.2400 0.2422 0.2561 0.2701 0.2840 

Dry Whey ............................................................................. 0.2300 0.2582 0.2778 0.2976 0.3172 

NFDM ................................................................................... 0.2100 0.2198 0.2370 0.2544 0.2716 

Butter .................................................................................... 0.2100 0.2251 0.2428 0.2607 0.2785 

NMPF asserted that their proposed 

levels take a balanced approach between 

recognizing increased manufacturing 

costs and the impact to producers if 

there is a significant increase from 

current levels. They testified that while 

they evaluated the 2021 survey when 

developing their proposal, the levels 

they ultimately proposed were a 

consensus judgment of all NMPF 

members. By their own description, the 

proposal is not intended to reflect the 

entirety of current manufacturing costs. 

NMPF witnesses argued that their 

proposal would update make 

allowances to be a closer reflection of 

manufacturing costs, but further 

increases could not be justified because 

of the potential impact to producers. 

They argued at the hearing, as well as 

in their public comments in response to 

the recommended decision, that until a 

mandatory cost survey can be 

conducted to provide assurances of 

accuracy in manufacturing cost 

calculations, any increases larger than 

they proposed would reduce producer 

revenue, lower already slim (if any) 

margins, and negatively impact the 

availability of adequate supplies of milk 

for fluid use. They considered such 

consequences disorderly. 

NMPF stressed current make 

allowances are too low and have 

resulted in cooperative reblending as a 

method of sharing losses among 

cooperative members who own 

manufacturing plants. NMPF witnesses 

also testified to receiving reduced 

premiums from manufacturing plant 

customers as they attempt to recoup 

costs not covered by the current make 

allowance levels. Reduced and/or 

deferred plant investment caused by 

inadequate make allowances was also a 

theme discussed by many witnesses. 

Cooperative witnesses spoke of the 

disproportionate burden on 

cooperatives with balancing plants, 

which inherently have higher 

manufacturing costs as they do not 

operate continuously at full capacity 

because of the market-wide balancing 

role they necessarily assume. 

NMPF cooperative witnesses and 

dairy farmer members presented 

evidence on increasing farm production 


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costs and slim farm margins. They 

opined at the hearing, as well as in their 

public comments to the recommended 

decision, that the impact to producers’ 

profitability should be considered when 

determining appropriate make 

allowance levels. 

WCMA and IDFA offered separate, 

but identical, proposals. Their proposed 

make allowance levels were derived 

from the average of the 2023 study and 

the CA Forecast, plus a $0.0015 

marketing cost factor. The proposals 

contained a 4-year implementation 

schedule with 50 percent of the increase 

implemented in year 1 and the 

remaining 50 percent implemented 

evenly across the next 3 years. 

Proponents offered a phased 

implementation schedule in recognition 

of the impact that sudden, large 

increases in make allowances would 

have on producer revenue. 

WCMA and IDFA witnesses asserted 

there are limits to a manufacturing 

handler’s ability to lower costs through 

efficiencies. As make allowances have 

not been increased in over 15 years, the 

witnesses stated plants have reached the 

limit on capturing cost efficiencies, and 

inadequate make allowances are now 

impacting innovation and capital 

investments. Manufacturing handlers 

testified their costs of manufacturing 

have increased and are in line with the 

2021 and 2023 survey results. As a 

consequence of inadequate make 

allowances, the witnesses said classified 

prices are overvaluing raw milk. To 

substantiate the claim, witnesses 

compared producer mailbox prices with 

FMMO blend prices. In regions where 

mailbox prices (which contain 

premiums and deductions reflecting 

reblending) are below blend prices, the 

witnesses asserted regulated prices are 

too high, as manufacturers have lowered 

market premiums to make up for high 

manufacturing costs. 

The record clearly demonstrates that 

current make allowance levels are not 

reflective of the costs manufacturers 

incur in processing raw milk into the 

finished bulk products of cheese, butter, 

NFDM, and dry whey. This was one of 

the only facts to which all participating 

parties agreed and offered evidence in 

support, as discussed above. However, 

there were divergent views on what 

should constitute adequate make 

allowance values going forward. 

Since 2000, when product pricing was 

adopted, FMMO decisions have 

consistently relied on surveys of 

observed manufacturing costs to 

determine proper make allowance 

levels. Previous make allowances have 

been derived in whole, or in 

combination with, surveys conducted 

by CPDMP, CDFA, and the USDA Rural 

Business Cooperative Service. The 

importance of relying on actual, 

observed costs cannot be overstated. 

FMMO price formulas determine the 

classified prices handlers pay to dairy 

farmers. It is important that all variables 

reflect actual market conditions. 

While the use of modeling is helpful 

for policy analysis, the evidentiary 

record of this proceeding contains 

adequate observed market data to 

determine make allowance levels 

without the need to rely on model 

assumptions. Modeling involves a host 

of assumptions made by the modeler, as 

was described by the CA Forecast 

author, which result in estimates with a 

wide confidence interval. In other 

words, cost estimates could have a wide 

range of possible values consistent with 

the model. The confidence interval for 

the cost estimates widens when some 

indexes used to forecast are not specific 

to dairy manufacturing. Economic 

modeling was considered and rejected 

during Order Reform as a replacement 

for the Basic Formula Price. This 

decision affirms the Department’s longheld position that this type of modeling, 

requiring extensive assumptions, is not 

an appropriate methodology for 

determining make allowances when 

superior information is available. As it 

is common for participants to not reveal 

confidential information such as 

manufacturing costs, the cost surveys 

contained in evidence provide the best 

available information on observed costs 

for this proceeding. Accordingly, this 

decision does not find justification for 

using the CA Forecast in determining 

appropriate make allowances levels. 

In opposition to Proposals 8 and 9, 

cooperatives and dairy farmer members 

offered substantial testimony regarding 

the potential impact to dairy farmers 

should make allowances be significantly 

increased. Accordingly, they 

recommend adoption of the NMPF 

proposal as it attempts to temper the 

impact to producers. 

FMMOs are designed to provide for 

orderly marketing through classified 

prices paid by handlers and marketwide 

pooling to determine average minimum 

blend prices paid to producers. As 

FMMO formulas are market-oriented, 

the product prices that drive classified 

prices are chosen to reflect current 

supply and demand conditions. This 

was last reiterated by the Department in 

2013, writing ‘‘when the supply of milk 

is insufficient to meet the demand for 

Class III and Class IV products, the 

prices for these products increase as do 

regulated minimum milk prices paid to 

dairy farmers; because the milk is more 

valuable, and the greater value is 

captured in the pricing formulas.’’ 78 FR 

9248 (Feb. 7, 2013). Further, the 

Secretary is expressly authorized in the 

AMAA to set prices to reflect ‘‘. . . the 

price of feeds, the available supplies of 

feeds, and other economic conditions 

which affect market supply and demand 

for milk or its products. . . .’’ 7 U.S.C. 

608c(18). This concept was discussed 

and validated by a federal court and is 

relevant to this proceeding. Bridgewater 

Dairy, LLC et al. v. USDA, No. 3:07–cv– 

104, 2007 WL 634059 (N.D. Ohio, 2007). 

Therefore, the potential impact to 

producers remains an inappropriate 

factor in determining make allowance 

levels. While many stakeholders look to 

the FMMO program to provide stability, 

it is not within FMMO authority to 

support dairy farmer income. 

Accordingly, record evidence does 

not support adoption of Proposal 7, 

whose make allowances levels are not 

reflective of observed costs provided in 

evidence and is designed to dampen the 

impact to producers. 

A vast majority of hearing participants 

supported a USDA-administered, 

mandatory, and audited survey as the 

most appropriate method for obtaining 

observed cost data to determine make 

allowance levels. Some witnesses 

asserted at the hearing, as well as in 

public comments to the recommended 

decision, that make allowances should 

not be changed until such a survey is 

administered and results published. 

Conducting such a survey is not 

currently authorized by law. The lack of 

a mandatory survey has not been reason 

to delay two previous updates to make 

allowance levels, and its continued lack 

of existence now is not a reason for 

delaying such an update in this 

proceeding. As discussed, the record of 

this proceeding clearly demonstrates 

manufacturing costs have increased 

since make allowance levels were last 

changed. Given the body of evidence, 

this final decision continues to find it 

appropriate to increase make allowances 

to ensure the price formulas better 

reflect manufacturing costs and provide 

for more orderly marketing conditions. 

The record reveals the voluntary, 

unaudited nature of the 2021 and 2023 

surveys are not considered an accurate 

representation of costs by some 

stakeholders, particularly the producer 

community. Forty dairy farmers located 

throughout the U.S. and 10 dairy farmer 

organizations who submitted comments 

to the recommended decision opposed 

the make allowances levels contained in 

the hearing notice and proposed by 

USDA due to the unaudited and 

voluntary nature of the surveys on 

which they were based; further, DFA 

and NMPF mentioned that the surveys 


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and hearing record do not include cost 

data from several large manufacturers, 

potentially leading to an upward bias in 

the make allowances contained in the 

recommended decision. The AFBF; the 

Arizona, Florida, New York, Michigan, 

and Tennessee Farm Bureaus; and some 

dairy farmers argued in their comments 

that make allowances should not be 

changed without a mandatory audited 

survey, reiterating testimony on the 

weaknesses of the 2021 and 2023 

surveys. In their joint comment, the 

Wisconsin and Minnesota Farm Bureaus 

rejected raising make allowances, as the 

survey data is unaudited and voluntary. 

Raising make allowances, they 

commented, will be detrimental to dairy 

farmers in the Upper Midwest and other 

regions with high Class III and IV 

utilization, speeding up dairy farm 

consolidation and bankruptcies. NMPF 

and DFA comments expressed support 

of an increase in make allowance levels 

at this time but maintained the NMPFproposed make allowances in Proposal 

7 are best supported by the record until 

a mandatory survey can be conducted. 

Questions regarding plant sampling, 

cost allocation methodology, and 

capturing a high-cost time period 

expressed in testimony and public 

comments are legitimate considerations. 

Issues with the results of voluntary, 

unaudited surveys are not new to the 

process of determining make 

allowances. Similar situations occurred 

in both the 2006 and 2007 rulemakings. 

In both instances, make allowances 

were determined by using parts of 

different survey results. The record of 

this proceeding continues to support the 

use of unaudited, voluntary surveys for 

determining make allowances, as has 

been done in the past. 

What remains for the Department to 

consider is determining representative 

make allowance levels given the 

evidentiary survey data: the 2021 

survey, the 2023 survey, and the 2016 

CA survey. The record does not support 

consideration of the 2021 survey results 

that relied on the transformation cost 

allocation method for allocating 

unallocated costs. Hearing participants 

expressed skepticism of this method as 

it is standard industry practice to 

allocate costs on a solids basis. 

Although the study author explained 

how the transformation numbers were 

assigned to products, the record does 

not contain sufficient evidence to 

validate the new methodology. Whether 

or not the transformation methodology 

is theoretically more accurate is not 

relevant. What is germane is that 

manufacturers allocate costs, manage 

their plants, and make marketing and 

pricing decisions in accordance with the 

traditional method of allocating fixed 

and unallocated costs on a pro-rata basis 

of milk solids in the final products. 

Accordingly, the 2021 survey results 

utilizing this methodology were not 

considered when determining the 

proposed levels in this decision. Select’s 

alternative methodology presented in its 

post-hearing brief, which relied on the 

transformed 2021 survey numbers, was 

not considered further. 

The recommended decision found 

usage of the revised non-transformed 

2021 and 2023 surveys and the 2016 CA 

survey appropriate to determine the 

proposed make allowances. The 

decision found that relying on a 

combination of these survey results 

provided a consensus set of data to 

determine appropriate make allowance 

levels and was superior to relying only 

on one survey. 

The Department received 75 

comments regarding amendments to 

make allowances, submitted by dairy 

farmers (mostly small), cooperatives, 

processors, trade associations, and 

advocacy groups from 23 different 

states. 

Dairy farmers and organizations 

representing dairy farmers, including 

the AFBF; state Farm Bureaus 

representing Florida, Michigan, 

Minnesota, New York, Tennessee, and 

Wisconsin; Farm Women United; the 

National Family Farm Coalition; and the 

Ohio Farmers Union opposed the make 

allowance levels in the recommended 

decision. The comments said increasing 

make allowances would reduce farm 

income, particularly for small and 

medium-sized farms, potentially leading 

to more closures and accelerating 

industry consolidation. 

In their comments, NMPF and DFA 

also opposed the make allowance levels 

specified in the recommended decision 

and continued to advocate for the 

NMPF-proposed levels in Proposal 7. 

They reiterated hearing testimony that 

dairy farmer cost of production should 

be considered when determining make 

allowances to ensure orderly marketing 

conditions. In its comment, NMPF cited 

a 2008 amendment to the AMAA 

stipulating the price for feed and fuel 

should be considered when determining 

whether to adjust make allowances. (7 

U.S.C. 608c(17)(G)). The provision cited 

by NMPF applies to hearings 

commencing prior to September 20, 

2012, and the provision was not 

extended in the 2012 Farm Bill. The 

Department continues to find it to be 

inappropriate to consider producer 

income as a factor in determining make 

allowance levels. 

In its comment to the recommended 

decision, Edge reiterated arguments 

from its post-hearing brief that make 

allowances should be based on plants at 

the technological frontier, rather than 

inefficient plants they claim were 

represented in the voluntary surveys 

whose results are part of this hearing 

record. Since Edge offered no details in 

their comment on how this 

methodology would be implemented 

given this proceeding’s evidence, no 

further consideration was given. 

Also opposing the make allowances 

contained in the recommended 

decision, IDFA and WCMA advocated 

in their comments for use of the 2023 

survey data only. IDFA and WCMA 

argued that after eliminating the 2022 

CA Forecast from consideration, the 

only reasonable data remaining is the 

2023 survey results. They both objected 

to the use of the 2021 survey to 

moderate the influence of prices during 

an inflationary period. According to 

IDFA and WCMA, unless price deflation 

occurred, which they argued did not, 

there is no reason for adopting anything 

other than the 2023 survey results for all 

four commodities. 

Inflation describes a general price 

level increase across the whole 

economy, whereas deflation describes a 

general price level decrease. Price 

decreases can occur in an inflationary 

environment just as price increases can 

occur in a deflationary one, and 

producer price indexes (PPIs) are one 

way to evaluate such price movements. 

A series of Federal Reserve Bank of St. 

Louis input indexes and U.S. Energy 

Information Administration price data 

relevant to dairy commodity 

manufacturing, from June 2022 (marking 

the end of most pandemic-related 

programs) to June 2024 (the last full 

month before the recommended 

decision was issued) was evaluated to 

analyze IDFA and WCMA comments. 

While this decision does not find it 

appropriate to rely on indexing or 

forecasting to determine make 

allowances levels, the consideration of 

indexes can serve as a check that the 

proposed levels are reasonable and 

reflect current costs given the totality of 

evidence in this rulemaking. 

As stated in the recommended 

decision, there have been price 

decreases in sectors relevant to the 

manufacturing process that indicate 

manufacturing costs were high in 2022 

and thus are not reflective of current 

costs. The PPIs from June 2022 to June 

2024 for Corrugated Materials, which 

declined approximately 14 percent, and 

Lumber, which declined more than 21 

percent, as well as the Henry Hub (U.S. 

Energy Information Administration) 

average spot price for natural gas, which 

declined more than 67 percent, serve as 


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examples of prices that declined during 

an inflationary period. The PPI for All 

Commodities, which decreased nearly 9 

percent from June 2022 to 2024, is 

another more general indicator that 

input prices for commodities were 

particularly high in 2022 compared to 

2024. Other examples of elevated input 

prices highlighted in the IDFA and 

WCMA public comments include labor, 

legal, insurance, and administrative 

costs. The presence of cost categories 

that have not declined do not preclude 

objective declines in other categories. 

The record indicates that even after 

accounting for wage increases of nearly 

9 percent, according to the Employment 

Cost Index from the U.S. Bureau of 

Labor Statistics, declines in other areas 

outweigh increased labor costs, leading 

to an overall decrease in manufacturing 

costs. These overall input price 

decreases are relevant to all surveyed 

products; thus, the Department 

continues to find sole reliance on the 

2023 survey is inappropriate in 

determining make allowances that 

reflect current costs. 

IDFA and Leprino commented the 

Department should continue to 

incorporate a $0.0015 marketing 

allowance in all make allowances, based 

on the necessary costs to get commodity 

products to market, historical precedent, 

and lack of supporting data to merit its 

removal. IDFA stated the $0.0015 

marketing allowance was first adopted 

as part of Order Reform to cover the cost 

of moving commodity products to 

market, which include maintaining and 

staffing warehouses, supporting a 

marketing and sales staff, and 

transporting product to market. Leprino 

commented that the marketing 

allowance is necessary to reflect 

commodity costs at the same stage in 

the value chain as commodity prices in 

the NDPSR. In its comment, Leprino 

pointed to the make allowance levels 

since Order Reform as examples of the 

rationale in maintaining the $0.0015 

marketing allowance without new data 

to merit its removal. IDFA commented 

that, while no specific data was offered 

to estimate the current marketing 

allowance cost level, a review of the 

record reveals no evidence to support its 

removal. 

The Department reevaluated the 

record for testimony related to the 

marketing allowance. The 2021 and 

2023 cost surveys included costs 

through product packaging. Postpackaging costs such as warehousing 

and marketing were specifically 

excluded. Testimony from a cheese 

manufacturer estimated the $0.0015 

marketing allowance covers postpackaging costs unaccounted for in the 

2021 and 2023 cost surveys. Further, the 

DPMRP requires manufacturers to report 

prices that incorporate all costs 

associated with the product before it is 

shipped to market. It is important that 

prices reported to DPMRP and released 

through the NDPSR relate to the costs 

accounted for in the make allowance. 

Since marketing costs are included in 

prices reported through DPMRP, it is 

appropriate for such costs to also be 

accounted for in the make allowance. 

Therefore, this decision finds it 

appropriate for make allowances to 

include a $0.0015 marketing allowance. 

Additional public comments were 

submitted which pertained to specific 

make allowance levels proposed in the 

recommended decision. Those 

comments are addressed in the 

respective sections below. 

Cheese 

2021 2023 2016 

Current 

USDA 

proposed 

(recommended 

decision) 

USDA 

proposed 

(final 

decision-inc. 

marketing 

allowance) 

Non-transformed Non-transformed CA survey 

Low Cost .............................................. .............................. $0.2201 .................... .................... ........................ ........................

High Cost ............................................. .............................. $0.3181 .................... .................... ........................ ........................

Average ................................................ $0.2365 $0.2643 $0.2454 $0.2003 $0.2504 $0.2519 

# Plants ................................................ 10 18 4 .................... ........................ ........................

The recommended decision proposed 

a $0.2504 per pound cheese make 

allowance, derived from the average of 

the 2021 and 2023 non-transformed 

survey results. The 2023 survey 

incorporates a representative sample 

size, accounting for 55.6 percent of 

NASS cheddar cheese production. The 

record indicates the 2023 survey, which 

collected cost data primarily from 2022, 

covered a period of relatively high 

inflation and rising input costs. An 

example is packaging costs, including 

lumber and corrugated materials, which 

testimony indicates and the input index 

analysis described earlier confirms, 

have receded since peaking in 2022. 

Absent any other data on the record, 

this final decision continues to find it 

appropriate to utilize an average of the 

2023 and 2021 non-transformed survey 

results to ensure the proposed cheese 

make allowance is not 

disproportionately affected by higher 

2022 costs that have since moderated. 

The decision continues to find use of 

the 2021 and 2023 surveys provides a 

manufacturing allowance reflective of 

the national cheddar cheese market. In 

2022, California cheddar cheese 

production represented approximately 

6.9 percent of reported NASS cheddar 

cheese production. As incorporation of 

the 2016 CA survey would result in an 

over representation of California cheese 

manufacturing costs, this decision does 

not support its consideration. 

In its public comment, AFBF wrote 

the current cheese make allowance is 

clearly adequate as there has been 

considerable investment in cheese 

plants; thus, the recommended cheese 

make allowance is too high. While 

anecdotal testimony on investments in 

cheese plants was presented at the 

hearing, data on the record clearly 

indicates costs of processing commodity 

cheese have increased since make 

allowances were last updated. 

The AFBF, as well as dairy farmers 

from Iowa and Pennsylvania, 

commented in opposition of all make 

allowance increases, but specific to 

cheese they argued that only about half 

the number of DPMRP reporting 

manufacturing plants are represented in 

the data. The Department continues to 

find it appropriate to use the 2021 and 

2023 survey results, as the two samples 

together provide a reasonable 

representation of cheddar cheese 

processing. 

This final decision therefore 

recommends a $0.2519 per pound 

cheese make allowance, derived from 

the average of the 2021 and 2023 nontransformed survey results plus the 

$0.0015 marketing allowance. 

Butter 


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2021 2023 2016 

Current 

USDA 

proposed 

(recommended 

decision) 

USDA 

proposed 

(final 

decision-inc. 

marketing 

allowance) 

Non-transformed Non-transformed CA survey 

Low Cost .............................................. .............................. $0.2616 $0.1838 .................... ........................ ........................

High Cost ............................................. .............................. $0.4210 $0.2149 .................... ........................ ........................

Average ................................................ $0.1338 $0.3176 $0.1938 $0.1715 $0.2257 $0.2272 

# Plants ................................................ 12 13 7 .................... ........................ ........................

The recommended decision proposed 

a $0.2257 per pound butter make 

allowance, derived from the average of 

the 2021 and 2023 non-transformed 

survey results. While the 2021 and 2023 

surveys had roughly the same number of 

reporting plants and represented 

roughly the same volume of NASS U.S. 

butter production (approximately 80–82 

percent), the plant samples differed 

significantly. The study author claimed 

sampling was the main driver for the 

notably different survey results. The 

2023 survey captured data from both 

smaller and larger plants while the 2021 

survey consisted of a more homogenous 

sample of larger and more efficient 

plants. The record indicates the 2023 

survey, which collected cost data 

primarily from 2022, covered a period of 

relatively high inflation and rising input 

costs. According to the Producer Price 

Index for All Commodities (PPI), 

published by the Bureau of Labor 

Statistics, prices have moderated since 

their June 2022 peak. Thus, this final 

decision continues to find it appropriate 

to average the 2023 and 2021 nontransformed surveys to account for the 

differences in plant sampling, and to 

ensure the proposed butter make 

allowance is not disproportionately 

affected by higher 2022 input costs that 

have since moderated. The decision 

continues to find use of the 2021 and 

2023 surveys provides a manufacturing 

allowance reflective of the national 

butter market, as both surveys represent 

over 80 percent of 2022 NASS butter 

production volumes. This decision does 

not support incorporating the 2016 CA 

survey in the calculation as it would 

overrepresent California butter 

manufacturing costs. 

The Department received no public 

comments in response to the 

recommended decision specifically 

addressing the butter make allowance. 

However, since this decision finds it 

appropriate to continue to incorporate a 

marketing allowance into all make 

allowances, the final decision 

recommends a $0.2272 per pound butter 

make allowance, derived from the 

average of the 2021 and 2023 nontransformed survey results plus a 

$0.0015 marketing allowance. 

NFDM 

2021 2023 2016 

Current 

USDA 

proposed 

(recommended 

decision) 

USDA 

proposed 

(final 

decision-inc. 

marketing 

allowance) 

Non-transformed Non-transformed CA survey 

Low Cost .............................................. .............................. $0.2302 $0.1854 .................... ........................ ........................

High Cost ............................................. .............................. $0.3247 $0.2786 .................... ........................ ........................

Average ................................................ $0.2454 $0.2750 $0.2082 $0.1678 $0.2268 $0.2393 

# Plants ................................................ 27 15 8 .................... ........................ ........................

The recommended decision proposed 

a $0.2268 per pound NFDM make 

allowance, derived from the average of 

the 2021 non-transformed survey and 

2016 CDFA cost of processing survey 

results. In 2022, California represented 

43.7 percent of U.S. NFDM production. 

This supported hearing testimony 

describing the importance of California 

manufacturing facilities in the total U.S. 

production of NFDM powder. Therefore, 

the recommended decision found it 

appropriate to place more emphasis on 

California NFDM plant costs 

considering the dominant share of 

NFDM production by California plants. 

As stated previously, given all the cost 

surveys contained in the evidentiary 

record had shortcomings, the 

recommended decision found it 

appropriate to use an average of two 

surveys when recommending make 

allowances. The recommended decision 

concluded that it was best to combine 

the 2021 survey and the 2016 CDFA cost 

of processing survey to determine the 

NFDM make allowance. The 2021 

survey was selected over 2023 due to a 

better plant sample and because the 

2023 survey represented costs during a 

period of high inflation, in particular for 

energy-intensive (natural gas) dried 

products like NFDM. 

Comments from IDFA, CDI, and AgriMark specifically opposed the NFDM 

make allowance contained in the 

recommended decision, advocating for 

different methodologies to be applied. 

IDFA argued the NFDM make allowance 

should at least be based on a weighting 

of the 2021 non-transformed cost of 

production survey and the 2023 nontransformed cost of production survey 

for all plants, or at most an adjustment 

to the 2023 survey to address higher 

energy costs in 2022 could be made. 

Agri-Mark and CDI argued that data 

sources for the NFDM make allowance 

should be reconsidered, questioning 

whether use of 2016 data was too old 

and not reflective of current costs, 

especially given its 50 percent 

weighting in the computation. While the 

2023 survey was not used due to higherthan-normal natural gas prices that have 

since moderated, Agrimark argued in 

their comment, other cost categories 

have not similarly moderated. CDI 

commented that the NFDM make 

allowance should be determined using a 

similar methodology to dry whey, taking 

the simple average of the nontransformed 2021 survey and the 2023 

low-cost survey, which would equal 

$0.2378. 

This decision continues to find it 

appropriate, given the shortcomings of 

the cost surveys in the record, to use an 

average of two surveys to determine 

appropriate make allowance levels. 

However, after a review of public 

comments and a reevaluation of record 


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evidence, this final decision finds it 

appropriate to apply a consistent 

methodology for NFDM and dry whey, 

as described in CDI’s comment. 

The 2023 survey represents the most 

recent cost data but significantly fewer 

participating plants than the 2021 

survey. Additionally, as NFDM 

production is heavily reliant on natural 

gas, the 2023 survey captured the 

historically high energy costs, 

particularly natural gas. Natural gas 

prices increased substantially between 

2019 and 2022. The Henry Hub Natural 

Gas Spot Price increased 153 percent 

between 2019 and 2022. However, 

prices declined from June 2022 to June 

2024, with the spot price falling over 67 

percent. Natural gas prices in 2024 were 

comparable to prices in 2019, with the 

June 2024 spot price only 5 percent 

higher than in 2019. This data suggests 

current natural gas prices are similar to 

price levels observed during the 2021 

survey. Cost breakdown of the 2023 

survey show that utilities (energy) costs 

constituted 15 percent of the total 

manufacturing costs of dry whey. This 

is in contrast to utilities representing 7 

percent of total costs for butter and 6 

percent for cheese. As the record reveals 

the major component of this difference 

in utilities costs share is from drying the 

product, this cost category is sensitive to 

movements in natural gas prices. 

The record reveals the 2021 survey 

represents more NFDM plants than the 

2023 survey (27 vs. 15), while the 2023 

survey represents a larger volume of 

NDFM production than the 2021 survey 

(91.2 percent vs. 64.8 percent). Utilizing 

a simple average of the 2021 and the 

low-cost 2023 surveys results in a better 

representation of NFDM production 

across the universe of plants making the 

product, while moderating the influence 

of the high inflationary period in 2022 

as described earlier in the PPI analysis, 

with particular consideration of 

declining utilities costs described above. 

Therefore, in the final decision, the 

Department recommends a $0.2393 per 

pound NFDM make allowance, derived 

from the average of the 2021 nontransformed survey and the 2023 nontransformed low-cost survey result, plus 

a $0.0015 marketing allowance. 

Dry Whey 

2021 2023 2016 

Current 

USDA 

proposed 

(recommended 

decision) 

USDA 

proposed 

(final 

decision-inc. 

marketing 

allowance) 

Non-transformed Non-transformed CA survey 

Low Cost .............................................. .............................. $0.2848 .................... .................... ........................ ........................

High Cost ............................................. .............................. $0.3952 .................... .................... ........................ ........................

Average ................................................ $0.2457 $0.3361 .................... $0.1991 $0.2653 $0.2668 

# Plants ................................................ 8 9 .................... .................... ........................ ........................

The recommended decision proposed 

a $0.2653 per pound dry whey make 

allowance, derived from the 2021 nontransformed survey and 2023 nontransformed low-cost survey result. 

Similar to NFDM, dry whey production 

is heavily energy (natural gas) 

dependent, and the same concerns 

regarding the 2023 survey results exist 

for dry whey, as discussed above. 

Absent any other data on the record, the 

recommended decision found it suitable 

to utilize the 2023 non-transformed lowcost average ($0.2848) with the 2021 

non-transformed survey to ensure the 

proposed dry whey make allowance is 

not disproportionately affected by 

higher 2022 natural gas and utilities 

costs that have since moderated. 

Several comments were received 

specifically on the dry whey make 

allowance contained in the 

recommended decision. IDFA and 

WCMA opposed the methodology used 

and opined the dry whey make 

allowance should be based solely on the 

2023 non-transformed cost of 

production survey for dry whey plants. 

Due to 2022 being a period of 

particularly high prices, this decision 

continues to maintain their proposed 

methodology is not appropriate. Earlier 

analysis of relevant price indices 

contained in the record support this 

conclusion. 

In its public comment, the AFBF 

wrote that the current dry whey make 

allowance is clearly sufficient, as there 

has been considerable investment in dry 

whey plants; thus, the amended dry 

whey make allowance contained in the 

recommended decision is too high. 

While anecdotal testimony on 

investments in dry whey plants was 

presented at the hearing, data on the 

record clearly indicates costs of 

processing commodity dry whey have 

increased since make allowances were 

last updated. 

The AFBF, as well as dairy farmers 

from Iowa and Pennsylvania, 

commented in opposition of all make 

allowances, but especially dry whey, as 

only about half the number of DPMRP 

reporting plants provided cost data. 

This decision continues to find it 

appropriate to use two surveys in the 

make allowance calculation, as together 

they provide sufficient representation of 

dry whey production. 

A public comment filed by the 

American Dairy Coalition (ADC) 

opposed all make allowances in the 

recommended decision and advocated 

for reevaluation of all proposed changes. 

ADC specifically addressed the 

proposed increase in the dry whey make 

allowance relative to its small market 

price and advocated implementing a 

snubber to prevent negative producer 

values for other solids. Per ADC’s 

suggestion, if the market price for dry 

whey is less than the make allowance in 

a given month, the other solids price 

would be zero rather than a resulting 

negative value. For historical context, 

the Class III price formula briefly 

contained a similar snubber from Order 

Reform implementation (January 2000) 

to October 2001, but it was removed as 

it was found to mute market signals and 

arbitrarily adjust prices. There is 

insufficient evidence on the hearing 

record of this proceeding to support 

ADC’s comment suggesting a change to 

the other solids snubber. Similar to 

NFDM, utilities represent a larger share 

of manufacturing costs for dry whey at 

10 percent of total cost, rather than the 

7 percent and 6 percent for butter and 

cheese, respectively, which are not 

dried during the manufacturing process. 

Accordingly, the same consideration of 

declining utility costs evaluated in the 

NFDM section apply to dry whey. 

Utilizing a simple average of the 2021 

and low-cost 2023 surveys results in a 

better representation of dry whey 

production across the universe of plants 

making the product, while moderating 

the influence of the high inflationary 

period in 2022 as described earlier in 

the PPI analysis, with particular 

consideration of declining utilities cost 

since 2022. Therefore, this decision 

recommends a $0.2668 per pound dry 

whey make allowance, based on the 


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average of the 2021 non-transformed 

survey and 2023 low-cost dry whey 

surveys, plus a $0.0015 marketing 

allowance. 

The Department finds the proposed 

make allowances in this final decision 

are more representative of 

manufacturing costs than current make 

allowances, which were last changed in 

2008. Record evidence clearly supports 

updates. However, as previously 

mentioned, each of the observed costs 

surveys have weaknesses. The proposed 

make allowance levels are the best 

representation of manufacturing costs, 

given publicly available data and 

evidence contained in this proceeding’s 

record. 

b. Butterfat Recovery 

Currently, the Class III formula 

contains a 90-percent butterfat recovery 

assumption. This represents the 

percentage of butterfat in raw milk that 

can be recovered during the 

cheesemaking process, recognizing that 

for both theoretical and practical 

reasons, 100% of utilization of butterfat 

(or any other raw milk component) in 

the production of a dairy product is 

impossible. Proposal 10 seeks to 

increase the butterfat recovery 

assumption to 93 percent. Proponents 

claimed modern cheesemaking 

equipment and better cheese handling 

techniques make a higher butterfat 

recovery not only attainable, but 

common in practice. 

Opponents mainly consisted of 

manufacturers asserting that while some 

cheese plants attain butterfat recovery 

percentages in excess of 90 percent, 

yield assumptions that increase 

producer revenue, such as butterfat 

recovery, should not be amended 

outside a comprehensive review of all 

assumptions that determine yield 

factors. Multiple opponents mentioned 

the overvaluation of whey cream as an 

example of a potential issue. 

This rulemaking proceeding sought to 

consider changes to the FMMO pricing 

formulas. Industry participants were 

invited to submit proposals concerning 

the current pricing provisions of the 

FMMOs. Those opposing changes to the 

butterfat recovery percentage had an 

opportunity to submit proposals on any 

of the yield factors, as they fall within 

the provisions of the pricing formulas. 

None, other than those submitted by 

Select, were received. This decision 

does not find it appropriate to deny 

consideration of any yield related 

proposal presented in this proceeding 

on the basis of a potential future 

evaluation of all yield factors. 

The record contains testimony from 

several expert witnesses explaining the 

cheesemaking process and use of more 

modern cheese equipment and 

technology, including improvements in 

coagulants and curd handling, allowing 

handlers the ability to capture a larger 

percentage of butterfat in cheese. 

Testimony also described how cheese 

fines, or small particles of cheese left in 

whey during the cheesemaking process, 

represent a significant source of fat loss 

to a cheese manufacturer, and are not 

returned to the finished cheese product 

due to concerns of bacterial 

contamination. As butterfat recovery 

numbers are considered confidential 

information, the record does not contain 

a well-developed picture of recovery 

levels currently attained in U.S. cheese 

plants. The record indicates the age of 

equipment and technology used in 

cheese plants varies widely. While 

evidence was submitted describing high 

butterfat retention rates that are 

achievable using new equipment, it 

does not demonstrate those rates are 

reflective of the general industry 

conditions. Other than a few new, very 

modern plants, the record does not 

support a 93 percent butterfat recovery 

factor as attainable by most cheese 

plants. 

The record contains considerable 

testimony estimating current butterfat 

recovery rates in the universe of cheese 

plants with varying ages of equipment 

and technology. Expert witnesses 

estimated butterfat recovery in cheddar 

plants ranged from 88 to 93 percent, 

attributing much of the difference to 

cheddar vat equipment. It is important 

that the product price formulas reflect 

current, not theoretical, conditions for 

the general population of plants. Experts 

generally offered that most commodity 

cheddar cheese plants can obtain greater 

than 90 percent recovery, but few obtain 

93 percent, with a 91 percent butterfat 

recovery rate considered the industry 

average. Accordingly, this decision 

recommends a 91 percent butterfat 

recovery rate. Such an increase 

necessitates a change to the butterfat 

yield factor in cheese from 1.572 to 

1.589. 

The Department received comments 

in support of the amended butterfat 

recovery factor contained in the 

recommended decision, including from 

several state Farm Bureaus (Arizona, 

Florida, Michigan, Minnesota, New 

York, Tennessee, and Wisconsin) and 

five California dairy farmers. These 

commenters support increasing the 

butterfat recovery factor from 90 to 91 

percent, as it more accurately reflects 

modern cheesemaking technology and 

plant efficiencies. 

Several comments were also 

submitted in opposition of the proposed 

butterfat recovery factor. Commenting in 

opposition, Select continued to contend 

that the factor should be updated to 93 

percent. Select pointed to testimony 

from its expert witness claiming that 93 

percent butterfat recovery is attainable 

by most plants. Even with older cheese 

making equipment, Select reiterated 93 

percent butterfat recovery can be 

achieved. This decision maintains that 

the butterfat recovery percentage should 

represent what is currently attained by 

the universe of U.S. cheese 

manufacturing plants, not what can 

theoretically be attained or may be 

attained in modern plants. Therefore, 

this decision maintains a proposed 91 

percent butterfat recovery factor. 

In its comment, Crystal Creamery 

argued that cheese moisture levels and 

other factors in the cheese making 

process should also be considered in the 

amended butterfat recovery factor and 

requested conforming changes to the 

butterfat-to-protein ratio, from 1.17 to 

1.16. Sufficient testimony and evidence 

was not provided on the record to 

justify a change to the butterfat-toprotein ratio, therefore, the proposed 

conforming change is denied. 

c. Farm-to-Plant Shrinkage 

Currently, the FMMO formulas 

assume a farm-to-plant shrinkage factor 

of 0.25 percent and 0.015 pounds per 

cwt of additional butterfat loss. This 

represents normal milk losses that occur 

when milk is delivered from the farm to 

a plant. Under the FMMO system, most 

handlers purchase milk from producers 

based on farm weights and tests. The 

farm-to-plant shrinkage factor 

recognizes that when milk is pumped 

from a farm bulk tank to a milk tanker, 

and then from milk tanker to the plant 

silo, milk, and to a greater degree 

butterfat, sticks to the sides of the pipes 

and tanks. Milk and butterfat can also be 

lost in the milk hauling process when 

milk haulers must make multiple farm 

stops to fill a load. As a result, plants 

often physically receive less milk and 

butterfat than was measured at the farm. 

The record reflects that as the nature of 

milk and butterfat has not changed, it 

still sticks to equipment. In recognition 

of this reality, the yields are slightly 

reduced to reflect the amount of milk 

and butterfat actually available to make 

a product, as compared to the amount 

of milk picked up on farms. 

The proponents asserted that 

producers shipping full tanker loads is 

common in the Southwest where they 

operate. They testified to and provided 

cooperative data regarding the steps 

they have taken to reduce shrinkage. 

Proponents said increased average farm 

size results in fewer stops by the milk 


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hauler to fill up a load, thus lowering 

overall shrinkage. They opined 

shrinkage should no longer be a reality 

for farms as losses can be managed on 

any size farm through adoption of farm 

scales, flow measurements, and other 

technologies to improve accuracy. 

Opponents argued only a small 

percentage of dairy farms are able to 

produce enough milk to fill an entire 

tanker load. While the number of large 

farms has grown, opponents testified 

removing the shrinkage factor could 

further incentivize manufacturers to 

prefer large over small farms. 

Consequently, they opined the farm-toplant shrinkage factor should remain. 

Record evidence reveals most dairy 

farms are unable to fill a tanker load per 

day. According to the NASS, daily milk 

production per cow averaged 66.5 

pounds in 2022. Assuming an average 

tanker load of milk is approximately 

48,000 pounds, it would require a 

milking herd of 722 cows to fill a tanker. 

In 2022, of the 24,470 U.S. dairy farms 

with milk sales, only 3,451 farms 

(approximately 14 percent) had 500 or 

more milk cows, and 2,013 

(approximately 8 percent) had 1,000 or 

more milk cows. 

For the approximately 90 percent of 

farms that are not able to ship full 

tanker loads of milk, the record 

indicates farm-to-plant losses remain a 

reality for most producers and 

cooperatives operating within the 

FMMO system. As most handlers pay 

producers based on farm weights and 

tests, it remains appropriate to provide 

recognition in the formulas for milk 

solids paid for but not physically 

received at the handler’s facility. 

Leprino submitted a public comment 

in support of maintaining the farm-toplant shrinkage. In contrast, Select 

commented in opposition of the 

amended shrinkage in the 

recommended decision, reiterating 

arguments in the hearing that it should 

be eliminated. According to Select, the 

recommended decision underestimates 

the number of farms capable of shipping 

a full tanker. Select contends that more 

than 75 percent of milk is produced on 

farms shipping full tanker loads and 

asserts the recommended decision did 

not address unsupported additional 

butterfat shrink. 

While the recommended decision 

inadvertently failed to mention the 

0.015 pounds per cwt of additional 

butterfat loss, the entirety of the farmto-plant shrinkage within the formulas 

and the evidentiary record was 

evaluated. The record contains evidence 

that additional butterfat losses occur as 

butterfat naturally clings to equipment. 

While Select offered evidence its 

cooperative has developed operating 

practices that have greatly reduced 

observed shrinkage, no other data was 

offered to validate that it is being 

attained by other industry stakeholders. 

Thus, this decision continues to find it 

appropriate to include the 0.25 percent 

shrinkage factor and the 0.015 pounds 

of additional butterfat loss in the 

formulas as these factors should be 

based on what is attained, on average, 

rather than only attainable by some. 

Accordingly, this decision continues to 

reject Proposal 11. 

d. Nonfat Solids Yield 

Currently, the FMMO Class IV price 

formula contains a NFDM yield factor of 

0.99, representing the pounds of NFDM 

that can be made from one pound of 

nonfat solids of raw milk delivered from 

the farm. This factor is less than 1.0, as 

it recognizes both farm-to-plant 

shrinkage and the portion of nonfat 

solids utilized in NFDM. 

Select offered Proposal 12 to adjust 

the NFDM yield factor to account for 

both the NFDM and buttermilk powder 

that can be manufactured from the same 

pound of nonfat solids, and proposed an 

NFDM yield factor of 1.03. Proponents 

claim producers are not compensated 

for nonfat solids that end up in 

buttermilk powder since such 

production is not accounted for in the 

yield factor. 

A review of previous rulemakings 

reveals numerous changes to the NFDM 

yield factor both during and since Order 

Reform. The Order Reform 

recommended decision contained a 

nonfat solids yield factor of 0.96 as a 

divisor (equivalent to a 1.04 multiplier) 

in the nonfat solids price equation. It 

represented the percent of nonfat solids 

in a pound of NFDM. In other words, if 

a NFDM plant had 1 pound of nonfat 

solids, it could make 1.04 pounds of 

NFDM due to the moisture content in 

the final product. The factor was 

changed in the Order Reform final 

decision to a 1.02 divisor (equivalent to 

a 0.98 multiplier) as stakeholders 

commented it should represent both the 

NFDM and buttermilk powder that 

could be produced from one pound of 

nonfat solids. In other words, the yield 

factor, when converted to a multiplier, 

was less than one to reflect that only a 

portion of the nonfat solids that arrive 

at a plant are utilized in NFDM. 

The nonfat solids yield factor was 

again considered in a 2000 rulemaking. 

Initially, the factor was amended to 

1.00. 65 FR 82832 (Dec. 28, 2000). 

During that proceeding, stakeholders 

argued the yield factor should reflect 

that more than one pound of NFDM can 

be manufactured from one pound of 

nonfat solids, resulting in a divisor less 

than one, or a multiplier greater than 

one. Evidence from that proceeding was 

used to demonstrate a calculation using 

only the NFDM price, NFDM make 

allowance, and a multiplier of 1.00 

would be equivalent to a more complex 

formula attempting to combine the 

NFDM and buttermilk net prices using 

corresponding yield factors. 

The final decision in the 2000 

rulemaking changed all yield factors, 

including the nonfat solids yield, from 

divisors to multipliers. 67 FR 67906 

(Nov. 7, 2002). Keeping in line with 

only reflecting the nonfat solids used in 

NFDM, the nonfat solids yield 

multiplier changed from 1.0 to 0.99, 

with the incorporation of a farm-to-plant 

shrinkage factor of 0.25 percent. As 

calculated, for 1 pound of nonfat solids 

leaving the farm, 0.9975 pounds entered 

the plant (1.00 ¥ 0.0025 = 0.9975). 

Subtracting an estimated 0.0479 pounds 

of nonfat solids ending up in buttermilk 

powder left 0.9496 pounds of nonfat 

solids in NFDM (0.9975 ¥ 0.0479 = 

0.9496). It was assumed NFDM is 96.2 

percent nonfat solids, resulting in a 

NFDM yield factor calculation of 

0.9496/0.962 = 0.9871, which was 

rounded to 0.99. The final decision 

made clear the 0.99 should be 

considered a NFDM yield factor, no 

longer a nonfat solids yield factor as was 

the case when Order Reform was 

implemented. 

Proposal 12 requests buttermilk 

powder again be incorporated into the 

NFDM yield. Proponents testified that 

without accounting for buttermilk 

powder, producers are not compensated 

for all the nonfat solids they sell to a 

Class IV manufacturer. Record evidence 

does not support such a claim. Class IV 

manufacturers are required to pay the 

nonfat solids price for pooled milk 

purchased, regardless of whether those 

nonfat solids end up in NFDM, butter, 

buttermilk powder, or any other Class 

IV product. The same can be said for 

other classified products whose 

component prices are computed 

similarly, even if there are numerous 

products in the category. For example, 

the other solids price is determined 

through a survey of dry whey prices and 

a dry whey make allowance. 

Manufacturers pay the other solids price 

even if they are making other products 

in the category, such as whey protein 

concentrate or whey protein isolate. 

Additionally, while the rulemaking 

history of the NFDM and nonfat solids 

yield factors is complex, the record 

evidence in this proceeding does not 

support reflecting two products 

(buttermilk powder and NFDM) in the 

NFDM yield would provide for more 


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2Advanced refers to prices announced on or 

before the 23rd of the prior month. 

3Announced refers to prices announced on or 

before the 5th of the following month. 

orderly marketing conditions. As such, 

the recommended decision maintained 

the current NFDM yield factor to only 

reflect one product and did not propose 

the adoption of Proposal 12. 

Leprino, as well as the Arizona Farm 

Bureau, offered comments on the 

recommended decision in favor of 

maintaining the 0.99 nonfat solids yield, 

as they said it properly reflects a widely 

attainable NFDM yield. In its comment, 

Select objected to the continuation of 

the 0.99 NFDM yield, and reiterated 

arguments presented at the hearing that 

the value of buttermilk powder should 

be included. 

This decision maintains that yield 

factors are not intended to represent the 

value of milk components utilized in 

various products, but rather the quantity 

of a specific product that can be 

manufactured from a given quantity of 

milk components. As stated in the 

recommended decision, the NFDM yield 

factor represents the quantity of NFDM 

that can be produced from one pound of 

nonfat solids in producer milk. This 

decision continues to find the current 

NFDM yield factor, and the nonfat 

solids price formula, appropriately 

represent the value of NFDM to the 

nonfat solids utilized in manufacturing 

NFDM. This decision finds no basis to 

support the claim that powder 

manufacturers are not paying for solids 

in the buttermilk powder they produce. 

To the contrary, all nonfat solids 

entering a plant are accounted and paid 

for at the appropriate use classification. 

Thus, nonfat solids ending up in 

buttermilk powder are paid for at the 

nonfat solids price. This is similar to 

other products such as whey protein 

concentrate (WPC), whose other solids 

are priced at the FMMO other solids 

price which is based on dry whey yields 

and prices and does not specifically 

account for WPC yields and prices. 

This decision continues to find it 

appropriate for component price 

formulas to utilize a single product 

price and an associated make allowance 

and yield factor to determine the value 

of milk components, which can then be 

used to value the components utilized 

in all products under a given class. 

Accordingly, this decision continues to 

find it appropriate to maintain the 

NFDM yield factor of 0.99. 

Base Class I Skim Milk Price 

Currently, the base Class I skim milk 

price, also referred to as the ‘‘Class I 

mover’’ or ‘‘mover,’’ is the simple 

average of the monthly advanced Class 

III and Class IV skim milk pricing 

factors, plus an adjuster of $0.74 per 

cwt. This formula was implemented 

under the 2018 Farm Bill, which 

amended the AMAA to revise the 

provisions related to determining the 

monthly Class I skim milk price. Public 

Law 115–334, 132 Stat. 4490 § 1403. 

Congress exempted this amendment 

from the formal rulemaking process, and 

USDA implemented the change through 

a final rule. The formula has been in 

effect for milk marketed on and after 

May 1, 2019. 84 FR 8590 (March 11, 

2019). Prior to the change, the base 

Class I skim milk price was the higher 

of the advanced Class III or Class IV 

skim milk prices (the ‘‘higher-of’’), 

announced on or before the 23rd of the 

prior month. The higher-of formula had 

been in effect since January 1, 2000. 

Industry stakeholders offered six 

proposals to amend the Class I mover. 

Proposal 13 would return to the 

previous higher-of Class I mover. NMPF 

explained the change to the average-of 

was supported at the time by both 

NMPF and IDFA, as it was intended to 

be revenue neutral for producers and 

provide Class I processors the ability to 

utilize hedging for risk management. 

IDFA and MIG proposed maintaining 

the average-of mover but argued for 

different adjuster calculations. Proposal 

14, offered by IDFA, incorporates an 

adjuster that resets every January and 

would be the higher of either: (1) $0.74; 

or (2) the 24-month average difference 

between the higher-of and the averageof the advanced Class III and Class IV 

skim milk pricing factors. The 24-month 

calculation would run from August of 

three years prior to July of the previous 

year. For example: the 2024 adjuster 

would have been calculated by 

subtracting the average of the advanced 

Class III and IV skim pricing factors 

from the higher of the advanced Class III 

or Class IV skim pricing factor for each 

month of August 2021 through July 

2023, then averaging the differences of 

the 24 months. The result for the August 

2021 to July 2023 time period is $0.95, 

which is higher than $0.74, and thus 

would have been the adjuster effective 

January 1, 2024, for the calendar year. 

For the month of January 2024, the 

advanced Class III and IV skim pricing 

factors were $5.74 per cwt and $9.25 per 

cwt, respectively, averaging to $7.50 per 

cwt. With the addition of the adjuster, 

the January 2024 base Class I skim milk 

price would have been $8.45 per cwt 

($7.50 + $0.95) under Proposal 14. 

Proposal 15, offered by MIG, 

incorporates a monthly rolling average 

adjuster calculated as the difference 

between the higher-of and the averageof, for 24 months, with a 12-month lag. 

For example, the adjuster for January 

2024 would have been $1.01 per cwt, 

calculated from the 24-month average 

difference of the higher of the advanced 

Class III or Class IV skim pricing factor 

less the average of the advanced Class 

III and IV skim pricing factors from 

January 2021 to December 2022. The 

January 2024 advanced Class III skim 

pricing factor was $5.74 per cwt and 

advanced Class IV skim pricing factor 

was $9.25 per cwt, resulting in an 

average of $7.50 per cwt. The averageof, with the addition of the adjuster, 

would result in a January 2024 base 

Class I skim milk price of $8.51 per cwt 

($7.50 + $1.01) under Proposal 15. 

Edge offered Proposals 16 and 17. The 

Class I mover in Proposal 16 would be 

the announced Class III skim milk price, 

plus an adjuster reflecting the 36-month 

average of the difference between the 

higher-of the advanced 2 Class III or 

Class IV skim milk prices and the 

announced 3 Class III skim milk price 

from August of four years prior to July 

of the previous year. The adjuster would 

be calculated annually and be effective 

January of each year. For example: The 

adjuster for 2024 would be $1.64 per 

cwt, calculated from the 36-month 

average difference of the higher of the 

advanced Class III or Class IV skim 

pricing factor and the announced Class 

III skim milk price from August 2020 to 

July 2023. The announced Class III skim 

milk price for January 2024 was $4.92 

per cwt, and with the addition of the 

adjuster would result in a January 2024 

base Class I skim milk price of $6.56 per 

cwt under Proposal 16. Proposal 17 

would return to the previous higher-of 

calculation. Both Proposals 16 and 17 

would eliminate advanced pricing for 

Class I and Class II milk. Edge preferred 

Proposal 16, stating it would facilitate 

Class I hedging. 

The AFBF offered Proposal 18, which 

is nearly identical to Proposal 17. Both 

Edge and the AFBF stressed the 

importance of eliminating advanced 

pricing as a means for limiting price 

inversions that result in significant 

volumes of milk not pooled. 

NMPF presented testimony describing 

how the 2019 mover change was not 

revenue neutral, which is why they seek 

a return to the higher-of. NMPF and 

dairy farmers described volatile markets 

in response to the COVID–19 pandemic. 

Even as the COVID–19 pandemic has 

ended, prices have remained volatile, 

and stakeholders opined they expect 

volatility to continue. NMPF witnesses 

asserted that because of the current 

formula and volatile markets, there is no 

way for the impact to dairy farmers to 

be revenue neutral in the long term. 


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According to NMPF, an unanticipated 

consequence of the average-of mover is 

the asymmetric risk borne by dairy 

farmers. NMPF explained the static 

nature of the $0.74 adjuster means that 

dairy farmers only benefit from the 

average-of when the difference between 

the advanced Class III and Class IV skim 

milk prices is less than $1.48. When the 

difference is greater, producers are paid 

less, sometimes significantly less, than 

they would have been under the higherof mover. During the 50-month period 

from May 2019–June 2023, the averageof mover was lower than the higher-of 

in 27 months. NMPF asserted when the 

average-of exceeded the higher-of, it did 

so by no more than $0.74, regardless of 

the magnitude of the difference between 

Class III and Class IV skim milk prices. 

However, when the average-of was 

lower than the higher-of, the reduction 

could be significantly more than $0.74. 

NMPF cited October 2022 as an 

example. At that time, the average-of 

was lower than the higher-of by $2.08. 

According to NMPF, from May 2019 to 

August 2023, producers were paid 

$998.3 million less than they would 

have if the higher-of mover had been in 

place. 

Both IDFA and MIG asserted their 

adjusters would result in revenue 

neutrality to producers over time 

because of regular updates to better 

reflect current market conditions, 

whereas the current static $0.74 adjuster 

reflects market conditions from 2000– 

2018. IDFA further claimed the $0.74 

floor contained in Proposal 14 ensures 

producers would receive Class I skim 

milk prices at least equating to what 

they receive under the current formula. 

MIG opined a rolling average adjuster 

would provide better dynamic market 

signals while also stabilizing prices 

through more gradual monthly changes. 

In justifying these methods to 

continue an average-of mover, IDFA and 

MIG witnesses stressed the importance 

of maintaining the ability for Class I 

processors to hedge their future prices. 

The use of an average-of mover would 

allow them to continue to spread risk by 

taking equal positions in the Class III 

and Class IV futures and options 

markets. IDFA and MIG maintained 

hedging is a critical tool for certain 

processors, particularly ESL, to remain 

competitive with alternative beverages, 

such as bottled water, juice, and milk 

alternatives that do not face the same 

regulatory pricing framework as fluid 

milk. The ability to lock in a future 

price makes their cost known and 

allows a longer price horizon. They 

further asserted promoting and growing 

the sale of milk is a goal of the AMAA, 

which can be achieved using hedging. 

Both proponents explained a processor’s 

ability to hedge is not negatively 

impacted by the adjuster calculation 

(whether monthly or annually), so long 

as it is announced well in advance. 

IDFA was amenable to either adjuster 

calculation, so long as the average-of 

mover is maintained. 

Proponents of maintaining an averageof mover argued Congress amended the 

AMAA to facilitate risk management for 

Class I, and as it directed the 

Department to adopt the average-of 

mover, the Department must now 

continue that policy and refrain from 

taking action that would inhibit risk 

management. However, in the 2018 

Farm Bill, Congress stipulated the 

average-of mover must be maintained 

for a period of not less than two years, 

at which time the formula could be 

modified through the standard FMMO 

amendment process. Congress did not 

direct that risk management 

consideration must be maintained 

beyond the two years following 

implementation of the 2018 Farm Bill. 

To evaluate the NMPF claim 

regarding asymmetric risk, AMS 

analyzed May 2019–December 2023 

prices (56 months). The analysis found 

the current average-of mover to be 

greater than the higher-of mover in 23 

months, resulting in $334 million in 

additional revenue paid to producers in 

those months. The two movers were 

equal in 2 months, and in the remaining 

31 months, the average-of mover was 

less than the higher-of mover, resulting 

in $1.4 billion less in revenue paid to 

producers in those months than would 

have been without the mover change. 

The net result to dairy farmers during 

those 56 months was negative $1.066 

billion. Further, in months when the 

average-of was more than the higher-of 

mover, the difference was never greater 

than $0.74 and, mathematically, could 

never be greater than that amount under 

the current average-of system. However, 

in months when the average-of was less 

than the higher-of mover, the difference 

was as great as $5.19. This analysis 

supports NMPF’s assertion of the 

asymmetric risk borne by producers 

under the current mover calculation. 

The record reveals the $0.74 static 

adjuster was adopted because, at the 

time, it represented the additional value 

paid to producers through the higher-of 

versus what would have been the 

average-of mover from 2000–2017. 

Evidence shows $0.74 is no longer 

representative of the additional higherof value to producers as Class III and IV 

prices have become significantly more 

divergent in recent years. A comparison 

of advanced Class III skim and Class IV 

skim milk prices from January 2000– 

April 2019 and from May 2019– 

December 2023 illustrates the increased 

volatility. From January 2000–April 

2019, when the Class I skim milk price 

was determined by the higher-of mover, 

the monthly difference in advanced 

prices ranged from $0 to $6.77. From 

May 2019 through December 2023, the 

range was $0 to $11.86, equating to an 

increase of slightly more than 75 

percent. 

Testimony described rapidly changing 

Class III and IV prices resulting not only 

in months when the Class I mover was 

significantly lower than it would have 

been under the higher-of formula, but 

times when the Class I price (announced 

before the month) was less than the 

Class III and/or Class IV price 

(announced after the month). As 

handlers have the option to pool Class 

III and Class IV milk, this price 

inversion led to many months when the 

higher-valued manufacturing milk was 

not pooled. Testimony on the record 

described several consequences: (1) 

manufacturing handlers opted out of 

pool participation, keeping the higher 

market revenue instead of sharing it 

with all pooled producers; (2) instances 

when a manufacturing handler opted 

out of pool participation, and the 

historically high market revenue was 

not shared with their own producer 

suppliers; and (3) significant disparity 

in payments to pooled and nonpooled 

producers in some months. 

Testimony detailed the conditions in 

2020 when the demand for cheese 

relative to butter rapidly widened the 

spread between Class III and Class IV 

Prices. For example, the base Class I 

skim milk price for June 2020 

(announced May 20, 2020) was $7.08 

(based on an $6.68 advanced Class III 

skim milk price and an $5.99 advanced 

Class IV skim milk price). Cheese prices 

rose rapidly during the month, resulting 

in a $15.06 Class III skim milk price and 

$6.62 Class IV skim milk price. 

According to record evidence, high 

volumes of Class III milk were not 

pooled in order to avoid paying the 

higher valued Class III price into the 

marketwide pool. 

Record data reveals a significant 

increase in the estimated volume of 

milk not pooled in 2020 and 2021, 

which NMPF attributed to price 

volatility. Data shows milk volumes not 

pooled in 2020 and 2021 were 

approximately 60 percent greater than 

in 2019. Testimony and evidence 

pointed to pronounced price volatility 

being considered the norm, not the 

exception, going forward. 

Record evidence also shows how the 

lower average-of mover value resulted 

in muted blend prices in some regions 


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of the county, making it difficult to 

attract milk supplies for fluid use. This 

was particularly a concern in the 

southeastern FMMOs which 

experienced a disproportionate 

reduction in blend prices relative to 

other FMMOs because of their high 

Class I utilization. Testimony described 

how blend prices between the Southeast 

FMMO and nearby orders narrowed, 

making it difficult to attract 

supplemental milk to meet the fluid 

demand in the milk deficit region. 

During Order Reform, the Department 

considered numerous options for 

determining Class I prices as it 

evaluated an appropriate Class I pricing 

system. In the Order Reform 

recommended decision, several 

variations of an average mover were 

considered, including a moving average 

and a declining average weighted most 

heavily by the current month’s price, 

along with a higher-of option based on 

the second preceding month’s prices. 

When considering its recommendation, 

the Department evaluated each option’s 

ability to improve price stability while 

maintaining appropriate producer price 

signals to ensure an adequate supply of 

milk for fluid use. 

The Department initially 

recommended a 6-month declining 

average of the higher-of the Class III and 

Class IV skim milk prices. The goal was 

to ‘‘decrease monthly Class I price 

volatility while minimally affecting the 

long-run price.’’ 63 FR 4802, 4886 (Jan. 

30, 1998). Analysis of that option 

compared to the higher-of option 

showed only a two-cent difference 

based on data from 1992–1997, thus 

supporting the notion an average-of 

price would not impact prices in the 

long run. Public comments in response 

to the recommended decision cautioned 

the Class I price should be closely and 

directly linked to manufacturing prices. 

Commenters opposed a six-month 

declining average because it would 

delay the linkage with the Class I price, 

resulting in counter-cyclical pricing— 

something noted in the final decision, 

which stated that, for example, if Class 

I prices are undervalued, ‘‘it reduces 

producers’ pay prices at a time when the 

producers should be receiving a positive 

price signal.’’ 64 FR 16026, 16102 (Apr. 

2, 1999). Analysis conducted for the 

Order Reform final decision evaluated 

prices post-1998 and found using a 6- 

month average mover during times of 

increased price volatility would have 

led to price inversions. The decision 

explained how price inversions could 

lead to depooling under which 

disorderly marketing conditions may 

arise. As a result, the final decision also 

articulated, on the same page as the 

most recently noted quotation, ‘‘because 

handlers compete for the same milk for 

different uses, Class I prices should 

exceed Class III and Class IV prices to 

assure an adequate supply of milk for 

fluid use.’’ Accordingly, the final 

decision recommended the higher-of 

mover which remained in place until 

May 2019. 

Record evidence clearly shows that 

the price inversions and depooling 

predicted in the Order Reform final 

decision occurred after the average-of 

mover was implemented in 2019. The 

principle of maintaining a proper link 

between Class I and manufacturing 

prices to avoid price inversions and 

depooling remains an important 

consideration in evaluating change to 

the Class I mover in this rulemaking. 

Proponents offering modifications to 

the average-of mover acknowledge price 

inversions and depooling have occurred 

with greater frequency and duration. 

However, they maintain hedging is a 

critical risk management tool that 

should be preserved and cannot be 

achieved using the higher-of mover. 

Record evidence highlights that 

although both HTST and ESL are fluid 

milk products, there are notable 

differences between HTST and ESL 

processing and sales. ESL products 

require unique processing techniques 

and packaging that significantly 

increase product shelf-life. The record 

indicates ESL products have a shelf-life 

of at least 65 days; some ESL processors 

stated their products have a shelf-life of 

120 days or more. 

ESL processors described marketing 

differences between the two types of 

products. ESL products: (1) have a 

longer shelf-life which facilitates a 

wider distribution; (2) are typically 

shipped to centralized retail warehouses 

(distribution centers) and from there are 

distributed to individual stores by the 

store owners; and (3) are sold to retail 

customers who prefer long-term 

contracts and a long lead time for any 

price changes, often 60–90 days or 

more. This is significantly different than 

HTST products that: (1) have a 

significantly shorter self-life (common 

range is 14–21 days) necessitating more 

local distribution; (2) are typically 

distributed through direct-store-delivery 

(DSD); and (3) whose retail customers 

are accepting of FMMO Class I prices 

that vary monthly. 

ESL processors explained the averageof mover has enabled them to meet 

customer demand for long-term pricefixed contracts by using the futures and 

options market to hedge the risk 

associated with changes in monthly 

FMMO Class I prices. They credit the 

ability to manage risk as a factor in the 

growth of ESL products. Before 

adoption of the average-of mover, 

processors of ESL products took on a 

significant amount of price risk to meet 

the long-term, fixed price contracts 

required by customers because they had 

no way of knowing when they 

negotiated contracts whether the 

advanced Class III or Class IV price 

would become the base Class I skim 

milk price. The record contains no 

similar evidence that HTST processors 

face the same constraints. In fact, record 

evidence shows advanced Class I 

pricing with monthly sales negotiations 

was, and remains, standard practice for 

these products. 

Given all the record evidence, this 

decision must determine the best 

method for determining Class I skim 

milk prices that ensure adequate fluid 

milk supplies and orderly marketing 

conditions. The earlier discussion of 

record evidence clearly highlights the 

disorderly marketing conditions that 

occurred as a result of the average-of 

mover. However, when considering how 

to provide for more orderly marketing 

conditions, this decision cannot ignore 

how the Class I market has evolved 

since 2000. 

Prior to FMMO Reform, fluid milk 

products were almost exclusively HTST, 

which have a shorter shelf-life and 

move from farm to retail in a relatively 

short time. Advanced pricing ensures 

equity among fluid milk handlers, 

allowing them to know their regulated 

minimum raw milk cost at the time they 

negotiate prices with their buyers and 

ensure equal raw milk cost between 

similarly situated handlers. 

The record reflects significant 

development and growth of ESL 

products since Order Reform. The 

record also highlights marketing ESL 

products is significantly different than 

HTST products. Evidence shows the 

different distribution pattern 

(warehouse v. DSD) and longer shelf-life 

(65–120 days) facilitates wider 

geographic, rather than local, marketing 

and distribution. In addition, it is 

common for competing ESL products 

being sold in the same month to have 

been processed during a range of 

previous months. As a result, processors 

of ESL products do not necessarily have 

the same regulated minimum raw milk 

prices for products sold during the same 

month. This undermines handler equity 

between processors of ESL products as 

they do not have equal raw milk costs 

for products competing for sales in the 

same month. This decision supports a 

hybrid solution that will ensure 

adequate supplies of milk for fluid use, 

while also accounting for the inequities 

between processors of ESL products. 


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4 1xxx.7(a) or 1xxx.7(b). 

FMMOs are tasked with ensuring 

minimum prices reflect supply and 

demand conditions, which is 

accomplished, in part, through weekly 

surveys of wholesale bulk commodity 

products. Weekly survey prices provide 

signals to market participants on the 

changing value relationships between 

dairy product markets. FMMOs do not 

control those market-based 

relationships. As monthly average 

prices are determinants of Class III and 

IV prices, it is expected there will be 

periods when Class III values will be 

higher, and other times when Class IV 

values will be higher. Under a monthly 

pricing system that allows for voluntary 

pooling of manufactured milk and 

advanced Class I pricing, there will be 

occasions when these value differences 

are large enough to have price 

inversions and/or incentivize handlers 

to not pool milk during a particular 

month. The record clearly shows such 

situations occurred prior to May 2019. 

However, record data highlights the 

shift in duration and magnitude of these 

occurrences since the average-of mover 

was adopted. The record reveals large 

and prolonged value differences can 

cause significant differences in pay 

prices between producers and reduced 

willingness to supply the Class I market. 

The record of this proceeding supports 

returning to the higher-of Class I mover 

for HTST products. The higher-of would 

provide a better link between Class I 

and manufacturing prices and better 

ensure Class I prices remain the highest 

to bring forth an adequate supply of 

fluid milk. Therefore, this decision 

continues to recommend adoption of 

Proposal 13 for HTST fluid milk 

products. 

AMS received 29 comments that 

specifically supported a return to the 

higher-of mover. Comments in support 

of the higher-of mover were submitted 

by: NMPF; Select; AFBF; ADC; the state 

Farm Bureaus of Arizona, Michigan, 

New York, Michigan, Wisconsin, 

Minnesota, and Tennessee; Georgia Milk 

Producers, Inc.; Northeast Dairy 

Producers Association (NDPA); National 

Family Farm Coalition; Farm Women 

United; and 15 individual dairy farmers. 

Seven commenters, including NMPF, 

ADC, NDPA, and four individual dairy 

farmers, expressed the higher-of keeps 

dairy markets more orderly. NDPA 

noted the return to the higher-of would 

have an immediate positive impact on 

farmers. The Wisconsin and Minnesota 

Farm Bureaus commented the higher-of 

often provided better financial returns 

to farmers in the past. One dairy farmer 

praised a return to the higher-of, arguing 

its removal in 2019 decreased revenue. 

In its comment, AFBF reiterated 

arguments that the return to the higherof is critical for ensuring dairy farmers 

receive fair and adequate compensation 

for their milk, especially in the face of 

volatile market conditions. AFBF 

continued to argue that most fluid milk 

processors have not increased or even 

begun the use of hedging, which was the 

intent of adoption of the average-of 

mover. The Michigan Farm Bureau 

commented that a return to the higherof would better reflect current market 

conditions and improve overall pricing 

for farmers. Georgia Milk Producers, 

Inc., stated the return to the higher-of is 

critical to the success of its producers, 

who were disproportionately impacted 

by the change to the average-of mover. 

A dairy farmer commenter advocated for 

a simple and stable price program that 

uses the higher-of. 

CDC and two dairy farmers 

specifically requested the higher-of 

mover alone, without the proposed ESL 

adjustment, apply to all Class I milk. 

AFBF; the state Farm Bureaus of 

Arizona, Florida, New York, and 

Tennessee; and the two dairy farmers 

requested a return to the higher-of on an 

expedited basis. 

In their comments on the 

recommended decision, MIG and 

Crystal Creamery opposed a return to a 

higher-of Class I mover. MIG reiterated 

its hearing testimony that the return to 

the higher-of on HTST milk prohibits 

effective hedging. 

This decision continues to find that 

returning to the higher-of mover for ESL 

products would deepen the pricing 

inequity that naturally exists for those 

products, as described earlier. For 

example, under the higher-of mover, a 

handler processing and selling an ESL 

product in January 2023 would have 

faced a base Class I skim milk price of 

$11.62 per cwt. However, handlers who 

processed ESL products two or four 

months before, which are also being 

sold in January 2023, would have faced 

a base Class I skim milk price of $12.61 

and $13.82 per cwt, respectively. This 

results in a difference of base raw milk 

costs of up to $2.20 per cwt for ESL 

products competing for sales during 

January 2023. 

Given the marketing characteristics of 

ESL products, short of providing for 

fixed minimum prices, price differences 

between these competing products will 

always exist. However, this decision 

strives to recognize the evolution of the 

ESL market since Order Reform with a 

pricing structure for ESL products that 

would narrow differences, make them 

more predictable, and provide for more 

orderly marketing conditions. 

This decision continues to find 

pricing differences would be reduced 

through adoption of a Class I ESL 

adjustment that would equate to a Class 

I price for all ESL products equal to the 

average-of mover contained in Proposal 

15. The recommended Class I ESL 

adjustment would provide more longrun pricing equity for ESL product by 

better ensuring handlers whose ESL 

products compete for sales during the 

same month, but whose raw milk may 

have been purchased and processed 

during different time periods, have more 

similar costs. 

This decision continues to find 

adoption of the higher-of mover and 

Class I ESL adjustment appropriate to 

provide for more orderly marketing and 

better ensure price equity for handlers 

of similar Class I products. As set forth 

in the recommended decision, the 

higher-of Class I mover would be 

announced on or before the 23rd of the 

prior month. A Class I ESL adjustment 

would be announced at the same time 

and equal the difference between the 

higher-of mover and the average-of the 

advanced Class III and Class IV skim 

pricing factors plus a rolling monthly 

adjuster. The rolling monthly adjuster 

would be calculated as the average of 

the differences between the higher-of 

and the average-of calculations for the 

prior 13 to 36 months and could be 

positive or negative. 

The recommended decision described 

milk subject to the ESL adjustment as all 

milk used in ESL products with a shelflife no less than 60 days, regardless of 

the type of Class I plant in which they 

are made.4 This decision continues to 

propose an ESL adjustment that would 

be added to or subtracted from the 

handler’s pool obligation applicable to 

the amount of milk used in ESL 

products. The rolling adjuster would be 

computed in advance and announced 

on or before the 23rd of the month 12 

months in advance of its application 

(i.e., January 2023 rolling adjuster 

would have been announced on or 

before December 23, 2021). 

For example, the advanced Class III 

and IV skim pricing factors for January 

2023 were $9.54 per cwt and $11.62 per 

cwt, respectively. 

• The average-of the two factors 

(applicable to ESL milk) would have 

been $10.58 plus the rolling adjuster 

reflecting the average of the differences 

between the higher-of and the averageof from January 2020 to December 2021 

($1.58 per cwt), for a total of $12.16 per 

cwt. 


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• The higher-of mover (applicable to 

HTST milk) would have been $11.62 per 

cwt. 

• The January 2023 Class I ESL 

adjustment would have been $0.54 

($12.16 ¥ $11.62), calculated by 

subtracting the higher-of announced 

price from the average plus rolling 

average calculation. 

The effect of the adjustment would be 

a base Class I skim price for HTST milk 

of $11.62, and an effective base Class I 

skim milk price for ESL milk of $12.16. 

While this example computes a positive 

adjustment resulting in a higher 

effective price for ESL milk, it is to be 

expected in some months the 

adjustment will be negative, resulting in 

a lower effective price. The objective of 

the ESL adjustment is not to create a 

higher or lower effective Class I price, 

but rather to reduce the range of base 

Class I skim prices paid for milk used 

in ESL products being sold during a 

month. Evidence on the record indicates 

the Class I ESL adjustment would tend 

to moderate the price highs and lows, 

thus providing improved price equity 

between handlers of ESL products. The 

record indicates ESL products represent 

approximately 8 to 10 percent of the 

Class I market and would be subject to 

the Class I ESL adjustment. 

Comments to the recommended 

decision submitted by Select, Edge, 

Nestle, IDFA, and MIG supported the 

inclusion of the ESL adjustment as part 

of the Class I mover. MIG and IDFA 

further advocated for implementation of 

a base Class I skim milk price that 

supports risk management for all Class 

I milk products, not only ESL products. 

Both groups expressed that all Class I 

processors should benefit from the new 

formula, which they maintained is 

revenue-neutral with the higher-of 

formula over time. 

In its comment, MIG stated the ESL 

adjustment would allow processors of 

ultra-pasteurized or aseptically 

processed and packaged fluid milk to 

continue to hedge price risk. MIG 

credited use of an average-of formula 

with allowing ESL processors to offer 

stable pricing, which in turn allows ESL 

products to more effectively compete 

with non-dairy alternatives including 

plant-based beverages. 

Select stated the ESL adjustment 

would accommodate the expressed 

desire of handlers of ESL products to 

hedge their raw milk costs while 

providing dairy farmers the necessary 

stability of an overall higher-of Class I 

mover. Nestle opined the average-of 

formula utilized in the ESL adjuster 

provides holistic solutions for the 

industry and provides dairy farmers 

with assurances on the sale of their 

product before the milk is produced. 

These factors, Nestle wrote, create 

pricing stability for both retailers and 

end consumers. 

Many comments submitted expressed 

support for a return to the higher-of 

mover, but either opposed inclusion of 

the Class I ESL adjustment or expressed 

concern the provision could be abused. 

NMPF, AFBF, Michigan Farm Bureau, 

ADC, and seven individual dairy 

farmers stated the milk to which the 

ESL adjustment would apply was not 

well defined in the recommended 

decision, or that ESL itself was not 

clearly defined. Three commenters 

noted that the parameters of an ESL 

product are vague, including the 

recommended use of shelf-life to define 

qualifying products. NMPF, AFBF, 

Michigan Farm Bureau, Upstate Niagara, 

and an individual dairy farmer 

expressed concern that handlers could 

potentially abuse or manipulate the 

system, for example, by labeling a 

product with a shelf life of 59 days to 

benefit from a lower mover price when 

it is advantageous to do so. Such 

scenarios, AFBF noted, create a risk of 

inconsistent application and the 

potential for market distortions. 

AFBF, Michigan Farm Bureau, 

Upstate Niagara, and five individual 

dairy farmers expressed concern that the 

inclusion of the ESL adjustment creates 

a potential for handlers to take 

advantage of the ESL adjustment by 

opting in or out of an adjustment on a 

monthly basis when favorable. Some 

commenters expressed concern over 

handlers attempting to qualify milk for 

the more favorable mover in a month in 

order to reduce payments to producers, 

likening it to depooling. AFBF and other 

commenters noted the possible range of 

a 95-cent reduction to a $1.18 increase 

per cwt difference in base Class I price 

creates an incentive for handlers to take 

advantage of the system. 

Several commenters, including 

NMPF, requested a clear definition of 

ESL products based on processing 

characteristics, not product or marketing 

characteristics such as shelf life. While 

the recommended decision highlighted 

the marketing characteristics of ESL, 

including the significantly longer shelflife, the record reflects it is the 

processing technique that enables ESL 

products to have these marketing 

characteristics which facilitate wider 

distribution, shipping to centralized 

retail warehouses before distribution to 

individual stores, and most often, longterm sales contracts. In recognition of 

the possibility the ESL adjustment may 

be abused by adjusting the shelf life of 

a product as highlighted in the 

comments received, this decision finds 

it appropriate to rely solely on the 

definition of the processing technique to 

define milk eligible to receive the ESL 

adjustment. While it is an industry term 

to refer to ESL products, the method of 

achieving ESL is accomplished through 

specific temperature and time 

thresholds which are contained in the 

ultra-pasteurized definition. As 

described in the Pasteurized Milk 

Ordinance, the process of ultrapasteurization involves heating milk ‘‘at 

or above 138 °C (280 °F) for at least 2 

seconds . . . so as to produce a milk or 

milk product, which has an extended 

shelf-life under refrigerated conditions.’’ 

This process of obtaining ESL products 

is to what witnesses testified. 

Accordingly, this decision finds it 

appropriate that ultra-pasteurized milk 

as defined in 21 CFR 131.3(c) would 

receive the ESL adjustment. The 

regulatory definition also encompasses 

aseptically packaged milk products, as 

the process of aseptic packaging 

requires milk to first be ultra 

pasteurized. As a provision defining a 

shelf-life threshold was not part of the 

original proposed order language, no 

changes to the proposed order language 

are necessary. 

AFBF, Michigan Farm Bureau, and 

Upstate Niagara expressed concern 

about the potential for the ESL 

adjustment to set precedent for other 

types of adjustments for marketing 

claims for various production practices 

at the farm level. The proposed ESL 

adjustment would apply to a specific 

processing technique at the plant which 

the record demonstrates results in 

market characteristics that differentiate 

ESL products from HTST products. 

NMPF requested clear guidance on 

how handlers report and account for 

Class I milk to ensure handlers cannot 

take advantage of the ESL adjustment by 

only applying it when advantageous. In 

its comment, ADC requested qualifying 

Class I fluid products remain with the 

ESL designation to avoid opportunistic 

use of the ESL adjustment that could 

reduce pool payment obligations. 

Several other commenters requested a 

review process be incorporated into the 

ESL adjustment provisions. Upstate 

Niagara commented many plants have 

the capacity to process both HTST and 

ESL products and expressed concern 

whether the Department would be able 

to prevent plants switching the type of 

processing for a pricing advantage. 

This decision clarifies that the ESL 

adjustment would apply to all ESL milk 

meeting the ultra-pasteurized definition. 

Current handler reporting provisions in 

the regulations require handlers that 

process skim milk classified under 7 

CFR 1000.44, both ultra-pasteurized and 


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HTST, to report monthly utilization for 

Class I utilization as defined in 

§ 1xxx.30(a). Handlers report the type of 

product, how much product is sold or 

distributed within, and outside, the 

marketing area, as well as any other 

information pertaining to milk receipts 

and utilization the Market 

Administrator requires. If the ESL 

adjustment is adopted, handlers would 

report HTST and ESL products 

separately, ensuring accurate handler 

utilization is accounted for. 

The FMMO program has a robust 

component that audits all handler 

reports filed with the Market 

Administrator. As part of an ESL 

handler’s audit plan, FMMO auditors 

would review and verify handler 

records currently maintained under 7 

CFR 1000.27(a) to ensure the raw milk 

was processed using ultra-pasteurized 

equipment, in accordance with the 

reported utilization. FMMO auditors 

would use documents such as 

pasteurization reports and State health 

department inspection records 

identifying equipment used for 

processing as verification. 

Handlers producing ESL products 

would not determine when the Class I 

ESL adjustment would apply. The Class 

I ESL adjustment would apply 

automatically to milk used in ESL 

products. Handlers found misreporting 

ESL milk would be subject to an audit 

adjustment to the FMMO Producer 

Settlement Fund, as well as any other 

remedies authorized by current 

regulations. 

Upstate Niagara; AFBF; the state Farm 

Bureaus of Arizona, Georgia, and 

Michigan; the Kentucky Dairy 

Development Council; Pennsylvania 

Association of Milk Dealers (PAMD); 

CDC; and 10 individual dairy farmers 

claimed the recommended ESL 

adjustment was not discussed or 

evaluated at the hearing, and no 

justification was presented. The 

Michigan Farm Bureau commented no 

testimony specifically supporting this 

type of adjustment was offered during 

the hearing process, making it difficult 

to recognize the necessity of its 

inclusion. 

The commenters expressed concern 

that the impact of the package of 

proposed changes to the Class I mover 

provisions was not fully analyzed. 

Several expressed concern the proposed 

adjustment could have unintended 

consequences similar to those resulting 

from the Congressionally mandated 

change to the average-of mover in 2019. 

Upstate Niagara commented that as the 

percentage of ESL products in the 

market grows, the ESL adjustment 

would apply to an increasing volume of 

milk. As a result, Upstate Niagara 

claimed, while the adjuster could mute 

price volatility over the long term for 

processors, it could also impact FMMO 

pools and producer pay in real-time. 

Two commenters, PAMD and Upstate 

Niagara, claimed that because the 

combination of higher-of and ESL 

adjuster proposal was not specifically 

discussed at the hearing, the outcome 

was not properly noticed. The PAMD, a 

group representing fluid milk processors 

that own 14 processing plants located in 

and around Pennsylvania, opposed the 

return to the higher-of mover with the 

ESL adjustment. PAMD stated had the 

idea been noticed, it would have 

presented opposing evidence at the 

hearing. Additionally, PAMD argued the 

same advantages of less volatility and 

the opportunity to engage in risk 

management should apply to HTST 

processors as well as ESL processors in 

order to avoid competitive issues that 

would occur. 

As set forth in the hearing notice, the 

base Class I skim milk price was open 

for testimony and evidence to be offered 

on the record for amendments. All 

FMMO regulated handlers received 

notice that changes to how milk in Class 

I products was priced were being 

considered. The recommended Class I 

mover is a combination of two proposals 

noticed and examined through 

testimony at the hearing. While the 

mechanics of adding an ESL adjustment 

to a higher-of mover are slightly 

different than proposals presented, the 

record contains extensive testimony and 

evidence on the processing and 

marketing of HTST and ESL products. 

Based on this evidence, this decision 

continues to find the recommended 

mover best promotes orderly marketing. 

AFBF, Michigan Farm Bureau, ADC, 

and seven individual dairy farmers 

claimed the recommendation of a 

higher-of mover in combination with an 

ESL adjustment creates a ‘‘fifth’’ or 

‘‘new’’ class of milk. Upstate Niagara, 

AFBF, the state Farm Bureaus of 

Arizona and Michigan, ADC, and four 

individual dairy farmers stated that the 

addition of an ESL adjustment 

introduces significant complications to 

an already complex Class I pricing 

system. AFBF and Michigan Farm 

Bureau commented the ESL adjuster 

creates a dual pricing system and adds 

an additional layer of complexity to an 

already intricate system. Some 

commenters asserted the proposed Class 

I mover provisions would likely create 

disparities between processors operating 

at the same location and undermine the 

FMMO principle of uniform prices. 

Edge maintained the adjustment does 

not create a new classification of milk 

but is an innovative approach to allow 

ESL handlers the ability to continue to 

use risk management in a changing 

industry. 

Fluid milk products are defined in the 

current regulations as ‘‘. . . any milk 

products in fluid or frozen form that are 

intended to be used as beverages 

containing less than 9 percent butterfat 

and 6.5 percent or more nonfat solids or 

2.25 percent or more true milk protein 

. . .’’ 7 CFR 1000.15(a). Milk used in 

both HTST and ESL products meets this 

definition of a fluid milk product and, 

therefore, a new or separate class of 

milk is not being proposed. Inclusion of 

the ESL adjustment to the Class I mover 

reflects the substantial record evidence 

demonstrating the unique ultrapasteurization milk product 

characteristics warranting recognition in 

the pricing provisions. The ESL 

adjustment to a handler’s pool 

obligation meets current needs of the 

industry seeking to update the price 

formula provisions to reflect current 

market conditions. While the 

adjustment adds a new component to 

the Class I mover, the Department 

calculates the Class I base price and an 

ESL handler’s adjustment. Handlers 

already report to the Department the 

types of products they distribute and 

would not incur any new reporting as a 

result of the ESL adjustment. 

In its comment, NMPF noted that 

until 36 months after implementation, 

some or all of the look-back calculation 

for the ESL adjuster would be based on 

the announced Class III and Class IV 

skim milk pricing factors prior to the 

regulatory changes stemming from this 

proceeding. NMPF requested in its 

comment the prices used to compute the 

rolling adjuster prior to the 

implementation of the Final Rule be 

recalculated based on the regulatory 

changes proposed in this rulemaking. 

The record does not contain evidence 

explaining why historical prices should 

be recalculated. Therefore, this decision 

does not find is appropriate to 

recalculate the look-back portion of the 

ESL adjuster with updates for other 

amendments to the FMMOs. 

In its comment opposing a return to 

the higher-of, Crystal Creamery 

maintained the higher-of mover would 

provide no financial value to 

mandatorily pooled handlers and would 

not incentivize service to the Class I 

market. Further, Crystal Creamery 

argued, the higher-of would distort 

market signals and cause greater 

imbalances in manufacturing markets, 

leading to disorderly marketing and 

increased prices to consumers. Crystal 

Creamery reiterated a return to the 

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5Order Reform Final Decision. 

value manufacturing class milk to 

remain pooled because of the payment 

it receives from the producer settlement 

fund as a result of marketwide pooling. 

Marketwide pooling is a cornerstone 

of the FMMO program. As the record 

reveals, dairy farmers sell milk to a wide 

variety of handlers whose products have 

distinctly different supply, demand, and 

market conditions. Marketwide pooling 

provides for more orderly marketing by 

ensuring a minimum uniform price is 

paid to producers whose milk is used in 

distinctively different products, thus 

preventing destructive competition 

among producers. While some 

commenters allege the higher-of will 

cause disorderly marketing, the 

evidentiary record shows the adoption 

of the higher-of would result in greater 

value differences between Class I and 

manufacturing prices for shorter time 

periods, leading to fewer and smaller 

price inversions, less depooling, and 

more orderly marketing conditions. 

An individual dairy farmer 

commented the ESL adjustment would 

incentivize a large spread between Class 

III and Class IV in the short term, 

resulting in increased price volatility 

between ESL and HTST milk, against 

the intended purpose of FMMOs. The 

farmer claimed pricing Class I milk 

using two formulas could result in 

periods where the price for one product 

is increasing month-to-month while the 

other is decreasing, depending on the 

direction the adjuster moved. 

This decision does not find use of an 

ESL adjustment would incentivize large 

Class III and Class IV price spreads. The 

record of this proceeding reveals that 

farm milk used to produce products in 

each of the four classifications have 

distinct supply and demand conditions. 

The record does not contain evidence to 

support the implication that 

manufacturers of dairy products, the 

majority of which do not manufacture 

ESL products, would make business 

decisions to gain an advantage in the 

fluid market where they do compete. 

In its comment, MIG requested two 

changes to the proposed order language. 

MIG first requested a reference be added 

to the proposed Class I ESL adjustment 

in section 1000.50(r) to refer to section 

1000.43(e) General classification rules, 

in order to link the pricing provision 

and eligible Class I milk. This decision 

does not find this change necessary 

because section 1000.43(e) is referenced 

in the section 10xx.60(i) Handler’s value 

of milk. The reference in section 

10xx.60(i) provides the requested link 

between the eligible Class I milk and the 

pricing provision. 

MIG also requested clarifying 

language be added to section 1xxx.60(i) 

that the ESL adjustment may be a 

positive or negative value. This decision 

finds such technical change warranted 

but finds the clarifying clause more 

appropriate in section 1000.50(r). The 

language is contained in the proposed 

regulations below. 

This decision also continues to 

propose maintaining advanced Class I 

pricing. Proponents of Proposals 16, 17, 

and 18 argued advanced pricing should 

be eliminated to prevent short term 

inversions between the monthly Class I 

price and Class III and/or IV prices, and 

subsequent incentives for depooling. In 

their comments, AFBF, and the state 

Farm Bureaus of Arizona, Michigan, and 

New York expressed disappointment 

this decision did not eliminate 

advanced pricing. Commenters 

reiterated arguments in testimony that 

advanced pricing has contributed to 

discrepancies in milk prices, has 

increased price volatility, and has 

caused price inversions and depooling, 

resulting in lower payments to pooled 

producers. Eliminating advanced 

pricing would mitigate these issues, 

commenters argued, by improving class 

alignment. 

Opponents, both independent and 

cooperative Class I processors along 

with a majority of producers, supported 

the continued use of advanced pricing. 

As discussed previously, advanced 

Class I pricing provides equity to 

regulated Class I processors by 

informing them of their regulated 

minimum raw milk cost in advance of 

the sale of their product. This ensures 

all dairy processors have an opportunity 

to align their raw milk costs with the 

sale prices of their products, which are 

generally negotiated before the start of 

the month. In the case of Class I 

products and the nonfat solids portion 

of Class II products, this alignment is 

facilitated by advanced pricing. 

Accordingly, Proposals 16, 17, and 18 

are denied. 

Class I and Class II Differentials 

a. Class I Differentials 

The current Class I price structure 

was developed during the Order Reform 

process when Congress directed the 

Department to review the Class I price 

structure as part of larger FMMO 

consolidation efforts. Federal 

Agriculture Improvement and Reform 

Act of 1996, Public Law 104–127, 110 

Stat. 888. As stated in the recommended 

decision, the Department considered 

several objectives when determining an 

appropriate Class I price surface, 

including: being national in scope, 

while also accounting for local and 

regional conditions; recognizing the 

location value of milk; recognizing all 

uses of milk; and meeting AMAA 

requirements. The Department met 

AMAA requirements governing 

classified pricing by ensuring the price 

surface would ‘‘reflect enough of the 

milk value to maintain sufficient 

revenue for producers to maintain an 

adequate supply of milk and provide 

equity to handlers with regards to raw 

product costs.’’ 64 FR 16026, 16109 

(Apr. 2, 1999).5 The Class I price surface 

adopted on January 1, 2000, met those 

objectives. 

Class I milk pricing consists of two 

pieces: the base Class I mover applied 

uniformly to all Class I milk (as 

discussed previously) and a location 

specific differential which represents 

the value of milk at a specific plant 

location. The differentials provide 

producers a financial incentive to 

supply the Class I market, which tends 

to be closer to the population centers, 

rather than delivering milk to a 

manufacturing plant typically closer to 

the farm. The location specific 

differential consists of two parts: a base 

value (also referred to as the ‘‘base 

differential’’) applied uniformly to all 

Class I milk, and a location value. 

The base differential is currently 

$1.60 per cwt, representing three costs 

whose values were determined to reflect 

market conditions during the late 1990s. 

First, the cost of maintaining Grade A 

farm status ($0.40) which includes costs 

associated with the labor, resources and 

utility expenses for maintaining 

required equipment and facilities, and 

adherence to certain management 

practices. Second, marketing costs (also 

referred to as balancing costs) ($0.60) 

which include, among other things, the 

costs associated with seasonal and daily 

reserve balancing of milk supplies and 

transportation to more distant 

processing plants. Lastly, a competitive 

factor ($0.60) is included to represent a 

portion of the competitive costs 

incurred by fluid plants to compete with 

manufacturing plants for a milk supply. 

The location values were developed 

during the Order Reform process 

through an analysis conducted with the 

USDSS model, maintained at the time 

by Cornell University. The USDSS 

model was used to evaluate the 

geographic or ‘‘spatial’’ value of milk 

and milk components across the U.S. 

under the assumption of efficient 

markets. The model used 240 supply 

locations, 334 consumption locations, 

622 dairy processing plant locations, 5 

product groups, 2 milk components, and 

transportation and distribution costs 

among all locations to determine 


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mathematically consistent location 

values for milk and components. Model 

results provided county-specific 

information regarding the relationship 

of prices between geographic locations 

based on May and October 1995 data. 

Since adoption on January 1, 2000, 

only differentials in the Appalachian, 

Florida, and Southeast FMMOs have 

been amended. The amendments, 

effective May 1, 2008, were the result of 

a region-specific rulemaking evaluating 

transportation costs in servicing those 

milk deficit orders 73 FR 14153 (Mar. 

17, 2008). 

The record reflects consensus among 

hearing participants that the dairy 

marketplace has evolved significantly 

over the past 25 years. However, there 

remains strong disagreement on how the 

market changes should be interpreted 

and recognized in the Class I 

differentials. The producer community 

argued Class I differentials no longer 

reflect the cost of servicing fluid milk 

demand and should be updated to 

reflect the current structure and 

significantly higher transportation costs 

through adoption of Proposal 19. The 

processing and manufacturing 

community argued certain cost factors 

contained in the differentials are no 

longer relevant and should be 

eliminated through adoption of Proposal 

20. They stressed that if the costs of 

servicing the Class I market exceed 

those of the proposed reduced Class I 

differential values, they can be 

negotiated between buyers and sellers 

through over-order premiums. 

Proposal 19 would increase the Class 

I differentials based in part on updated 

USDSS model results reflecting the 

current dairy market structure and 

transportation costs. NMPF witnesses 

explained model result averages were 

the foundation of their deliberations, 

and deviations were made to account for 

a variety of factors they believed were 

not accounted for, including producer 

price impacts, competitive 

relationships, blend price alignment, 

private supply arrangements, and 

unique local market conditions such as 

traffic or geography. Although NMPF 

began with results from a mathematical 

model, the process thereafter was 

primarily subjective. They started by 

selecting a series of cities, which they 

called ‘‘anchor cities,’’ to represent areas 

which bordered multiple FMMO 

regions. Then, regional committees 

adjusted model-derived location values 

to better align location values and 

reflect local marketing and 

transportation conditions within their 

region, respecting the anchor cities as 

starting points. NMPF combined the 

independently derived regional results 

and made further refinements to ensure 

smooth pricing transitions between the 

regions. Ultimately, NMPF proposed the 

lowest differential increase from $1.60 

per cwt to $2.20 per cwt. NMPF 

maintained the cost factors provided for 

in the base differential value remain 

relevant and presented testimony from 

member cooperatives that such costs 

have increased. 

Opposition to Proposal 19 centered on 

several areas. First, opponents argued 

there is more than an adequate supply 

of milk nationally to meet Class I needs, 

therefore, adoption of Proposal 19, or 

any increase to Class I differentials, is 

not warranted. Second, opponents 

contended raising Class I prices would 

be disorderly because it would further 

decrease already declining Class I 

consumption and, they argued, the 

FMMO objective of ensuring adequate 

milk supplies implies FMMOs should 

adopt provisions that encourage Class I 

consumption. One such opponent 

presented an econometric study which 

found fluid milk demand is elastic, 

concluding that increasing Class I prices 

would decrease consumption and 

violate FMMO objectives. Third, 

opponents took exception to NMPF’s 

proposal development process and what 

they considered a lack of unifying 

principles used to adjust the USDSS 

model results, believing NMPF had 

failed to provide cost justification for 

maintaining a base differential. 

Independent fluid milk processors 

further argued the entire development 

process led to results with a favorable 

bias towards NMPF member-owned 

plants. Lastly, organic milk processors 

and some organic cooperatives argued 

organic milk should not be treated 

similarly to conventional milk in the 

FMMO program because it has different 

and unrelated market structures. In its 

post-hearing brief, MIG reiterated its 

position on organic milk and further 

argued that because NMPF did not 

demonstrate that current Class I 

differentials create disorderly marketing 

conditions the evidentiary threshold for 

increasing differentials had not been 

met. 

MIG offered Proposal 20, which 

would lower the base differential value 

to $0.00, contending FMMO Class I 

prices are too high and have resulted in 

an oversupply of milk that they believe 

is disorderly. According to MIG, there is 

more than an adequate supply of milk 

to meet fluid demand. Given 99 percent 

of U.S. milk production meets Grade A 

standards, MIG argued compensation for 

Grade A maintenance is already 

provided for in manufacturing milk 

prices and, therefore, the $0.40 Grade A 

factor is no longer justified. 

Additionally, MIG member 

testimonies detailed efforts they have 

adopted to balance their own milk 

supply, including infrastructure 

investments, creating more uniform 

receiving and processing schedules, and 

paying over-order premiums. Organic 

and ESL MIG members testified their 

fluid milk products function as wholly 

distinct markets with their own 

balancing and supply challenges. 

Therefore, MIG concluded the balancing 

cost and Class I competitive factors 

should no longer be recognized in the 

Class I price. Lastly, MIG and its 

members, and Lamers Dairy, argued that 

if additional money is needed to 

compensate dairy farmers and 

cooperatives for balancing costs or to 

incentivize milk to serve Class I plants, 

those costs should be negotiated 

between the buyer and seller and paid 

through over-order premiums, not as 

part of the regulated price. 

A vast majority of producers and their 

cooperatives opposed Proposal 20. They 

maintained, both in witness testimony 

and post-hearing briefs, there is 

relevancy of costs associated with the 

base differential. NMPF stressed the 

costs, while difficult to precisely 

quantify, are still relevant and have 

increased since adopted in 2000. NMPF 

described the disorder that would arise 

if the base differential was reduced to 

$0.00 and a greater portion of marketwide cost reimbursement was forced to 

be negotiated in the market. While some 

NMPF members testified to receiving 

over-order premiums, they stressed 

establishing and maintaining premiums 

is difficult because there remains a 

market imbalance of power between 

milk sellers and buyers. 

Opponents of any change to Class I 

prices, either through a change to Class 

I differentials or other FMMO 

amendments, raised several overarching 

objections. First, they alleged disorderly 

marketing must first be proven to justify 

any changes to FMMO provisions. They 

cited a lack of instances of fluid demand 

not being met as an indication disorder 

is not present in the fluid milk market. 

The declared policy of the AMAA is 

to ‘‘. . . establish and maintain such 

orderly marketing conditions for 

agricultural commodities in interstate 

commerce . . .’’ FMMOs accomplish 

this mandate through the classified 

pricing of milk products and 

marketwide pooling of those classified 

use values. Through these mechanisms, 

orderly marketing conditions are 

provided so handlers are assured of 

uniform minimum raw milk costs and 

producers receive minimum uniform 

payments for their raw milk, regardless 

of its use. While previous FMMO 


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amendatory proceedings may have 

found market disorder to warrant 

changes to provisions, the AMAA does 

not contain an express or implied 

declaration that a finding of disorderly 

marketing conditions is required before 

an order can be amended. 

Second, opponents argued Class I 

prices cannot be amended until the 

FMMO system is modified to recognize 

the organic milk sector. However, 

potential amendments that would adopt 

disparate treatment of organic milk were 

not within the scope of this proceeding, 

as defined in the hearing notice. 

Finally, opponents testified that milk 

is typically more valuable when used in 

Class III products, rather than Class I, 

and therefore the record lacks 

justification to increase Class I 

differentials. Testimony was given 

comparing USDSS model results 

(utilizing 2016 data) showing, outside of 

the southeastern region, higher marginal 

location values for milk used at Class III 

manufacturing locations than for milk 

used in Class I processing in the same 

locations. No evidence was presented as 

to how the Class III location values 

could or should be implemented to 

achieve the purposes of the AMAA. 

Unlike estimated Class I location values 

which have been historically relied 

upon to determine Class I differentials, 

this was the first time the USDSS model 

results were utilized to calculate 

location values for Class III milk, and 

the first time testimony was offered to 

suggest how the correlation between 

Class III and Class I location values 

should impact pricing decisions. The 

record lacks evidence to validate the 

interpretation of Class III location 

values, as further indicated by the 

differing views of the study authors as 

to whether this would be an appropriate 

interpretation of the various sets of 

USDSS model results. 

The Department received 33 

comments from stakeholders concerning 

amendments to the Class I differentials 

in the recommended decision. This 

included general comments as well as 

specific requests to reevaluate the 

proposed Class I differentials in certain 

counties, as discussed in greater detail 

by region below. In sum, the 

Department received 20 comments in 

support of and 13 comments in 

opposition to the Class I differentials as 

proposed in the recommended decision. 

Seven individual dairy farmers; 

AFBF; NMPF; Georgia Milk Producers, 

Inc.; Maine Dairy Industry Association 

(MDIA); the Arizona, Michigan, 

Tennessee, Wisconsin, and Minnesota 

State Farm Bureau Federations; Upstate 

Niagara; Select; and Plains Dairy 

commented in support of the 

recommended decision with some 

location-specific changes requested. 

These groups largely expressed support 

for the decision’s use of the USDSS 

model’s May results as the baseline for 

Class I differential changes, as well as 

the decision to maintain the current 

base differential of $1.60. They also 

pointed to record evidence from 

producer organizations supporting the 

need to update the Class I differentials 

from the levels set nearly 25 years ago. 

Supporters stated that the increases in 

the proposed differentials accurately 

reflect current costs and would ensure 

an adequate supply of fluid milk 

nationwide and orderly marketing 

conditions. 

Crystal Creamery; United Dairy; 

Nestle USA; New Dairy; Lamers Dairy; 

IDFA; MIG; Pennsylvania Association of 

Milk Dealers (PAMD); West Virginia 

Department of Agriculture; and Family 

Farm Defenders submitted comments 

objecting to the proposed amendments 

to the location-specific Class I 

differentials in the recommended 

decision and some specifically objected 

to the continuation of the $1.60 base 

differential. DFA, the DFA Mountain 

Area Council (separately), and an 

individual DFA producer submitted 

comments specifically objecting to the 

Department’s reliance on the USDSS 

model’s May results as the basis for 

determining Class I differentials. They 

argued the USDSS model does not take 

into account the unique relationships 

between dairy farmers and Class I 

manufacturers in Colorado and the 

proposed Class I differential levels in 

Colorado should be raised. 

MIG made numerous assertions 

regarding what it believed were 

arbitrary and capricious changes 

proposed in the recommended decision, 

particularly concerning any deviations 

from the USDSS model. MIG also 

continued to express strong opposition 

to the costs accounted for in the $1.60 

base differential, stating that the record 

lacks sufficient evidence to continue to 

account for the Grade A and Class I 

incentive costs, in particular. IDFA also 

commented that, in its view, there is no 

record evidence to support that Class I 

demand is not met and, thus, the 

decision to increase Class I differentials 

to incentivize supply to the Class I 

market is unsubstantiated. 

Comments by Crystal Creamery and 

Lamers Dairy also expressed additional 

concerns with the proposed Class I 

differentials. Crystal Creamery reiterated 

its support for MIG’s proposal to 

eliminate the base differential, which 

they believed would allow over-order 

premiums to incentivize supply to fluid 

plants. However, Crystal Creamery 

stated that if the Department continued 

to propose Class I differential increases, 

it believed the use of the USDSS model 

results, with no additional adjustments, 

was the best tool available for 

determining location differentials. 

Lamers Dairy expressed its continued 

opposition to any increase in the Class 

I differentials and criticized the 

Department’s determination not to 

account for over-order premiums in its 

recommended decision because they 

are, in its view, the real incentive to 

supplying fluid milk plants. 

Considering comments received on 

the recommended decision and all 

record evidence, this decision continues 

to find that the cost of servicing the 

Class I market is no longer sufficiently 

reflected by existing Class I differentials. 

This was evident in the USDSS model 

results and validated through firsthand 

testimony of cooperative milk suppliers 

who described increased servicing costs. 

Current Class I differentials were 

established based on 1995 data. In the 

nearly thirty years since, the record 

reflects the market has substantially 

changed in size and structure. While 

milk production by volume has 

increased approximately 45 percent 

from 1995 until 2022, during the same 

time period the number of dairy farms 

has decreased by approximately 74 

percent, and the average herd size has 

increased from 68 to 261 cows. 

Consolidation has also occurred on 

the processing and manufacturing side. 

The record describes plant closures, 

particularly on the fluid processing side, 

and plant investment, especially in large 

manufacturing plants. Considerable 

testimony and evidence were given 

describing increased distances milk 

must travel to find a market outlet. 

Because of the greater distances between 

supply locations and fluid processing 

plants, cooperative witnesses testified to 

increased costs to ensure fluid demand 

is met. The witnesses also described in 

detail how the increased costs are 

disproportionately borne by cooperative 

members who often see deductions on 

their milk checks to cover increased 

organizational and individual 

transportation costs, which some 

witnesses attested more than doubled in 

the past 20 years. 

There was little to no rebuttal to the 

claim the market has consolidated on 

both the producer and processor side, 

resulting in increased transportation 

costs. The USDSS study authors 

themselves attributed the observed 

differences in the 2022 results, when 

compared to the current differentials, to 

four primary factors: change in milk 

production locations, change in 

compositions of dairy product demand, 


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change in demand locations, and 

increased transportation costs per mile. 

What is at issue is the justification for 

increasing Class I differentials. While 

only one witness described a situation 

in which they were unable to procure 

enough milk to meet the demand of 

their fluid milk processor, the record is 

full of testimony on the difficulty 

cooperatives have faced to ensure fluid 

milk demand is met. Cooperative 

witnesses discussed needing to reach 

out to more distant supply locations to 

find available milk supplies willing to 

serve the Class I market instead of 

remaining at a manufacturing plant, and 

the inability to recoup a large portion of 

the additional transportation costs 

through over-order premiums. 

FMMOs were established in the 1930s 

when the market contained many sellers 

and few buyers of milk. The highly 

perishable nature of raw milk resulted 

in producers engaging in pricing 

behavior that lowered farm prices as 

producers undercut one another in 

order to find a market outlet, a 

condition generally described as 

destructive competition. This 

unavoidable competitive behavior was 

among the reasons producers petitioned 

Congress to authorize a marketing order 

program to provide orderly marketing 

through known terms of trade and the 

pooling of market returns, which in turn 

provided a more equitable balance of 

power between buyers and sellers. 

While the record of this proceeding 

reveals continued consolidation on both 

the producer and processing sides of the 

market, it also contains evidence the 

fundamental elements that were the 

genesis of the FMMO program still exist. 

Raw milk remains a highly perishable 

product, produced every day, that 

cannot be stored for any significant 

length of time and incurs high costs 

when transported over long distances. 

No substantive evidence was presented 

to indicate there is no longer an 

imbalance of market power between 

buyers and sellers. Processors spoke of 

the abundance of milk produced as a 

reason Class I prices should not be 

increased. However, that reality also 

highlights how the dairy marketplace 

continues to place processors in a price 

setting role. As a price taker, the record 

reflects considerable testimony attesting 

to the difficulty dairy farmers have had 

and continue to have in obtaining and 

maintaining over-order premiums at 

levels sufficient to cover actual and/or 

opportunity costs. 

It is natural for buyers of milk to want 

to pay less and for sellers of milk to 

want to be paid more. The role of 

FMMOs is to determine minimum 

prices that provide for orderly 

marketing conditions that balance these 

natural competitive desires. The AMAA 

expressly authorizes marketwide 

pooling of classified prices as a tool for 

accomplishing orderly marketing. In 

determining appropriate classified 

prices, the Department cannot place an 

undue reliance on over-order premiums 

which diminish the role of marketwide 

revenue pooling and can lead to 

disorderly marketing conditions. 

Accordingly, this decision recommends 

changes to the Class I differentials to 

better reflect the various aspects of the 

current marketplace. 

The first step in evaluating 

appropriate Class I differential levels is 

the base differential. While the USDSS 

model is appropriate to show the value 

differences of milk between two fluid 

plant locations, as will be discussed 

later, it is not designed to inform the 

level of the minimum value needed to 

service Class I plants. Proposal 20 seeks 

to reduce the base differential to $0.00 

on the premise the costs represented 

either are no longer relevant (Grade A 

maintenance) or should be left up to 

negotiation with the fluid milk 

processor and their supplier (balancing 

and Class I incentive cost). This 

decision continues to find that while the 

record does not precisely describe how 

much the cost components of the base 

differential have increased, it lacks 

evidence to demonstrate those costs 

have decreased. In fact, discussion of 

various costs throughout the proceeding 

indicates that costs have instead 

increased. Given the lack of clear record 

evidence specific to costs accounted for 

in the base differential, this decision 

continues to recommend that the $1.60 

per cwt base differential remain. 

Despite arguments Grade A 

maintenance costs should no longer be 

covered because 99 percent of U.S. milk 

production is Grade A, this decision 

continues to find it appropriate to 

recognize the additional costs for 

maintaining Grade A status in a 

regulatory pricing system requiring 

Grade A standards be met for 

participation. When the Grade A factor 

was incorporated into the base 

differential, it was specifically for Grade 

A maintenance costs, not costs 

associated with conversion to Grade A 

status. Proponents argue that because 

almost all milk meets Grade A 

standards, it is no longer necessary to 

provide a recognition of that cost in the 

base differential. Whether 99 percent of 

milk production today is Grade A, or 96 

percent as it was at the time of Order 

Reform, is irrelevant. The record 

demonstrates dairy producers incur 

costs to maintain Grade A standards 

which are a requirement for 

participating in the FMMO system. As 

only Class I milk is required to 

participate and raw milk used in fluid 

milk products is required to meet Grade 

A standards, it is appropriate for the 

Class I price to continue to recognize 

those costs. 

The record does not demonstrate the 

remaining two base differential factors, 

balancing costs and additional monies 

needed to compete for a milk supply, 

are no longer relevant. All parties 

testified to their continued existence. 

Proposal 20 would require those costs to 

be negotiated in the market. 

Proponents of Proposal 20 argued 

they have made capital investments to 

balance their supply and/or pay overorder premiums to their suppliers to 

meet their milk needs, and/or provide 

balancing services. While their 

testimony acknowledges these costs 

exist, proponents argued the FMMO is 

making them pay twice for such 

services—once through the regulated 

price and again through their negotiated 

over-order premium. They further 

argued that if cost reimbursement is 

needed for such services, they should be 

able to pay that value to their suppliers 

directly through over-order premiums, 

not into the marketwide pool. 

Cooperative witnesses testified at 

length on the costs associated with 

ensuring daily, weekly, monthly, and 

seasonal fluctuating needs of the fluid 

market are met. While their balancing 

costs were considered confidential 

information, cooperative witnesses 

testified to the overall increase in costs 

associated with providing those 

services. In particular, cooperative 

witnesses spoke to the higher costs 

incurred to operate regional balancing 

plants. These plants often do not run at 

full capacity year-round in order to 

ensure capacity to balance excess 

supply during flush periods or provide 

additional milk to fluid processing 

plants during months of increased 

demand. The record reflects these 

marketing costs are incurred for the 

benefit of balancing the entire market’s 

milk supplies, thus, providing for the 

orderly marketing of milk for fluid use. 

It has always been the case that an 

individual processor may find it 

necessary and/or advantageous to pay 

premiums above the minimum value to 

suit their individual and fluctuating 

needs. FMMO pricing balances the 

value needed to be reflected in the 

minimum regulated prices, without an 

over-reliance on over-order premiums 

that can undermine marketwide revenue 

pooling and lead to unequal raw 

product costs between similarly situated 

handlers and non-uniform payments to 

producers. 


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An additional function of the base 

differential, as described in the Order 

Reform Recommended Decision, is to 

generate the additional monies 

necessary for the FMMO pools to 

balance the reliance on over-order 

premiums. This was of particular 

concern in marketing orders with low 

Class I differentials and low Class I 

utilization, for which the decision noted 

‘‘there is a risk that handlers may not 

face equal raw product costs for various 

reasons. Thus, having a larger 

proportion of the actual value of Class 

I milk in the market order pool in these 

areas, than is now the case, should 

promote pricing equity among market 

participants.’’ 63 FR 4802, 4909 (Jan. 30, 

1998). As this decision seeks to update 

Class I differentials, maintaining the 

balance of what proportion of the value 

of Class I should be reflected in the 

marketwide pool remains a 

consideration. Negotiations for overorder premiums are not conducted in a 

vacuum but are done with the benefit of 

both parties knowing minimum FMMO 

values and the costs represented in the 

minimum values the plant is 

responsible for paying. If Class I 

processors believe they are being double 

charged, they can use that information 

in their over-order premium 

negotiations. 

Maintaining the $1.60 per cwt base 

differential would ensure Class I prices 

typically remain the highest, which is of 

particular importance in locations 

where the base differential is the 

effective differential. Without a base 

differential value in these locations, 

there would be little difference between 

the Class I price and the manufacturing 

price, and, thus, no financial incentive 

to supply the fluid market would exist 

to ensure the FMMO policy objective is 

met. Accordingly, this decision finds a 

$1.60 per cwt base differential remains 

an appropriate minimum value to 

ensure Class I demand is met. 

While the Department appreciates the 

effort put forth to submit a 

comprehensive option in Proposal 19, 

the record of this proceeding does not 

support its adoption. Proposal 19 

contains a base differential of $2.20, 

which is an increase of $0.60 from the 

current level. However, the record lacks 

data to quantify costs in excess of the 

$1.60 base value. 

Proponents described using the 

average of the USDSS model’s May and 

October results as a starting point for 

consideration but did not provide 

evidence as to why, under a minimum 

pricing system, the average rather than 

the minimum values observed in the 

May results was appropriate or 

preferable. Furthermore, the record does 

not contain evidence to support how the 

deviations made from the model’s 

averages are appropriate. Proponents 

described their own marketing expertise 

but presented insufficient evidence to 

determine if the proposed differentials 

would result in Class I prices in excess 

of what is appropriate for a minimum 

pricing system. Accordingly, this 

decision does not recommend adoption 

of Proposal 19. 

However, this decision continues to 

find there is record evidence to support 

raising the Class I differentials from 

current levels. The record of this 

proceeding demonstrates the cost of 

servicing the Class I market has 

increased since the Class I differentials 

were adopted in 2000 and amended in 

the southeastern FMMOs in 2008. 

Evidence reflects the market structure of 

Class I plants and the milk supply have 

changed considerably in the last 25 

years. That was supported in witness 

testimony, as well as USDSS model 

results, which clearly show the location 

value of milk has changed. The 

Department continues to find the 

USDSS model to be the best available 

tool for determining the location value 

of milk given the vast array of factors 

that contribute to how milk is produced, 

transported, processed, and distributed 

in the U.S. 

When the differentials were adopted 

during Order Reform, testimony reflects 

the Department used USDSS model 

results as a starting point and made 

adjustments for various reasons. The 

Order Reform Recommended Decision 

described several options the 

Department considered. Of the 

differential surface ultimately adopted, 

AMS wrote, ‘‘. . . [n]ine differential 

zones provide the basis for establishing 

the price structure. These zones were 

established based on results of the 

USDSS model, knowledge of current 

supply and demand conditions, and 

recognition of other marketing 

conditions such as fluid versus 

manufacturing markets, urban versus 

rural areas, and surplus versus deficit 

markets.’’ 63 FR 4802, 4905 (Jan. 30, 

1998). The decision went on to outline 

additional reasons for adjustments 

including ensuring price alignment with 

neighboring zones and adequate 

marketwide pool draws. 

The USDSS model estimates results 

for an efficient milk supply and 

distribution network, provided at its 

lowest cost. The USDSS study authors 

acknowledged when using the model 

results to determine Class I differentials, 

adjustments would be appropriate as 

there are factors unaccounted for in the 

model, such as FMMO provisions, 

abnormal traffic patterns, and 

competitive relationships. 

Accordingly, this decision continues 

to recommend that Class I differentials 

be amended, as appropriate, to better 

reflect the current cost of serving the 

Class I market. When determining 

appropriate levels, the Department 

began with the USDSS model’s May 

results, referred to hereinafter as ‘‘May 

results.’’ The May results are the lower 

of the two months provided in evidence, 

which is an appropriate starting point 

for determining minimum prices. The 

Department then evaluated the results 

on a regional basis and made 

adjustments based on three principles 

and two additional considerations. 

First, adjustments were made where 

necessary to better align Class I handler 

equity. This means the proposed Class 

I differentials should not give one 

handler an uneconomic cost advantage 

relative to an actual or potential 

competing handler. Second, 

adjustments were made to maintain 

producer equity and prevent 

uneconomic rewards or penalties to 

producers who deliver or could deliver 

milk to the same plant or market. Third, 

adjustments were made to ensure the 

marketwide pools continue to provide 

orderly marketing conditions. The 

combination of handler and producer 

equity goals is further achieved through 

the size and shape of pricing zones. The 

model results are determined at specific 

locations, or ‘‘nodes,’’ in the model. 

Model results can be displayed on a 

map or in a list of counties to convey 

the price surface, but the methodology 

for doing so, as explained by the study 

authors, was a mathematical tool which 

interpolated values between distances. 

Additional information about markets 

can be added to the model results 

through knowledge about the economic 

or geographic (roads, natural barriers, 

etc.) conditions in specific locations. 

This may lead to a decision to change 

the shape or contours of the pricing 

surface that is estimated from the model 

results. Lastly, adjustments were made 

to reflect unique challenges associated 

with servicing dense urban 

environments. The changes by regions 

and any changes from the recommended 

decision for specific locations—made in 

this final decision are described below. 

The general process began with 

roughly $0.20 differential bands 

generated from the May results. The 

May and October results formed a soft 

boundary for differential adjustments. 

The current differentials formed a hard 

lower boundary, which were rounded to 

the nearest dime to eliminate $0.05 

differences between zones, consistent 


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with the USDSS model results which 

were in $0.10 increments. 

Northeast 

The recommended Class I 

differentials in the Northeast region 

continue to largely follow the May 

results with minimal changes. The 

differential for Portland, Maine, 

continues to be raised to $4.50 to match 

the results in Concord, New Hampshire, 

and ensure handler equity. Albany 

County, New York, and Rensselaer 

County, New York, were moved to the 

same differential by increasing the 

Albany differential $0.10 to meet the 

Rensselaer differential, as plants in 

those counties are located just across a 

bridge from one another but were 

assigned different prices by the model. 

Comments on the recommended 

decision from NMPF and Upstate 

Niagara expressed concern with 

inconsistent Class I differentials across 

the area of western New York. NMPF 

and Upstate Niagara commented that 

the proposed differentials in the 

recommended decision would require 

milk supplying Class I destinations in 

that region to move from higher to lower 

differential zones, largely due to the 

geography of the Great Lakes. They 

requested the Department consider a 

flatter differential area by raising some 

counties from $3.80 to $3.90 and 

decreasing others from $4.00 to $3.90 to 

facilitate the movement of milk in 

different directions. Without an 

adjustment, they argue, producers will 

not have the necessary incentive to 

supply Class I handlers in the region. 

After closer review of the record, this 

decision recommends increasing the 

Class I differentials in the following 

counties from $3.80 to $3.90: Niagara, 

Erie, Orleans, Genesee, Wyoming, 

Livingston, Yates, Ontario, Monroe, and 

Wayne. This decision also recommends 

decreasing the currently proposed Class 

I differentials from $4.00 to $3.90 in the 

counties of Lewis, Jefferson, and St. 

Lawrence. These changes will create a 

consistent $3.90 zone that addresses 

milk movements in the region. This 

decision is consistent with record 

testimony concerning the market in 

western New York and expected 

increases in capacity and demand in the 

region which may potentially require 

milk to be sourced from outside of the 

immediate local area. 

MDIA, NMPF, and MIG commented 

on the recommended decision’s 

proposed Class I differentials in Maine 

and New Hampshire. MDIA requested 

that the proposed Class I differential for 

Cumberland County, Maine, be 

increased from $4.50 to $4.85 to restore 

the previous $0.25 variance between the 

Portland and Boston areas and ensure 

handler equity in the region. The 

current spread, MDIA argued, will 

incentivize Maine producers to ship to 

handlers in Boston, rather than those 

located in Cumberland County, Maine 

(Portland). Similarly, NMPF requested 

an increase from $4.50 to $4.70 for 6 

counties in Maine and New Hampshire 

to maintain producer and handler 

equity. Lastly, MIG commented in 

opposition to the Department’s proposal 

to align certain counties in Maine and 

New Hampshire, at levels $0.20 above 

the model results. 

The Department considered MDIA, 

NMPF, and MIG’s comments in the 

context of the overall marketing 

dynamic in the northeast marketing 

areas and concluded that the Class I 

differential for Cumberland County, 

Maine should remain at $4.50, as 

indicated in the recommended decision. 

This will align the Portland area with 

nearby Merrimack County, New 

Hampshire (Concord) to ensure handler 

equity in the region. The larger increase 

in Suffolk County, Massachusetts 

(Boston) reflects the increase in costs to 

service that market and fluid milk 

demand. Accordingly, no changes were 

made to the Class I differentials 

assigned in this region from the 

recommended decision to the final 

decision. 

Differentials in most New Jersey 

counties are proposed to be $0.10 to 

$0.20 above the May results, but within 

the May and October range, to reflect 

testimony on the cost of servicing urban 

areas and transportation concerns. 

NMPF requested the differentials be 

aligned across southern New Jersey to 

ensure handlers competing in the same 

market face the same raw milk costs. 

The recommended decision proposed 

changes to the current Class I 

differentials at varied levels for certain 

counties in southern New Jersey. More 

specifically, the proposal for 

Cumberland County, New Jersey was 

$4.70, while the proposal for 

neighboring Burlington, Atlantic and 

Cape May counties was $4.80. However, 

a review of the record reveals these fluid 

milk plants compete for sales in the 

same market and should face similar 

raw milk costs. Therefore, this decision 

decreases the Class I differentials for 

Burlington, Atlantic, and Cape May 

counties from $4.80 to $4.70. This 

change will also align the differentials 

with the May results and maintain 

uniform Class I differentials across the 

region, as has been the case historically. 

The differential for Washington, DC, 

continues to be $0.10 above the May 

result to reflect testimony on servicing 

an urban area. 

In eastern Pennsylvania and northern 

Maryland, NMPF’s comments to the 

recommended decision requested a 

$0.10 increase for 7 counties to maintain 

a historical $0.10 price difference with 

Berks County, Pennsylvania, and to 

promote handler equity. Similarly, in 

the Philadelphia and Baltimore corridor, 

which includes areas in Maryland, 

Delaware, and southern Pennsylvania, 

NMPF requested $0.10 to $0.20 

increases in 15 counties due to milk 

movements in the region and handler 

equity concerns. The Department 

considered NMPF’s requests to increase 

the differentials in Pennsylvania, 

Maryland, and Delaware. However, the 

proposed differentials are aligned with 

the USDSS model results and record 

evidence does not support the requested 

increases. Accordingly, no additional 

changes were made to the Class I 

differentials proposed in Pennsylvania, 

Maryland, and Delaware from the 

recommended decision to the final 

decision. 

Appalachian 

The variation between the model 

results in May and October are more 

significant in the three southeastern 

orders. As discussed by several 

witnesses, this region experiences 

unique marketing conditions with high 

Class I utilization and deficit local milk 

supply. Due to the substantial 

seasonality of the local milk supply, it 

requires significant but variable 

volumes of supplemental milk supplies 

from outside the region as well as 

changes in milk movements of regular 

suppliers to the market throughout the 

year. The Transportation Credit 

Balancing Fund (TCBF) and the recently 

implemented Distributing Plant 

Delivery Credit (DPDC) are programs to 

compensate handlers for some of the 

additional and variable transportation 

costs associated with supplying the 

Class I markets in these orders during 

different periods of the year. The 

reimbursement rates for these programs 

include adjustments for any gain in 

Class I differentials from supply point to 

receiving plant. Therefore, any changes 

in the difference between Class I 

differentials would be reflected in the 

calculated rate for eligible payments in 

both the TCBF and DPDC in all three 

southeastern orders. 

The Class I differentials in the 

Appalachian region are largely formed 

in $0.20 and $0.30 bands based on the 

May results starting with $3.70 in 

southern Indiana and, moving 

southeast, increasing to $6.00 along the 

North and South Carolina coasts. In 

most areas, the proposed differentials 

are within $0.10 (+/¥) of the May 


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results. There are a few exceptions 

where the proposed differentials are 

$0.20 less than the May results to better 

align handler equity. For example, in 

Spartanburg County, South Carolina, the 

proposed differential is $5.60, $0.20 less 

than the May results. This maintains the 

current competitive relationship 

between this area and the Atlanta, 

Georgia area, and with the competing 

handlers in North Carolina. 

The Department received comments 

on the Class I differentials proposed in 

the recommended decision in the 

Appalachian region from NMPF, IDFA, 

MIG, and New Dairy. NMPF requested 

a $0.20 increase in 9 Virginia counties 

to align with the differential proposed 

for nearby Kanawha County, West 

Virginia. NMPF explained that the 

handlers in these areas all compete for 

the same market and receive milk from 

the same milkshed. NMPF also 

requested a $0.20 increase to 40 

additional Virginia counties to reduce 

the spread in the proposed differentials 

in Virginia and northern North Carolina, 

as well as a series of changes to the 

proposed differentials in other Virginia, 

West Virginia, and North Carolina 

counties considering logistical and 

geographical challenges. Conversely, 

IDFA, MIG, and New Dairy commented 

in strong opposition to the proposed 

increases and requested general 

downward adjustments. 

The Department considered all 

comments on the Class I differentials 

proposed for the Appalachian region. 

First, rather than increasing the 

differentials for certain Virginia 

counties by $0.20 to align with 

Kanawha County, West Virginia, this 

final decision decreases the proposed 

differentials for Kanawha County, West 

Virginia by $0.20 to $4.30. As discussed 

later in this decision with regard to the 

Mideast region, this change effectively 

aligns the region and addresses handler 

equity concerns described on the record 

in both West Virginia and neighboring 

Ohio counties that compete in the same 

market. Second, with regard to all other 

requested adjustments in this region, 

this decision finds that the Class I 

differentials proposed in the 

recommended decision are aligned with 

the model results and record evidence 

does not support additional changes. As 

such, no additional changes were made 

to the Class I differentials assigned in 

this region from the recommended 

decision to the final decision. 

Southeast 

The proposed Class I differentials in 

the Southeast FMMO start at $3.20 in 

southwest Missouri and increase 

moving southeast to $6.00 in southeast 

Georgia. The proposed differentials 

continue to follow the May results 

closely, within $0.10 (+/¥), with a few 

modifications. The East Baton Rouge 

Parish differential was reduced by $0.20 

from the May results to be consistent 

with the May result of $5.20 for 

competing areas such as Lafayette 

Parish. Tangipahoa Parish was placed in 

the $5.40 zone, or $0.30 below the May 

result. These decreases are meant to 

ensure handler equity while still 

acknowledging the thinner and steeper 

surface reflected in the May results in 

the southeastern U.S. 

Rutherford County, Tennessee, is also 

proposed to be modified to be consistent 

with neighboring Davidson County, 

Tennessee, at $4.60 ($0.20 below the 

May result) to provide for handler 

equity. In Missouri, Webster County was 

placed in the $3.20 zone to match the 

Greene, Hickory, and Polk County 

differentials. This addresses handler 

equity concerns and results in a $0.10 

proposed decrease for Webster County 

from the May result. 

NMPF provided specific comments on 

the Class I differentials proposed in the 

recommended decision for the southeast 

region and requested a series of 

increases in 12 counties located in 

Tennessee and Kentucky. NMPF’s 

rationale for these requests was based 

on historical and expected milk 

movements and known producer equity 

concerns among those delivering milk 

from the same milkshed to the same 

plant locations. The Department 

considered NMPF’s request to increase 

the Class I differentials in this region. 

However, the differentials proposed in 

the recommended decision are aligned 

with the model results and record 

evidence does not support the requested 

increases. Accordingly, no changes were 

made to the Class I differentials 

assigned in this region from the 

recommended decision to the final 

decision. 

Florida 

The proposed Class I differentials for 

Florida largely follow the May results 

with modification to address handler 

equity concerns. The differentials start 

at $6.00 in the Florida panhandle region 

and increase going south with mostly 

$0.40 bands ending at $7.40 in south 

Florida. Processing plants in central 

Florida were placed in the same $6.80 

band to match the May result in Volusia 

County due to handler equity concerns. 

This necessitated decreases from the 

May results of $0.10 in Orange County, 

$0.10 in Hillsborough County, and $0.20 

in Polk County. For similar handler 

equity concerns, Broward County is 

proposed to match the May result in 

Dade County of $7.40 in the 

southernmost part of Florida. 

In its comments on the recommended 

decision, NMPF requested a series of 

increases of $0.20 to $0.40 to the Class 

I differentials proposed for 14 Florida 

counties. NMPF cited producer equity 

concerns and their ability to ensure a 

sufficient supply of fluid milk to meet 

consumer demand in high-population 

areas such as Miami. The Department 

considered NMPF’s requests to increase 

the differentials in Florida. However, 

the proposed differentials are generally 

aligned with the model results and 

record evidence does not support 

additional increases. Accordingly, no 

changes were made to the Class I 

differentials proposed in this region 

from the recommended decision to the 

final decision. 

Upper Midwest 

In the Upper Midwest region, this 

decision continues to propose 

deviations from the May results to 

ensure producer equity and ensure the 

marketwide pool provides for orderly 

marketing. The Upper Midwest FMMO 

is unique in its low Class I utilization, 

which creates challenges in setting a 

differential surface that sends the proper 

signals to producers supplying the Class 

I market, while also ensuring producer 

equity and orderly marketing among 

producers supplying the region’s plants. 

Record evidence indicates a large 

differential range in the region would 

not result in equity between producers 

and could result in disorderly 

marketing. Therefore, the differential 

surface was flattened from the May 

results, in general, by raising the Class 

I differentials in the western part of the 

region—in the eastern Dakotas and 

much of Minnesota—and lowering the 

differentials in the eastern part—in 

northern Illinois, southeastern 

Minnesota, and Wisconsin. 

Differentials in five counties, Dakota, 

Hennepin, Ramsey, Scott, and 

Washington, in the Minneapolis/St. 

Paul metropolitan area of Minnesota, are 

raised $0.10 higher than neighboring 

counties to reflect higher costs of 

serving an urban area and incentivize 

Class I service relative to surrounding 

manufacturing plants. In addition, they 

are set at the same differential of $2.90 

to promote handler equity among fluid 

processing plants in the metropolitan 

area. The new differential for these 

counties, except for Hennepin, are $0.10 

to $0.20 above the May results. The 

differential for Hennepin, $0.30 above 

the May results, is set the same as its 

peer counties to ensure that handlers in 

this county are able to compete for 


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available milk supplies on an equitable 

basis. 

Differentials in the regions supplying 

the Chicago, Illinois, area are adjusted to 

ensure handler equity. Generally, the 

differentials in this area are set at $3.10 

to $3.20. The record reflects bottling 

plants in eastern Iowa, northern Illinois, 

southeastern Wisconsin, northern 

Indiana, and southwest Michigan all 

compete for Class I sales into the 

Chicago area. Thus, Class I differentials 

in northern Illinois are lowered $0.20 

and $0.10 in Kane and Winnebago 

counties, respectively, from the May 

results. Similarly, comparisons and 

adjustments were made to the May 

results to align with northern Indiana 

and southwest Michigan counties 

supplying the Chicago area. 

The Department received a comment 

from NMPF concerning the Class I 

differentials assigned to eastern North 

Dakota and western Minnesota. NMPF 

stated the Department’s recommended 

decision changed the historical 

relationship in the Class I differentials 

assigned to Cass County, North Dakota, 

and four, adjacent western Minnesota 

counties compared to the rest of western 

Minnesota. More specifically, these 

counties were proposed at $2.70, while 

the surrounding counties were proposed 

at $2.80. Without a change, NMPF 

commented, dairy farmers would be 

disincentivized to supply Class I 

handlers in the recommended $2.70 

zone. Considering these comments, this 

decision increases the Class I 

differentials for Cass County, North 

Dakota, and Clay, Becker, Hubbard, and 

Wilkin counties in Minnesota from 

$2.70 to $2.80. These changes will help 

to align these counties with the 

neighboring counties in Minnesota 

where the record reveals the reserve 

supply is located. The increase will also 

incentivize the supply of milk to Class 

I plants in the area to ensure fluid milk 

availability to populations throughout 

North Dakota and northwestern 

Minnesota. 

Central 

The proposed Class I differentials in 

the Central FMMO start at $2.30 in 

western Colorado and increase moving 

east to $4.00 in southern Illinois. This 

decision continues to align the 

production area of northern Colorado 

with the large production areas of New 

Mexico, the Texas Panhandle, and 

southwest Kansas at $2.50. This 

required increasing the differential in 

Weld, Boulder, and Morgan counties of 

Colorado by $0.10 to $0.20 from the 

May model results. In order to 

encourage milk to service Class I 

demand, some counties in the greater 

Denver area, including Colorado 

Springs, are proposed to remain aligned 

with the May results of $2.70, while 

others are proposed to increase as much 

as $0.20 above the May results to 

provide for handler equity. 

In southern Illinois, testimony reflects 

plants compete for sales within a similar 

distribution area. Therefore, counties 

were grouped into a $3.60 zone. This 

represents an increase of $0.10 for some 

plants, while others remained at the 

May result of $3.60. In Iowa, all 

counties with distributing plants remain 

aligned with the May result of $2.70. 

Douglas County, Nebraska, and 

Minnehaha County, South Dakota, 

proposed Class I differentials are $2.70 

and $2.60, an increase of $0.20 and 

$0.10, respectively, from the May 

results. These increases continue to 

recognize handler equity both to the east 

with Polk County, Iowa, and to the 

north with Cass County, North Dakota. 

In Kansas, the two counties with 

distributing plants, Reno and Sedgwick, 

are proposed to be aligned at $2.90; as 

they are neighboring counties, the same 

differential levels would provide for 

handler equity. This increase also 

provides handler equity and price 

alignment with Oklahoma plants to the 

south. 

In Oklahoma, Lincoln, Cleveland, and 

Grady counties continue to be proposed 

at the same differential of $3.30. Lincoln 

and Cleveland counties continue to be 

proposed in alignment with the May 

results, which represents a $0.20 

increase for Grady County. The $3.30 

differential for these three counties 

provides for handler equity and price 

alignment both to the north in Kansas 

and the south in Texas. 

The Department received specific 

comments on the Class I differentials 

proposed in the recommended decision 

for the Central FMMO region from 

NMPF, DFA, and DFA’s Mountain Area 

Council in collaboration with Colorado 

dairy farmers. NMPF’s comments 

focused on producer and handler equity 

concerns in the region and included a 

request for a $0.20 increase in the 

proposed Class I differentials for 23 

Colorado counties. DFA and its 

Mountain Area Council provided 

similar comments and argued further 

that the USDSS model is inappropriate 

for the Colorado market because of the 

unique circumstances in that market 

where a single Class III handler absorbs 

nearly all the milk produced in 

Colorado. The DFA Mountain Area 

Council also reiterated hearing 

testimony on Colorado milk production 

costs. 

The Department considered all 

comments received on the Class I 

differentials in the State of Colorado. 

Record evidence, however, does not 

justify a change in the proposed 

differentials. While the record reflects 

the USDSS model did not account for a 

variety of milk cost of production 

factors and plant supply relationships, 

this decision has consistently 

articulated consideration of producer 

costs is not appropriate when 

determining Class I differential levels. 

As such, no changes were made to the 

Class I differentials proposed in 

Colorado from the recommended 

decision to the final decision. 

NMPF also commented on the Class I 

differentials proposed for 35 counties 

across Oklahoma, Missouri, and 

Arkansas, covered by both the Central 

and Southeast FMMOs. NMPF 

requested that the Department align 

these counties at $3.40 because handlers 

in the tri-state area all compete for the 

same markets and are supplied by the 

same milkshed. This decision finds, 

however, that record evidence does not 

justify an additional increase or a reason 

to align the tri-state area at $3.40, as the 

proposed differentials generally follow 

the model results. As such, no changes 

were made to the Class I differentials 

proposed in this region from the 

recommended decision to the final 

decision. 

Mideast 

Differentials in the Mideast region 

were evaluated on a state-by-state basis. 

Michigan differentials are set at the May 

results, $3.00 in the upper peninsula 

and $3.30 in the lower peninsula, 

because there were no additional 

producer or handler equity issues to 

address. Indiana is divided into three 

differential zones moving north to south 

($3.30, $3.60, and $3.70) which align 

with the May results. This decision 

continues to propose Class I 

differentials for Lake and Huntington 

counties $0.40 and $0.10 lower, 

respectively, from the May results to 

provide handler equity in the northern 

Indiana zone. This decision continues to 

propose an increase to the Class I 

differentials in Madison and Wayne 

counties by $0.10 and $0.20, 

respectively, from the May results to 

provide handler equity in the central 

Indiana zone of $3.60. Southern Indiana 

counties are proposed at the May result 

of $3.70. 

Proposed differentials in Ohio 

generally follow the May results within 

$0.10 (+/¥) and zones were determined 

based on handler equity concerns. 

Moving northwest to southeast, 

proposed differential zones are $3.30, 

$3.60, $3.80, $4.00, and $4.30. The five 

differential zones align within a $0.10 


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(+/¥) range of the May results. The 

exception is Cuyahoga County with a 

proposed $0.20 decrease from the May 

result to provide for hander equity with 

Wayne and Stark counties. 

Considering additional handler equity 

concerns in southern Ohio, as expressed 

in comments received from United 

Dairy, and competition among plants in 

the region as revealed in hearing 

testimony, this decision decreases the 

Class I differentials from $4.00 to $3.80 

in the counties of Noble, Belmont, 

Morgan, Jefferson, and Perry, Ohio. 

United Dairy noted in its comments that 

current Class I differentials in the region 

are aligned, yet the recommended 

decision amended the differentials at 

higher levels for some counties. United 

Dairy added that the proposed Class I 

differentials in the recommended 

decision set the minimum raw milk 

price for some Class I handlers located 

in southern Ohio $0.20 higher than 

those in neighboring central Ohio 

counties. United Dairy asserted that 

with such a large price difference, it 

would be at a competitive disadvantage 

relative to its current price relationships 

with competitors. Upon further review, 

this decision finds the Class I 

differentials proposed in the 

recommended decision would create 

competitive disadvantages for plants 

located in southern Ohio and, thus, a 

decrease in these counties was 

appropriate. 

West Virgina differentials range from 

$4.00 to $4.80, moving northwest to 

southeast, and are largely consistent 

with the May results. However, 

considering handler equity concerns in 

West Virginia, as expressed in 

comments received from NMPF, United 

Dairy, and the West Virginia 

Department of Agriculture, this decision 

decreases the Class I differentials in 

Cabell, Putnam, Clay, and Kanawha 

Counties in West Virginia from $4.50 to 

$4.30. NMPF, United Dairy, and the 

West Virginia Department of Agriculture 

all highlighted handler equity concerns 

in their comments because of 

significantly higher differentials in 

Kanawha County, West Virginia 

compared to neighboring West Virginia, 

Virginia, and southern Ohio counties. 

To address these concerns, this decision 

will align the Class I differentials in 

Cabell, Putnam, Clay, and Kanawha 

Counties in West Virginia with nearby 

counties that compete in the same 

market. 

MIG provided specific comments 

regarding Pennsylvania, urging the 

Department to lower additional Class I 

differentials to ensure handler equity 

with unregulated areas of the State. The 

Department reviewed relevant record 

evidence and found no justification to 

modify the proposed Class I differentials 

from the recommended decision to the 

final decision. While the proposed 

differentials in western Pennsylvania 

are higher than the May results, they 

generally follow the model results that 

showed multiple differential zones 

through the state moving west to east. 

As such, this decision continues to 

propose a Class I differential for Butler, 

Fayette, Lawrence, and Mercer counties 

of $4.00, $0.10 lower than the May 

results, to encourage service to the 

demand areas of Western Pennsylvania. 

Southwest 

The proposed Class I differentials in 

the Southwest FMMO start at $2.30 in 

northwest New Mexico and increase 

moving southeast to $4.80 in southeast 

Texas. Testimony reflects the Texas 

Panhandle and southeastern New 

Mexico regions contain mostly 

manufacturing plants and draw milk 

from the same supply region in the 

Panhandle. For producer equity 

concerns, these regions are proposed to 

be in a $2.50 zone. This aligns with the 

May results for the eastern New Mexico 

plant locations, necessitating a proposed 

increase of $0.10 to $0.30 in counties 

within the Panhandle region to reach a 

uniform $2.50 zone. In Lubbock County, 

Texas, the differential is proposed at 

$2.60, a decrease of $0.20 from the May 

result, recognizing handler equity in the 

Panhandle region and producer equity 

considerations with manufacturing 

plants competing for milk supplies. 

Dallas County, Texas, continues to be 

proposed in alignment with the May 

result of $3.70 and a $0.10 increase is 

proposed for Tarrant County to maintain 

handler equity. Bexar County, Texas is 

proposed at $4.30, a $0.10 increase from 

the May result, and Harris and 

Montgomery counties are proposed at 

$4.80, a $0.20 increase from the May 

result to reflect difficulties in servicing 

congested urban areas. 

Upon review of comments received 

from NMPF and Plains Dairy regarding 

Class I differentials in New Mexico, this 

decision proposes to increase the Class 

I differentials for Bernalillo, Los 

Alamos, Sandoval, Santa Fe, Socorro, 

Torrance, and Valencia counties from 

$2.40 to $2.50. NMPF commented 

specifically that, as proposed in the 

recommended decision, there would be 

a $0.10 disincentive to supply the Class 

I market in Bernalillo County, New 

Mexico (Albuquerque). NMPF argued an 

increase is needed in these counties to 

ensure there remains an incentive to 

supply the Class I market in 

Albuquerque from the reserve supply 

available in New Mexico, as reflected in 

hearing testimony. This change aligns 

the differentials for the fluid market of 

Albuquerque with nearby 

manufacturing markets that compete for 

the same milk supply and would not 

disincentivize service to the Class I 

market in Albuquerque. 

Plains Dairy was the only Class I 

handler to comment in support of the 

recommended Class I differentials and 

for use of the USDSS model results. 

Plains Dairy requested a series of 

decreases in the southwest region to 

align with the May results. While this 

decision increases some of the Class I 

differentials included in Plains Dairy’s 

comments, it creates a consistent $2.50 

zone in New Mexico so as to not 

disincentivize milk movements to the 

milk demand location in Bernalillo 

County, New Mexico. This change is 

supported by record testimony 

concerning the location of the milk 

supply and demand locations in New 

Mexico. 

This decision also recognizes the 

competitive relationship between plants 

located in the Texas panhandle that 

draw from a common local milk supply, 

as also discussed by Plains Dairy in its 

comments. While Plains Dairy requests 

decreases in some locations, NMPF 

requests increases in other locations in 

Texas and neighboring Oklahoma 

counties. Because processors and 

manufacturing plants located in the 

panhandle compete for a shared milk 

supply, as revealed in the hearing 

record, this decision finds lowering the 

differentials in the region to the May 

results would both disrupt this 

competitive relationship and 

disincentivize service to the Class I 

market. Considering resulting producer 

and handler equity concerns, deviations 

from the model results are appropriate 

for the Southwest region. 

MIG also provided specific comments 

questioning the Department’s proposed 

Class I differentials in certain Texas and 

New Mexico counties where the model 

suggested a Class I differential lower 

than current levels, but the Department 

proposed an increase. The record of this 

proceeding reflects the model estimates 

for some supply locations in Texas and 

New Mexico were higher than the 

demand areas where the bottling plants 

are located. The record does not 

indicate why such a price relationship 

is suggested given that economic theory 

would assume the opposite—the 

demand areas should have higher 

differential levels to incentivize milk to 

supply bottling plants in those 

locations. During the national hearing, 

the model authors testified that while 

the model results entered into evidence 

give estimates for the 3,108 counties in 


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the contiguous United States, the model 

only produces estimates for 663 demand 

locations. The model then uses a 

Kriging process which interpolates 

estimates for the counties between the 

demand locations. As such, when 

determining the proposed differentials, 

adjustments from the model were made 

to some demand locations in the Texas 

and New Mexico areas to not 

disincentivize milk movements from 

supply to demand locations. 

Arizona 

In Arizona, the metropolitan area of 

Phoenix encompasses both Maricopa 

and Pinal counties. This decision 

continues to propose an increase to the 

Class I differentials for these counties by 

$0.30 and $0.20, respectively, above the 

May results to reflect the higher cost of 

servicing an urban area, in addition to 

providing handler equity with Clark 

County, Nevada. The differential for 

Yuma County is proposed at $2.50, an 

increase of $0.40 from the May result to 

maintain handler equity between 

Maricopa County, Arizona, and Los 

Angeles, California. 

In its comments on the recommended 

decision, MIG indicated its opposition 

to the proposed increase in Kern 

County, California to align with Yuma 

County, Arizona. The record reflects 

there are additional costs to service the 

Los Angeles market that are not 

accounted for in the USDSS model and, 

thus, the differentials as proposed in the 

recommended decision would 

incentivize milk to service the Los 

Angeles market, MIG argued the 

proposed differentials will incentivize 

dairy farmers in Arizona to supply the 

California market rather than the 

Phoenix area, where demand is high. 

However, the record does not indicate 

the proposed differentials would cause 

a milk shortage for the Phoenix market 

as hearing evidence demonstrates the 

supply for Phoenix comes from its 

surrounding area. 

Considering the same urban area, 

NMPF requested an increase from $2.60 

to $2.80 in Maricopa County, Arizona 

due to a number of logistical, 

geographical and climate-related 

challenges when servicing Phoenix. The 

Department considered NMPF’s 

comments, however, this decision finds 

that record evidence does not justify a 

change in the proposed differentials. 

Additional costs of servicing the urban 

area were already considered in 

determining the proposed differentials, 

and as already articulated in the 

decision, producer costs are not an 

appropriate consideration when 

determining Class I differential levels. 

As such, no changes were made to the 

Class I differentials assigned in this 

region from the recommended decision 

to the final decision. 

California 

For California, testimony was given 

regarding additional transportation costs 

from excessive traffic congestion and 

geographic obstacles in southern 

California that were not accounted for in 

the model. Accordingly, this decision 

continues to propose an increase to the 

Class I differential in San Diego by $0.20 

from the May result to $2.80. To 

maintain handler equity within the 

southern California region, the 

differentials for Orange, Riverside, and 

Los Angeles counties are proposed to be 

$2.80. This is $0.40, $0.50 and $0.60 

above the May results in Orange, 

Riverside, and Los Angeles counties, 

respectively. Ventura County is 

proposed to increase $0.40 from the 

May result, to $2.60, to address 

producer equity concerns and ensure 

price alignment with the surrounding 

counties. For Kern County, the primary 

milk supply area for much of this 

region, the differential is proposed to be 

$2.50. This also serves to encourage 

Kern County milk to move south to 

distributing plants, rather than north to 

manufacturing plants where the 

proposed differential is $2.20. 

The differentials in the remaining San 

Joaquin Valley counties, Tulare, Kings, 

Fresno, Madera, Merced, Stanislaus, and 

San Joaquin, are proposed to be $2.20 

based on testimony indicating these 

counties are considered one supply 

area. Of these counties, Madera County 

has the highest increase from the May 

result, $0.40, to maintain handler equity 

as well as maintain producer equity for 

the producer milk in this area. 

The proposed $2.20 differential zone 

is then carried into the Sacramento 

Valley counties of Sacramento, Yolo, 

Colusa, and Glenn, an increase of $0.20 

to $0.30 from the May results. These 

counties, along with those in the San 

Joaquin Valley, supply milk for 

distributing plants in the San Francisco 

Bay area. The proposed Class I 

differentials for Alameda, Contra Costa, 

Solano, Napa, Marin, and Sonoma 

counties continue to be proposed at 

$2.40 to encourage milk to service the 

San Francisco Bay area. This represents 

an increase of $0.40 to $0.50 from the 

May model results for these supply 

counties to maintain handler equity. 

San Francisco and counties south 

along the central California coast are 

further from a milk supply. The 

differentials in that area are proposed at 

$2.50 and include San Francisco, San 

Mateo, Santa Cruz, Santa Clara, San 

Benito, Monterey, San Luis Obispo, and 

Santa Barbara counties, representing 

increases from the May results of $0.20 

to $0.50. 

Similar to the Sacramento Valley, the 

differentials for the counties of 

Mendocino, Lake, and Humboldt, which 

are located along the northeast 

California coast and supply the San 

Francisco Bay area, are proposed to be 

$2.20 to provide for producer equity. 

The Department received specific 

comments from MIG, NMPF, and 

Crystal Creamery regarding the Class I 

differentials proposed in California. 

MIG and Crystal Creamery commented 

in opposition to the Department’s 

deviations from the USDSS model 

results in the region and emphasized 

specific concerns with the Class I 

differentials proposed for the Fresno 

area. NMPF requested an increase from 

$2.60 to $2.80 to the Class I differentials 

for San Bernardino County to align with 

neighboring counties where handlers 

compete for the same milk supply. 

The Department reviewed and 

considered these comments and 

reexamined relevant record evidence. 

The proposed differentials reflect 

consideration of the cost to supply the 

multiple California metropolitan 

demand centers given its unique 

geography and significant logistical 

supply challenges. Witnesses testified 

and the model authors indicated the 

USDSS model was not capable of taking 

these factors into consideration. 

Therefore, the record supported 

differential levels higher than the model 

results. The differentials in the 

metropolitan areas were raised with 

consideration for record evidence 

pertaining to handler equity, geography 

and traffic congestion. These increases 

then necessitated changes to the supply 

regions. A review of the record evidence 

regarding milk movements in southern 

California similarly finds no 

justification for change. Given the large 

size of San Bernadino County, the 

largest county in the state, this decision 

does not find justification to increase 

the differential applicable to the entire 

county, given only a small portion is 

located next to Los Angeles County. 

Considering this analysis, no changes 

were made to the Class I differentials 

assigned in this region from the 

recommended decision to the final 

decision. 

Western Unregulated States 

Differentials in Nevada generally 

follow the May results, except for a few 

modifications. In northern Nevada, to 

provide for handler equity, Washoe 

County is proposed to increase $0.10 

from the May result to align with the 

neighboring $2.00 California zone. 


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Eureka, Nye, and Esmerelda counties 

are proposed at $2.20, resulting in 

changes from the May results of plus or 

minus $0.10. 

The proposed Class I differentials in 

Utah start at $2.00 in the north and 

increase moving south up to $2.50 in 

the southwest part of the State. While 

most of the proposed differentials are 

aligned with the May results, the 

counties of Davis, Morgan, Salt Lake, 

Tooele, Utah, and Weber are 

recommended at $2.20, an increase of 

$0.10. This aligns those counties with 

counties to the north and west, ensuring 

both producer and handler equity. 

The proposed Class I differentials in 

the state of Montana start at $1.70 and 

increase to $2.40 in the southeast part 

of the state. Most of the proposed 

differentials are aligned with the May 

results. The only county with a 

proposed differential that is more than 

$0.10 different from the May result is 

Golden Valley which is lowered $0.20 

to ensure handler equity with the 

counties to its north and south. 

The proposed differentials in the 

unregulated portions of the state of 

Idaho start at $1.70 and increase to 

$2.20. While most of the proposed 

differentials are within $0.10 of the May 

results, the county of Cassia is 

decreased $0.20 for handler equity with 

plants to the south into Utah. This 

brings the unregulated Idaho counties in 

alignment with counties to the north 

and south, ensuring both producer and 

handler equity with those areas. 

Lastly, the proposed differentials in 

Wyoming generally follow the May 

results as there were no producer or 

handler equity concerns to address. 

Except for Laramie, Wyoming, which is 

proposed at $2.50 to align with 

neighboring Northeast Colorado. This 

represents a $0.20 increase compared to 

the May results. 

The Department received specific 

requests from NMPF, DFA, and an 

individual dairy farmer for changes to 

the Class I differentials proposed for 

certain counties in northwestern Nevada 

to address alleged producer equity 

concerns. NMPF and DFA suggested a 

flat pricing surface of $2.20 for 6 Nevada 

counties, while the dairy farmer 

requested a $0.30 increase for Churchill 

County, Nevada, specifically. The 

Department reviewed record evidence 

relevant to the requested changes in 

Nevada and found no justification for 

change. The proposed differentials 

generally follow the May results with a 

slight increase in Washoe county to 

encourage milk movements to service 

the demand in Reno, NV. As such, no 

changes were made to the Class I 

differentials assigned in this region from 

the recommended decision to the final 

decision. 

Pacific Northwest 

In the Pacific Northwest, the proposed 

Class I differential in Seattle increased 

$0.30 above the May result to reflect 

unique geography and the cost of 

serving an urban market. Likewise, the 

proposed differential in Portland, 

Oregon, was increased from the May 

result to align with Seattle to provide for 

producer and handler equity. Testimony 

reflected both cities are equidistant to 

milk supplies in south central 

Washington, and both have similar 

supply issues. The remaining proposed 

differentials reflect a $0.20 banding 

around the May results. 

MIG commented that the Department 

deviated from the model results in the 

Pacific Northwest without justification. 

It also stated that the $0.20 banding of 

the Class I differentials is inconsistent 

with the Department’s proposals for 

other regions and highlighted several 

specific differentials of concern. The 

Department reviewed the record 

regarding the differentials in the Pacific 

Northwest FMMO. While MIG contends 

Portland and Seattle are not comparable 

demand areas, the record shows similar 

population areas facing similar 

geographic and traffic congestion issues 

that cause milk supply logistical issues 

necessitating an increase over the model 

results. The differential for Spokane, 

Washington was proposed at the model 

result as it does not face some of the 

same logistical challenges. The modelrecommended $2.40 differential for 

Spokane, which is higher than the 

surrounding areas, will encourage milk 

to move to the demand location. As for 

the banding of differentials in the 

middle of the Pacific Northwestmarketing area, as referenced in MIGs 

comment, the model suggested a more 

gradual differential gradient between 

the milk supply and demand centers. 

However, the record does not 

demonstrate that there are plants 

located in many of those areas to justify 

the numerous differential areas. The 

decision does not find such additional 

differential values necessary to move 

milk from supply and demand areas. As 

such, no changes were made to the Class 

I differentials assigned in this region 

from the recommended decision to the 

final decision. 

Summary 

In total, the Class I differentials 

proposed in this decision reflect a 

simple average of $0.01 higher than the 

May results ($3.81 versus $3.80) for the 

3,108 counties in the contiguous U.S. 

The following is a general description 

of the changes from the May results: 

Number of counties Range of difference Number of plants 

5 .............................................................................................. ¥$0.40 to ¥$0.60 ................................................................. 1 

227 .......................................................................................... ¥$0.20 to ¥$0.30 ................................................................. 13 

2,648 ....................................................................................... ¥$0.10 to +$0.10 ................................................................... 171 

187 .......................................................................................... +$0.20 to +$0.30 .................................................................... 34 

41 ............................................................................................ +$0.40 to $0.60 ...................................................................... 23 

An analysis shows the proposed 

differentials, on a weighted average 

basis for FMMO Class I milk (2019– 

2023), increased $1.24 per cwt. Based 

on pooled Class I milk during 2019– 

2023, the current weighted Class I 

differential was $2.63 per cwt. The 

differentials proposed in this decision 

would have increased the weighted 

average to $3.87 per cwt. 

This final decision details all 

requested changes to the proposed Class 

I differentials from the recommended 

decision to the final decision. The 

Department reviewed and considered all 

33 comments received on the Class I 

differentials but found, as detailed by 

region above, that any additional 

changes not made in this final decision 

were either already considered or were 

not supported by record evidence. 

Other Issues 

In post-hearing briefs, some 

stakeholders objected to NMPF’s use of 

producer costs of production for 

proposing updated Class I differential 

levels. As described above, such costs 

were not considered in the development 

of the Class I differentials recommended 

in this decision. 

As discussed above, with regard to the 

Appalachian region, another argument 

made in post-hearing briefs and in 


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comments centered on the amended 

TCBF provisions in the Appalachian 

and Southeast FMMOs and newly 

established DPDC provisions in the 

Appalachian, Florida, and Southeast 

FMMOs. These provisions became 

effective March 1, 2024, and were a 

result of a regional rulemaking 

proceeding to address the chronic milk 

supply issues of those regions 89 FR 

6401 (Feb.1, 2024). As the proceeding 

resulted in increased transportation cost 

related assessments on Class I handlers, 

some stakeholders argue no changes 

should be made to the Class I 

differentials until the impact of these 

regional changes can be observed. MIG, 

New Dairy, NMPF, and IDFA reiterated 

these concerns in their comments on the 

recommended decision and requested 

the Class I differentials in these orders 

be reduced by the amount of the TCBF 

and DPDC payments. 

The Appalachian, Florida, and 

Southeast FMMOs adopted marketwide 

service payment provisions that 

authorize year-round assessments on 

Class I milk, paid by handlers, for 

payment to handlers for Class I 

deliveries made to their plants 

according to the TCBF and DPDC 

provisions. Under the marketwide 

service provisions of the AMAA, 

marketwide service programs are only 

authorized to pay monies to handlers 7 

U.S.C. 608c(5)(J). Therefore, it would 

not be appropriate to delay 

consideration of Class I differential 

levels, monies which are paid to 

producers (both cooperative and 

independent), for TCBF and DPDC 

payments which are made only to 

handlers. As was stated in the 

recommended decision, if Class I 

differential levels are changed as a 

result of this proceeding, thus, 

impacting the market conditions which 

led to the creation of the marketwide 

service programs, stakeholders could 

petition USDA to make changes to the 

TCBF and DPDC provisions. 

Demand Elasticity 

IDFA, and Nestle USA, commented 

that Class I differentials should not be 

increased until a thorough econometric 

study is conducted to inform decisionmaking. This study, they argued, should 

center around the relationship between 

fluid milk prices and retail consumer 

demand, otherwise referred to by these 

and other commentors as changes in 

demand elasticity. Several Class I 

processors such as United Dairy, Crystal 

Creamery, New Dairy, and Lamers 

Dairy, as well as the trade association 

Pennsylvania Association of Milk 

Dealers, provided similar comments that 

described, in their view, changes in 

consumer demand because of higher 

prices and competition from alternative 

beverages in the marketplace. MIG, 

IDFA, and PAMD go further in their 

comments, repeating arguments made at 

the hearing and in post-hearing briefs 

centered around the notion that USDA 

is not authorized to raise differentials 

because it would decrease demand, 

which they believe is a violation of the 

AMAA. More specifically, IDFA and 

MIG commented that the AMAA 

requires that FMMOs: (1) consider 

economic conditions which affect 

market supply and consumer demand, 

and (2) be in the public interest. IDFA 

acknowledged the Department’s 

explanation in the recommended 

decision that the AMAA does not 

explicitly state that FMMO provisions 

should encourage Class I sales. 

However, IDFA opined that the AMAA 

does so implicitly. In its view, per the 

AMAA, FMMOs should never reduce 

quantity demanded by consumers. 

During the hearing and in posthearing briefs, Class I processors and 

manufacturers similarly argued that the 

Department should consider the impact 

to Class I sales when evaluating changes 

as they allege the AMAA objective of 

ensuring adequate milk supplies implies 

the FMMO should encourage fluid 

consumption. They further argued that 

consumer demand for fluid milk is 

elastic and, therefore, raising Class I 

differentials would be disorderly as it 

would result in a decline in Class I 

sales. 

As to whether fluid milk has an 

inelastic or elastic demand, four studies 

were entered onto the record, some 

drawing opposite conclusions. One 

study found the consumer demand for 

regular milk to be inelastic, while 

specialty milk (i.e., lactose free) to be 

price elastic. A second study concluded 

consumer demand was elastic, but less 

so than was determined in the fourth 

study on the record. Another witness 

reviewed time series data published 

within the last 20 years, concluding that 

consumer demand for fluid milk 

remains inelastic with respect to milk 

prices. 

The recommended decision 

highlighted the fourth study which 

looked at cross-sectional data over 

relatively short periods of time as an 

example. This econometric study, 

entered on behalf of IDFA and 

emphasized by IDFA and MIG in their 

comments on the recommended 

decision, found the retail level demand 

for fluid milk to be elastic. An analysis 

of the IDFA study indicates that other 

than product prices and quantities, no 

other variables were considered that 

could explain changes in demand. Some 

variables that are generally recognized 

to be determinants of demand outside of 

price include, but are not limited to, 

household income, demographics, and 

measures of preferences. While the 

IDFA study found retail price affects 

retail milk demand, it did not 

demonstrate price was the only factor 

that impacts demand. By design, the 

study estimated that only prices for milk 

and competing products could account 

for changes in quantities sold. Certainly, 

more studies may be warranted given 

the evolution of the dairy industry in 

the last 25 years. However, a conclusion 

of the long-term consumer demand 

elasticity of fluid milk cannot be drawn 

from the varying results of the four 

studies contained in the record. 

MIG and IDFA arguments around 

elasticity rely on the premise that fluid 

milk product demand at the retail level 

is elastic and thus, any increase in Class 

I prices would lower consumer demand, 

which they assert would not be in the 

public interest and violate the AMAA 

policy objective. The AMAA authorizes 

marketing orders to provide for more 

orderly marketing conditions. In the 

context of milk prices, the AMAA states 

FMMOs shall ‘‘. . . insure a sufficient 

quantity of pure and wholesome milk, 

and be in the public interest . . .’’ 7 

U.S.C. 608c(18). This decision 

emphasizes that one objective of 

FMMOs is to ensure minimum milk 

prices reflect supply and demand 

conditions. In so doing, FMMOs satisfy 

the AMAA’s public interest requirement 

by ensuring buyers are purchasing raw 

milk at minimum prices that reflect 

current market conditions. 

Upon review of comments received 

and all record evidence, the Department 

maintains the changes proposed in this 

decision would ensure the FMMO 

pricing provisions reflect current supply 

and demand conditions. This decision 

does not find that the AMAA explicitly 

states or implies FMMO provisions 

should encourage Class I sales and thus, 

a determination of fluid milk consumer 

demand elasticity is not required. As 

described in detail throughout this 

decision, the record of this proceeding 

reveals the cost of supplying the Class 

I market has increased. This was 

demonstrated through the USDSS 

model, which was an academic exercise 

to quantify the location-specific cost of 

servicing Class I plants, and 

corroborated through witness testimony 

concerning increasing transportation 

costs and distances traveled for milk to 

supply Class I plants. 

b. Class II Differential 

The FMMO system currently prices 

milk used in Class II products 


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uniformly. The Class II skim milk price 

is computed as the advanced Class IV 

skim price plus $0.70 per cwt. The Class 

II butterfat price is the Class III butterfat 

price for the month, plus the same 

amount expressed as $0.007 per pound. 

The $0.70 differential between the Class 

IV and Class II skim milk prices, 

adopted in the Order Reform Final 

Decision, was based on an estimate of 

the cost of drying condensed milk and 

re-wetting the solids for use in Class II 

products, which was seen as an 

economic, upper-bound constraint on 

the use of fresh milk in Class II 

processing. 

Proposal 21, submitted by AFBF, 

seeks to update the Class II differential 

to $1.56 per cwt. AFBF derived the 

proposed level by updating the factors 

originally used to determine drying cost. 

Those include the NFDM make 

allowance and the nonfat solids yield 

factor used in the FMMO formulas, and 

butterfat and nonfat solids levels in 

FMMO pooled milk. As rewetting 

solids, the practice of first reconstituting 

powdered milk with water, is no longer 

a common practice, AFBF argued such 

cost no longer needs to be considered. 

AFBF opined a $1.56 Class II 

differential would not be high enough to 

incentivize the substitution of Class IV 

products for fresh milk. AFBF claimed 

the additional Class II value added to 

the marketwide pool because of the 

higher differential would reduce the 

occurrence of negative PPDs and 

depooling. 

Opponents of Proposal 21 argued 

such a large Class II differential increase 

would incentivize the substitution of 

Class IV products in the manufacture of 

Class II products. Class I processors, 

who also have Class II production, 

argued such an increase would put them 

at a competitive disadvantage with 

standalone Class II manufacturers. They 

indicated processors who produce both 

products are required to pool all milk 

received at the plant but processors who 

only produce Class II products can opt 

to pool milk. 

As indicated in the recommended 

decision, record evidence does not 

support adoption of Proposal 21. 

Mathematically, the formula used by 

AFBF to compute an updated Class II 

differential mimics the calculation from 

Order Reform. However, it is clear from 

record testimony that more than 

doubling the current Class II 

differential, as proposed by AFBF, 

would result in handler equity issues 

and increased substitution of Class IV 

products in lieu of fresh fluid milk in 

Class II products. Class II production is 

unusual, if not unique, among dairy 

processing facilities as some products 

are produced at Class I plants, and 

others at standalone Class II plants. 

Because all milk received at Class I 

plants is required to be pooled, 

regardless of use, this can result in the 

same products having different 

regulatory burdens depending on the 

type of plant where it was produced. 

That phenomenon has existed since 

2000. However, the record shows that 

instances of milk in Class II products 

produced from Class II plants not being 

pooled could dramatically increase with 

adoption of Proposal 21. The result 

would be a competitive disadvantage for 

Class I plants by creating a pricing 

inequity that would produce disorderly 

marketing conditions. 

AMS received four comments specific 

to the Class II differential. NMPF and 

the Arizona Farm Bureau Federation 

commented in support of the decision to 

maintain the current Class II 

differential. Comments filed in 

opposition to the recommended 

decision, from AFBF and the Tennessee 

Farm Bureau, requested that USDA 

reconsider increasing the Class II 

differential for the final decision for 

reasons previously communicated on 

the record, which were specifically 

addressed and rejected in the 

recommended decision. Therefore, this 

final decision continues to find it 

appropriate to maintain the current 

Class II differential. Accordingly, 

Proposal 21 is denied. 

Conforming Changes 

Proposal 22, authored by AMS, would 

authorize changes, where necessary, in 

the respective marketing orders to 

conform with any amendments resulting 

from this proceeding. The record 

contains no opposition to the proposal. 

Accordingly, this decision recommends 

a series of conforming changes to ensure 

the proposed amendments to the 

uniform pricing formulas applicable to 

the respective marketing orders can be 

effectuated. The proposed changes are 

as follows: 

1. Amending 7 CFR 1000.43 to 

remove references to 1135.11, as the 

order is no longer in effect. Also adding 

7 CFR 1000.43(e) which would define 

skim milk used in ultra-pasteurized or 

aseptically processed and packaged 

fluid milk products eligible for the Class 

I ESL adjustment be limited to available 

Class I producer milk classified 

pursuant to the allocation process 

contained in Section1000.44(a); 

2. Amending 7 CFR 1000.50 to 

remove all references to NASS and 

replace them with AMS; 

3. Amending the following counties 

(and FIPS code) in 7 CFR 1000.52, to be 

consistent with the Federal Information 

Procession Series maintained by the 

Federal Communication Commission: 

Yellowstone, MT (30113) has been 

merged into Gallatin and Park Counties, 

MT (30031) (30067), Shannon, SD 

(46113) has been renamed Oglala 

Lakota, SD (46102), Bedford City, VA 

(51515) has been merged into Bedford 

County, VA (51019), and Clifton Forge 

City, VA (51560) has been merged into 

Alleghany County, VA (51005). 

Additionally, amending the FIPS code 

for Pierce, WA (53053) as it was original 

printed incorrectly. The differentials are 

also listed in order of FIPS code, not 

state abbreviation, in order to be listed 

alphabetically by state; 

4. Amending 7 CFR 1000.76, 

provisions governing partially regulated 

distributing plants to add ‘‘applicable’’ 

to references to the Class I price 

throughout the section to indicate 

application of a Class I ESL adjustment, 

when applicable, and remove the 

reference in 7 CFR 1000.76(b)(1)(i) to 7 

CFR 1135.11 as the latter is no longer in 

effect; 

5. Amend the introductory paragraphs 

of 7 CFR 1001.60, 1005.60, 1006.60, 

1007.60, 1030.60, 1032.60, 1033.60, 

1051.60, 1124.60, 1126.60, and 1131.60, 

sections which calculate the handler’s 

value of milk in each FMMO. Section 

.60 of each order would be revised with 

the addition of an instruction to 

compute an adjustment to a handler’s 

producer milk obligation for Class I 

producer milk eligible for the Class I 

ESL adjustment. The adjustment would 

be calculated by multiplying the 

monthly Class I ESL adjustment by the 

monthly pounds of eligible Class I skim 

milk. The instruction would be inserted 

prior to the instruction regarding 

reconstituted milk for each order. Other 

paragraphs are proposed to be 

redesignated to reflect the insertion; 

6. Further amending 7 CFR 

1005.60(g), 1006.60(g)–(i), and 

1007.60(g) to remove language 

pertaining to transportation cost 

reimbursement during the months of 

January 2005 through March 2005 and 

September 2017, which is no longer in 

effect; 

7. Amending 7 CFR 1005.51, 1006.51, 

and 1007.51 to remove Class I price 

adjustments in the Appalachian, 

Florida, and Southeast FMMOs. The 

order language would no longer be 

necessary with the proposed 

amendments to the Class I differentials; 

and 

8. Amending 7 CFR 1170.8 to remove 

the collection of 500-pound barrel price 

information. The order language would 

no longer be necessary with the 

proposed amendments to cheese survey. 


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Rulings on Proposed Findings and 

Conclusions 

AMS has also considered proposed 

findings submitted in post-hearing 

briefs, officially noticed documents, and 

comments and exceptions filed in 

response to the recommended decision 

to formulate this proposed FMMO. 

These briefs, proposed findings and 

conclusions, comments and exceptions, 

and the evidence in the record were 

considered in making the findings and 

conclusions set forth above. To the 

extent that the suggested findings and 

conclusions filed by interested parties 

are inconsistent with the findings and 

conclusions set forth herein, the claims 

to make such findings or reach such 

conclusions are denied for the reasons 

previously stated in this decision. 

General Findings 

The findings and determinations 

hereinafter set forth supplement those 

that were made when the Northeast, 

Southeast, Appalachian, Florida, Upper 

Midwest, Central, Mideast, California, 

Southwest, Pacific Northwest, and 

Arizona FMMOs were first issued and 

when they were amended. The previous 

findings and determinations are hereby 

ratified and confirmed, except where 

they may conflict with those set forth 

herein. 

The following findings are hereby 

made with respect to the aforenamed 

marketing agreements and orders: 

a. The tentative marketing agreements 

and the orders, as hereby proposed to be 

amended, and all of the terms and 

conditions thereof, will tend to 

effectuate the declared policy of the Act; 

b. The parity prices of milk as 

determined pursuant to section 2 of the 

Act are not reasonable with respect to 

the price of feeds, available supplies of 

feeds, and other economic conditions 

that affect market supply and demand 

for milk in the marketing area, and the 

minimum prices specified in the 

proposed marketing agreements and the 

orders are such prices as will reflect the 

aforesaid factors, ensure a sufficient 

quantity of pure and wholesome milk, 

and be in the public interest; and 

c. The proposed marketing 

agreements and the orders will regulate 

the handling of milk in the same 

manner as and will be applicable only 

to persons in the respective classes of 

industrial and commercial activity 

specified in, the marketing agreements 

upon which a hearing have been held. 

d. All milk and milk products 

handled by handlers, as defined in the 

marketing agreements and the orders as 

hereby proposed to be amended, are in 

the current of interstate commerce or 

directly burden, obstruct, or affect 

interstate commerce in milk or its 

products. 

Recommended Marketing Agreements 

and Orders 

The recommended marketing 

agreements are not included in this 

decision because the regulatory 

provisions thereof would be the same as 

those contained in the orders, as hereby 

proposed to be amended. The following 

orders regulating the handling of milk in 

the Northeast, Appalachian, Florida, 

Southeast, Upper Midwest, Central, 

Mideast, California, Pacific Northwest, 

Southwest, and Arizona marketing areas 

are recommended as the detailed and 

appropriate means by which the 

foregoing conclusions may be carried 

out. 

January 2024 is hereby determined to 

be the representative period for the 

purpose of ascertaining whether the 

issuance of the orders, as amended and 

as hereby proposed to be amended the 

uniform pricing provisions in the 

Northeast, Appalachian, Florida, 

Southeast, Upper Midwest, Central, 

Mideast, California, Pacific Northwest, 

Southwest, and Arizona FMMOs, are 

approved or favored by producers, as 

defined under the terms of the orders (as 

amended and as hereby proposed to be 

amended), who during such 

representative period were engaged in 

the production of milk for sale within 

the aforesaid marketing areas. 

Referendum Order To Determine 

Producer Approval; Determination of 

Representative Period; and Designation 

of Referendum Agent 

It is hereby directed that a referendum 

be conducted and completed on 

December 31, 2024, in accordance with 

the procedures for the conduct of 

referenda (7 CFR 900.300–311), to 

determine whether the issuance of the 

order regulating the handling of milk in 

the Northeast, Appalachian, Florida, 

Southeast, Upper Midwest, Central, 

Mideast, California, Pacific Northwest, 

Southwest, and Arizona marketing areas 

is approved or favored by producers, as 

defined under the terms of the order, 

who during such representative period 

were engaged in the production of milk 

for sale within the aforesaid marketing 

area. The representative period for the 

conduct of such referenda is hereby 

determined to be January 2024. The 

agent of the Secretary of Agriculture to 

conduct such referenda is hereby 

designated to be the Director of 

Operations and Accountability, Dairy 

Program, AMS, USDA. 

List of Subjects in 7 CFR Parts 1000, 

1001, 1005, 1006, 1007, 1030, 1032, 

1033, 1051, 1124, 1126, 1131, and 1170 

Milk marketing orders. 

Order Amending the Orders Regulating 

the Handling of Milk in the Northeast, 

Appalachian, Florida, Southeast, Upper 

Midwest, Central, Mideast, California, 

Pacific Northwest, Southwest, and 

Arizona Marketing Areas 

(This order shall not become effective 

unless and until the requirements of 

§ 900.14 of the rules of practice and 

procedure governing proceedings to 

formulate marketing agreements and 

marketing orders have been met.) 

Findings and Determinations 

The findings and determinations 

hereinafter set forth supplement those 

that were made when the orders were 

first issued and when they were 

amended. The previous findings and 

determinations are hereby ratified and 

confirmed, except where they may 

conflict with those set forth herein. 

(a) Findings. A public hearing was 

held upon certain proposed 

amendments to the marketing agreement 

and to the orders regulating the 

handling of milk in the Northeast, 

Southeast, Appalachian, Florida, Upper 

Midwest, Central, Mideast, California, 

Southwest, Pacific Northwest, and 

Arizona marketing areas. The hearing 

was held pursuant to the provisions of 

the AMAA, as amended (7 U.S.C. 601– 

674), and the applicable rules of 

practice and procedure governing the 

formulation of marketing agreements 

and marketing orders (7 CFR part 900). 

Upon the basis of the evidence 

introduced at such hearing and the 

record thereof, it is determined that: 

(1) The said orders as hereby 

amended, and all of the terms and 

conditions thereof, will tend to 

effectuate the declared policy of the 

AMAA; 

(2) The parity prices of milk, as 

determined pursuant to section 2 of the 

AMAA, are not reasonable in view of 

the price of feeds, available supplies of 

feeds, and other economic conditions 

which affect market supply and demand 

for milk in the aforesaid marketing area. 

The minimum prices specified in the 

orders as hereby amended are such 

prices as will reflect the aforesaid 

factors, ensure a sufficient quantity of 

pure and wholesome milk, and be in the 

public interest; and 

(3) The said orders, as hereby 

amended, regulate the handling of milk 

in the same manner as and are 

applicable only to persons in the 

respective classes of industrial or 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95538 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

commercial activity specified in, 

marketing agreements upon which a 

hearing has been held. 

Order Relative to Handling 

It is therefore ordered, that on and 

after the effective date hereof, the 

handling of milk in the Northeast, 

Southeast, Appalachian, Florida, Upper 

Midwest, Central, Mideast, California, 

Southwest, Pacific Northwest, and 

Arizona marketing areas shall be in 

conformity to and in compliance with 

the terms and conditions of the orders, 

as amended, and as hereby amended, as 

follows: 

For the reasons set forth in the 

preamble, AMS proposes to amend 7 

CFR chapter X as follows: 

PART 1000—GENERAL PROVISIONS 

OF FEDERAL MILK MARKETING 

ORDERS 

■ 1. The authority citation for 7 CFR 

part 1000 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 2. Amend § 1000.43 by: 

■ a. In paragraph (a) and paragraph (b) 

introductory text, removing the words 

‘‘and § 1135.11 of this chapter’’; 

■ b. In paragraph (b)(2) removing the 

words ‘‘or § 1135.11 of this chapter’’; 

and 

■ c. Adding paragraph (e). 

The addition reads as follows: 

§ 1000.43 General classification rules. 

* * * * * 

(e) Any skim milk used in ultrapasteurized or aseptically processed and 

packaged fluid milk products shall be 

allocated in combination with Class I 

milk and the quantity of producer milk 

eligible to be priced shall be limited to 

available Class I producer milk 

classified pursuant to § 1000.44(a). 

■ 3. Revise and republish § 1000.50 to 

read as follows: 

§ 1000.50 Class prices, component prices, 

and advanced pricing factors. 

Class prices per hundredweight of 

milk containing 3.5 percent butterfat, 

component prices, and advanced 

pricing factors shall be as follows. The 

prices and pricing factors described in 

paragraphs (a), (b), (c), (e), (f), and (q) of 

this section shall be based on a 

weighted average of the most recent 2 

weekly prices announced by the 

Agricultural Marketing Service (AMS) 

before the 24th day of the month. These 

prices shall be announced on or before 

the 23rd day of the month and shall 

apply to milk received during the 

following month. The prices described 

in paragraphs (g) through (p) of this 

section shall be based on a weighted 

average for the preceding month of 

weekly prices announced by AMS on or 

before the 5th day of the month and 

shall apply to milk received during the 

preceding month. The price described 

in paragraph (d) of this section shall be 

derived from the Class II skim milk 

price announced on or before the 23rd 

day of the month preceding the month 

to which it applies and the butterfat 

price announced on or before the 5th 

day of the month following the month 

to which it applies. 

(a) Class I price. The Class I price per 

hundredweight, rounded to the nearest 

cent, shall be 0.965 times the Class I 

skim milk price plus 3.5 times the Class 

I butterfat price. 

(b) Class I skim milk price. The Class 

I skim milk price per hundredweight 

shall be the adjusted Class I differential 

specified in § 1000.52, plus the higher of 

the advanced pricing factors computed 

in paragraph (q)(1) or (2) of this section 

rounded to the nearest cent. 

(c) Class I butterfat price. The Class I 

butterfat price per pound shall be the 

adjusted Class I differential specified in 

§ 1000.52 divided by 100, plus the 

advanced butterfat price computed in 

paragraph (q)(3) of this section. 

(d) Class II price. The Class II price 

per hundredweight, rounded to the 

nearest cent, shall be .965 times the 

Class II skim milk price plus 3.5 times 

the Class II butterfat price. 

(e) Class II skim milk price. The Class 

II skim milk price per hundredweight 

shall be the advanced Class IV skim 

milk price computed in paragraph (q)(2) 

of this section plus 70 cents. 

(f) Class II nonfat solids price. The 

Class II nonfat solids price per pound, 

rounded to the nearest one-hundredth 

cent, shall be the Class II skim milk 

price divided by 9.3. 

(g) Class II butterfat price. The Class 

II butterfat price per pound shall be the 

butterfat price plus $0.007. 

(h) Class III price. The Class III price 

per hundredweight, rounded to the 

nearest cent, shall be 0.965 times the 

Class III skim milk price plus 3.5 times 

the butterfat price. 

(i) Class III skim milk price. The Class 

III skim milk price per hundredweight, 

rounded to the nearest cent, shall be the 

protein price per pound times 3.30 plus 

the other solids price per pound times 

6.00. 

(j) Class IV price. The Class IV price 

per hundredweight, rounded to the 

nearest cent, shall be 0.965 times the 

Class IV skim milk price plus 3.5 times 

the butterfat price. 

(k) Class IV skim milk price. The Class 

IV skim milk price per hundredweight, 

rounded to the nearest cent, shall be the 

nonfat solids price per pound times 

9.30. 

(l) Butterfat price. The butterfat price 

per pound, rounded to the nearest onehundredth cent, shall be the U.S. 

average AMS AA Butter survey price 

reported by the Department for the 

month, less 22.72 cents, with the result 

multiplied by 1.211. 

(m) Nonfat solids price. The nonfat 

solids price per pound, rounded to the 

nearest one-hundredth cent, shall be the 

U.S. average AMS nonfat dry milk 

survey price reported by the Department 

for the month, less 23.93 cents and 

multiplying the result by 0.99. 

(n) Protein price. The protein price 

per pound, rounded to the nearest onehundredth cent, shall be computed as 

follows: 

(1) The U.S. average AMS survey 

price for 40-lb. block cheese reported by 

the Department for the month; 

(2) Subtract 25.19 cents from the price 

computed pursuant to paragraph (n)(1) 

of this section and multiply the result 

by 1.383; 

(3) Add to the amount computed 

pursuant to paragraph (n)(2) of this 

section an amount computed as follows: 

(i) Subtract 25.19 cents from the price 

computed pursuant to paragraph (n)(1) 

of this section and multiply the result 

by 1.589; and 

(ii) Subtract 0.91 times the butterfat 

price computed pursuant to paragraph 

(l) of this section from the amount 

computed pursuant to paragraph 

(n)(3)(i) of this section; and 

(iii) Multiply the amount computed 

pursuant to paragraph (n)(3)(ii) of this 

section by 1.17. 

(o) Other solids price. The other solids 

price per pound, rounded to the nearest 

one-hundredth cent, shall be the U.S. 

average AMS dry whey survey price 

reported by the Department for the 

month minus 26.68 cents, with the 

result multiplied by 1.03. 

(p) Somatic cell adjustment. The 

somatic cell adjustment per 

hundredweight of milk shall be 

determined as follows: 

(1) Multiply 0.0005 by the weighted 

average price computed pursuant to 

paragraph (n)(1) of this section and 

round to the 5th decimal place; 

(2) Subtract the somatic cell count of 

the milk (reported in thousands) from 

350; and 

(3) Multiply the amount computed in 

paragraph (p)(1) of this section by the 

amount computed in paragraph (p)(2) of 

this section and round to the nearest full 

cent. 

(q) Advanced pricing factors. For the 

purpose of computing the Class I skim 

milk price, the Class II skim milk price, 

the Class II nonfat solids price, and the 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95539 

Class I butterfat price for the following 

month, the following pricing factors 

shall be computed using the weighted 

average of the 2 most recent AMS U.S. 

average weekly survey prices 

announced before the 24th day of the 

month: 

(1) An advanced Class III skim milk 

price per hundredweight, rounded to 

the nearest cent, shall be computed as 

follows: 

(i) Following the procedure set forth 

in paragraphs (n) and (o) of this section, 

but using the weighted average of the 2 

most recent AMS U.S. average weekly 

survey prices announced before the 24th 

day of the month, compute a protein 

price and an other solids price; 

(ii) Multiply the protein price 

computed in paragraph (q)(1)(i) of this 

section by 3.30; 

(iii) Multiply the other solids price 

per pound computed in paragraph 

(q)(1)(i) of this section by 6.0; and 

(iv) Add the amounts computed in 

paragraphs (q)(1)(ii) and (iii) of this 

section. 

(2) An advanced Class IV skim milk 

price per hundredweight, rounded to 

the nearest cent, shall be computed as 

follows: 

(i) Following the procedure set forth 

in paragraph (m) of this section, but 

using the weighted average of the 2 most 

recent AMS U.S. average weekly survey 

prices announced before the 24th day of 

the month, compute a nonfat solids 

price; and 

(ii) Multiply the nonfat solids price 

computed in paragraph (q)(2)(i) of this 

section by 9.30. 

(3) An advanced butterfat price per 

pound rounded to the nearest onehundredth cent, shall be calculated by 

computing a weighted average of the 2 

most recent U.S. average AMS AA 

Butter survey prices announced before 

the 24th day of the month, subtracting 

22.72 cents from this average, and 

multiplying the result by 1.211. 

(r) Class I Extended Shelf Life (ESL) 

adjustment. The Class I ESL adjustment, 

whether positive or negative, rounded to 

the nearest cent, shall be computed as 

follows: 

(1) Compute the simple average of the 

advanced pricing factors computed in 

paragraphs (q)(1) and (2) of this section; 

(2) Add the following: 

(i) Determine the higher of the 

advanced pricing factors computed in 

paragraphs (q)(1) and (2) of this section, 

for each of the preceding 13 to 36 

months; 

(ii) Calculate the average of the 

advanced pricing factors computed in 

paragraphs (q)(1) and (2) of this section, 

for each of the preceding 13 to 36 

months; 

(iii) For each of the preceding 13 to 

36 months, subtract the amount 

computed in paragraph (r)(2)(ii) of this 

section from the amount computed in 

paragraph (r)(2)(i) of this section; and 

(iv) Compute the average of the 

differences computed in paragraph 

(r)(2)(iii) of this section. 

(3) Subtract the higher of the 

advanced pricing factors computed in 

paragraphs (q)(1) and (2) of this section. 

■ 4. Revise and republish § 1000.52 to 

read as follows: 

§ 1000.52 Adjusted Class I differentials. 

The Class I differential adjusted for 

location to be used in § 1000.50(b) and 

(c) shall be as follows: 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

AUTAUGA ........................................................................................................................................... AL 01001 5.80 

BALDWIN ............................................................................................................................................ AL 01003 5.80 

BARBOUR ........................................................................................................................................... AL 01005 5.80 

BIBB ..................................................................................................................................................... AL 01007 5.60 

BLOUNT .............................................................................................................................................. AL 01009 5.40 

BULLOCK ............................................................................................................................................ AL 01011 5.80 

BUTLER ............................................................................................................................................... AL 01013 5.80 

CALHOUN ........................................................................................................................................... AL 01015 5.60 

CHAMBERS ........................................................................................................................................ AL 01017 5.60 

CHEROKEE ......................................................................................................................................... AL 01019 5.40 

CHILTON ............................................................................................................................................. AL 01021 5.60 

CHOCTAW .......................................................................................................................................... AL 01023 5.80 

CLARKE .............................................................................................................................................. AL 01025 5.80 

CLAY ................................................................................................................................................... AL 01027 5.60 

CLEBURNE ......................................................................................................................................... AL 01029 5.60 

COFFEE .............................................................................................................................................. AL 01031 5.80 

COLBERT ............................................................................................................................................ AL 01033 4.90 

CONECUH ........................................................................................................................................... AL 01035 5.80 

COOSA ................................................................................................................................................ AL 01037 5.60 

COVINGTON ....................................................................................................................................... AL 01039 5.80 

CRENSHAW ........................................................................................................................................ AL 01041 5.80 

CULLMAN ............................................................................................................................................ AL 01043 5.40 

DALE ................................................................................................................................................... AL 01045 5.80 

DALLAS ............................................................................................................................................... AL 01047 5.80 

DE KALB ............................................................................................................................................. AL 01049 5.40 

ELMORE .............................................................................................................................................. AL 01051 5.80 

ESCAMBIA .......................................................................................................................................... AL 01053 5.80 

ETOWAH ............................................................................................................................................. AL 01055 5.40 

FAYETTE ............................................................................................................................................. AL 01057 5.40 

FRANKLIN ........................................................................................................................................... AL 01059 5.20 

GENEVA .............................................................................................................................................. AL 01061 5.80 

GREENE .............................................................................................................................................. AL 01063 5.60 

HALE ................................................................................................................................................... AL 01065 5.60 

HENRY ................................................................................................................................................ AL 01067 5.80 

HOUSTON ........................................................................................................................................... AL 01069 5.80 

JACKSON ............................................................................................................................................ AL 01071 5.20 

JEFFERSON ....................................................................................................................................... AL 01073 5.60 

LAMAR ................................................................................................................................................ AL 01075 5.40 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95540 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

LAUDERDALE ..................................................................................................................................... AL 01077 4.90 

LAWRENCE ........................................................................................................................................ AL 01079 5.20 

LEE ...................................................................................................................................................... AL 01081 5.80 

LIMESTONE ........................................................................................................................................ AL 01083 5.20 

LOWNDES ........................................................................................................................................... AL 01085 5.80 

MACON ............................................................................................................................................... AL 01087 5.80 

MADISON ............................................................................................................................................ AL 01089 5.20 

MARENGO .......................................................................................................................................... AL 01091 5.80 

MARION .............................................................................................................................................. AL 01093 5.20 

MARSHALL ......................................................................................................................................... AL 01095 5.40 

MOBILE ............................................................................................................................................... AL 01097 5.80 

MONROE ............................................................................................................................................. AL 01099 5.80 

MONTGOMERY .................................................................................................................................. AL 01101 5.80 

MORGAN ............................................................................................................................................. AL 01103 5.40 

PERRY ................................................................................................................................................ AL 01105 5.60 

PICKENS ............................................................................................................................................. AL 01107 5.40 

PIKE ..................................................................................................................................................... AL 01109 5.80 

RANDOLPH ......................................................................................................................................... AL 01111 5.60 

RUSSELL ............................................................................................................................................ AL 01113 5.80 

ST. CLAIR ........................................................................................................................................... AL 01115 5.60 

SHELBY ............................................................................................................................................... AL 01117 5.60 

SUMTER .............................................................................................................................................. AL 01119 5.60 

TALLADEGA ........................................................................................................................................ AL 01121 5.60 

TALLAPOOSA ..................................................................................................................................... AL 01123 5.60 

TUSCALOOSA .................................................................................................................................... AL 01125 5.60 

WALKER .............................................................................................................................................. AL 01127 5.40 

WASHINGTON .................................................................................................................................... AL 01129 5.80 

WILCOX ............................................................................................................................................... AL 01131 5.80 

WINSTON ............................................................................................................................................ AL 01133 5.40 

APACHE .............................................................................................................................................. AZ 04001 2.30 

COCHISE ............................................................................................................................................ AZ 04003 2.40 

COCONINO ......................................................................................................................................... AZ 04005 2.40 

GILA ..................................................................................................................................................... AZ 04007 2.40 

GRAHAM ............................................................................................................................................. AZ 04009 2.40 

GREENLEE ......................................................................................................................................... AZ 04011 2.40 

LA PAZ ................................................................................................................................................ AZ 04012 2.50 

MARICOPA .......................................................................................................................................... AZ 04013 2.60 

MOHAVE ............................................................................................................................................. AZ 04015 2.50 

NAVAJO .............................................................................................................................................. AZ 04017 2.30 

PIMA .................................................................................................................................................... AZ 04019 2.40 

PINAL .................................................................................................................................................. AZ 04021 2.60 

SANTA CRUZ ...................................................................................................................................... AZ 04023 2.40 

YAVAPAI ............................................................................................................................................. AZ 04025 2.40 

YUMA .................................................................................................................................................. AZ 04027 2.50 

ARKANSAS ......................................................................................................................................... AR 05001 4.60 

ASHLEY ............................................................................................................................................... AR 05003 4.90 

BAXTER .............................................................................................................................................. AR 05005 3.60 

BENTON .............................................................................................................................................. AR 05007 3.20 

BOONE ................................................................................................................................................ AR 05009 3.30 

BRADLEY ............................................................................................................................................ AR 05011 4.60 

CALHOUN ........................................................................................................................................... AR 05013 4.60 

CARROLL ............................................................................................................................................ AR 05015 3.30 

CHICOT ............................................................................................................................................... AR 05017 4.90 

CLARK ................................................................................................................................................. AR 05019 4.00 

CLAY ................................................................................................................................................... AR 05021 4.30 

CLEBURNE ......................................................................................................................................... AR 05023 4.00 

CLEVELAND ....................................................................................................................................... AR 05025 4.60 

COLUMBIA .......................................................................................................................................... AR 05027 4.30 

CONWAY ............................................................................................................................................. AR 05029 4.00 

CRAIGHEAD ....................................................................................................................................... AR 05031 4.30 

CRAWFORD ........................................................................................................................................ AR 05033 3.30 

CRITTENDEN ...................................................................................................................................... AR 05035 4.60 

CROSS ................................................................................................................................................ AR 05037 4.30 

DALLAS ............................................................................................................................................... AR 05039 4.30 

DESHA ................................................................................................................................................ AR 05041 4.90 

DREW .................................................................................................................................................. AR 05043 4.60 

FAULKNER .......................................................................................................................................... AR 05045 4.00 

FRANKLIN ........................................................................................................................................... AR 05047 3.60 

FULTON .............................................................................................................................................. AR 05049 4.00 

GARLAND ........................................................................................................................................... AR 05051 4.00 

GRANT ................................................................................................................................................ AR 05053 4.30 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95541 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

GREENE .............................................................................................................................................. AR 05055 4.30 

HEMPSTEAD ...................................................................................................................................... AR 05057 4.00 

HOT SPRING ...................................................................................................................................... AR 05059 4.30 

HOWARD ............................................................................................................................................ AR 05061 4.00 

INDEPENDENCE ................................................................................................................................ AR 05063 4.00 

IZARD .................................................................................................................................................. AR 05065 4.00 

JACKSON ............................................................................................................................................ AR 05067 4.30 

JEFFERSON ....................................................................................................................................... AR 05069 4.60 

JOHNSON ........................................................................................................................................... AR 05071 3.60 

LAFAYETTE ........................................................................................................................................ AR 05073 4.30 

LAWRENCE ........................................................................................................................................ AR 05075 4.30 

LEE ...................................................................................................................................................... AR 05077 4.60 

LINCOLN ............................................................................................................................................. AR 05079 4.60 

LITTLE RIVER ..................................................................................................................................... AR 05081 3.60 

LOGAN ................................................................................................................................................ AR 05083 3.60 

LONOKE .............................................................................................................................................. AR 05085 4.30 

MADISON ............................................................................................................................................ AR 05087 3.30 

MARION .............................................................................................................................................. AR 05089 3.60 

MILLER ................................................................................................................................................ AR 05091 4.00 

MISSISSIPPI ....................................................................................................................................... AR 05093 4.30 

MONROE ............................................................................................................................................. AR 05095 4.60 

MONTGOMERY .................................................................................................................................. AR 05097 4.00 

NEVADA .............................................................................................................................................. AR 05099 4.30 

NEWTON ............................................................................................................................................. AR 05101 3.60 

OUACHITA .......................................................................................................................................... AR 05103 4.30 

PERRY ................................................................................................................................................ AR 05105 4.00 

PHILLIPS ............................................................................................................................................. AR 05107 4.60 

PIKE ..................................................................................................................................................... AR 05109 4.00 

POINSETT ........................................................................................................................................... AR 05111 4.30 

POLK ................................................................................................................................................... AR 05113 3.60 

POPE ................................................................................................................................................... AR 05115 3.60 

PRAIRIE .............................................................................................................................................. AR 05117 4.30 

PULASKI .............................................................................................................................................. AR 05119 4.30 

RANDOLPH ......................................................................................................................................... AR 05121 4.00 

ST. FRANCIS ...................................................................................................................................... AR 05123 4.60 

SALINE ................................................................................................................................................ AR 05125 4.30 

SCOTT ................................................................................................................................................. AR 05127 3.60 

SEARCY .............................................................................................................................................. AR 05129 3.60 

SEBASTIAN ......................................................................................................................................... AR 05131 3.60 

SEVIER ................................................................................................................................................ AR 05133 3.60 

SHARP ................................................................................................................................................ AR 05135 4.00 

STONE ................................................................................................................................................ AR 05137 4.00 

UNION ................................................................................................................................................. AR 05139 4.60 

VAN BUREN ........................................................................................................................................ AR 05141 4.00 

WASHINGTON .................................................................................................................................... AR 05143 3.30 

WHITE ................................................................................................................................................. AR 05145 4.30 

WOODRUFF ........................................................................................................................................ AR 05147 4.30 

YELL .................................................................................................................................................... AR 05149 3.60 

ALAMEDA ............................................................................................................................................ CA 06001 2.40 

ALPINE ................................................................................................................................................ CA 06003 1.80 

AMADOR ............................................................................................................................................. CA 06005 1.80 

BUTTE ................................................................................................................................................. CA 06007 2.00 

CALAVERAS ....................................................................................................................................... CA 06009 1.80 

COLUSA .............................................................................................................................................. CA 06011 2.20 

CONTRA COSTA ................................................................................................................................ CA 06013 2.40 

DEL NORTE ........................................................................................................................................ CA 06015 2.20 

EL DORADO ....................................................................................................................................... CA 06017 1.80 

FRESNO .............................................................................................................................................. CA 06019 2.20 

GLENN ................................................................................................................................................ CA 06021 2.20 

HUMBOLDT ......................................................................................................................................... CA 06023 2.20 

IMPERIAL ............................................................................................................................................ CA 06025 2.50 

INYO .................................................................................................................................................... CA 06027 2.20 

KERN ................................................................................................................................................... CA 06029 2.50 

KINGS .................................................................................................................................................. CA 06031 2.20 

LAKE .................................................................................................................................................... CA 06033 2.20 

LASSEN ............................................................................................................................................... CA 06035 2.00 

LOS ANGELES ................................................................................................................................... CA 06037 2.80 

MADERA ............................................................................................................................................. CA 06039 2.20 

MARIN ................................................................................................................................................. CA 06041 2.40 

MARIPOSA .......................................................................................................................................... CA 06043 1.80 

MENDOCINO ...................................................................................................................................... CA 06045 2.20 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95542 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

MERCED ............................................................................................................................................. CA 06047 2.20 

MODOC ............................................................................................................................................... CA 06049 2.00 

MONO .................................................................................................................................................. CA 06051 2.00 

MONTEREY ........................................................................................................................................ CA 06053 2.50 

NAPA ................................................................................................................................................... CA 06055 2.40 

NEVADA .............................................................................................................................................. CA 06057 2.00 

ORANGE ............................................................................................................................................. CA 06059 2.80 

PLACER .............................................................................................................................................. CA 06061 2.00 

PLUMAS .............................................................................................................................................. CA 06063 2.00 

RIVERSIDE ......................................................................................................................................... CA 06065 2.80 

SACRAMENTO ................................................................................................................................... CA 06067 2.20 

SAN BENITO ....................................................................................................................................... CA 06069 2.50 

SAN BERNARDINO ............................................................................................................................ CA 06071 2.60 

SAN DIEGO ......................................................................................................................................... CA 06073 2.80 

SAN FRANCISCO ............................................................................................................................... CA 06075 2.50 

SAN JOAQUIN .................................................................................................................................... CA 06077 2.20 

SAN LUIS OBISPO ............................................................................................................................. CA 06079 2.50 

SAN MATEO ....................................................................................................................................... CA 06081 2.50 

SANTA BARBARA .............................................................................................................................. CA 06083 2.50 

SANTA CLARA .................................................................................................................................... CA 06085 2.50 

SANTA CRUZ ...................................................................................................................................... CA 06087 2.50 

SHASTA .............................................................................................................................................. CA 06089 2.00 

SIERRA ............................................................................................................................................... CA 06091 2.00 

SISKIYOU ............................................................................................................................................ CA 06093 2.00 

SOLANO .............................................................................................................................................. CA 06095 2.40 

SONOMA ............................................................................................................................................. CA 06097 2.40 

STANISLAUS ...................................................................................................................................... CA 06099 2.20 

SUTTER .............................................................................................................................................. CA 06101 2.20 

TEHAMA .............................................................................................................................................. CA 06103 2.20 

TRINITY ............................................................................................................................................... CA 06105 2.00 

TULARE ............................................................................................................................................... CA 06107 2.20 

TUOLUMNE ......................................................................................................................................... CA 06109 1.80 

VENTURA ............................................................................................................................................ CA 06111 2.60 

YOLO ................................................................................................................................................... CA 06113 2.20 

YUBA ................................................................................................................................................... CA 06115 2.00 

ADAMS ................................................................................................................................................ CO 08001 2.70 

ALAMOSA ........................................................................................................................................... CO 08003 2.50 

ARAPAHOE ......................................................................................................................................... CO 08005 2.70 

ARCHULETA ....................................................................................................................................... CO 08007 2.30 

BACA ................................................................................................................................................... CO 08009 2.50 

BENT ................................................................................................................................................... CO 08011 2.50 

BOULDER ........................................................................................................................................... CO 08013 2.50 

BROOMFIELD ..................................................................................................................................... CO 08014 2.50 

CHAFFEE ............................................................................................................................................ CO 08015 2.50 

CHEYENNE ......................................................................................................................................... CO 08017 2.50 

CLEAR CREEK ................................................................................................................................... CO 08019 2.50 

CONEJOS ........................................................................................................................................... CO 08021 2.50 

COSTILLA ........................................................................................................................................... CO 08023 2.50 

CROWLEY ........................................................................................................................................... CO 08025 2.70 

CUSTER .............................................................................................................................................. CO 08027 2.70 

DELTA ................................................................................................................................................. CO 08029 2.30 

DENVER .............................................................................................................................................. CO 08031 2.70 

DOLORES ........................................................................................................................................... CO 08033 2.30 

DOUGLAS ........................................................................................................................................... CO 08035 2.70 

EAGLE ................................................................................................................................................. CO 08037 2.50 

ELBERT ............................................................................................................................................... CO 08039 2.70 

EL PASO ............................................................................................................................................. CO 08041 2.70 

FREMONT ........................................................................................................................................... CO 08043 2.70 

GARFIELD ........................................................................................................................................... CO 08045 2.30 

GILPIN ................................................................................................................................................. CO 08047 2.50 

GRAND ................................................................................................................................................ CO 08049 2.50 

GUNNISON ......................................................................................................................................... CO 08051 2.50 

HINSDALE ........................................................................................................................................... CO 08053 2.30 

HUERFANO ......................................................................................................................................... CO 08055 2.70 

JACKSON ............................................................................................................................................ CO 08057 2.50 

JEFFERSON ....................................................................................................................................... CO 08059 2.70 

KIOWA ................................................................................................................................................. CO 08061 2.50 

KIT CARSON ....................................................................................................................................... CO 08063 2.50 

LAKE .................................................................................................................................................... CO 08065 2.50 

LA PLATA ............................................................................................................................................ CO 08067 2.30 

LARIMER ............................................................................................................................................. CO 08069 2.50 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95543 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

LAS ANIMAS ....................................................................................................................................... CO 08071 2.50 

LINCOLN ............................................................................................................................................. CO 08073 2.70 

LOGAN ................................................................................................................................................ CO 08075 2.50 

MESA ................................................................................................................................................... CO 08077 2.30 

MINERAL ............................................................................................................................................. CO 08079 2.50 

MOFFAT .............................................................................................................................................. CO 08081 2.30 

MONTEZUMA ...................................................................................................................................... CO 08083 2.30 

MONTROSE ........................................................................................................................................ CO 08085 2.30 

MORGAN ............................................................................................................................................. CO 08087 2.50 

OTERO ................................................................................................................................................ CO 08089 2.70 

OURAY ................................................................................................................................................ CO 08091 2.30 

PARK ................................................................................................................................................... CO 08093 2.70 

PHILLIPS ............................................................................................................................................. CO 08095 2.50 

PITKIN ................................................................................................................................................. CO 08097 2.50 

PROWERS .......................................................................................................................................... CO 08099 2.50 

PUEBLO .............................................................................................................................................. CO 08101 2.70 

RIO BLANCO ...................................................................................................................................... CO 08103 2.30 

RIO GRANDE ...................................................................................................................................... CO 08105 2.50 

ROUTT ................................................................................................................................................ CO 08107 2.50 

SAGUACHE ......................................................................................................................................... CO 08109 2.50 

SAN JUAN ........................................................................................................................................... CO 08111 2.30 

SAN MIGUEL ...................................................................................................................................... CO 08113 2.30 

SEDGWICK ......................................................................................................................................... CO 08115 2.50 

SUMMIT ............................................................................................................................................... CO 08117 2.50 

TELLER ............................................................................................................................................... CO 08119 2.70 

WASHINGTON .................................................................................................................................... CO 08121 2.50 

WELD .................................................................................................................................................. CO 08123 2.50 

YUMA .................................................................................................................................................. CO 08125 2.50 

FAIRFIELD .......................................................................................................................................... CT 09001 5.00 

HARTFORD ......................................................................................................................................... CT 09003 4.80 

LITCHFIELD ........................................................................................................................................ CT 09005 4.80 

MIDDLESEX ........................................................................................................................................ CT 09007 4.80 

NEW HAVEN ....................................................................................................................................... CT 09009 4.80 

NEW LONDON .................................................................................................................................... CT 09011 4.80 

TOLLAND ............................................................................................................................................ CT 09013 4.80 

WINDHAM ........................................................................................................................................... CT 09015 4.80 

KENT ................................................................................................................................................... DE 10001 4.60 

NEW CASTLE ..................................................................................................................................... DE 10003 4.40 

SUSSEX .............................................................................................................................................. DE 10005 4.80 

DISTRICT OF COLUMBIA .................................................................................................................. DC 11001 4.70 

ALACHUA ............................................................................................................................................ FL 12001 6.40 

BAKER ................................................................................................................................................. FL 12003 6.40 

BAY ...................................................................................................................................................... FL 12005 6.00 

BRADFORD ......................................................................................................................................... FL 12007 6.40 

BREVARD ........................................................................................................................................... FL 12009 6.80 

BROWARD .......................................................................................................................................... FL 12011 7.40 

CALHOUN ........................................................................................................................................... FL 12013 6.00 

CHARLOTTE ....................................................................................................................................... FL 12015 7.00 

CITRUS ............................................................................................................................................... FL 12017 6.80 

CLAY ................................................................................................................................................... FL 12019 6.40 

COLLIER ............................................................................................................................................. FL 12021 7.40 

COLUMBIA .......................................................................................................................................... FL 12023 6.40 

DE SOTO ............................................................................................................................................ FL 12027 7.00 

DIXIE ................................................................................................................................................... FL 12029 6.40 

DUVAL ................................................................................................................................................. FL 12031 6.40 

ESCAMBIA .......................................................................................................................................... FL 12033 5.80 

FLAGLER ............................................................................................................................................ FL 12035 6.80 

FRANKLIN ........................................................................................................................................... FL 12037 6.00 

GADSDEN ........................................................................................................................................... FL 12039 6.00 

GILCHRIST .......................................................................................................................................... FL 12041 6.40 

GLADES .............................................................................................................................................. FL 12043 7.00 

GULF ................................................................................................................................................... FL 12045 6.00 

HAMILTON .......................................................................................................................................... FL 12047 6.40 

HARDEE .............................................................................................................................................. FL 12049 7.00 

HENDRY .............................................................................................................................................. FL 12051 7.40 

HERNANDO ........................................................................................................................................ FL 12053 6.80 

HIGHLANDS ........................................................................................................................................ FL 12055 7.00 

HILLSBOROUGH ................................................................................................................................ FL 12057 6.80 

HOLMES .............................................................................................................................................. FL 12059 6.00 

INDIAN RIVER .................................................................................................................................... FL 12061 7.00 

JACKSON ............................................................................................................................................ FL 12063 6.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95544 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

JEFFERSON ....................................................................................................................................... FL 12065 6.00 

LAFAYETTE ........................................................................................................................................ FL 12067 6.40 

LAKE .................................................................................................................................................... FL 12069 6.80 

LEE ...................................................................................................................................................... FL 12071 7.00 

LEON ................................................................................................................................................... FL 12073 6.00 

LEVY .................................................................................................................................................... FL 12075 6.40 

LIBERTY .............................................................................................................................................. FL 12077 6.00 

MADISON ............................................................................................................................................ FL 12079 6.00 

MANATEE ........................................................................................................................................... FL 12081 7.00 

MARION .............................................................................................................................................. FL 12083 6.80 

MARTIN ............................................................................................................................................... FL 12085 7.00 

MIAMI-DADE ....................................................................................................................................... FL 12086 7.40 

MONROE ............................................................................................................................................. FL 12087 7.40 

NASSAU .............................................................................................................................................. FL 12089 6.40 

OKALOOSA ......................................................................................................................................... FL 12091 5.80 

OKEECHOBEE .................................................................................................................................... FL 12093 7.00 

ORANGE ............................................................................................................................................. FL 12095 6.80 

OSCEOLA ........................................................................................................................................... FL 12097 6.80 

PALM BEACH ..................................................................................................................................... FL 12099 7.40 

PASCO ................................................................................................................................................ FL 12101 6.80 

PINELLAS ............................................................................................................................................ FL 12103 6.80 

POLK ................................................................................................................................................... FL 12105 6.80 

PUTNAM .............................................................................................................................................. FL 12107 6.40 

ST. JOHNS .......................................................................................................................................... FL 12109 6.40 

ST. LUCIE ........................................................................................................................................... FL 12111 7.00 

SANTA ROSA ..................................................................................................................................... FL 12113 5.80 

SARASOTA ......................................................................................................................................... FL 12115 7.00 

SEMINOLE .......................................................................................................................................... FL 12117 6.80 

SUMTER .............................................................................................................................................. FL 12119 6.80 

SUWANNEE ........................................................................................................................................ FL 12121 6.40 

TAYLOR .............................................................................................................................................. FL 12123 6.40 

UNION ................................................................................................................................................. FL 12125 6.40 

VOLUSIA ............................................................................................................................................. FL 12127 6.80 

WAKULLA ............................................................................................................................................ FL 12129 6.00 

WALTON ............................................................................................................................................. FL 12131 6.00 

WASHINGTON .................................................................................................................................... FL 12133 6.00 

APPLING ............................................................................................................................................. GA 13001 6.00 

ATKINSON .......................................................................................................................................... GA 13003 6.00 

BACON ................................................................................................................................................ GA 13005 6.00 

BAKER ................................................................................................................................................. GA 13007 5.80 

BALDWIN ............................................................................................................................................ GA 13009 5.80 

BANKS ................................................................................................................................................. GA 13011 5.60 

BARROW ............................................................................................................................................. GA 13013 5.80 

BARTOW ............................................................................................................................................. GA 13015 5.60 

BEN HILL ............................................................................................................................................. GA 13017 6.00 

BERRIEN ............................................................................................................................................. GA 13019 6.00 

BIBB ..................................................................................................................................................... GA 13021 5.80 

BLECKLEY .......................................................................................................................................... GA 13023 5.80 

BRANTLEY .......................................................................................................................................... GA 13025 6.00 

BROOKS ............................................................................................................................................. GA 13027 6.00 

BRYAN ................................................................................................................................................ GA 13029 6.00 

BULLOCH ............................................................................................................................................ GA 13031 6.00 

BURKE ................................................................................................................................................ GA 13033 6.00 

BUTTS ................................................................................................................................................. GA 13035 5.80 

CALHOUN ........................................................................................................................................... GA 13037 5.80 

CAMDEN ............................................................................................................................................. GA 13039 6.00 

CANDLER ............................................................................................................................................ GA 13043 6.00 

CARROLL ............................................................................................................................................ GA 13045 5.60 

CATOOSA ........................................................................................................................................... GA 13047 5.40 

CHARLTON ......................................................................................................................................... GA 13049 6.00 

CHATHAM ........................................................................................................................................... GA 13051 6.00 

CHATTAHOOCHEE ............................................................................................................................ GA 13053 5.80 

CHATTOOGA ...................................................................................................................................... GA 13055 5.40 

CHEROKEE ......................................................................................................................................... GA 13057 5.60 

CLARKE .............................................................................................................................................. GA 13059 5.80 

CLAY ................................................................................................................................................... GA 13061 5.80 

CLAYTON ............................................................................................................................................ GA 13063 5.80 

CLINCH ............................................................................................................................................... GA 13065 6.00 

COBB ................................................................................................................................................... GA 13067 5.60 

COFFEE .............................................................................................................................................. GA 13069 6.00 

COLQUITT ........................................................................................................................................... GA 13071 6.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95545 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

COLUMBIA .......................................................................................................................................... GA 13073 5.80 

COOK .................................................................................................................................................. GA 13075 6.00 

COWETA ............................................................................................................................................. GA 13077 5.80 

CRAWFORD ........................................................................................................................................ GA 13079 5.80 

CRISP .................................................................................................................................................. GA 13081 5.80 

DADE ................................................................................................................................................... GA 13083 5.40 

DAWSON ............................................................................................................................................. GA 13085 5.60 

DECATUR ........................................................................................................................................... GA 13087 6.00 

DE KALB ............................................................................................................................................. GA 13089 5.80 

DODGE ................................................................................................................................................ GA 13091 5.80 

DOOLY ................................................................................................................................................ GA 13093 5.80 

DOUGHERTY ...................................................................................................................................... GA 13095 5.80 

DOUGLAS ........................................................................................................................................... GA 13097 5.60 

EARLY ................................................................................................................................................. GA 13099 5.80 

ECHOLS .............................................................................................................................................. GA 13101 6.00 

EFFINGHAM ........................................................................................................................................ GA 13103 6.00 

ELBERT ............................................................................................................................................... GA 13105 5.80 

EMANUEL ........................................................................................................................................... GA 13107 6.00 

EVANS ................................................................................................................................................. GA 13109 6.00 

FANNIN ............................................................................................................................................... GA 13111 5.60 

FAYETTE ............................................................................................................................................. GA 13113 5.80 

FLOYD ................................................................................................................................................. GA 13115 5.60 

FORSYTH ............................................................................................................................................ GA 13117 5.60 

FRANKLIN ........................................................................................................................................... GA 13119 5.60 

FULTON .............................................................................................................................................. GA 13121 5.80 

GILMER ............................................................................................................................................... GA 13123 5.60 

GLASCOCK ......................................................................................................................................... GA 13125 5.80 

GLYNN ................................................................................................................................................ GA 13127 6.00 

GORDON ............................................................................................................................................. GA 13129 5.60 

GRADY ................................................................................................................................................ GA 13131 6.00 

GREENE .............................................................................................................................................. GA 13133 5.80 

GWINNETT .......................................................................................................................................... GA 13135 5.80 

HABERSHAM ...................................................................................................................................... GA 13137 5.60 

HALL .................................................................................................................................................... GA 13139 5.60 

HANCOCK ........................................................................................................................................... GA 13141 5.80 

HARALSON ......................................................................................................................................... GA 13143 5.60 

HARRIS ............................................................................................................................................... GA 13145 5.80 

HART ................................................................................................................................................... GA 13147 5.60 

HEARD ................................................................................................................................................ GA 13149 5.60 

HENRY ................................................................................................................................................ GA 13151 5.80 

HOUSTON ........................................................................................................................................... GA 13153 5.80 

IRWIN .................................................................................................................................................. GA 13155 6.00 

JACKSON ............................................................................................................................................ GA 13157 5.80 

JASPER ............................................................................................................................................... GA 13159 5.80 

JEFF DAVIS ........................................................................................................................................ GA 13161 6.00 

JEFFERSON ....................................................................................................................................... GA 13163 5.80 

JENKINS .............................................................................................................................................. GA 13165 6.00 

JOHNSON ........................................................................................................................................... GA 13167 5.80 

JONES ................................................................................................................................................. GA 13169 5.80 

LAMAR ................................................................................................................................................ GA 13171 5.80 

LANIER ................................................................................................................................................ GA 13173 6.00 

LAURENS ............................................................................................................................................ GA 13175 5.80 

LEE ...................................................................................................................................................... GA 13177 5.80 

LIBERTY .............................................................................................................................................. GA 13179 6.00 

LINCOLN ............................................................................................................................................. GA 13181 5.80 

LONG ................................................................................................................................................... GA 13183 6.00 

LOWNDES ........................................................................................................................................... GA 13185 6.00 

LUMPKIN ............................................................................................................................................. GA 13187 5.60 

MCDUFFIE .......................................................................................................................................... GA 13189 5.80 

MCINTOSH .......................................................................................................................................... GA 13191 6.00 

MACON ............................................................................................................................................... GA 13193 5.80 

MADISON ............................................................................................................................................ GA 13195 5.80 

MARION .............................................................................................................................................. GA 13197 5.80 

MERIWETHER .................................................................................................................................... GA 13199 5.80 

MILLER ................................................................................................................................................ GA 13201 5.80 

MITCHELL ........................................................................................................................................... GA 13205 5.80 

MONROE ............................................................................................................................................. GA 13207 5.80 

MONTGOMERY .................................................................................................................................. GA 13209 6.00 

MORGAN ............................................................................................................................................. GA 13211 5.80 

MURRAY ............................................................................................................................................. GA 13213 5.40 

MUSCOGEE ........................................................................................................................................ GA 13215 5.80 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95546 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

NEWTON ............................................................................................................................................. GA 13217 5.80 

OCONEE ............................................................................................................................................. GA 13219 5.80 

OGLETHORPE .................................................................................................................................... GA 13221 5.80 

PAULDING .......................................................................................................................................... GA 13223 5.60 

PEACH ................................................................................................................................................ GA 13225 5.80 

PICKENS ............................................................................................................................................. GA 13227 5.60 

PIERCE ............................................................................................................................................... GA 13229 6.00 

PIKE ..................................................................................................................................................... GA 13231 5.80 

POLK ................................................................................................................................................... GA 13233 5.60 

PULASKI .............................................................................................................................................. GA 13235 5.80 

PUTNAM .............................................................................................................................................. GA 13237 5.80 

QUITMAN ............................................................................................................................................ GA 13239 5.80 

RABUN ................................................................................................................................................ GA 13241 5.60 

RANDOLPH ......................................................................................................................................... GA 13243 5.80 

RICHMOND ......................................................................................................................................... GA 13245 6.00 

ROCKDALE ......................................................................................................................................... GA 13247 5.80 

SCHLEY .............................................................................................................................................. GA 13249 5.80 

SCREVEN ........................................................................................................................................... GA 13251 6.00 

SEMINOLE .......................................................................................................................................... GA 13253 6.00 

SPALDING ........................................................................................................................................... GA 13255 5.80 

STEPHENS ......................................................................................................................................... GA 13257 5.60 

STEWART ........................................................................................................................................... GA 13259 5.80 

SUMTER .............................................................................................................................................. GA 13261 5.80 

TALBOT ............................................................................................................................................... GA 13263 5.80 

TALIAFERRO ...................................................................................................................................... GA 13265 5.80 

TATTNALL ........................................................................................................................................... GA 13267 6.00 

TAYLOR .............................................................................................................................................. GA 13269 5.80 

TELFAIR .............................................................................................................................................. GA 13271 6.00 

TERRELL ............................................................................................................................................. GA 13273 5.80 

THOMAS ............................................................................................................................................. GA 13275 6.00 

TIFT ..................................................................................................................................................... GA 13277 5.80 

TOOMBS ............................................................................................................................................. GA 13279 6.00 

TOWNS ............................................................................................................................................... GA 13281 5.60 

TREUTLEN .......................................................................................................................................... GA 13283 6.00 

TROUP ................................................................................................................................................ GA 13285 5.60 

TURNER .............................................................................................................................................. GA 13287 5.80 

TWIGGS .............................................................................................................................................. GA 13289 5.80 

UNION ................................................................................................................................................. GA 13291 5.60 

UPSON ................................................................................................................................................ GA 13293 5.80 

WALKER .............................................................................................................................................. GA 13295 5.40 

WALTON ............................................................................................................................................. GA 13297 5.80 

WARE .................................................................................................................................................. GA 13299 6.00 

WARREN ............................................................................................................................................. GA 13301 5.80 

WASHINGTON .................................................................................................................................... GA 13303 5.80 

WAYNE ................................................................................................................................................ GA 13305 6.00 

WEBSTER ........................................................................................................................................... GA 13307 5.80 

WHEELER ........................................................................................................................................... GA 13309 6.00 

WHITE ................................................................................................................................................. GA 13311 5.60 

WHITFIELD ......................................................................................................................................... GA 13313 5.40 

WILCOX ............................................................................................................................................... GA 13315 5.80 

WILKES ............................................................................................................................................... GA 13317 5.80 

WILKINSON ......................................................................................................................................... GA 13319 5.80 

WORTH ............................................................................................................................................... GA 13321 5.80 

ADA ..................................................................................................................................................... ID 16001 1.70 

ADAMS ................................................................................................................................................ ID 16003 2.00 

BANNOCK ........................................................................................................................................... ID 16005 2.00 

BEAR LAKE ......................................................................................................................................... ID 16007 2.20 

BENEWAH ........................................................................................................................................... ID 16009 2.40 

BINGHAM ............................................................................................................................................ ID 16011 2.00 

BLAINE ................................................................................................................................................ ID 16013 1.80 

BOISE .................................................................................................................................................. ID 16015 1.70 

BONNER ............................................................................................................................................. ID 16017 2.40 

BONNEVILLE ...................................................................................................................................... ID 16019 2.00 

BOUNDARY ........................................................................................................................................ ID 16021 2.40 

BUTTE ................................................................................................................................................. ID 16023 2.00 

CAMAS ................................................................................................................................................ ID 16025 1.80 

CANYON ............................................................................................................................................. ID 16027 1.70 

CARIBOU ............................................................................................................................................ ID 16029 2.00 

CASSIA ................................................................................................................................................ ID 16031 1.70 

CLARK ................................................................................................................................................. ID 16033 2.00 

CLEARWATER .................................................................................................................................... ID 16035 2.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95547 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

CUSTER .............................................................................................................................................. ID 16037 1.80 

ELMORE .............................................................................................................................................. ID 16039 1.70 

FRANKLIN ........................................................................................................................................... ID 16041 2.00 

FREMONT ........................................................................................................................................... ID 16043 2.00 

GEM ..................................................................................................................................................... ID 16045 1.70 

GOODING ........................................................................................................................................... ID 16047 1.70 

IDAHO ................................................................................................................................................. ID 16049 2.00 

JEFFERSON ....................................................................................................................................... ID 16051 2.00 

JEROME .............................................................................................................................................. ID 16053 1.70 

KOOTENAI .......................................................................................................................................... ID 16055 2.40 

LATAH ................................................................................................................................................. ID 16057 2.20 

LEMHI .................................................................................................................................................. ID 16059 1.80 

LEWIS .................................................................................................................................................. ID 16061 2.00 

LINCOLN ............................................................................................................................................. ID 16063 1.70 

MADISON ............................................................................................................................................ ID 16065 2.00 

MINIDOKA ........................................................................................................................................... ID 16067 1.70 

NEZ PERCE ........................................................................................................................................ ID 16069 2.00 

ONEIDA ............................................................................................................................................... ID 16071 2.00 

OWYHEE ............................................................................................................................................. ID 16073 1.80 

PAYETTE ............................................................................................................................................ ID 16075 1.70 

POWER ............................................................................................................................................... ID 16077 2.00 

SHOSHONE ........................................................................................................................................ ID 16079 2.20 

TETON ................................................................................................................................................. ID 16081 2.00 

TWIN FALLS ....................................................................................................................................... ID 16083 1.70 

VALLEY ............................................................................................................................................... ID 16085 1.80 

WASHINGTON .................................................................................................................................... ID 16087 1.70 

ADAMS ................................................................................................................................................ IL 17001 3.20 

ALEXANDER ....................................................................................................................................... IL 17003 4.00 

BOND .................................................................................................................................................. IL 17005 3.60 

BOONE ................................................................................................................................................ IL 17007 3.10 

BROWN ............................................................................................................................................... IL 17009 3.40 

BUREAU .............................................................................................................................................. IL 17011 3.40 

CALHOUN ........................................................................................................................................... IL 17013 3.60 

CARROLL ............................................................................................................................................ IL 17015 3.20 

CASS ................................................................................................................................................... IL 17017 3.40 

CHAMPAIGN ....................................................................................................................................... IL 17019 3.60 

CHRISTIAN ......................................................................................................................................... IL 17021 3.60 

CLARK ................................................................................................................................................. IL 17023 3.60 

CLAY ................................................................................................................................................... IL 17025 3.60 

CLINTON ............................................................................................................................................. IL 17027 3.60 

COLES ................................................................................................................................................. IL 17029 3.60 

COOK .................................................................................................................................................. IL 17031 3.20 

CRAWFORD ........................................................................................................................................ IL 17033 3.60 

CUMBERLAND .................................................................................................................................... IL 17035 3.60 

DE KALB ............................................................................................................................................. IL 17037 3.20 

DE WITT .............................................................................................................................................. IL 17039 3.40 

DOUGLAS ........................................................................................................................................... IL 17041 3.60 

DU PAGE ............................................................................................................................................ IL 17043 3.20 

EDGAR ................................................................................................................................................ IL 17045 3.60 

EDWARDS .......................................................................................................................................... IL 17047 3.60 

EFFINGHAM ........................................................................................................................................ IL 17049 3.60 

FAYETTE ............................................................................................................................................. IL 17051 3.60 

FORD ................................................................................................................................................... IL 17053 3.60 

FRANKLIN ........................................................................................................................................... IL 17055 3.60 

FULTON .............................................................................................................................................. IL 17057 3.40 

GALLATIN ........................................................................................................................................... IL 17059 4.00 

GREENE .............................................................................................................................................. IL 17061 3.60 

GRUNDY ............................................................................................................................................. IL 17063 3.40 

HAMILTON .......................................................................................................................................... IL 17065 3.60 

HANCOCK ........................................................................................................................................... IL 17067 3.20 

HARDIN ............................................................................................................................................... IL 17069 4.00 

HENDERSON ...................................................................................................................................... IL 17071 3.20 

HENRY ................................................................................................................................................ IL 17073 3.20 

IROQUOIS ........................................................................................................................................... IL 17075 3.60 

JACKSON ............................................................................................................................................ IL 17077 3.60 

JASPER ............................................................................................................................................... IL 17079 3.60 

JEFFERSON ....................................................................................................................................... IL 17081 3.60 

JERSEY ............................................................................................................................................... IL 17083 3.60 

JO DAVIESS ....................................................................................................................................... IL 17085 3.10 

JOHNSON ........................................................................................................................................... IL 17087 4.00 

KANE ................................................................................................................................................... IL 17089 3.20 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95548 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

KANKAKEE ......................................................................................................................................... IL 17091 3.40 

KENDALL ............................................................................................................................................ IL 17093 3.20 

KNOX ................................................................................................................................................... IL 17095 3.40 

LAKE .................................................................................................................................................... IL 17097 3.10 

LA SALLE ............................................................................................................................................ IL 17099 3.40 

LAWRENCE ........................................................................................................................................ IL 17101 3.60 

LEE ...................................................................................................................................................... IL 17103 3.20 

LIVINGSTON ....................................................................................................................................... IL 17105 3.40 

LOGAN ................................................................................................................................................ IL 17107 3.40 

MCDONOUGH .................................................................................................................................... IL 17109 3.40 

MCHENRY ........................................................................................................................................... IL 17111 3.10 

MCLEAN .............................................................................................................................................. IL 17113 3.40 

MACON ............................................................................................................................................... IL 17115 3.40 

MACOUPIN ......................................................................................................................................... IL 17117 3.60 

MADISON ............................................................................................................................................ IL 17119 3.60 

MARION .............................................................................................................................................. IL 17121 3.60 

MARSHALL ......................................................................................................................................... IL 17123 3.40 

MASON ................................................................................................................................................ IL 17125 3.40 

MASSAC .............................................................................................................................................. IL 17127 4.00 

MENARD ............................................................................................................................................. IL 17129 3.40 

MERCER ............................................................................................................................................. IL 17131 3.20 

MONROE ............................................................................................................................................. IL 17133 3.60 

MONTGOMERY .................................................................................................................................. IL 17135 3.60 

MORGAN ............................................................................................................................................. IL 17137 3.40 

MOULTRIE .......................................................................................................................................... IL 17139 3.60 

OGLE ................................................................................................................................................... IL 17141 3.20 

PEORIA ............................................................................................................................................... IL 17143 3.40 

PERRY ................................................................................................................................................ IL 17145 3.60 

PIATT ................................................................................................................................................... IL 17147 3.40 

PIKE ..................................................................................................................................................... IL 17149 3.40 

POPE ................................................................................................................................................... IL 17151 4.00 

PULASKI .............................................................................................................................................. IL 17153 4.00 

PUTNAM .............................................................................................................................................. IL 17155 3.40 

RANDOLPH ......................................................................................................................................... IL 17157 3.60 

RICHLAND .......................................................................................................................................... IL 17159 3.60 

ROCK ISLAND .................................................................................................................................... IL 17161 3.20 

ST. CLAIR ........................................................................................................................................... IL 17163 3.60 

SALINE ................................................................................................................................................ IL 17165 4.00 

SANGAMON ........................................................................................................................................ IL 17167 3.40 

SCHUYLER ......................................................................................................................................... IL 17169 3.40 

SCOTT ................................................................................................................................................. IL 17171 3.40 

SHELBY ............................................................................................................................................... IL 17173 3.60 

STARK ................................................................................................................................................. IL 17175 3.40 

STEPHENSON .................................................................................................................................... IL 17177 3.10 

TAZEWELL .......................................................................................................................................... IL 17179 3.40 

UNION ................................................................................................................................................. IL 17181 4.00 

VERMILION ......................................................................................................................................... IL 17183 3.60 

WABASH ............................................................................................................................................. IL 17185 3.60 

WARREN ............................................................................................................................................. IL 17187 3.20 

WASHINGTON .................................................................................................................................... IL 17189 3.60 

WAYNE ................................................................................................................................................ IL 17191 3.60 

WHITE ................................................................................................................................................. IL 17193 3.60 

WHITESIDE ......................................................................................................................................... IL 17195 3.20 

WILL .................................................................................................................................................... IL 17197 3.20 

WILLIAMSON ...................................................................................................................................... IL 17199 4.00 

WINNEBAGO ...................................................................................................................................... IL 17201 3.10 

WOODFORD ....................................................................................................................................... IL 17203 3.40 

ADAMS ................................................................................................................................................ IN 18001 3.30 

ALLEN ................................................................................................................................................. IN 18003 3.30 

BARTHOLOMEW ................................................................................................................................ IN 18005 3.70 

BENTON .............................................................................................................................................. IN 18007 3.60 

BLACKFORD ....................................................................................................................................... IN 18009 3.30 

BOONE ................................................................................................................................................ IN 18011 3.60 

BROWN ............................................................................................................................................... IN 18013 3.70 

CARROLL ............................................................................................................................................ IN 18015 3.60 

CASS ................................................................................................................................................... IN 18017 3.30 

CLARK ................................................................................................................................................. IN 18019 4.00 

CLAY ................................................................................................................................................... IN 18021 3.60 

CLINTON ............................................................................................................................................. IN 18023 3.60 

CRAWFORD ........................................................................................................................................ IN 18025 4.00 

DAVIESS ............................................................................................................................................. IN 18027 3.70 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95549 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

DEARBORN ........................................................................................................................................ IN 18029 3.70 

DECATUR ........................................................................................................................................... IN 18031 3.70 

DEKALB ............................................................................................................................................... IN 18033 3.30 

DELAWARE ......................................................................................................................................... IN 18035 3.60 

DUBOIS ............................................................................................................................................... IN 18037 3.70 

ELKHART ............................................................................................................................................ IN 18039 3.30 

FAYETTE ............................................................................................................................................. IN 18041 3.60 

FLOYD ................................................................................................................................................. IN 18043 4.00 

FOUNTAIN .......................................................................................................................................... IN 18045 3.60 

FRANKLIN ........................................................................................................................................... IN 18047 3.70 

FULTON .............................................................................................................................................. IN 18049 3.30 

GIBSON ............................................................................................................................................... IN 18051 3.70 

GRANT ................................................................................................................................................ IN 18053 3.30 

GREENE .............................................................................................................................................. IN 18055 3.70 

HAMILTON .......................................................................................................................................... IN 18057 3.60 

HANCOCK ........................................................................................................................................... IN 18059 3.60 

HARRISON .......................................................................................................................................... IN 18061 4.00 

HENDRICKS ........................................................................................................................................ IN 18063 3.60 

HENRY ................................................................................................................................................ IN 18065 3.60 

HOWARD ............................................................................................................................................ IN 18067 3.60 

HUNTINGTON ..................................................................................................................................... IN 18069 3.30 

JACKSON ............................................................................................................................................ IN 18071 3.70 

JASPER ............................................................................................................................................... IN 18073 3.60 

JAY ...................................................................................................................................................... IN 18075 3.30 

JEFFERSON ....................................................................................................................................... IN 18077 4.00 

JENNINGS ........................................................................................................................................... IN 18079 3.70 

JOHNSON ........................................................................................................................................... IN 18081 3.60 

KNOX ................................................................................................................................................... IN 18083 3.70 

KOSCIUSKO ....................................................................................................................................... IN 18085 3.30 

LAGRANGE ......................................................................................................................................... IN 18087 3.30 

LAKE .................................................................................................................................................... IN 18089 3.30 

LA PORTE ........................................................................................................................................... IN 18091 3.30 

LAWRENCE ........................................................................................................................................ IN 18093 3.70 

MADISON ............................................................................................................................................ IN 18095 3.60 

MARION .............................................................................................................................................. IN 18097 3.60 

MARSHALL ......................................................................................................................................... IN 18099 3.30 

MARTIN ............................................................................................................................................... IN 18101 3.70 

MIAMI .................................................................................................................................................. IN 18103 3.30 

MONROE ............................................................................................................................................. IN 18105 3.70 

MONTGOMERY .................................................................................................................................. IN 18107 3.60 

MORGAN ............................................................................................................................................. IN 18109 3.60 

NEWTON ............................................................................................................................................. IN 18111 3.60 

NOBLE ................................................................................................................................................. IN 18113 3.30 

OHIO .................................................................................................................................................... IN 18115 3.70 

ORANGE ............................................................................................................................................. IN 18117 3.70 

OWEN .................................................................................................................................................. IN 18119 3.60 

PARKE ................................................................................................................................................. IN 18121 3.60 

PERRY ................................................................................................................................................ IN 18123 4.00 

PIKE ..................................................................................................................................................... IN 18125 3.70 

PORTER .............................................................................................................................................. IN 18127 3.30 

POSEY ................................................................................................................................................ IN 18129 3.70 

PULASKI .............................................................................................................................................. IN 18131 3.30 

PUTNAM .............................................................................................................................................. IN 18133 3.60 

RANDOLPH ......................................................................................................................................... IN 18135 3.60 

RIPLEY ................................................................................................................................................ IN 18137 3.70 

RUSH ................................................................................................................................................... IN 18139 3.60 

ST. JOSEPH ........................................................................................................................................ IN 18141 3.30 

SCOTT ................................................................................................................................................. IN 18143 4.00 

SHELBY ............................................................................................................................................... IN 18145 3.60 

SPENCER ........................................................................................................................................... IN 18147 4.00 

STARKE .............................................................................................................................................. IN 18149 3.30 

STEUBEN ............................................................................................................................................ IN 18151 3.30 

SULLIVAN ........................................................................................................................................... IN 18153 3.70 

SWITZERLAND ................................................................................................................................... IN 18155 4.00 

TIPPECANOE ...................................................................................................................................... IN 18157 3.60 

TIPTON ................................................................................................................................................ IN 18159 3.60 

UNION ................................................................................................................................................. IN 18161 3.60 

VANDERBURGH ................................................................................................................................. IN 18163 3.70 

VERMILLION ....................................................................................................................................... IN 18165 3.60 

VIGO .................................................................................................................................................... IN 18167 3.60 

WABASH ............................................................................................................................................. IN 18169 3.30 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95550 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

WARREN ............................................................................................................................................. IN 18171 3.60 

WARRICK ............................................................................................................................................ IN 18173 3.70 

WASHINGTON .................................................................................................................................... IN 18175 4.00 

WAYNE ................................................................................................................................................ IN 18177 3.60 

WELLS ................................................................................................................................................. IN 18179 3.30 

WHITE ................................................................................................................................................. IN 18181 3.60 

WHITLEY ............................................................................................................................................. IN 18183 3.30 

ADAIR .................................................................................................................................................. IA 19001 2.70 

ADAMS ................................................................................................................................................ IA 19003 2.90 

ALLAMAKEE ....................................................................................................................................... IA 19005 2.90 

APPANOOSE ...................................................................................................................................... IA 19007 2.90 

AUDUBON ........................................................................................................................................... IA 19009 2.70 

BENTON .............................................................................................................................................. IA 19011 2.90 

BLACK HAWK ..................................................................................................................................... IA 19013 2.90 

BOONE ................................................................................................................................................ IA 19015 2.70 

BREMER ............................................................................................................................................. IA 19017 2.90 

BUCHANAN ......................................................................................................................................... IA 19019 2.90 

BUENA VISTA ..................................................................................................................................... IA 19021 2.60 

BUTLER ............................................................................................................................................... IA 19023 2.90 

CALHOUN ........................................................................................................................................... IA 19025 2.70 

CARROLL ............................................................................................................................................ IA 19027 2.70 

CASS ................................................................................................................................................... IA 19029 2.70 

CEDAR ................................................................................................................................................ IA 19031 3.10 

CERRO GORDO ................................................................................................................................. IA 19033 2.90 

CHEROKEE ......................................................................................................................................... IA 19035 2.60 

CHICKASAW ....................................................................................................................................... IA 19037 2.90 

CLARKE .............................................................................................................................................. IA 19039 2.90 

CLAY ................................................................................................................................................... IA 19041 2.60 

CLAYTON ............................................................................................................................................ IA 19043 2.90 

CLINTON ............................................................................................................................................. IA 19045 3.10 

CRAWFORD ........................................................................................................................................ IA 19047 2.60 

DALLAS ............................................................................................................................................... IA 19049 2.70 

DAVIS .................................................................................................................................................. IA 19051 2.90 

DECATUR ........................................................................................................................................... IA 19053 2.90 

DELAWARE ......................................................................................................................................... IA 19055 2.90 

DES MOINES ...................................................................................................................................... IA 19057 3.10 

DICKINSON ......................................................................................................................................... IA 19059 2.70 

DUBUQUE ........................................................................................................................................... IA 19061 3.10 

EMMET ................................................................................................................................................ IA 19063 2.70 

FAYETTE ............................................................................................................................................. IA 19065 2.90 

FLOYD ................................................................................................................................................. IA 19067 2.90 

FRANKLIN ........................................................................................................................................... IA 19069 2.70 

FREMONT ........................................................................................................................................... IA 19071 2.70 

GREENE .............................................................................................................................................. IA 19073 2.70 

GRUNDY ............................................................................................................................................. IA 19075 2.90 

GUTHRIE ............................................................................................................................................. IA 19077 2.70 

HAMILTON .......................................................................................................................................... IA 19079 2.70 

HANCOCK ........................................................................................................................................... IA 19081 2.70 

HARDIN ............................................................................................................................................... IA 19083 2.70 

HARRISON .......................................................................................................................................... IA 19085 2.60 

HENRY ................................................................................................................................................ IA 19087 2.90 

HOWARD ............................................................................................................................................ IA 19089 2.80 

HUMBOLDT ......................................................................................................................................... IA 19091 2.70 

IDA ....................................................................................................................................................... IA 19093 2.60 

IOWA ................................................................................................................................................... IA 19095 2.90 

JACKSON ............................................................................................................................................ IA 19097 3.10 

JASPER ............................................................................................................................................... IA 19099 2.90 

JEFFERSON ....................................................................................................................................... IA 19101 2.90 

JOHNSON ........................................................................................................................................... IA 19103 2.90 

JONES ................................................................................................................................................. IA 19105 3.10 

KEOKUK .............................................................................................................................................. IA 19107 2.90 

KOSSUTH ........................................................................................................................................... IA 19109 2.70 

LEE ...................................................................................................................................................... IA 19111 3.10 

LINN ..................................................................................................................................................... IA 19113 2.90 

LOUISA ................................................................................................................................................ IA 19115 3.10 

LUCAS ................................................................................................................................................. IA 19117 2.90 

LYON ................................................................................................................................................... IA 19119 2.60 

MADISON ............................................................................................................................................ IA 19121 2.70 

MAHASKA ........................................................................................................................................... IA 19123 2.90 

MARION .............................................................................................................................................. IA 19125 2.90 

MARSHALL ......................................................................................................................................... IA 19127 2.90 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95551 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

MILLS .................................................................................................................................................. IA 19129 2.70 

MITCHELL ........................................................................................................................................... IA 19131 2.80 

MONONA ............................................................................................................................................. IA 19133 2.60 

MONROE ............................................................................................................................................. IA 19135 2.90 

MONTGOMERY .................................................................................................................................. IA 19137 2.70 

MUSCATINE ........................................................................................................................................ IA 19139 3.10 

O’BRIEN .............................................................................................................................................. IA 19141 2.60 

OSCEOLA ........................................................................................................................................... IA 19143 2.70 

PAGE ................................................................................................................................................... IA 19145 2.90 

PALO ALTO ......................................................................................................................................... IA 19147 2.70 

PLYMOUTH ......................................................................................................................................... IA 19149 2.60 

POCAHONTAS .................................................................................................................................... IA 19151 2.70 

POLK ................................................................................................................................................... IA 19153 2.70 

POTTAWATTAMIE .............................................................................................................................. IA 19155 2.70 

POWESHIEK ....................................................................................................................................... IA 19157 2.90 

RINGGOLD .......................................................................................................................................... IA 19159 2.90 

SAC ..................................................................................................................................................... IA 19161 2.60 

SCOTT ................................................................................................................................................. IA 19163 3.10 

SHELBY ............................................................................................................................................... IA 19165 2.60 

SIOUX .................................................................................................................................................. IA 19167 2.60 

STORY ................................................................................................................................................ IA 19169 2.70 

TAMA ................................................................................................................................................... IA 19171 2.90 

TAYLOR .............................................................................................................................................. IA 19173 2.90 

UNION ................................................................................................................................................. IA 19175 2.90 

VAN BUREN ........................................................................................................................................ IA 19177 2.90 

WAPELLO ........................................................................................................................................... IA 19179 2.90 

WARREN ............................................................................................................................................. IA 19181 2.70 

WASHINGTON .................................................................................................................................... IA 19183 2.90 

WAYNE ................................................................................................................................................ IA 19185 2.90 

WEBSTER ........................................................................................................................................... IA 19187 2.70 

WINNEBAGO ...................................................................................................................................... IA 19189 2.70 

WINNESHIEK ...................................................................................................................................... IA 19191 2.80 

WOODBURY ....................................................................................................................................... IA 19193 2.60 

WORTH ............................................................................................................................................... IA 19195 2.80 

WRIGHT .............................................................................................................................................. IA 19197 2.70 

ALLEN ................................................................................................................................................. KS 20001 2.90 

ANDERSON ........................................................................................................................................ KS 20003 2.90 

ATCHISON .......................................................................................................................................... KS 20005 2.90 

BARBER .............................................................................................................................................. KS 20007 2.60 

BARTON .............................................................................................................................................. KS 20009 2.60 

BOURBON ........................................................................................................................................... KS 20011 3.20 

BROWN ............................................................................................................................................... KS 20013 2.90 

BUTLER ............................................................................................................................................... KS 20015 2.90 

CHASE ................................................................................................................................................ KS 20017 2.70 

CHAUTAUQUA .................................................................................................................................... KS 20019 2.90 

CHEROKEE ......................................................................................................................................... KS 20021 3.20 

CHEYENNE ......................................................................................................................................... KS 20023 2.50 

CLARK ................................................................................................................................................. KS 20025 2.60 

CLAY ................................................................................................................................................... KS 20027 2.70 

CLOUD ................................................................................................................................................ KS 20029 2.70 

COFFEY .............................................................................................................................................. KS 20031 2.90 

COMANCHE ........................................................................................................................................ KS 20033 2.60 

COWLEY ............................................................................................................................................. KS 20035 2.90 

CRAWFORD ........................................................................................................................................ KS 20037 3.20 

DECATUR ........................................................................................................................................... KS 20039 2.50 

DICKINSON ......................................................................................................................................... KS 20041 2.70 

DONIPHAN .......................................................................................................................................... KS 20043 2.90 

DOUGLAS ........................................................................................................................................... KS 20045 2.90 

EDWARDS .......................................................................................................................................... KS 20047 2.60 

ELK ...................................................................................................................................................... KS 20049 2.90 

ELLIS ................................................................................................................................................... KS 20051 2.50 

ELLSWORTH ...................................................................................................................................... KS 20053 2.60 

FINNEY ................................................................................................................................................ KS 20055 2.50 

FORD ................................................................................................................................................... KS 20057 2.50 

FRANKLIN ........................................................................................................................................... KS 20059 2.90 

GEARY ................................................................................................................................................ KS 20061 2.70 

GOVE .................................................................................................................................................. KS 20063 2.50 

GRAHAM ............................................................................................................................................. KS 20065 2.50 

GRANT ................................................................................................................................................ KS 20067 2.50 

GRAY ................................................................................................................................................... KS 20069 2.50 

GREELEY ............................................................................................................................................ KS 20071 2.50 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95552 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

GREENWOOD .................................................................................................................................... KS 20073 2.90 

HAMILTON .......................................................................................................................................... KS 20075 2.50 

HARPER .............................................................................................................................................. KS 20077 2.90 

HARVEY .............................................................................................................................................. KS 20079 2.90 

HASKELL ............................................................................................................................................. KS 20081 2.50 

HODGEMAN ........................................................................................................................................ KS 20083 2.50 

JACKSON ............................................................................................................................................ KS 20085 2.90 

JEFFERSON ....................................................................................................................................... KS 20087 2.90 

JEWELL ............................................................................................................................................... KS 20089 2.60 

JOHNSON ........................................................................................................................................... KS 20091 3.20 

KEARNY .............................................................................................................................................. KS 20093 2.50 

KINGMAN ............................................................................................................................................ KS 20095 2.90 

KIOWA ................................................................................................................................................. KS 20097 2.60 

LABETTE ............................................................................................................................................. KS 20099 3.20 

LANE ................................................................................................................................................... KS 20101 2.50 

LEAVENWORTH ................................................................................................................................. KS 20103 2.90 

LINCOLN ............................................................................................................................................. KS 20105 2.60 

LINN ..................................................................................................................................................... KS 20107 3.20 

LOGAN ................................................................................................................................................ KS 20109 2.50 

LYON ................................................................................................................................................... KS 20111 2.90 

MCPHERSON ..................................................................................................................................... KS 20113 2.70 

MARION .............................................................................................................................................. KS 20115 2.70 

MARSHALL ......................................................................................................................................... KS 20117 2.70 

MEADE ................................................................................................................................................ KS 20119 2.50 

MIAMI .................................................................................................................................................. KS 20121 3.20 

MITCHELL ........................................................................................................................................... KS 20123 2.60 

MONTGOMERY .................................................................................................................................. KS 20125 3.20 

MORRIS .............................................................................................................................................. KS 20127 2.70 

MORTON ............................................................................................................................................. KS 20129 2.50 

NEMAHA ............................................................................................................................................. KS 20131 2.70 

NEOSHO ............................................................................................................................................. KS 20133 2.90 

NESS ................................................................................................................................................... KS 20135 2.50 

NORTON ............................................................................................................................................. KS 20137 2.50 

OSAGE ................................................................................................................................................ KS 20139 2.90 

OSBORNE ........................................................................................................................................... KS 20141 2.50 

OTTAWA ............................................................................................................................................. KS 20143 2.70 

PAWNEE ............................................................................................................................................. KS 20145 2.50 

PHILLIPS ............................................................................................................................................. KS 20147 2.50 

POTTAWATOMIE ................................................................................................................................ KS 20149 2.70 

PRATT ................................................................................................................................................. KS 20151 2.60 

RAWLINS ............................................................................................................................................ KS 20153 2.50 

RENO .................................................................................................................................................. KS 20155 2.90 

REPUBLIC ........................................................................................................................................... KS 20157 2.60 

RICE .................................................................................................................................................... KS 20159 2.60 

RILEY .................................................................................................................................................. KS 20161 2.70 

ROOKS ................................................................................................................................................ KS 20163 2.50 

RUSH ................................................................................................................................................... KS 20165 2.50 

RUSSELL ............................................................................................................................................ KS 20167 2.50 

SALINE ................................................................................................................................................ KS 20169 2.70 

SCOTT ................................................................................................................................................. KS 20171 2.50 

SEDGWICK ......................................................................................................................................... KS 20173 2.90 

SEWARD ............................................................................................................................................. KS 20175 2.50 

SHAWNEE ........................................................................................................................................... KS 20177 2.90 

SHERIDAN .......................................................................................................................................... KS 20179 2.50 

SHERMAN ........................................................................................................................................... KS 20181 2.50 

SMITH .................................................................................................................................................. KS 20183 2.50 

STAFFORD ......................................................................................................................................... KS 20185 2.60 

STANTON ............................................................................................................................................ KS 20187 2.50 

STEVENS ............................................................................................................................................ KS 20189 2.50 

SUMNER ............................................................................................................................................. KS 20191 2.90 

THOMAS ............................................................................................................................................. KS 20193 2.50 

TREGO ................................................................................................................................................ KS 20195 2.50 

WABAUNSEE ...................................................................................................................................... KS 20197 2.90 

WALLACE ............................................................................................................................................ KS 20199 2.50 

WASHINGTON .................................................................................................................................... KS 20201 2.70 

WICHITA .............................................................................................................................................. KS 20203 2.50 

WILSON ............................................................................................................................................... KS 20205 2.90 

WOODSON ......................................................................................................................................... KS 20207 2.90 

WYANDOTTE ...................................................................................................................................... KS 20209 3.20 

ADAIR .................................................................................................................................................. KY 21001 4.20 

ALLEN ................................................................................................................................................. KY 21003 4.20 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95553 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

ANDERSON ........................................................................................................................................ KY 21005 4.20 

BALLARD ............................................................................................................................................ KY 21007 4.00 

BARREN .............................................................................................................................................. KY 21009 4.20 

BATH ................................................................................................................................................... KY 21011 4.20 

BELL .................................................................................................................................................... KY 21013 4.80 

BOONE ................................................................................................................................................ KY 21015 4.00 

BOURBON ........................................................................................................................................... KY 21017 4.20 

BOYD ................................................................................................................................................... KY 21019 4.20 

BOYLE ................................................................................................................................................. KY 21021 4.20 

BRACKEN ........................................................................................................................................... KY 21023 4.00 

BREATHITT ......................................................................................................................................... KY 21025 4.50 

BRECKINRIDGE ................................................................................................................................. KY 21027 4.00 

BULLITT .............................................................................................................................................. KY 21029 4.00 

BUTLER ............................................................................................................................................... KY 21031 4.20 

CALDWELL ......................................................................................................................................... KY 21033 4.00 

CALLOWAY ......................................................................................................................................... KY 21035 4.20 

CAMPBELL .......................................................................................................................................... KY 21037 4.00 

CARLISLE ........................................................................................................................................... KY 21039 4.00 

CARROLL ............................................................................................................................................ KY 21041 4.00 

CARTER .............................................................................................................................................. KY 21043 4.20 

CASEY ................................................................................................................................................. KY 21045 4.20 

CHRISTIAN ......................................................................................................................................... KY 21047 4.20 

CLARK ................................................................................................................................................. KY 21049 4.20 

CLAY ................................................................................................................................................... KY 21051 4.50 

CLINTON ............................................................................................................................................. KY 21053 4.50 

CRITTENDEN ...................................................................................................................................... KY 21055 4.00 

CUMBERLAND .................................................................................................................................... KY 21057 4.50 

DAVIESS ............................................................................................................................................. KY 21059 4.00 

EDMONSON ........................................................................................................................................ KY 21061 4.20 

ELLIOTT .............................................................................................................................................. KY 21063 4.20 

ESTILL ................................................................................................................................................. KY 21065 4.20 

FAYETTE ............................................................................................................................................. KY 21067 4.20 

FLEMING ............................................................................................................................................. KY 21069 4.20 

FLOYD ................................................................................................................................................. KY 21071 4.50 

FRANKLIN ........................................................................................................................................... KY 21073 4.00 

FULTON .............................................................................................................................................. KY 21075 4.00 

GALLATIN ........................................................................................................................................... KY 21077 4.00 

GARRARD ........................................................................................................................................... KY 21079 4.20 

GRANT ................................................................................................................................................ KY 21081 4.00 

GRAVES .............................................................................................................................................. KY 21083 4.20 

GRAYSON ........................................................................................................................................... KY 21085 4.00 

GREEN ................................................................................................................................................ KY 21087 4.20 

GREENUP ........................................................................................................................................... KY 21089 4.20 

HANCOCK ........................................................................................................................................... KY 21091 4.00 

HARDIN ............................................................................................................................................... KY 21093 4.20 

HARLAN .............................................................................................................................................. KY 21095 4.80 

HARRISON .......................................................................................................................................... KY 21097 4.20 

HART ................................................................................................................................................... KY 21099 4.20 

HENDERSON ...................................................................................................................................... KY 21101 4.00 

HENRY ................................................................................................................................................ KY 21103 4.00 

HICKMAN ............................................................................................................................................ KY 21105 4.00 

HOPKINS ............................................................................................................................................. KY 21107 4.00 

JACKSON ............................................................................................................................................ KY 21109 4.20 

JEFFERSON ....................................................................................................................................... KY 21111 4.00 

JESSAMINE ........................................................................................................................................ KY 21113 4.20 

JOHNSON ........................................................................................................................................... KY 21115 4.50 

KENTON .............................................................................................................................................. KY 21117 4.00 

KNOTT ................................................................................................................................................. KY 21119 4.50 

KNOX ................................................................................................................................................... KY 21121 4.50 

LARUE ................................................................................................................................................. KY 21123 4.20 

LAUREL ............................................................................................................................................... KY 21125 4.50 

LAWRENCE ........................................................................................................................................ KY 21127 4.20 

LEE ...................................................................................................................................................... KY 21129 4.20 

LESLIE ................................................................................................................................................. KY 21131 4.50 

LETCHER ............................................................................................................................................ KY 21133 4.80 

LEWIS .................................................................................................................................................. KY 21135 4.20 

LINCOLN ............................................................................................................................................. KY 21137 4.20 

LIVINGSTON ....................................................................................................................................... KY 21139 4.00 

LOGAN ................................................................................................................................................ KY 21141 4.20 

LYON ................................................................................................................................................... KY 21143 4.00 

MCCRACKEN ...................................................................................................................................... KY 21145 4.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95554 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

MCCREARY ........................................................................................................................................ KY 21147 4.50 

MCLEAN .............................................................................................................................................. KY 21149 4.00 

MADISON ............................................................................................................................................ KY 21151 4.20 

MAGOFFIN .......................................................................................................................................... KY 21153 4.50 

MARION .............................................................................................................................................. KY 21155 4.20 

MARSHALL ......................................................................................................................................... KY 21157 4.00 

MARTIN ............................................................................................................................................... KY 21159 4.50 

MASON ................................................................................................................................................ KY 21161 4.20 

MEADE ................................................................................................................................................ KY 21163 4.00 

MENIFEE ............................................................................................................................................. KY 21165 4.20 

MERCER ............................................................................................................................................. KY 21167 4.20 

METCALFE .......................................................................................................................................... KY 21169 4.20 

MONROE ............................................................................................................................................. KY 21171 4.50 

MONTGOMERY .................................................................................................................................. KY 21173 4.20 

MORGAN ............................................................................................................................................. KY 21175 4.20 

MUHLENBERG ................................................................................................................................... KY 21177 4.00 

NELSON .............................................................................................................................................. KY 21179 4.20 

NICHOLAS .......................................................................................................................................... KY 21181 4.20 

OHIO .................................................................................................................................................... KY 21183 4.00 

OLDHAM ............................................................................................................................................. KY 21185 4.00 

OWEN .................................................................................................................................................. KY 21187 4.00 

OWSLEY ............................................................................................................................................. KY 21189 4.50 

PENDLETON ....................................................................................................................................... KY 21191 4.00 

PERRY ................................................................................................................................................ KY 21193 4.50 

PIKE ..................................................................................................................................................... KY 21195 4.50 

POWELL .............................................................................................................................................. KY 21197 4.20 

PULASKI .............................................................................................................................................. KY 21199 4.50 

ROBERTSON ...................................................................................................................................... KY 21201 4.20 

ROCKCASTLE .................................................................................................................................... KY 21203 4.20 

ROWAN ............................................................................................................................................... KY 21205 4.20 

RUSSELL ............................................................................................................................................ KY 21207 4.50 

SCOTT ................................................................................................................................................. KY 21209 4.00 

SHELBY ............................................................................................................................................... KY 21211 4.00 

SIMPSON ............................................................................................................................................ KY 21213 4.20 

SPENCER ........................................................................................................................................... KY 21215 4.00 

TAYLOR .............................................................................................................................................. KY 21217 4.20 

TODD ................................................................................................................................................... KY 21219 4.20 

TRIGG ................................................................................................................................................. KY 21221 4.20 

TRIMBLE ............................................................................................................................................. KY 21223 4.00 

UNION ................................................................................................................................................. KY 21225 4.00 

WARREN ............................................................................................................................................. KY 21227 4.20 

WASHINGTON .................................................................................................................................... KY 21229 4.20 

WAYNE ................................................................................................................................................ KY 21231 4.50 

WEBSTER ........................................................................................................................................... KY 21233 4.00 

WHITLEY ............................................................................................................................................. KY 21235 4.50 

WOLFE ................................................................................................................................................ KY 21237 4.20 

WOODFORD ....................................................................................................................................... KY 21239 4.20 

ACADIA ............................................................................................................................................... LA 22001 5.20 

ALLEN ................................................................................................................................................. LA 22003 4.90 

ASCENSION ........................................................................................................................................ LA 22005 5.20 

ASSUMPTION ..................................................................................................................................... LA 22007 5.20 

AVOYELLES ........................................................................................................................................ LA 22009 5.20 

BEAUREGARD .................................................................................................................................... LA 22011 4.90 

BIENVILLE ........................................................................................................................................... LA 22013 4.60 

BOSSIER ............................................................................................................................................. LA 22015 4.30 

CADDO ................................................................................................................................................ LA 22017 4.30 

CALCASIEU ........................................................................................................................................ LA 22019 4.90 

CALDWELL ......................................................................................................................................... LA 22021 4.90 

CAMERON .......................................................................................................................................... LA 22023 4.90 

CATAHOULA ....................................................................................................................................... LA 22025 5.20 

CLAIBORNE ........................................................................................................................................ LA 22027 4.30 

CONCORDIA ....................................................................................................................................... LA 22029 5.20 

DE SOTO ............................................................................................................................................ LA 22031 4.30 

EAST BATON ROUGE ....................................................................................................................... LA 22033 5.20 

EAST CARROLL ................................................................................................................................. LA 22035 5.20 

EAST FELICIANA ................................................................................................................................ LA 22037 5.20 

EVANGELINE ...................................................................................................................................... LA 22039 4.90 

FRANKLIN ........................................................................................................................................... LA 22041 4.90 

GRANT ................................................................................................................................................ LA 22043 4.90 

IBERIA ................................................................................................................................................. LA 22045 5.20 

IBERVILLE ........................................................................................................................................... LA 22047 5.20 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95555 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

JACKSON ............................................................................................................................................ LA 22049 4.60 

JEFFERSON ....................................................................................................................................... LA 22051 5.60 

JEFFERSON DAVIS ........................................................................................................................... LA 22053 4.90 

LAFAYETTE ........................................................................................................................................ LA 22055 5.20 

LAFOURCHE ....................................................................................................................................... LA 22057 5.60 

LA SALLE ............................................................................................................................................ LA 22059 4.90 

LINCOLN ............................................................................................................................................. LA 22061 4.60 

LIVINGSTON ....................................................................................................................................... LA 22063 5.40 

MADISON ............................................................................................................................................ LA 22065 5.20 

MOREHOUSE ..................................................................................................................................... LA 22067 4.90 

NATCHITOCHES ................................................................................................................................ LA 22069 4.60 

ORLEANS ............................................................................................................................................ LA 22071 5.60 

OUACHITA .......................................................................................................................................... LA 22073 4.90 

PLAQUEMINES ................................................................................................................................... LA 22075 5.60 

POINTE COUPEE ............................................................................................................................... LA 22077 5.20 

RAPIDES ............................................................................................................................................. LA 22079 4.90 

RED RIVER ......................................................................................................................................... LA 22081 4.60 

RICHLAND .......................................................................................................................................... LA 22083 4.90 

SABINE ................................................................................................................................................ LA 22085 4.60 

ST. BERNARD .................................................................................................................................... LA 22087 5.60 

ST. CHARLES ..................................................................................................................................... LA 22089 5.60 

ST. HELENA ........................................................................................................................................ LA 22091 5.40 

ST. JAMES .......................................................................................................................................... LA 22093 5.20 

ST. JOHN THE BAPTIST .................................................................................................................... LA 22095 5.60 

ST. LANDRY ....................................................................................................................................... LA 22097 5.20 

ST. MARTIN ........................................................................................................................................ LA 22099 5.20 

ST. MARY ............................................................................................................................................ LA 22101 5.20 

ST. TAMMANY .................................................................................................................................... LA 22103 5.60 

TANGIPAHOA ..................................................................................................................................... LA 22105 5.40 

TENSAS .............................................................................................................................................. LA 22107 5.20 

TERREBONNE .................................................................................................................................... LA 22109 5.60 

UNION ................................................................................................................................................. LA 22111 4.60 

VERMILION ......................................................................................................................................... LA 22113 5.20 

VERNON ............................................................................................................................................. LA 22115 4.60 

WASHINGTON .................................................................................................................................... LA 22117 5.60 

WEBSTER ........................................................................................................................................... LA 22119 4.30 

WEST BATON ROUGE ...................................................................................................................... LA 22121 5.20 

WEST CARROLL ................................................................................................................................ LA 22123 4.90 

WEST FELICIANA ............................................................................................................................... LA 22125 5.20 

WINN ................................................................................................................................................... LA 22127 4.60 

ANDROSCOGGIN ............................................................................................................................... ME 23001 4.20 

AROOSTOOK ...................................................................................................................................... ME 23003 3.90 

CUMBERLAND .................................................................................................................................... ME 23005 4.50 

FRANKLIN ........................................................................................................................................... ME 23007 4.20 

HANCOCK ........................................................................................................................................... ME 23009 3.90 

KENNEBEC ......................................................................................................................................... ME 23011 4.20 

KNOX ................................................................................................................................................... ME 23013 4.20 

LINCOLN ............................................................................................................................................. ME 23015 4.20 

OXFORD ............................................................................................................................................. ME 23017 4.20 

PENOBSCOT ...................................................................................................................................... ME 23019 3.90 

PISCATAQUIS ..................................................................................................................................... ME 23021 3.90 

SAGADAHOC ...................................................................................................................................... ME 23023 4.20 

SOMERSET ......................................................................................................................................... ME 23025 3.90 

WALDO ................................................................................................................................................ ME 23027 3.90 

WASHINGTON .................................................................................................................................... ME 23029 3.90 

YORK ................................................................................................................................................... ME 23031 4.50 

ALLEGANY .......................................................................................................................................... MD 24001 4.10 

ANNE ARUNDEL ................................................................................................................................ MD 24003 4.60 

BALTIMORE ........................................................................................................................................ MD 24005 4.40 

CALVERT ............................................................................................................................................ MD 24009 4.80 

CAROLINE .......................................................................................................................................... MD 24011 4.60 

CARROLL ............................................................................................................................................ MD 24013 4.40 

CECIL .................................................................................................................................................. MD 24015 4.40 

CHARLES ............................................................................................................................................ MD 24017 4.80 

DORCHESTER .................................................................................................................................... MD 24019 4.80 

FREDERICK ........................................................................................................................................ MD 24021 4.40 

GARRETT ............................................................................................................................................ MD 24023 4.10 

HARFORD ........................................................................................................................................... MD 24025 4.40 

HOWARD ............................................................................................................................................ MD 24027 4.60 

KENT ................................................................................................................................................... MD 24029 4.60 

MONTGOMERY .................................................................................................................................. MD 24031 4.60 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95556 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

PRINCE GEORGE’S ........................................................................................................................... MD 24033 4.60 

QUEEN ANNE’S .................................................................................................................................. MD 24035 4.60 

ST. MARY’S ........................................................................................................................................ MD 24037 4.80 

SOMERSET ......................................................................................................................................... MD 24039 4.80 

TALBOT ............................................................................................................................................... MD 24041 4.60 

WASHINGTON .................................................................................................................................... MD 24043 4.20 

WICOMICO .......................................................................................................................................... MD 24045 4.80 

WORCESTER ..................................................................................................................................... MD 24047 4.80 

BALTIMORE CITY ............................................................................................................................... MD 24510 4.60 

BARNSTABLE ..................................................................................................................................... MA 25001 5.10 

BERKSHIRE ........................................................................................................................................ MA 25003 4.50 

BRISTOL ............................................................................................................................................. MA 25005 5.10 

DUKES ................................................................................................................................................ MA 25007 5.10 

ESSEX ................................................................................................................................................. MA 25009 5.10 

FRANKLIN ........................................................................................................................................... MA 25011 4.70 

HAMPDEN ........................................................................................................................................... MA 25013 4.70 

HAMPSHIRE ....................................................................................................................................... MA 25015 4.70 

MIDDLESEX ........................................................................................................................................ MA 25017 5.10 

NANTUCKET ....................................................................................................................................... MA 25019 5.10 

NORFOLK ........................................................................................................................................... MA 25021 5.10 

PLYMOUTH ......................................................................................................................................... MA 25023 5.10 

SUFFOLK ............................................................................................................................................ MA 25025 5.10 

WORCESTER ..................................................................................................................................... MA 25027 4.90 

ALCONA .............................................................................................................................................. MI 26001 3.30 

ALGER ................................................................................................................................................. MI 26003 3.00 

ALLEGAN ............................................................................................................................................ MI 26005 3.30 

ALPENA ............................................................................................................................................... MI 26007 3.30 

ANTRIM ............................................................................................................................................... MI 26009 3.30 

ARENAC .............................................................................................................................................. MI 26011 3.30 

BARAGA .............................................................................................................................................. MI 26013 3.00 

BARRY ................................................................................................................................................ MI 26015 3.30 

BAY ...................................................................................................................................................... MI 26017 3.30 

BENZIE ................................................................................................................................................ MI 26019 3.30 

BERRIEN ............................................................................................................................................. MI 26021 3.30 

BRANCH .............................................................................................................................................. MI 26023 3.30 

CALHOUN ........................................................................................................................................... MI 26025 3.30 

CASS ................................................................................................................................................... MI 26027 3.30 

CHARLEVOIX ...................................................................................................................................... MI 26029 3.30 

CHEBOYGAN ...................................................................................................................................... MI 26031 3.30 

CHIPPEWA .......................................................................................................................................... MI 26033 3.00 

CLARE ................................................................................................................................................. MI 26035 3.30 

CLINTON ............................................................................................................................................. MI 26037 3.30 

CRAWFORD ........................................................................................................................................ MI 26039 3.30 

DELTA ................................................................................................................................................. MI 26041 2.80 

DICKINSON ......................................................................................................................................... MI 26043 2.80 

EATON ................................................................................................................................................ MI 26045 3.30 

EMMET ................................................................................................................................................ MI 26047 3.30 

GENESEE ........................................................................................................................................... MI 26049 3.30 

GLADWIN ............................................................................................................................................ MI 26051 3.30 

GOGEBIC ............................................................................................................................................ MI 26053 2.80 

GRAND TRAVERSE ........................................................................................................................... MI 26055 3.30 

GRATIOT ............................................................................................................................................. MI 26057 3.30 

HILLSDALE ......................................................................................................................................... MI 26059 3.30 

HOUGHTON ........................................................................................................................................ MI 26061 3.00 

HURON ................................................................................................................................................ MI 26063 3.30 

INGHAM .............................................................................................................................................. MI 26065 3.30 

IONIA ................................................................................................................................................... MI 26067 3.30 

IOSCO ................................................................................................................................................. MI 26069 3.30 

IRON .................................................................................................................................................... MI 26071 2.80 

ISABELLA ............................................................................................................................................ MI 26073 3.30 

JACKSON ............................................................................................................................................ MI 26075 3.30 

KALAMAZOO ...................................................................................................................................... MI 26077 3.30 

KALKASKA .......................................................................................................................................... MI 26079 3.30 

KENT ................................................................................................................................................... MI 26081 3.30 

KEWEENAW ....................................................................................................................................... MI 26083 3.00 

LAKE .................................................................................................................................................... MI 26085 3.30 

LAPEER ............................................................................................................................................... MI 26087 3.30 

LEELANAU .......................................................................................................................................... MI 26089 3.30 

LENAWEE ........................................................................................................................................... MI 26091 3.30 

LIVINGSTON ....................................................................................................................................... MI 26093 3.30 

LUCE ................................................................................................................................................... MI 26095 3.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95557 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

MACKINAC .......................................................................................................................................... MI 26097 3.00 

MACOMB ............................................................................................................................................. MI 26099 3.30 

MANISTEE .......................................................................................................................................... MI 26101 3.30 

MARQUETTE ...................................................................................................................................... MI 26103 3.00 

MASON ................................................................................................................................................ MI 26105 3.30 

MECOSTA ........................................................................................................................................... MI 26107 3.30 

MENOMINEE ....................................................................................................................................... MI 26109 2.80 

MIDLAND ............................................................................................................................................. MI 26111 3.30 

MISSAUKEE ........................................................................................................................................ MI 26113 3.30 

MONROE ............................................................................................................................................. MI 26115 3.30 

MONTCALM ........................................................................................................................................ MI 26117 3.30 

MONTMORENCY ................................................................................................................................ MI 26119 3.30 

MUSKEGON ........................................................................................................................................ MI 26121 3.30 

NEWAYGO .......................................................................................................................................... MI 26123 3.30 

OAKLAND ............................................................................................................................................ MI 26125 3.30 

OCEANA .............................................................................................................................................. MI 26127 3.30 

OGEMAW ............................................................................................................................................ MI 26129 3.30 

ONTONAGON ..................................................................................................................................... MI 26131 2.80 

OSCEOLA ........................................................................................................................................... MI 26133 3.30 

OSCODA ............................................................................................................................................. MI 26135 3.30 

OTSEGO ............................................................................................................................................. MI 26137 3.30 

OTTAWA ............................................................................................................................................. MI 26139 3.30 

PRESQUE ISLE .................................................................................................................................. MI 26141 3.30 

ROSCOMMON .................................................................................................................................... MI 26143 3.30 

SAGINAW ............................................................................................................................................ MI 26145 3.30 

ST. CLAIR ........................................................................................................................................... MI 26147 3.30 

ST. JOSEPH ........................................................................................................................................ MI 26149 3.30 

SANILAC ............................................................................................................................................. MI 26151 3.30 

SCHOOLCRAFT .................................................................................................................................. MI 26153 3.00 

SHIAWASSEE ..................................................................................................................................... MI 26155 3.30 

TUSCOLA ............................................................................................................................................ MI 26157 3.30 

VAN BUREN ........................................................................................................................................ MI 26159 3.30 

WASHTENAW ..................................................................................................................................... MI 26161 3.30 

WAYNE ................................................................................................................................................ MI 26163 3.30 

WEXFORD .......................................................................................................................................... MI 26165 3.30 

AITKIN ................................................................................................................................................. MN 27001 2.80 

ANOKA ................................................................................................................................................ MN 27003 2.80 

BECKER .............................................................................................................................................. MN 27005 2.80 

BELTRAMI ........................................................................................................................................... MN 27007 2.30 

BENTON .............................................................................................................................................. MN 27009 2.80 

BIG STONE ......................................................................................................................................... MN 27011 2.70 

BLUE EARTH ...................................................................................................................................... MN 27013 2.80 

BROWN ............................................................................................................................................... MN 27015 2.80 

CARLTON ............................................................................................................................................ MN 27017 2.80 

CARVER .............................................................................................................................................. MN 27019 2.80 

CASS ................................................................................................................................................... MN 27021 2.80 

CHIPPEWA .......................................................................................................................................... MN 27023 2.80 

CHISAGO ............................................................................................................................................ MN 27025 2.80 

CLAY ................................................................................................................................................... MN 27027 2.80 

CLEARWATER .................................................................................................................................... MN 27029 2.30 

COOK .................................................................................................................................................. MN 27031 2.30 

COTTONWOOD .................................................................................................................................. MN 27033 2.80 

CROW WING ...................................................................................................................................... MN 27035 2.80 

DAKOTA .............................................................................................................................................. MN 27037 2.90 

DODGE ................................................................................................................................................ MN 27039 2.80 

DOUGLAS ........................................................................................................................................... MN 27041 2.80 

FARIBAULT ......................................................................................................................................... MN 27043 2.80 

FILLMORE ........................................................................................................................................... MN 27045 2.80 

FREEBORN ......................................................................................................................................... MN 27047 2.80 

GOODHUE .......................................................................................................................................... MN 27049 2.80 

GRANT ................................................................................................................................................ MN 27051 2.80 

HENNEPIN .......................................................................................................................................... MN 27053 2.90 

HOUSTON ........................................................................................................................................... MN 27055 2.80 

HUBBARD ........................................................................................................................................... MN 27057 2.80 

ISANTI ................................................................................................................................................. MN 27059 2.80 

ITASCA ................................................................................................................................................ MN 27061 2.30 

JACKSON ............................................................................................................................................ MN 27063 2.80 

KANABEC ............................................................................................................................................ MN 27065 2.80 

KANDIYOHI ......................................................................................................................................... MN 27067 2.80 

KITTSON ............................................................................................................................................. MN 27069 2.30 

KOOCHICHING ................................................................................................................................... MN 27071 2.30 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95558 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

LAC QUI PARLE ................................................................................................................................. MN 27073 2.70 

LAKE .................................................................................................................................................... MN 27075 2.30 

LAKE OF THE WOODS ...................................................................................................................... MN 27077 2.30 

LE SUEUR ........................................................................................................................................... MN 27079 2.80 

LINCOLN ............................................................................................................................................. MN 27081 2.60 

LYON ................................................................................................................................................... MN 27083 2.70 

MCLEOD ............................................................................................................................................. MN 27085 2.80 

MAHNOMEN ....................................................................................................................................... MN 27087 2.60 

MARSHALL ......................................................................................................................................... MN 27089 2.30 

MARTIN ............................................................................................................................................... MN 27091 2.80 

MEEKER .............................................................................................................................................. MN 27093 2.80 

MILLE LACS ........................................................................................................................................ MN 27095 2.80 

MORRISON ......................................................................................................................................... MN 27097 2.80 

MOWER ............................................................................................................................................... MN 27099 2.80 

MURRAY ............................................................................................................................................. MN 27101 2.70 

NICOLLET ........................................................................................................................................... MN 27103 2.80 

NOBLES .............................................................................................................................................. MN 27105 2.70 

NORMAN ............................................................................................................................................. MN 27107 2.60 

OLMSTED ........................................................................................................................................... MN 27109 2.80 

OTTER TAIL ........................................................................................................................................ MN 27111 2.80 

PENNINGTON ..................................................................................................................................... MN 27113 2.30 

PINE .................................................................................................................................................... MN 27115 2.80 

PIPESTONE ........................................................................................................................................ MN 27117 2.60 

POLK ................................................................................................................................................... MN 27119 2.30 

POPE ................................................................................................................................................... MN 27121 2.80 

RAMSEY .............................................................................................................................................. MN 27123 2.90 

RED LAKE ........................................................................................................................................... MN 27125 2.30 

REDWOOD .......................................................................................................................................... MN 27127 2.80 

RENVILLE ........................................................................................................................................... MN 27129 2.80 

RICE .................................................................................................................................................... MN 27131 2.80 

ROCK .................................................................................................................................................. MN 27133 2.60 

ROSEAU .............................................................................................................................................. MN 27135 2.30 

ST. LOUIS ........................................................................................................................................... MN 27137 2.30 

SCOTT ................................................................................................................................................. MN 27139 2.90 

SHERBURNE ...................................................................................................................................... MN 27141 2.80 

SIBLEY ................................................................................................................................................ MN 27143 2.80 

STEARNS ............................................................................................................................................ MN 27145 2.80 

STEELE ............................................................................................................................................... MN 27147 2.80 

STEVENS ............................................................................................................................................ MN 27149 2.80 

SWIFT .................................................................................................................................................. MN 27151 2.80 

TODD ................................................................................................................................................... MN 27153 2.80 

TRAVERSE ......................................................................................................................................... MN 27155 2.70 

WABASHA ........................................................................................................................................... MN 27157 2.80 

WADENA ............................................................................................................................................. MN 27159 2.80 

WASECA ............................................................................................................................................. MN 27161 2.80 

WASHINGTON .................................................................................................................................... MN 27163 2.90 

WATONWAN ....................................................................................................................................... MN 27165 2.80 

WILKIN ................................................................................................................................................ MN 27167 2.80 

WINONA .............................................................................................................................................. MN 27169 2.80 

WRIGHT .............................................................................................................................................. MN 27171 2.80 

YELLOW MEDICINE ........................................................................................................................... MN 27173 2.70 

ADAMS ................................................................................................................................................ MS 28001 5.20 

ALCORN .............................................................................................................................................. MS 28003 4.90 

AMITE .................................................................................................................................................. MS 28005 5.40 

ATTALA ............................................................................................................................................... MS 28007 5.20 

BENTON .............................................................................................................................................. MS 28009 4.90 

BOLIVAR ............................................................................................................................................. MS 28011 4.90 

CALHOUN ........................................................................................................................................... MS 28013 5.20 

CARROLL ............................................................................................................................................ MS 28015 5.20 

CHICKASAW ....................................................................................................................................... MS 28017 5.20 

CHOCTAW .......................................................................................................................................... MS 28019 5.20 

CLAIBORNE ........................................................................................................................................ MS 28021 5.20 

CLARKE .............................................................................................................................................. MS 28023 5.60 

CLAY ................................................................................................................................................... MS 28025 5.20 

COAHOMA .......................................................................................................................................... MS 28027 4.90 

COPIAH ............................................................................................................................................... MS 28029 5.40 

COVINGTON ....................................................................................................................................... MS 28031 5.60 

DE SOTO ............................................................................................................................................ MS 28033 4.60 

FORREST ............................................................................................................................................ MS 28035 5.80 

FRANKLIN ........................................................................................................................................... MS 28037 5.20 

GEORGE ............................................................................................................................................. MS 28039 5.80 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95559 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

GREENE .............................................................................................................................................. MS 28041 5.80 

GRENADA ........................................................................................................................................... MS 28043 5.20 

HANCOCK ........................................................................................................................................... MS 28045 5.80 

HARRISON .......................................................................................................................................... MS 28047 5.80 

HINDS .................................................................................................................................................. MS 28049 5.40 

HOLMES .............................................................................................................................................. MS 28051 5.20 

HUMPHREYS ...................................................................................................................................... MS 28053 5.20 

ISSAQUENA ........................................................................................................................................ MS 28055 5.20 

ITAWAMBA .......................................................................................................................................... MS 28057 5.20 

JACKSON ............................................................................................................................................ MS 28059 5.80 

JASPER ............................................................................................................................................... MS 28061 5.60 

JEFFERSON ....................................................................................................................................... MS 28063 5.20 

JEFFERSON DAVIS ........................................................................................................................... MS 28065 5.60 

JONES ................................................................................................................................................. MS 28067 5.60 

KEMPER .............................................................................................................................................. MS 28069 5.40 

LAFAYETTE ........................................................................................................................................ MS 28071 4.90 

LAMAR ................................................................................................................................................ MS 28073 5.80 

LAUDERDALE ..................................................................................................................................... MS 28075 5.60 

LAWRENCE ........................................................................................................................................ MS 28077 5.60 

LEAKE ................................................................................................................................................. MS 28079 5.40 

LEE ...................................................................................................................................................... MS 28081 5.20 

LEFLORE ............................................................................................................................................ MS 28083 5.20 

LINCOLN ............................................................................................................................................. MS 28085 5.40 

LOWNDES ........................................................................................................................................... MS 28087 5.20 

MADISON ............................................................................................................................................ MS 28089 5.40 

MARION .............................................................................................................................................. MS 28091 5.60 

MARSHALL ......................................................................................................................................... MS 28093 4.90 

MONROE ............................................................................................................................................. MS 28095 5.20 

MONTGOMERY .................................................................................................................................. MS 28097 5.20 

NESHOBA ........................................................................................................................................... MS 28099 5.40 

NEWTON ............................................................................................................................................. MS 28101 5.60 

NOXUBEE ........................................................................................................................................... MS 28103 5.40 

OKTIBBEHA ........................................................................................................................................ MS 28105 5.20 

PANOLA .............................................................................................................................................. MS 28107 4.90 

PEARL RIVER ..................................................................................................................................... MS 28109 5.80 

PERRY ................................................................................................................................................ MS 28111 5.80 

PIKE ..................................................................................................................................................... MS 28113 5.40 

PONTOTOC ........................................................................................................................................ MS 28115 4.90 

PRENTISS ........................................................................................................................................... MS 28117 4.90 

QUITMAN ............................................................................................................................................ MS 28119 4.90 

RANKIN ............................................................................................................................................... MS 28121 5.40 

SCOTT ................................................................................................................................................. MS 28123 5.40 

SHARKEY ............................................................................................................................................ MS 28125 5.20 

SIMPSON ............................................................................................................................................ MS 28127 5.60 

SMITH .................................................................................................................................................. MS 28129 5.60 

STONE ................................................................................................................................................ MS 28131 5.80 

SUNFLOWER ...................................................................................................................................... MS 28133 4.90 

TALLAHATCHIE .................................................................................................................................. MS 28135 4.90 

TATE .................................................................................................................................................... MS 28137 4.90 

TIPPAH ................................................................................................................................................ MS 28139 4.90 

TISHOMINGO ...................................................................................................................................... MS 28141 4.90 

TUNICA ............................................................................................................................................... MS 28143 4.60 

UNION ................................................................................................................................................. MS 28145 4.90 

WALTHALL .......................................................................................................................................... MS 28147 5.60 

WARREN ............................................................................................................................................. MS 28149 5.20 

WASHINGTON .................................................................................................................................... MS 28151 4.90 

WAYNE ................................................................................................................................................ MS 28153 5.80 

WEBSTER ........................................................................................................................................... MS 28155 5.20 

WILKINSON ......................................................................................................................................... MS 28157 5.20 

WINSTON ............................................................................................................................................ MS 28159 5.40 

YALOBUSHA ....................................................................................................................................... MS 28161 4.90 

YAZOO ................................................................................................................................................ MS 28163 5.20 

ADAIR .................................................................................................................................................. MO 29001 3.20 

ANDREW ............................................................................................................................................. MO 29003 2.90 

ATCHISON .......................................................................................................................................... MO 29005 2.70 

AUDRAIN ............................................................................................................................................. MO 29007 3.40 

BARRY ................................................................................................................................................ MO 29009 3.20 

BARTON .............................................................................................................................................. MO 29011 3.20 

BATES ................................................................................................................................................. MO 29013 3.20 

BENTON .............................................................................................................................................. MO 29015 3.20 

BOLLINGER ........................................................................................................................................ MO 29017 3.60 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95560 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

BOONE ................................................................................................................................................ MO 29019 3.40 

BUCHANAN ......................................................................................................................................... MO 29021 3.20 

BUTLER ............................................................................................................................................... MO 29023 4.00 

CALDWELL ......................................................................................................................................... MO 29025 3.20 

CALLAWAY ......................................................................................................................................... MO 29027 3.40 

CAMDEN ............................................................................................................................................. MO 29029 3.40 

CAPE GIRARDEAU ............................................................................................................................ MO 29031 3.60 

CARROLL ............................................................................................................................................ MO 29033 3.20 

CARTER .............................................................................................................................................. MO 29035 4.00 

CASS ................................................................................................................................................... MO 29037 3.20 

CEDAR ................................................................................................................................................ MO 29039 3.20 

CHARITON .......................................................................................................................................... MO 29041 3.20 

CHRISTIAN ......................................................................................................................................... MO 29043 3.30 

CLARK ................................................................................................................................................. MO 29045 3.20 

CLAY ................................................................................................................................................... MO 29047 3.20 

CLINTON ............................................................................................................................................. MO 29049 3.20 

COLE ................................................................................................................................................... MO 29051 3.40 

COOPER ............................................................................................................................................. MO 29053 3.40 

CRAWFORD ........................................................................................................................................ MO 29055 3.60 

DADE ................................................................................................................................................... MO 29057 3.20 

DALLAS ............................................................................................................................................... MO 29059 3.30 

DAVIESS ............................................................................................................................................. MO 29061 3.20 

DE KALB ............................................................................................................................................. MO 29063 3.20 

DENT ................................................................................................................................................... MO 29065 3.60 

DOUGLAS ........................................................................................................................................... MO 29067 3.30 

DUNKLIN ............................................................................................................................................. MO 29069 4.30 

FRANKLIN ........................................................................................................................................... MO 29071 3.60 

GASCONADE ...................................................................................................................................... MO 29073 3.60 

GENTRY .............................................................................................................................................. MO 29075 2.90 

GREENE .............................................................................................................................................. MO 29077 3.20 

GRUNDY ............................................................................................................................................. MO 29079 3.20 

HARRISON .......................................................................................................................................... MO 29081 2.90 

HENRY ................................................................................................................................................ MO 29083 3.20 

HICKORY ............................................................................................................................................ MO 29085 3.20 

HOLT ................................................................................................................................................... MO 29087 2.90 

HOWARD ............................................................................................................................................ MO 29089 3.40 

HOWELL .............................................................................................................................................. MO 29091 3.60 

IRON .................................................................................................................................................... MO 29093 3.60 

JACKSON ............................................................................................................................................ MO 29095 3.20 

JASPER ............................................................................................................................................... MO 29097 3.20 

JEFFERSON ....................................................................................................................................... MO 29099 3.60 

JOHNSON ........................................................................................................................................... MO 29101 3.20 

KNOX ................................................................................................................................................... MO 29103 3.20 

LACLEDE ............................................................................................................................................ MO 29105 3.30 

LAFAYETTE ........................................................................................................................................ MO 29107 3.20 

LAWRENCE ........................................................................................................................................ MO 29109 3.20 

LEWIS .................................................................................................................................................. MO 29111 3.20 

LINCOLN ............................................................................................................................................. MO 29113 3.60 

LINN ..................................................................................................................................................... MO 29115 3.20 

LIVINGSTON ....................................................................................................................................... MO 29117 3.20 

MCDONALD ........................................................................................................................................ MO 29119 3.20 

MACON ............................................................................................................................................... MO 29121 3.20 

MADISON ............................................................................................................................................ MO 29123 3.60 

MARIES ............................................................................................................................................... MO 29125 3.60 

MARION .............................................................................................................................................. MO 29127 3.20 

MERCER ............................................................................................................................................. MO 29129 2.90 

MILLER ................................................................................................................................................ MO 29131 3.40 

MISSISSIPPI ....................................................................................................................................... MO 29133 4.00 

MONITEAU .......................................................................................................................................... MO 29135 3.40 

MONROE ............................................................................................................................................. MO 29137 3.40 

MONTGOMERY .................................................................................................................................. MO 29139 3.40 

MORGAN ............................................................................................................................................. MO 29141 3.40 

NEW MADRID ..................................................................................................................................... MO 29143 4.00 

NEWTON ............................................................................................................................................. MO 29145 3.20 

NODAWAY .......................................................................................................................................... MO 29147 2.90 

OREGON ............................................................................................................................................. MO 29149 4.00 

OSAGE ................................................................................................................................................ MO 29151 3.60 

OZARK ................................................................................................................................................ MO 29153 3.60 

PEMISCOT .......................................................................................................................................... MO 29155 4.30 

PERRY ................................................................................................................................................ MO 29157 3.60 

PETTIS ................................................................................................................................................ MO 29159 3.40 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95561 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

PHELPS ............................................................................................................................................... MO 29161 3.60 

PIKE ..................................................................................................................................................... MO 29163 3.40 

PLATTE ............................................................................................................................................... MO 29165 3.20 

POLK ................................................................................................................................................... MO 29167 3.20 

PULASKI .............................................................................................................................................. MO 29169 3.40 

PUTNAM .............................................................................................................................................. MO 29171 2.90 

RALLS ................................................................................................................................................. MO 29173 3.40 

RANDOLPH ......................................................................................................................................... MO 29175 3.40 

RAY ..................................................................................................................................................... MO 29177 3.20 

REYNOLDS ......................................................................................................................................... MO 29179 3.60 

RIPLEY ................................................................................................................................................ MO 29181 4.00 

ST. CHARLES ..................................................................................................................................... MO 29183 3.60 

ST. CLAIR ........................................................................................................................................... MO 29185 3.20 

STE. GENEVIEVE ............................................................................................................................... MO 29186 3.60 

ST. FRANCOIS ................................................................................................................................... MO 29187 3.60 

ST. LOUIS ........................................................................................................................................... MO 29189 3.60 

SALINE ................................................................................................................................................ MO 29195 3.40 

SCHUYLER ......................................................................................................................................... MO 29197 3.20 

SCOTLAND ......................................................................................................................................... MO 29199 3.20 

SCOTT ................................................................................................................................................. MO 29201 4.00 

SHANNON ........................................................................................................................................... MO 29203 3.60 

SHELBY ............................................................................................................................................... MO 29205 3.20 

STODDARD ......................................................................................................................................... MO 29207 4.00 

STONE ................................................................................................................................................ MO 29209 3.30 

SULLIVAN ........................................................................................................................................... MO 29211 3.20 

TANEY ................................................................................................................................................. MO 29213 3.30 

TEXAS ................................................................................................................................................. MO 29215 3.60 

VERNON ............................................................................................................................................. MO 29217 3.20 

WARREN ............................................................................................................................................. MO 29219 3.60 

WASHINGTON .................................................................................................................................... MO 29221 3.60 

WAYNE ................................................................................................................................................ MO 29223 4.00 

WEBSTER ........................................................................................................................................... MO 29225 3.20 

WORTH ............................................................................................................................................... MO 29227 2.90 

WRIGHT .............................................................................................................................................. MO 29229 3.30 

ST. LOUIS CITY .................................................................................................................................. MO 29510 3.60 

BEAVERHEAD .................................................................................................................................... MT 30001 1.80 

BIG HORN ........................................................................................................................................... MT 30003 2.40 

BLAINE ................................................................................................................................................ MT 30005 2.00 

BROADWATER ................................................................................................................................... MT 30007 1.80 

CARBON ............................................................................................................................................. MT 30009 2.40 

CARTER .............................................................................................................................................. MT 30011 2.40 

CASCADE ........................................................................................................................................... MT 30013 1.80 

CHOUTEAU ......................................................................................................................................... MT 30015 1.80 

CUSTER .............................................................................................................................................. MT 30017 2.40 

DANIELS ............................................................................................................................................. MT 30019 2.30 

DAWSON ............................................................................................................................................. MT 30021 2.40 

DEER LODGE ..................................................................................................................................... MT 30023 1.80 

FALLON ............................................................................................................................................... MT 30025 2.40 

FERGUS .............................................................................................................................................. MT 30027 2.00 

FLATHEAD .......................................................................................................................................... MT 30029 2.00 

GALLATIN ........................................................................................................................................... MT 30031 2.00 

GARFIELD ........................................................................................................................................... MT 30033 2.40 

GLACIER ............................................................................................................................................. MT 30035 1.80 

GOLDEN VALLEY ............................................................................................................................... MT 30037 2.00 

GRANITE ............................................................................................................................................. MT 30039 1.80 

HILL ..................................................................................................................................................... MT 30041 1.80 

JEFFERSON ....................................................................................................................................... MT 30043 1.80 

JUDITH BASIN .................................................................................................................................... MT 30045 2.00 

LAKE .................................................................................................................................................... MT 30047 2.00 

LEWIS AND CLARK ............................................................................................................................ MT 30049 1.70 

LIBERTY .............................................................................................................................................. MT 30051 1.80 

LINCOLN ............................................................................................................................................. MT 30053 2.00 

MCCONE ............................................................................................................................................. MT 30055 2.40 

MADISON ............................................................................................................................................ MT 30057 1.80 

MEAGHER ........................................................................................................................................... MT 30059 1.80 

MINERAL ............................................................................................................................................. MT 30061 2.00 

MISSOULA .......................................................................................................................................... MT 30063 1.80 

MUSSELSHELL ................................................................................................................................... MT 30065 2.40 

PARK ................................................................................................................................................... MT 30067 2.00 

PETROLEUM ...................................................................................................................................... MT 30069 2.40 

PHILLIPS ............................................................................................................................................. MT 30071 2.30 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95562 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

PONDERA ........................................................................................................................................... MT 30073 1.70 

POWDER RIVER ................................................................................................................................ MT 30075 2.40 

POWELL .............................................................................................................................................. MT 30077 1.80 

PRAIRIE .............................................................................................................................................. MT 30079 2.40 

RAVALLI .............................................................................................................................................. MT 30081 1.80 

RICHLAND .......................................................................................................................................... MT 30083 2.40 

ROOSEVELT ....................................................................................................................................... MT 30085 2.30 

ROSEBUD ........................................................................................................................................... MT 30087 2.40 

SANDERS ........................................................................................................................................... MT 30089 2.00 

SHERIDAN .......................................................................................................................................... MT 30091 2.30 

SILVER BOW ...................................................................................................................................... MT 30093 1.80 

STILLWATER ...................................................................................................................................... MT 30095 2.40 

SWEET GRASS .................................................................................................................................. MT 30097 2.00 

TETON ................................................................................................................................................. MT 30099 1.70 

TOOLE ................................................................................................................................................. MT 30101 1.80 

TREASURE ......................................................................................................................................... MT 30103 2.40 

VALLEY ............................................................................................................................................... MT 30105 2.30 

WHEATLAND ...................................................................................................................................... MT 30107 2.00 

WIBAUX ............................................................................................................................................... MT 30109 2.40 

YELLOWSTONE ................................................................................................................................. MT 30111 2.40 

ADAMS ................................................................................................................................................ NE 31001 2.60 

ANTELOPE .......................................................................................................................................... NE 31003 2.60 

ARTHUR .............................................................................................................................................. NE 31005 2.40 

BANNER .............................................................................................................................................. NE 31007 2.40 

BLAINE ................................................................................................................................................ NE 31009 2.50 

BOONE ................................................................................................................................................ NE 31011 2.60 

BOX BUTTE ........................................................................................................................................ NE 31013 2.40 

BOYD ................................................................................................................................................... NE 31015 2.50 

BROWN ............................................................................................................................................... NE 31017 2.50 

BUFFALO ............................................................................................................................................ NE 31019 2.50 

BURT ................................................................................................................................................... NE 31021 2.60 

BUTLER ............................................................................................................................................... NE 31023 2.60 

CASS ................................................................................................................................................... NE 31025 2.70 

CEDAR ................................................................................................................................................ NE 31027 2.60 

CHASE ................................................................................................................................................ NE 31029 2.50 

CHERRY .............................................................................................................................................. NE 31031 2.40 

CHEYENNE ......................................................................................................................................... NE 31033 2.40 

CLAY ................................................................................................................................................... NE 31035 2.60 

COLFAX .............................................................................................................................................. NE 31037 2.60 

CUMING .............................................................................................................................................. NE 31039 2.60 

CUSTER .............................................................................................................................................. NE 31041 2.50 

DAKOTA .............................................................................................................................................. NE 31043 2.60 

DAWES ................................................................................................................................................ NE 31045 2.40 

DAWSON ............................................................................................................................................. NE 31047 2.50 

DEUEL ................................................................................................................................................. NE 31049 2.40 

DIXON ................................................................................................................................................. NE 31051 2.60 

DODGE ................................................................................................................................................ NE 31053 2.60 

DOUGLAS ........................................................................................................................................... NE 31055 2.70 

DUNDY ................................................................................................................................................ NE 31057 2.50 

FILLMORE ........................................................................................................................................... NE 31059 2.60 

FRANKLIN ........................................................................................................................................... NE 31061 2.60 

FRONTIER .......................................................................................................................................... NE 31063 2.50 

FURNAS .............................................................................................................................................. NE 31065 2.50 

GAGE .................................................................................................................................................. NE 31067 2.70 

GARDEN ............................................................................................................................................. NE 31069 2.40 

GARFIELD ........................................................................................................................................... NE 31071 2.50 

GOSPER ............................................................................................................................................. NE 31073 2.50 

GRANT ................................................................................................................................................ NE 31075 2.40 

GREELEY ............................................................................................................................................ NE 31077 2.60 

HALL .................................................................................................................................................... NE 31079 2.60 

HAMILTON .......................................................................................................................................... NE 31081 2.60 

HARLAN .............................................................................................................................................. NE 31083 2.50 

HAYES ................................................................................................................................................. NE 31085 2.50 

HITCHCOCK ....................................................................................................................................... NE 31087 2.50 

HOLT ................................................................................................................................................... NE 31089 2.50 

HOOKER ............................................................................................................................................. NE 31091 2.40 

HOWARD ............................................................................................................................................ NE 31093 2.60 

JEFFERSON ....................................................................................................................................... NE 31095 2.60 

JOHNSON ........................................................................................................................................... NE 31097 2.70 

KEARNEY ............................................................................................................................................ NE 31099 2.60 

KEITH .................................................................................................................................................. NE 31101 2.50 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95563 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

KEYA PAHA ........................................................................................................................................ NE 31103 2.50 

KIMBALL .............................................................................................................................................. NE 31105 2.40 

KNOX ................................................................................................................................................... NE 31107 2.60 

LANCASTER ....................................................................................................................................... NE 31109 2.60 

LINCOLN ............................................................................................................................................. NE 31111 2.50 

LOGAN ................................................................................................................................................ NE 31113 2.40 

LOUP ................................................................................................................................................... NE 31115 2.50 

MCPHERSON ..................................................................................................................................... NE 31117 2.40 

MADISON ............................................................................................................................................ NE 31119 2.60 

MERRICK ............................................................................................................................................ NE 31121 2.60 

MORRILL ............................................................................................................................................. NE 31123 2.40 

NANCE ................................................................................................................................................ NE 31125 2.60 

NEMAHA ............................................................................................................................................. NE 31127 2.70 

NUCKOLLS ......................................................................................................................................... NE 31129 2.60 

OTOE ................................................................................................................................................... NE 31131 2.70 

PAWNEE ............................................................................................................................................. NE 31133 2.70 

PERKINS ............................................................................................................................................. NE 31135 2.50 

PHELPS ............................................................................................................................................... NE 31137 2.50 

PIERCE ............................................................................................................................................... NE 31139 2.60 

PLATTE ............................................................................................................................................... NE 31141 2.60 

POLK ................................................................................................................................................... NE 31143 2.60 

RED WILLOW ..................................................................................................................................... NE 31145 2.50 

RICHARDSON ..................................................................................................................................... NE 31147 2.70 

ROCK .................................................................................................................................................. NE 31149 2.50 

SALINE ................................................................................................................................................ NE 31151 2.60 

SARPY ................................................................................................................................................. NE 31153 2.70 

SAUNDERS ......................................................................................................................................... NE 31155 2.60 

SCOTTS BLUFF .................................................................................................................................. NE 31157 2.40 

SEWARD ............................................................................................................................................. NE 31159 2.60 

SHERIDAN .......................................................................................................................................... NE 31161 2.40 

SHERMAN ........................................................................................................................................... NE 31163 2.50 

SIOUX .................................................................................................................................................. NE 31165 2.40 

STANTON ............................................................................................................................................ NE 31167 2.60 

THAYER .............................................................................................................................................. NE 31169 2.60 

THOMAS ............................................................................................................................................. NE 31171 2.40 

THURSTON ......................................................................................................................................... NE 31173 2.60 

VALLEY ............................................................................................................................................... NE 31175 2.50 

WASHINGTON .................................................................................................................................... NE 31177 2.60 

WAYNE ................................................................................................................................................ NE 31179 2.60 

WEBSTER ........................................................................................................................................... NE 31181 2.60 

WHEELER ........................................................................................................................................... NE 31183 2.50 

YORK ................................................................................................................................................... NE 31185 2.60 

CHURCHILL ........................................................................................................................................ NV 32001 1.90 

CLARK ................................................................................................................................................. NV 32003 2.60 

DOUGLAS ........................................................................................................................................... NV 32005 1.80 

ELKO ................................................................................................................................................... NV 32007 2.00 

ESMERALDA ....................................................................................................................................... NV 32009 2.20 

EUREKA .............................................................................................................................................. NV 32011 2.20 

HUMBOLDT ......................................................................................................................................... NV 32013 1.90 

LANDER .............................................................................................................................................. NV 32015 2.00 

LINCOLN ............................................................................................................................................. NV 32017 2.50 

LYON ................................................................................................................................................... NV 32019 1.90 

MINERAL ............................................................................................................................................. NV 32021 2.00 

NYE ..................................................................................................................................................... NV 32023 2.20 

PERSHING .......................................................................................................................................... NV 32027 1.90 

STOREY .............................................................................................................................................. NV 32029 1.90 

WASHOE ............................................................................................................................................. NV 32031 2.00 

WHITE PINE ........................................................................................................................................ NV 32033 2.20 

CARSON CITY .................................................................................................................................... NV 32510 1.90 

BELKNAP ............................................................................................................................................ NH 33001 4.50 

CARROLL ............................................................................................................................................ NH 33003 4.50 

CHESHIRE .......................................................................................................................................... NH 33005 4.50 

COOS .................................................................................................................................................. NH 33007 4.20 

GRAFTON ........................................................................................................................................... NH 33009 4.40 

HILLSBOROUGH ................................................................................................................................ NH 33011 4.50 

MERRIMACK ....................................................................................................................................... NH 33013 4.50 

ROCKINGHAM .................................................................................................................................... NH 33015 4.50 

STRAFFORD ....................................................................................................................................... NH 33017 4.50 

SULLIVAN ........................................................................................................................................... NH 33019 4.50 

ATLANTIC ........................................................................................................................................... NJ 34001 4.70 

BERGEN .............................................................................................................................................. NJ 34003 5.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95564 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

BURLINGTON ..................................................................................................................................... NJ 34005 4.70 

CAMDEN ............................................................................................................................................. NJ 34007 4.70 

CAPE MAY .......................................................................................................................................... NJ 34009 4.70 

CUMBERLAND .................................................................................................................................... NJ 34011 4.70 

ESSEX ................................................................................................................................................. NJ 34013 5.00 

GLOUCESTER .................................................................................................................................... NJ 34015 4.70 

HUDSON ............................................................................................................................................. NJ 34017 5.00 

HUNTERDON ...................................................................................................................................... NJ 34019 4.70 

MERCER ............................................................................................................................................. NJ 34021 4.70 

MIDDLESEX ........................................................................................................................................ NJ 34023 4.90 

MONMOUTH ....................................................................................................................................... NJ 34025 4.90 

MORRIS .............................................................................................................................................. NJ 34027 4.90 

OCEAN ................................................................................................................................................ NJ 34029 4.90 

PASSAIC ............................................................................................................................................. NJ 34031 5.00 

SALEM ................................................................................................................................................. NJ 34033 4.70 

SOMERSET ......................................................................................................................................... NJ 34035 4.90 

SUSSEX .............................................................................................................................................. NJ 34037 4.70 

UNION ................................................................................................................................................. NJ 34039 5.00 

WARREN ............................................................................................................................................. NJ 34041 4.70 

BERNALILLO ....................................................................................................................................... NM 35001 2.50 

CATRON .............................................................................................................................................. NM 35003 2.30 

CHAVES .............................................................................................................................................. NM 35005 2.50 

CIBOLA ................................................................................................................................................ NM 35006 2.30 

COLFAX .............................................................................................................................................. NM 35007 2.50 

CURRY ................................................................................................................................................ NM 35009 2.50 

DE BACA ............................................................................................................................................. NM 35011 2.50 

DONA ANA .......................................................................................................................................... NM 35013 2.50 

EDDY ................................................................................................................................................... NM 35015 2.50 

GRANT ................................................................................................................................................ NM 35017 2.50 

GUADALUPE ....................................................................................................................................... NM 35019 2.50 

HARDING ............................................................................................................................................ NM 35021 2.50 

HIDALGO ............................................................................................................................................. NM 35023 2.50 

LEA ...................................................................................................................................................... NM 35025 2.50 

LINCOLN ............................................................................................................................................. NM 35027 2.50 

LOS ALAMOS ..................................................................................................................................... NM 35028 2.50 

LUNA ................................................................................................................................................... NM 35029 2.50 

MCKINLEY .......................................................................................................................................... NM 35031 2.30 

MORA .................................................................................................................................................. NM 35033 2.50 

OTERO ................................................................................................................................................ NM 35035 2.50 

QUAY ................................................................................................................................................... NM 35037 2.50 

RIO ARRIBA ........................................................................................................................................ NM 35039 2.30 

ROOSEVELT ....................................................................................................................................... NM 35041 2.50 

SANDOVAL ......................................................................................................................................... NM 35043 2.50 

SAN JUAN ........................................................................................................................................... NM 35045 2.30 

SAN MIGUEL ...................................................................................................................................... NM 35047 2.50 

SANTA FE ........................................................................................................................................... NM 35049 2.50 

SIERRA ............................................................................................................................................... NM 35051 2.50 

SOCORRO .......................................................................................................................................... NM 35053 2.50 

TAOS ................................................................................................................................................... NM 35055 2.50 

TORRANCE ......................................................................................................................................... NM 35057 2.50 

UNION ................................................................................................................................................. NM 35059 2.50 

VALENCIA ........................................................................................................................................... NM 35061 2.50 

ALBANY ............................................................................................................................................... NY 36001 4.40 

ALLEGANY .......................................................................................................................................... NY 36003 3.90 

BRONX ................................................................................................................................................ NY 36005 5.10 

BROOME ............................................................................................................................................. NY 36007 4.00 

CATTARAUGUS .................................................................................................................................. NY 36009 3.90 

CAYUGA .............................................................................................................................................. NY 36011 3.90 

CHAUTAUQUA .................................................................................................................................... NY 36013 3.90 

CHEMUNG .......................................................................................................................................... NY 36015 4.00 

CHENANGO ........................................................................................................................................ NY 36017 4.00 

CLINTON ............................................................................................................................................. NY 36019 4.20 

COLUMBIA .......................................................................................................................................... NY 36021 4.40 

CORTLAND ......................................................................................................................................... NY 36023 3.90 

DELAWARE ......................................................................................................................................... NY 36025 4.20 

DUTCHESS ......................................................................................................................................... NY 36027 4.70 

ERIE .................................................................................................................................................... NY 36029 3.90 

ESSEX ................................................................................................................................................. NY 36031 4.20 

FRANKLIN ........................................................................................................................................... NY 36033 4.10 

FULTON .............................................................................................................................................. NY 36035 4.10 

GENESEE ........................................................................................................................................... NY 36037 3.90 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95565 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

GREENE .............................................................................................................................................. NY 36039 4.40 

HAMILTON .......................................................................................................................................... NY 36041 4.10 

HERKIMER .......................................................................................................................................... NY 36043 4.00 

JEFFERSON ....................................................................................................................................... NY 36045 3.90 

KINGS .................................................................................................................................................. NY 36047 5.10 

LEWIS .................................................................................................................................................. NY 36049 3.90 

LIVINGSTON ....................................................................................................................................... NY 36051 3.90 

MADISON ............................................................................................................................................ NY 36053 3.90 

MONROE ............................................................................................................................................. NY 36055 3.90 

MONTGOMERY .................................................................................................................................. NY 36057 4.10 

NASSAU .............................................................................................................................................. NY 36059 5.10 

NEW YORK ......................................................................................................................................... NY 36061 5.10 

NIAGARA ............................................................................................................................................. NY 36063 3.90 

ONEIDA ............................................................................................................................................... NY 36065 3.90 

ONONDAGA ........................................................................................................................................ NY 36067 3.90 

ONTARIO ............................................................................................................................................ NY 36069 3.90 

ORANGE ............................................................................................................................................. NY 36071 4.70 

ORLEANS ............................................................................................................................................ NY 36073 3.90 

OSWEGO ............................................................................................................................................ NY 36075 3.90 

OTSEGO ............................................................................................................................................. NY 36077 4.10 

PUTNAM .............................................................................................................................................. NY 36079 4.70 

QUEENS .............................................................................................................................................. NY 36081 5.10 

RENSSELAER ..................................................................................................................................... NY 36083 4.40 

RICHMOND ......................................................................................................................................... NY 36085 5.10 

ROCKLAND ......................................................................................................................................... NY 36087 5.00 

ST. LAWRENCE .................................................................................................................................. NY 36089 3.90 

SARATOGA ......................................................................................................................................... NY 36091 4.20 

SCHENECTADY .................................................................................................................................. NY 36093 4.20 

SCHOHARIE ....................................................................................................................................... NY 36095 4.20 

SCHUYLER ......................................................................................................................................... NY 36097 3.90 

SENECA .............................................................................................................................................. NY 36099 3.90 

STEUBEN ............................................................................................................................................ NY 36101 3.90 

SUFFOLK ............................................................................................................................................ NY 36103 5.10 

SULLIVAN ........................................................................................................................................... NY 36105 4.40 

TIOGA .................................................................................................................................................. NY 36107 4.00 

TOMPKINS .......................................................................................................................................... NY 36109 3.90 

ULSTER ............................................................................................................................................... NY 36111 4.40 

WARREN ............................................................................................................................................. NY 36113 4.20 

WASHINGTON .................................................................................................................................... NY 36115 4.20 

WAYNE ................................................................................................................................................ NY 36117 3.90 

WESTCHESTER ................................................................................................................................. NY 36119 5.00 

WYOMING ........................................................................................................................................... NY 36121 3.90 

YATES ................................................................................................................................................. NY 36123 3.90 

ALAMANCE ......................................................................................................................................... NC 37001 5.40 

ALEXANDER ....................................................................................................................................... NC 37003 5.60 

ALLEGHANY ....................................................................................................................................... NC 37005 5.40 

ANSON ................................................................................................................................................ NC 37007 5.80 

ASHE ................................................................................................................................................... NC 37009 5.40 

AVERY ................................................................................................................................................. NC 37011 5.40 

BEAUFORT ......................................................................................................................................... NC 37013 5.80 

BERTIE ................................................................................................................................................ NC 37015 5.60 

BLADEN .............................................................................................................................................. NC 37017 5.80 

BRUNSWICK ....................................................................................................................................... NC 37019 6.00 

BUNCOMBE ........................................................................................................................................ NC 37021 5.40 

BURKE ................................................................................................................................................ NC 37023 5.60 

CABARRUS ......................................................................................................................................... NC 37025 5.60 

CALDWELL ......................................................................................................................................... NC 37027 5.60 

CAMDEN ............................................................................................................................................. NC 37029 5.60 

CARTERET ......................................................................................................................................... NC 37031 6.00 

CASWELL ............................................................................................................................................ NC 37033 5.40 

CATAWBA ........................................................................................................................................... NC 37035 5.60 

CHATHAM ........................................................................................................................................... NC 37037 5.60 

CHEROKEE ......................................................................................................................................... NC 37039 5.40 

CHOWAN ............................................................................................................................................ NC 37041 5.60 

CLAY ................................................................................................................................................... NC 37043 5.60 

CLEVELAND ....................................................................................................................................... NC 37045 5.60 

COLUMBUS ........................................................................................................................................ NC 37047 6.00 

CRAVEN .............................................................................................................................................. NC 37049 6.00 

CUMBERLAND .................................................................................................................................... NC 37051 5.80 

CURRITUCK ........................................................................................................................................ NC 37053 5.60 

DARE ................................................................................................................................................... NC 37055 5.80 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95566 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

DAVIDSON .......................................................................................................................................... NC 37057 5.60 

DAVIE .................................................................................................................................................. NC 37059 5.60 

DUPLIN ................................................................................................................................................ NC 37061 5.80 

DURHAM ............................................................................................................................................. NC 37063 5.40 

EDGECOMBE ..................................................................................................................................... NC 37065 5.60 

FORSYTH ............................................................................................................................................ NC 37067 5.40 

FRANKLIN ........................................................................................................................................... NC 37069 5.60 

GASTON .............................................................................................................................................. NC 37071 5.60 

GATES ................................................................................................................................................. NC 37073 5.60 

GRAHAM ............................................................................................................................................. NC 37075 5.40 

GRANVILLE ......................................................................................................................................... NC 37077 5.40 

GREENE .............................................................................................................................................. NC 37079 5.80 

GUILFORD .......................................................................................................................................... NC 37081 5.40 

HALIFAX .............................................................................................................................................. NC 37083 5.60 

HARNETT ............................................................................................................................................ NC 37085 5.80 

HAYWOOD .......................................................................................................................................... NC 37087 5.40 

HENDERSON ...................................................................................................................................... NC 37089 5.60 

HERTFORD ......................................................................................................................................... NC 37091 5.60 

HOKE ................................................................................................................................................... NC 37093 5.80 

HYDE ................................................................................................................................................... NC 37095 5.80 

IREDELL .............................................................................................................................................. NC 37097 5.60 

JACKSON ............................................................................................................................................ NC 37099 5.60 

JOHNSTON ......................................................................................................................................... NC 37101 5.80 

JONES ................................................................................................................................................. NC 37103 6.00 

LEE ...................................................................................................................................................... NC 37105 5.60 

LENOIR ............................................................................................................................................... NC 37107 5.80 

LINCOLN ............................................................................................................................................. NC 37109 5.60 

MCDOWELL ........................................................................................................................................ NC 37111 5.60 

MACON ............................................................................................................................................... NC 37113 5.60 

MADISON ............................................................................................................................................ NC 37115 5.40 

MARTIN ............................................................................................................................................... NC 37117 5.80 

MECKLENBURG ................................................................................................................................. NC 37119 5.60 

MITCHELL ........................................................................................................................................... NC 37121 5.40 

MONTGOMERY .................................................................................................................................. NC 37123 5.60 

MOORE ............................................................................................................................................... NC 37125 5.60 

NASH ................................................................................................................................................... NC 37127 5.60 

NEW HANOVER ................................................................................................................................. NC 37129 6.00 

NORTHAMPTON ................................................................................................................................. NC 37131 5.60 

ONSLOW ............................................................................................................................................. NC 37133 6.00 

ORANGE ............................................................................................................................................. NC 37135 5.40 

PAMLICO ............................................................................................................................................. NC 37137 6.00 

PASQUOTANK .................................................................................................................................... NC 37139 5.60 

PENDER .............................................................................................................................................. NC 37141 6.00 

PERQUIMANS ..................................................................................................................................... NC 37143 5.60 

PERSON .............................................................................................................................................. NC 37145 5.40 

PITT ..................................................................................................................................................... NC 37147 5.80 

POLK ................................................................................................................................................... NC 37149 5.60 

RANDOLPH ......................................................................................................................................... NC 37151 5.60 

RICHMOND ......................................................................................................................................... NC 37153 5.80 

ROBESON ........................................................................................................................................... NC 37155 5.80 

ROCKINGHAM .................................................................................................................................... NC 37157 5.40 

ROWAN ............................................................................................................................................... NC 37159 5.60 

RUTHERFORD .................................................................................................................................... NC 37161 5.60 

SAMPSON ........................................................................................................................................... NC 37163 5.80 

SCOTLAND ......................................................................................................................................... NC 37165 5.80 

STANLY ............................................................................................................................................... NC 37167 5.60 

STOKES .............................................................................................................................................. NC 37169 5.40 

SURRY ................................................................................................................................................ NC 37171 5.40 

SWAIN ................................................................................................................................................. NC 37173 5.40 

TRANSYLVANIA ................................................................................................................................. NC 37175 5.60 

TYRRELL ............................................................................................................................................. NC 37177 5.80 

UNION ................................................................................................................................................. NC 37179 5.80 

VANCE ................................................................................................................................................ NC 37181 5.40 

WAKE .................................................................................................................................................. NC 37183 5.60 

WARREN ............................................................................................................................................. NC 37185 5.40 

WASHINGTON .................................................................................................................................... NC 37187 5.80 

WATAUGA ........................................................................................................................................... NC 37189 5.40 

WAYNE ................................................................................................................................................ NC 37191 5.80 

WILKES ............................................................................................................................................... NC 37193 5.40 

WILSON ............................................................................................................................................... NC 37195 5.80 

YADKIN ............................................................................................................................................... NC 37197 5.40 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95567 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

YANCEY .............................................................................................................................................. NC 37199 5.40 

ADAMS ................................................................................................................................................ ND 38001 2.40 

BARNES .............................................................................................................................................. ND 38003 2.60 

BENSON .............................................................................................................................................. ND 38005 2.30 

BILLINGS ............................................................................................................................................. ND 38007 2.40 

BOTTINEAU ........................................................................................................................................ ND 38009 2.30 

BOWMAN ............................................................................................................................................ ND 38011 2.40 

BURKE ................................................................................................................................................ ND 38013 2.30 

BURLEIGH .......................................................................................................................................... ND 38015 2.40 

CASS ................................................................................................................................................... ND 38017 2.80 

CAVALIER ........................................................................................................................................... ND 38019 2.30 

DICKEY ............................................................................................................................................... ND 38021 2.60 

DIVIDE ................................................................................................................................................. ND 38023 2.30 

DUNN .................................................................................................................................................. ND 38025 2.40 

EDDY ................................................................................................................................................... ND 38027 2.40 

EMMONS ............................................................................................................................................. ND 38029 2.40 

FOSTER .............................................................................................................................................. ND 38031 2.40 

GOLDEN VALLEY ............................................................................................................................... ND 38033 2.40 

GRAND FORKS .................................................................................................................................. ND 38035 2.30 

GRANT ................................................................................................................................................ ND 38037 2.40 

GRIGGS .............................................................................................................................................. ND 38039 2.60 

HETTINGER ........................................................................................................................................ ND 38041 2.40 

KIDDER ............................................................................................................................................... ND 38043 2.40 

LA MOURE .......................................................................................................................................... ND 38045 2.60 

LOGAN ................................................................................................................................................ ND 38047 2.40 

MCHENRY ........................................................................................................................................... ND 38049 2.30 

MCINTOSH .......................................................................................................................................... ND 38051 2.40 

MCKENZIE .......................................................................................................................................... ND 38053 2.40 

MCLEAN .............................................................................................................................................. ND 38055 2.40 

MERCER ............................................................................................................................................. ND 38057 2.40 

MORTON ............................................................................................................................................. ND 38059 2.40 

MOUNTRAIL ........................................................................................................................................ ND 38061 2.30 

NELSON .............................................................................................................................................. ND 38063 2.30 

OLIVER ................................................................................................................................................ ND 38065 2.40 

PEMBINA ............................................................................................................................................. ND 38067 2.30 

PIERCE ............................................................................................................................................... ND 38069 2.30 

RAMSEY .............................................................................................................................................. ND 38071 2.30 

RANSOM ............................................................................................................................................. ND 38073 2.60 

RENVILLE ........................................................................................................................................... ND 38075 2.30 

RICHLAND .......................................................................................................................................... ND 38077 2.60 

ROLETTE ............................................................................................................................................ ND 38079 2.30 

SARGENT ........................................................................................................................................... ND 38081 2.60 

SHERIDAN .......................................................................................................................................... ND 38083 2.40 

SIOUX .................................................................................................................................................. ND 38085 2.40 

SLOPE ................................................................................................................................................. ND 38087 2.40 

STARK ................................................................................................................................................. ND 38089 2.40 

STEELE ............................................................................................................................................... ND 38091 2.60 

STUTSMAN ......................................................................................................................................... ND 38093 2.40 

TOWNER ............................................................................................................................................. ND 38095 2.30 

TRAILL ................................................................................................................................................. ND 38097 2.60 

WALSH ................................................................................................................................................ ND 38099 2.30 

WARD .................................................................................................................................................. ND 38101 2.30 

WELLS ................................................................................................................................................. ND 38103 2.40 

WILLIAMS ............................................................................................................................................ ND 38105 2.30 

ADAMS ................................................................................................................................................ OH 39001 4.00 

ALLEN ................................................................................................................................................. OH 39003 3.30 

ASHLAND ............................................................................................................................................ OH 39005 3.80 

ASHTABULA ....................................................................................................................................... OH 39007 3.80 

ATHENS .............................................................................................................................................. OH 39009 4.00 

AUGLAIZE ........................................................................................................................................... OH 39011 3.60 

BELMONT ........................................................................................................................................... OH 39013 3.80 

BROWN ............................................................................................................................................... OH 39015 4.00 

BUTLER ............................................................................................................................................... OH 39017 3.80 

CARROLL ............................................................................................................................................ OH 39019 3.80 

CHAMPAIGN ....................................................................................................................................... OH 39021 3.60 

CLARK ................................................................................................................................................. OH 39023 3.60 

CLERMONT ......................................................................................................................................... OH 39025 4.00 

CLINTON ............................................................................................................................................. OH 39027 3.80 

COLUMBIANA ..................................................................................................................................... OH 39029 4.00 

COSHOCTON ..................................................................................................................................... OH 39031 3.80 

CRAWFORD ........................................................................................................................................ OH 39033 3.60 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95568 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

CUYAHOGA ........................................................................................................................................ OH 39035 3.80 

DARKE ................................................................................................................................................ OH 39037 3.60 

DEFIANCE ........................................................................................................................................... OH 39039 3.30 

DELAWARE ......................................................................................................................................... OH 39041 3.60 

ERIE .................................................................................................................................................... OH 39043 3.60 

FAIRFIELD .......................................................................................................................................... OH 39045 3.80 

FAYETTE ............................................................................................................................................. OH 39047 3.80 

FRANKLIN ........................................................................................................................................... OH 39049 3.60 

FULTON .............................................................................................................................................. OH 39051 3.30 

GALLIA ................................................................................................................................................ OH 39053 4.30 

GEAUGA ............................................................................................................................................. OH 39055 3.80 

GREENE .............................................................................................................................................. OH 39057 3.60 

GUERNSEY ......................................................................................................................................... OH 39059 3.80 

HAMILTON .......................................................................................................................................... OH 39061 3.80 

HANCOCK ........................................................................................................................................... OH 39063 3.60 

HARDIN ............................................................................................................................................... OH 39065 3.60 

HARRISON .......................................................................................................................................... OH 39067 3.80 

HENRY ................................................................................................................................................ OH 39069 3.30 

HIGHLAND .......................................................................................................................................... OH 39071 4.00 

HOCKING ............................................................................................................................................ OH 39073 4.00 

HOLMES .............................................................................................................................................. OH 39075 3.80 

HURON ................................................................................................................................................ OH 39077 3.60 

JACKSON ............................................................................................................................................ OH 39079 4.00 

JEFFERSON ....................................................................................................................................... OH 39081 3.80 

KNOX ................................................................................................................................................... OH 39083 3.80 

LAKE .................................................................................................................................................... OH 39085 3.80 

LAWRENCE ........................................................................................................................................ OH 39087 4.30 

LICKING .............................................................................................................................................. OH 39089 3.80 

LOGAN ................................................................................................................................................ OH 39091 3.60 

LORAIN ............................................................................................................................................... OH 39093 3.80 

LUCAS ................................................................................................................................................. OH 39095 3.30 

MADISON ............................................................................................................................................ OH 39097 3.60 

MAHONING ......................................................................................................................................... OH 39099 4.00 

MARION .............................................................................................................................................. OH 39101 3.60 

MEDINA ............................................................................................................................................... OH 39103 3.80 

MEIGS ................................................................................................................................................. OH 39105 4.30 

MERCER ............................................................................................................................................. OH 39107 3.30 

MIAMI .................................................................................................................................................. OH 39109 3.60 

MONROE ............................................................................................................................................. OH 39111 4.00 

MONTGOMERY .................................................................................................................................. OH 39113 3.60 

MORGAN ............................................................................................................................................. OH 39115 3.90 

MORROW ............................................................................................................................................ OH 39117 3.60 

MUSKINGUM ...................................................................................................................................... OH 39119 3.80 

NOBLE ................................................................................................................................................. OH 39121 3.80 

OTTAWA ............................................................................................................................................. OH 39123 3.60 

PAULDING .......................................................................................................................................... OH 39125 3.30 

PERRY ................................................................................................................................................ OH 39127 3.80 

PICKAWAY .......................................................................................................................................... OH 39129 3.80 

PIKE ..................................................................................................................................................... OH 39131 4.00 

PORTAGE ........................................................................................................................................... OH 39133 3.80 

PREBLE ............................................................................................................................................... OH 39135 3.60 

PUTNAM .............................................................................................................................................. OH 39137 3.30 

RICHLAND .......................................................................................................................................... OH 39139 3.60 

ROSS ................................................................................................................................................... OH 39141 4.00 

SANDUSKY ......................................................................................................................................... OH 39143 3.60 

SCIOTO ............................................................................................................................................... OH 39145 4.00 

SENECA .............................................................................................................................................. OH 39147 3.60 

SHELBY ............................................................................................................................................... OH 39149 3.60 

STARK ................................................................................................................................................. OH 39151 3.80 

SUMMIT ............................................................................................................................................... OH 39153 3.80 

TRUMBULL ......................................................................................................................................... OH 39155 4.00 

TUSCARAWAS ................................................................................................................................... OH 39157 3.80 

UNION ................................................................................................................................................. OH 39159 3.60 

VAN WERT .......................................................................................................................................... OH 39161 3.30 

VINTON ............................................................................................................................................... OH 39163 4.00 

WARREN ............................................................................................................................................. OH 39165 3.80 

WASHINGTON .................................................................................................................................... OH 39167 4.00 

WAYNE ................................................................................................................................................ OH 39169 3.80 

WILLIAMS ............................................................................................................................................ OH 39171 3.30 

WOOD ................................................................................................................................................. OH 39173 3.60 

WYANDOT .......................................................................................................................................... OH 39175 3.60 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95569 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

ADAIR .................................................................................................................................................. OK 40001 3.30 

ALFALFA ............................................................................................................................................. OK 40003 2.60 

ATOKA ................................................................................................................................................. OK 40005 3.60 

BEAVER .............................................................................................................................................. OK 40007 2.50 

BECKHAM ........................................................................................................................................... OK 40009 2.60 

BLAINE ................................................................................................................................................ OK 40011 2.90 

BRYAN ................................................................................................................................................ OK 40013 3.60 

CADDO ................................................................................................................................................ OK 40015 2.90 

CANADIAN .......................................................................................................................................... OK 40017 2.90 

CARTER .............................................................................................................................................. OK 40019 3.30 

CHEROKEE ......................................................................................................................................... OK 40021 3.30 

CHOCTAW .......................................................................................................................................... OK 40023 3.60 

CIMARRON ......................................................................................................................................... OK 40025 2.50 

CLEVELAND ....................................................................................................................................... OK 40027 3.30 

COAL ................................................................................................................................................... OK 40029 3.60 

COMANCHE ........................................................................................................................................ OK 40031 2.90 

COTTON .............................................................................................................................................. OK 40033 3.30 

CRAIG ................................................................................................................................................. OK 40035 3.20 

CREEK ................................................................................................................................................ OK 40037 3.30 

CUSTER .............................................................................................................................................. OK 40039 2.60 

DELAWARE ......................................................................................................................................... OK 40041 3.20 

DEWEY ................................................................................................................................................ OK 40043 2.60 

ELLIS ................................................................................................................................................... OK 40045 2.60 

GARFIELD ........................................................................................................................................... OK 40047 2.90 

GARVIN ............................................................................................................................................... OK 40049 3.30 

GRADY ................................................................................................................................................ OK 40051 3.30 

GRANT ................................................................................................................................................ OK 40053 2.90 

GREER ................................................................................................................................................ OK 40055 2.60 

HARMON ............................................................................................................................................. OK 40057 2.60 

HARPER .............................................................................................................................................. OK 40059 2.60 

HASKELL ............................................................................................................................................. OK 40061 3.60 

HUGHES ............................................................................................................................................. OK 40063 3.30 

JACKSON ............................................................................................................................................ OK 40065 2.90 

JEFFERSON ....................................................................................................................................... OK 40067 3.30 

JOHNSTON ......................................................................................................................................... OK 40069 3.60 

KAY ...................................................................................................................................................... OK 40071 2.90 

KINGFISHER ....................................................................................................................................... OK 40073 2.90 

KIOWA ................................................................................................................................................. OK 40075 2.90 

LATIMER ............................................................................................................................................. OK 40077 3.60 

LE FLORE ........................................................................................................................................... OK 40079 3.60 

LINCOLN ............................................................................................................................................. OK 40081 3.30 

LOGAN ................................................................................................................................................ OK 40083 3.30 

LOVE ................................................................................................................................................... OK 40085 3.30 

MCCLAIN ............................................................................................................................................. OK 40087 3.30 

MCCURTAIN ....................................................................................................................................... OK 40089 3.60 

MCINTOSH .......................................................................................................................................... OK 40091 3.30 

MAJOR ................................................................................................................................................ OK 40093 2.60 

MARSHALL ......................................................................................................................................... OK 40095 3.60 

MAYES ................................................................................................................................................ OK 40097 3.20 

MURRAY ............................................................................................................................................. OK 40099 3.30 

MUSKOGEE ........................................................................................................................................ OK 40101 3.30 

NOBLE ................................................................................................................................................. OK 40103 3.20 

NOWATA ............................................................................................................................................. OK 40105 3.20 

OKFUSKEE ......................................................................................................................................... OK 40107 3.30 

OKLAHOMA ........................................................................................................................................ OK 40109 3.30 

OKMULGEE ........................................................................................................................................ OK 40111 3.30 

OSAGE ................................................................................................................................................ OK 40113 3.20 

OTTAWA ............................................................................................................................................. OK 40115 3.20 

PAWNEE ............................................................................................................................................. OK 40117 3.20 

PAYNE ................................................................................................................................................. OK 40119 3.30 

PITTSBURG ........................................................................................................................................ OK 40121 3.60 

PONTOTOC ........................................................................................................................................ OK 40123 3.30 

POTTAWATOMIE ................................................................................................................................ OK 40125 3.30 

PUSHMATAHA .................................................................................................................................... OK 40127 3.60 

ROGER MILLS .................................................................................................................................... OK 40129 2.60 

ROGERS ............................................................................................................................................. OK 40131 3.20 

SEMINOLE .......................................................................................................................................... OK 40133 3.30 

SEQUOYAH ........................................................................................................................................ OK 40135 3.30 

STEPHENS ......................................................................................................................................... OK 40137 3.30 

TEXAS ................................................................................................................................................. OK 40139 2.50 

TILLMAN .............................................................................................................................................. OK 40141 2.90 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95570 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

TULSA ................................................................................................................................................. OK 40143 3.30 

WAGONER .......................................................................................................................................... OK 40145 3.30 

WASHINGTON .................................................................................................................................... OK 40147 3.20 

WASHITA ............................................................................................................................................ OK 40149 2.60 

WOODS ............................................................................................................................................... OK 40151 2.60 

WOODWARD ...................................................................................................................................... OK 40153 2.60 

BAKER ................................................................................................................................................. OR 41001 2.20 

BENTON .............................................................................................................................................. OR 41003 2.20 

CLACKAMAS ....................................................................................................................................... OR 41005 2.70 

CLATSOP ............................................................................................................................................ OR 41007 2.20 

COLUMBIA .......................................................................................................................................... OR 41009 2.20 

COOS .................................................................................................................................................. OR 41011 2.20 

CROOK ................................................................................................................................................ OR 41013 2.20 

CURRY ................................................................................................................................................ OR 41015 2.20 

DESCHUTES ....................................................................................................................................... OR 41017 2.20 

DOUGLAS ........................................................................................................................................... OR 41019 2.20 

GILLIAM ............................................................................................................................................... OR 41021 2.20 

GRANT ................................................................................................................................................ OR 41023 2.20 

HARNEY .............................................................................................................................................. OR 41025 2.20 

HOOD RIVER ...................................................................................................................................... OR 41027 2.20 

JACKSON ............................................................................................................................................ OR 41029 2.20 

JEFFERSON ....................................................................................................................................... OR 41031 2.20 

JOSEPHINE ........................................................................................................................................ OR 41033 2.20 

KLAMATH ............................................................................................................................................ OR 41035 2.20 

LAKE .................................................................................................................................................... OR 41037 2.20 

LANE ................................................................................................................................................... OR 41039 2.20 

LINCOLN ............................................................................................................................................. OR 41041 2.20 

LINN ..................................................................................................................................................... OR 41043 2.20 

MALHEUR ........................................................................................................................................... OR 41045 1.80 

MARION .............................................................................................................................................. OR 41047 2.20 

MORROW ............................................................................................................................................ OR 41049 2.20 

MULTNOMAH ...................................................................................................................................... OR 41051 2.70 

POLK ................................................................................................................................................... OR 41053 2.20 

SHERMAN ........................................................................................................................................... OR 41055 2.20 

TILLAMOOK ........................................................................................................................................ OR 41057 2.20 

UMATILLA ........................................................................................................................................... OR 41059 2.20 

UNION ................................................................................................................................................. OR 41061 2.20 

WALLOWA .......................................................................................................................................... OR 41063 2.20 

WASCO ............................................................................................................................................... OR 41065 2.20 

WASHINGTON .................................................................................................................................... OR 41067 2.20 

WHEELER ........................................................................................................................................... OR 41069 2.20 

YAMHILL ............................................................................................................................................. OR 41071 2.20 

ADAMS ................................................................................................................................................ PA 42001 4.30 

ALLEGHENY ....................................................................................................................................... PA 42003 4.00 

ARMSTRONG ..................................................................................................................................... PA 42005 4.00 

BEAVER .............................................................................................................................................. PA 42007 4.00 

BEDFORD ........................................................................................................................................... PA 42009 4.10 

BERKS ................................................................................................................................................. PA 42011 4.30 

BLAIR .................................................................................................................................................. PA 42013 4.00 

BRADFORD ......................................................................................................................................... PA 42015 4.00 

BUCKS ................................................................................................................................................ PA 42017 4.50 

BUTLER ............................................................................................................................................... PA 42019 4.00 

CAMBRIA ............................................................................................................................................ PA 42021 4.00 

CAMERON .......................................................................................................................................... PA 42023 4.00 

CARBON ............................................................................................................................................. PA 42025 4.30 

CENTRE .............................................................................................................................................. PA 42027 4.00 

CHESTER ............................................................................................................................................ PA 42029 4.30 

CLARION ............................................................................................................................................. PA 42031 4.00 

CLEARFIELD ....................................................................................................................................... PA 42033 4.00 

CLINTON ............................................................................................................................................. PA 42035 4.00 

COLUMBIA .......................................................................................................................................... PA 42037 4.10 

CRAWFORD ........................................................................................................................................ PA 42039 4.00 

CUMBERLAND .................................................................................................................................... PA 42041 4.20 

DAUPHIN ............................................................................................................................................. PA 42043 4.20 

DELAWARE ......................................................................................................................................... PA 42045 4.40 

ELK ...................................................................................................................................................... PA 42047 4.00 

ERIE .................................................................................................................................................... PA 42049 3.90 

FAYETTE ............................................................................................................................................. PA 42051 4.00 

FOREST .............................................................................................................................................. PA 42053 4.00 

FRANKLIN ........................................................................................................................................... PA 42055 4.20 

FULTON .............................................................................................................................................. PA 42057 4.10 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95571 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

GREENE .............................................................................................................................................. PA 42059 4.00 

HUNTINGDON .................................................................................................................................... PA 42061 4.10 

INDIANA .............................................................................................................................................. PA 42063 4.00 

JEFFERSON ....................................................................................................................................... PA 42065 4.00 

JUNIATA .............................................................................................................................................. PA 42067 4.10 

LACKAWANNA .................................................................................................................................... PA 42069 4.30 

LANCASTER ....................................................................................................................................... PA 42071 4.30 

LAWRENCE ........................................................................................................................................ PA 42073 4.00 

LEBANON ............................................................................................................................................ PA 42075 4.20 

LEHIGH ............................................................................................................................................... PA 42077 4.30 

LUZERNE ............................................................................................................................................ PA 42079 4.20 

LYCOMING .......................................................................................................................................... PA 42081 4.10 

MCKEAN ............................................................................................................................................. PA 42083 3.90 

MERCER ............................................................................................................................................. PA 42085 4.00 

MIFFLIN ............................................................................................................................................... PA 42087 4.10 

MONROE ............................................................................................................................................. PA 42089 4.40 

MONTGOMERY .................................................................................................................................. PA 42091 4.40 

MONTOUR .......................................................................................................................................... PA 42093 4.10 

NORTHAMPTON ................................................................................................................................. PA 42095 4.40 

NORTHUMBERLAND ......................................................................................................................... PA 42097 4.10 

PERRY ................................................................................................................................................ PA 42099 4.20 

PHILADELPHIA ................................................................................................................................... PA 42101 4.60 

PIKE ..................................................................................................................................................... PA 42103 4.40 

POTTER .............................................................................................................................................. PA 42105 3.90 

SCHUYLKILL ....................................................................................................................................... PA 42107 4.20 

SNYDER .............................................................................................................................................. PA 42109 4.10 

SOMERSET ......................................................................................................................................... PA 42111 4.10 

SULLIVAN ........................................................................................................................................... PA 42113 4.10 

SUSQUEHANNA ................................................................................................................................. PA 42115 4.20 

TIOGA .................................................................................................................................................. PA 42117 4.00 

UNION ................................................................................................................................................. PA 42119 4.10 

VENANGO ........................................................................................................................................... PA 42121 4.00 

WARREN ............................................................................................................................................. PA 42123 3.90 

WASHINGTON .................................................................................................................................... PA 42125 4.00 

WAYNE ................................................................................................................................................ PA 42127 4.30 

WESTMORELAND .............................................................................................................................. PA 42129 4.00 

WYOMING ........................................................................................................................................... PA 42131 4.20 

YORK ................................................................................................................................................... PA 42133 4.30 

BRISTOL ............................................................................................................................................. RI 44001 5.10 

KENT ................................................................................................................................................... RI 44003 5.10 

NEWPORT .......................................................................................................................................... RI 44005 5.10 

PROVIDENCE ..................................................................................................................................... RI 44007 5.10 

WASHINGTON .................................................................................................................................... RI 44009 5.10 

ABBEVILLE ......................................................................................................................................... SC 45001 5.80 

AIKEN .................................................................................................................................................. SC 45003 6.00 

ALLENDALE ........................................................................................................................................ SC 45005 6.00 

ANDERSON ........................................................................................................................................ SC 45007 5.60 

BAMBERG ........................................................................................................................................... SC 45009 6.00 

BARNWELL ......................................................................................................................................... SC 45011 6.00 

BEAUFORT ......................................................................................................................................... SC 45013 6.00 

BERKELEY .......................................................................................................................................... SC 45015 6.00 

CALHOUN ........................................................................................................................................... SC 45017 6.00 

CHARLESTON .................................................................................................................................... SC 45019 6.00 

CHEROKEE ......................................................................................................................................... SC 45021 5.60 

CHESTER ............................................................................................................................................ SC 45023 5.80 

CHESTERFIELD ................................................................................................................................. SC 45025 5.80 

CLARENDON ...................................................................................................................................... SC 45027 6.00 

COLLETON ......................................................................................................................................... SC 45029 6.00 

DARLINGTON ..................................................................................................................................... SC 45031 6.00 

DILLON ................................................................................................................................................ SC 45033 6.00 

DORCHESTER .................................................................................................................................... SC 45035 6.00 

EDGEFIELD ........................................................................................................................................ SC 45037 5.80 

FAIRFIELD .......................................................................................................................................... SC 45039 5.80 

FLORENCE ......................................................................................................................................... SC 45041 6.00 

GEORGETOWN .................................................................................................................................. SC 45043 6.00 

GREENVILLE ...................................................................................................................................... SC 45045 5.60 

GREENWOOD .................................................................................................................................... SC 45047 5.80 

HAMPTON ........................................................................................................................................... SC 45049 6.00 

HORRY ................................................................................................................................................ SC 45051 6.00 

JASPER ............................................................................................................................................... SC 45053 6.00 

KERSHAW ........................................................................................................................................... SC 45055 6.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95572 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

LANCASTER ....................................................................................................................................... SC 45057 5.80 

LAURENS ............................................................................................................................................ SC 45059 5.80 

LEE ...................................................................................................................................................... SC 45061 6.00 

LEXINGTON ........................................................................................................................................ SC 45063 6.00 

MCCORMICK ...................................................................................................................................... SC 45065 5.80 

MARION .............................................................................................................................................. SC 45067 6.00 

MARLBORO ........................................................................................................................................ SC 45069 5.80 

NEWBERRY ........................................................................................................................................ SC 45071 5.80 

OCONEE ............................................................................................................................................. SC 45073 5.60 

ORANGEBURG ................................................................................................................................... SC 45075 6.00 

PICKENS ............................................................................................................................................. SC 45077 5.60 

RICHLAND .......................................................................................................................................... SC 45079 6.00 

SALUDA .............................................................................................................................................. SC 45081 5.80 

SPARTANBURG ................................................................................................................................. SC 45083 5.60 

SUMTER .............................................................................................................................................. SC 45085 6.00 

UNION ................................................................................................................................................. SC 45087 5.80 

WILLIAMSBURG ................................................................................................................................. SC 45089 6.00 

YORK ................................................................................................................................................... SC 45091 5.60 

AURORA ............................................................................................................................................. SD 46003 2.60 

BEADLE ............................................................................................................................................... SD 46005 2.60 

BENNETT ............................................................................................................................................ SD 46007 2.40 

BON HOMME ...................................................................................................................................... SD 46009 2.60 

BROOKINGS ....................................................................................................................................... SD 46011 2.60 

BROWN ............................................................................................................................................... SD 46013 2.60 

BRULE ................................................................................................................................................. SD 46015 2.50 

BUFFALO ............................................................................................................................................ SD 46017 2.50 

BUTTE ................................................................................................................................................. SD 46019 2.40 

CAMPBELL .......................................................................................................................................... SD 46021 2.50 

CHARLES MIX .................................................................................................................................... SD 46023 2.50 

CLARK ................................................................................................................................................. SD 46025 2.60 

CLAY ................................................................................................................................................... SD 46027 2.60 

CODINGTON ....................................................................................................................................... SD 46029 2.60 

CORSON ............................................................................................................................................. SD 46031 2.40 

CUSTER .............................................................................................................................................. SD 46033 2.40 

DAVISON ............................................................................................................................................. SD 46035 2.60 

DAY ..................................................................................................................................................... SD 46037 2.60 

DEUEL ................................................................................................................................................. SD 46039 2.60 

DEWEY ................................................................................................................................................ SD 46041 2.40 

DOUGLAS ........................................................................................................................................... SD 46043 2.60 

EDMUNDS ........................................................................................................................................... SD 46045 2.50 

FALL RIVER ........................................................................................................................................ SD 46047 2.40 

FAULK ................................................................................................................................................. SD 46049 2.50 

GRANT ................................................................................................................................................ SD 46051 2.60 

GREGORY .......................................................................................................................................... SD 46053 2.50 

HAAKON .............................................................................................................................................. SD 46055 2.40 

HAMLIN ............................................................................................................................................... SD 46057 2.60 

HAND ................................................................................................................................................... SD 46059 2.50 

HANSON ............................................................................................................................................. SD 46061 2.60 

HARDING ............................................................................................................................................ SD 46063 2.40 

HUGHES ............................................................................................................................................. SD 46065 2.50 

HUTCHINSON ..................................................................................................................................... SD 46067 2.60 

HYDE ................................................................................................................................................... SD 46069 2.50 

JACKSON ............................................................................................................................................ SD 46071 2.40 

JERAULD ............................................................................................................................................ SD 46073 2.60 

JONES ................................................................................................................................................. SD 46075 2.40 

KINGSBURY ........................................................................................................................................ SD 46077 2.60 

LAKE .................................................................................................................................................... SD 46079 2.60 

LAWRENCE ........................................................................................................................................ SD 46081 2.40 

LINCOLN ............................................................................................................................................. SD 46083 2.60 

LYMAN ................................................................................................................................................ SD 46085 2.50 

MCCOOK ............................................................................................................................................. SD 46087 2.60 

MCPHERSON ..................................................................................................................................... SD 46089 2.50 

MARSHALL ......................................................................................................................................... SD 46091 2.60 

MEADE ................................................................................................................................................ SD 46093 2.40 

MELLETTE .......................................................................................................................................... SD 46095 2.40 

MINER ................................................................................................................................................. SD 46097 2.60 

MINNEHAHA ....................................................................................................................................... SD 46099 2.60 

MOODY ............................................................................................................................................... SD 46101 2.60 

OGLALA LAKOTA ............................................................................................................................... SD 46102 2.40 

PENNINGTON ..................................................................................................................................... SD 46103 2.40 

PERKINS ............................................................................................................................................. SD 46105 2.40 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95573 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

POTTER .............................................................................................................................................. SD 46107 2.50 

ROBERTS ........................................................................................................................................... SD 46109 2.60 

SANBORN ........................................................................................................................................... SD 46111 2.60 

SHANNON ........................................................................................................................................... SD 46113 0.00 

SPINK .................................................................................................................................................. SD 46115 2.60 

STANLEY ............................................................................................................................................ SD 46117 2.40 

SULLY ................................................................................................................................................. SD 46119 2.50 

TODD ................................................................................................................................................... SD 46121 2.40 

TRIPP .................................................................................................................................................. SD 46123 2.50 

TURNER .............................................................................................................................................. SD 46125 2.60 

UNION ................................................................................................................................................. SD 46127 2.60 

WALWORTH ....................................................................................................................................... SD 46129 2.50 

YANKTON ........................................................................................................................................... SD 46135 2.60 

ZIEBACH ............................................................................................................................................. SD 46137 2.40 

ANDERSON ........................................................................................................................................ TN 47001 4.90 

BEDFORD ........................................................................................................................................... TN 47003 4.90 

BENTON .............................................................................................................................................. TN 47005 4.60 

BLEDSOE ............................................................................................................................................ TN 47007 4.90 

BLOUNT .............................................................................................................................................. TN 47009 5.20 

BRADLEY ............................................................................................................................................ TN 47011 5.20 

CAMPBELL .......................................................................................................................................... TN 47013 4.90 

CANNON ............................................................................................................................................. TN 47015 4.90 

CARROLL ............................................................................................................................................ TN 47017 4.60 

CARTER .............................................................................................................................................. TN 47019 5.20 

CHEATHAM ......................................................................................................................................... TN 47021 4.60 

CHESTER ............................................................................................................................................ TN 47023 4.60 

CLAIBORNE ........................................................................................................................................ TN 47025 4.90 

CLAY ................................................................................................................................................... TN 47027 4.60 

COCKE ................................................................................................................................................ TN 47029 5.20 

COFFEE .............................................................................................................................................. TN 47031 4.90 

CROCKETT ......................................................................................................................................... TN 47033 4.30 

CUMBERLAND .................................................................................................................................... TN 47035 4.90 

DAVIDSON .......................................................................................................................................... TN 47037 4.60 

DECATUR ........................................................................................................................................... TN 47039 4.60 

DE KALB ............................................................................................................................................. TN 47041 4.90 

DICKSON ............................................................................................................................................ TN 47043 4.60 

DYER ................................................................................................................................................... TN 47045 4.30 

FAYETTE ............................................................................................................................................. TN 47047 4.60 

FENTRESS .......................................................................................................................................... TN 47049 4.60 

FRANKLIN ........................................................................................................................................... TN 47051 5.20 

GIBSON ............................................................................................................................................... TN 47053 4.30 

GILES .................................................................................................................................................. TN 47055 4.90 

GRAINGER .......................................................................................................................................... TN 47057 4.90 

GREENE .............................................................................................................................................. TN 47059 5.20 

GRUNDY ............................................................................................................................................. TN 47061 4.90 

HAMBLEN ........................................................................................................................................... TN 47063 5.20 

HAMILTON .......................................................................................................................................... TN 47065 5.20 

HANCOCK ........................................................................................................................................... TN 47067 4.90 

HARDEMAN ........................................................................................................................................ TN 47069 4.60 

HARDIN ............................................................................................................................................... TN 47071 4.90 

HAWKINS ............................................................................................................................................ TN 47073 5.20 

HAYWOOD .......................................................................................................................................... TN 47075 4.60 

HENDERSON ...................................................................................................................................... TN 47077 4.60 

HENRY ................................................................................................................................................ TN 47079 4.30 

HICKMAN ............................................................................................................................................ TN 47081 4.60 

HOUSTON ........................................................................................................................................... TN 47083 4.60 

HUMPHREYS ...................................................................................................................................... TN 47085 4.60 

JACKSON ............................................................................................................................................ TN 47087 4.60 

JEFFERSON ....................................................................................................................................... TN 47089 5.20 

JOHNSON ........................................................................................................................................... TN 47091 5.20 

KNOX ................................................................................................................................................... TN 47093 4.90 

LAKE .................................................................................................................................................... TN 47095 4.30 

LAUDERDALE ..................................................................................................................................... TN 47097 4.30 

LAWRENCE ........................................................................................................................................ TN 47099 4.90 

LEWIS .................................................................................................................................................. TN 47101 4.90 

LINCOLN ............................................................................................................................................. TN 47103 5.20 

LOUDON ............................................................................................................................................. TN 47105 5.20 

MCMINN .............................................................................................................................................. TN 47107 5.20 

MCNAIRY ............................................................................................................................................ TN 47109 4.90 

MACON ............................................................................................................................................... TN 47111 4.60 

MADISON ............................................................................................................................................ TN 47113 4.60 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95574 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

MARION .............................................................................................................................................. TN 47115 5.20 

MARSHALL ......................................................................................................................................... TN 47117 4.90 

MAURY ................................................................................................................................................ TN 47119 4.90 

MEIGS ................................................................................................................................................. TN 47121 5.20 

MONROE ............................................................................................................................................. TN 47123 5.20 

MONTGOMERY .................................................................................................................................. TN 47125 4.30 

MOORE ............................................................................................................................................... TN 47127 4.90 

MORGAN ............................................................................................................................................. TN 47129 4.90 

OBION ................................................................................................................................................. TN 47131 4.30 

OVERTON ........................................................................................................................................... TN 47133 4.60 

PERRY ................................................................................................................................................ TN 47135 4.60 

PICKETT .............................................................................................................................................. TN 47137 4.60 

POLK ................................................................................................................................................... TN 47139 5.40 

PUTNAM .............................................................................................................................................. TN 47141 4.60 

RHEA ................................................................................................................................................... TN 47143 4.90 

ROANE ................................................................................................................................................ TN 47145 4.90 

ROBERTSON ...................................................................................................................................... TN 47147 4.60 

RUTHERFORD .................................................................................................................................... TN 47149 4.60 

SCOTT ................................................................................................................................................. TN 47151 4.90 

SEQUATCHIE ..................................................................................................................................... TN 47153 5.20 

SEVIER ................................................................................................................................................ TN 47155 5.20 

SHELBY ............................................................................................................................................... TN 47157 4.60 

SMITH .................................................................................................................................................. TN 47159 4.60 

STEWART ........................................................................................................................................... TN 47161 4.30 

SULLIVAN ........................................................................................................................................... TN 47163 5.20 

SUMNER ............................................................................................................................................. TN 47165 4.60 

TIPTON ................................................................................................................................................ TN 47167 4.60 

TROUSDALE ....................................................................................................................................... TN 47169 4.60 

UNICOI ................................................................................................................................................ TN 47171 5.40 

UNION ................................................................................................................................................. TN 47173 4.90 

VAN BUREN ........................................................................................................................................ TN 47175 4.90 

WARREN ............................................................................................................................................. TN 47177 4.90 

WASHINGTON .................................................................................................................................... TN 47179 5.20 

WAYNE ................................................................................................................................................ TN 47181 4.90 

WEAKLEY ........................................................................................................................................... TN 47183 4.30 

WHITE ................................................................................................................................................. TN 47185 4.90 

WILLIAMSON ...................................................................................................................................... TN 47187 4.60 

WILSON ............................................................................................................................................... TN 47189 4.60 

ANDERSON ........................................................................................................................................ TX 48001 4.00 

ANDREWS .......................................................................................................................................... TX 48003 2.90 

ANGELINA ........................................................................................................................................... TX 48005 4.60 

ARANSAS ............................................................................................................................................ TX 48007 4.60 

ARCHER .............................................................................................................................................. TX 48009 3.30 

ARMSTRONG ..................................................................................................................................... TX 48011 2.50 

ATASCOSA ......................................................................................................................................... TX 48013 4.30 

AUSTIN ................................................................................................................................................ TX 48015 4.30 

BAILEY ................................................................................................................................................ TX 48017 2.50 

BANDERA ........................................................................................................................................... TX 48019 4.00 

BASTROP ............................................................................................................................................ TX 48021 4.30 

BAYLOR .............................................................................................................................................. TX 48023 2.90 

BEE ...................................................................................................................................................... TX 48025 4.60 

BELL .................................................................................................................................................... TX 48027 4.00 

BEXAR ................................................................................................................................................. TX 48029 4.30 

BLANCO .............................................................................................................................................. TX 48031 4.00 

BORDEN ............................................................................................................................................. TX 48033 2.90 

BOSQUE ............................................................................................................................................. TX 48035 3.60 

BOWIE ................................................................................................................................................. TX 48037 4.00 

BRAZORIA .......................................................................................................................................... TX 48039 4.80 

BRAZOS .............................................................................................................................................. TX 48041 4.30 

BREWSTER ........................................................................................................................................ TX 48043 3.30 

BRISCOE ............................................................................................................................................. TX 48045 2.50 

BROOKS ............................................................................................................................................. TX 48047 4.60 

BROWN ............................................................................................................................................... TX 48049 3.60 

BURLESON ......................................................................................................................................... TX 48051 4.30 

BURNET .............................................................................................................................................. TX 48053 4.00 

CALDWELL ......................................................................................................................................... TX 48055 4.30 

CALHOUN ........................................................................................................................................... TX 48057 4.60 

CALLAHAN .......................................................................................................................................... TX 48059 3.30 

CAMERON .......................................................................................................................................... TX 48061 4.60 

CAMP .................................................................................................................................................. TX 48063 3.70 

CARSON ............................................................................................................................................. TX 48065 2.50 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95575 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

CASS ................................................................................................................................................... TX 48067 4.00 

CASTRO .............................................................................................................................................. TX 48069 2.50 

CHAMBERS ........................................................................................................................................ TX 48071 4.80 

CHEROKEE ......................................................................................................................................... TX 48073 4.00 

CHILDRESS ........................................................................................................................................ TX 48075 2.60 

CLAY ................................................................................................................................................... TX 48077 3.30 

COCHRAN ........................................................................................................................................... TX 48079 2.50 

COKE ................................................................................................................................................... TX 48081 3.30 

COLEMAN ........................................................................................................................................... TX 48083 3.60 

COLLIN ................................................................................................................................................ TX 48085 3.70 

COLLINGSWORTH ............................................................................................................................. TX 48087 2.60 

COLORADO ........................................................................................................................................ TX 48089 4.30 

COMAL ................................................................................................................................................ TX 48091 4.00 

COMANCHE ........................................................................................................................................ TX 48093 3.60 

CONCHO ............................................................................................................................................. TX 48095 3.60 

COOKE ................................................................................................................................................ TX 48097 3.30 

CORYELL ............................................................................................................................................ TX 48099 4.00 

COTTLE ............................................................................................................................................... TX 48101 2.60 

CRANE ................................................................................................................................................ TX 48103 2.90 

CROCKETT ......................................................................................................................................... TX 48105 3.30 

CROSBY .............................................................................................................................................. TX 48107 2.60 

CULBERSON ...................................................................................................................................... TX 48109 2.90 

DALLAM .............................................................................................................................................. TX 48111 2.50 

DALLAS ............................................................................................................................................... TX 48113 3.70 

DAWSON ............................................................................................................................................. TX 48115 2.90 

DEAF SMITH ....................................................................................................................................... TX 48117 2.50 

DELTA ................................................................................................................................................. TX 48119 3.70 

DENTON .............................................................................................................................................. TX 48121 3.70 

DE WITT .............................................................................................................................................. TX 48123 4.30 

DICKENS ............................................................................................................................................. TX 48125 2.60 

DIMMIT ................................................................................................................................................ TX 48127 4.00 

DONLEY .............................................................................................................................................. TX 48129 2.50 

DUVAL ................................................................................................................................................. TX 48131 4.60 

EASTLAND .......................................................................................................................................... TX 48133 3.60 

ECTOR ................................................................................................................................................ TX 48135 2.90 

EDWARDS .......................................................................................................................................... TX 48137 3.60 

ELLIS ................................................................................................................................................... TX 48139 3.70 

EL PASO ............................................................................................................................................. TX 48141 2.70 

ERATH ................................................................................................................................................. TX 48143 3.60 

FALLS .................................................................................................................................................. TX 48145 4.00 

FANNIN ............................................................................................................................................... TX 48147 3.70 

FAYETTE ............................................................................................................................................. TX 48149 4.30 

FISHER ................................................................................................................................................ TX 48151 2.90 

FLOYD ................................................................................................................................................. TX 48153 2.60 

FOARD ................................................................................................................................................ TX 48155 2.90 

FORT BEND ........................................................................................................................................ TX 48157 4.60 

FRANKLIN ........................................................................................................................................... TX 48159 3.70 

FREESTONE ....................................................................................................................................... TX 48161 4.00 

FRIO .................................................................................................................................................... TX 48163 4.30 

GAINES ............................................................................................................................................... TX 48165 2.60 

GALVESTON ....................................................................................................................................... TX 48167 4.80 

GARZA ................................................................................................................................................ TX 48169 2.90 

GILLESPIE .......................................................................................................................................... TX 48171 4.00 

GLASSCOCK ...................................................................................................................................... TX 48173 3.30 

GOLIAD ............................................................................................................................................... TX 48175 4.60 

GONZALES ......................................................................................................................................... TX 48177 4.30 

GRAY ................................................................................................................................................... TX 48179 2.50 

GRAYSON ........................................................................................................................................... TX 48181 3.70 

GREGG ............................................................................................................................................... TX 48183 4.00 

GRIMES ............................................................................................................................................... TX 48185 4.60 

GUADALUPE ....................................................................................................................................... TX 48187 4.30 

HALE ................................................................................................................................................... TX 48189 2.50 

HALL .................................................................................................................................................... TX 48191 2.50 

HAMILTON .......................................................................................................................................... TX 48193 3.60 

HANSFORD ......................................................................................................................................... TX 48195 2.50 

HARDEMAN ........................................................................................................................................ TX 48197 2.90 

HARDIN ............................................................................................................................................... TX 48199 4.80 

HARRIS ............................................................................................................................................... TX 48201 4.80 

HARRISON .......................................................................................................................................... TX 48203 4.00 

HARTLEY ............................................................................................................................................ TX 48205 2.50 

HASKELL ............................................................................................................................................. TX 48207 2.90 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95576 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

HAYS ................................................................................................................................................... TX 48209 4.00 

HEMPHILL ........................................................................................................................................... TX 48211 2.60 

HENDERSON ...................................................................................................................................... TX 48213 3.70 

HIDALGO ............................................................................................................................................. TX 48215 4.60 

HILL ..................................................................................................................................................... TX 48217 3.70 

HOCKLEY ............................................................................................................................................ TX 48219 2.60 

HOOD .................................................................................................................................................. TX 48221 3.70 

HOPKINS ............................................................................................................................................. TX 48223 3.70 

HOUSTON ........................................................................................................................................... TX 48225 4.00 

HOWARD ............................................................................................................................................ TX 48227 2.90 

HUDSPETH ......................................................................................................................................... TX 48229 2.70 

HUNT ................................................................................................................................................... TX 48231 3.70 

HUTCHINSON ..................................................................................................................................... TX 48233 2.50 

IRION ................................................................................................................................................... TX 48235 3.30 

JACK .................................................................................................................................................... TX 48237 3.30 

JACKSON ............................................................................................................................................ TX 48239 4.60 

JASPER ............................................................................................................................................... TX 48241 4.80 

JEFF DAVIS ........................................................................................................................................ TX 48243 2.90 

JEFFERSON ....................................................................................................................................... TX 48245 4.80 

JIM HOGG ........................................................................................................................................... TX 48247 4.60 

JIM WELLS .......................................................................................................................................... TX 48249 4.60 

JOHNSON ........................................................................................................................................... TX 48251 3.70 

JONES ................................................................................................................................................. TX 48253 3.30 

KARNES .............................................................................................................................................. TX 48255 4.30 

KAUFMAN ........................................................................................................................................... TX 48257 3.70 

KENDALL ............................................................................................................................................ TX 48259 4.00 

KENEDY .............................................................................................................................................. TX 48261 4.60 

KENT ................................................................................................................................................... TX 48263 2.90 

KERR ................................................................................................................................................... TX 48265 4.00 

KIMBLE ................................................................................................................................................ TX 48267 3.60 

KING .................................................................................................................................................... TX 48269 2.90 

KINNEY ............................................................................................................................................... TX 48271 4.00 

KLEBERG ............................................................................................................................................ TX 48273 4.60 

KNOX ................................................................................................................................................... TX 48275 2.90 

LAMAR ................................................................................................................................................ TX 48277 3.70 

LAMB ................................................................................................................................................... TX 48279 2.50 

LAMPASAS ......................................................................................................................................... TX 48281 4.00 

LA SALLE ............................................................................................................................................ TX 48283 4.30 

LAVACA ............................................................................................................................................... TX 48285 4.30 

LEE ...................................................................................................................................................... TX 48287 4.30 

LEON ................................................................................................................................................... TX 48289 4.00 

LIBERTY .............................................................................................................................................. TX 48291 4.80 

LIMESTONE ........................................................................................................................................ TX 48293 4.00 

LIPSCOMB .......................................................................................................................................... TX 48295 2.60 

LIVE OAK ............................................................................................................................................ TX 48297 4.30 

LLANO ................................................................................................................................................. TX 48299 4.00 

LOVING ............................................................................................................................................... TX 48301 2.90 

LUBBOCK ............................................................................................................................................ TX 48303 2.60 

LYNN ................................................................................................................................................... TX 48305 2.90 

MCCULLOCH ...................................................................................................................................... TX 48307 3.60 

MCLENNAN ......................................................................................................................................... TX 48309 4.00 

MCMULLEN ......................................................................................................................................... TX 48311 4.30 

MADISON ............................................................................................................................................ TX 48313 4.00 

MARION .............................................................................................................................................. TX 48315 4.00 

MARTIN ............................................................................................................................................... TX 48317 2.90 

MASON ................................................................................................................................................ TX 48319 3.60 

MATAGORDA ...................................................................................................................................... TX 48321 4.80 

MAVERICK .......................................................................................................................................... TX 48323 4.00 

MEDINA ............................................................................................................................................... TX 48325 4.00 

MENARD ............................................................................................................................................. TX 48327 3.60 

MIDLAND ............................................................................................................................................. TX 48329 2.90 

MILAM ................................................................................................................................................. TX 48331 4.00 

MILLS .................................................................................................................................................. TX 48333 3.60 

MITCHELL ........................................................................................................................................... TX 48335 3.30 

MONTAGUE ........................................................................................................................................ TX 48337 3.30 

MONTGOMERY .................................................................................................................................. TX 48339 4.80 

MOORE ............................................................................................................................................... TX 48341 2.50 

MORRIS .............................................................................................................................................. TX 48343 3.70 

MOTLEY .............................................................................................................................................. TX 48345 2.60 

NACOGDOCHES ................................................................................................................................ TX 48347 4.00 

NAVARRO ........................................................................................................................................... TX 48349 3.70 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95577 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

NEWTON ............................................................................................................................................. TX 48351 4.80 

NOLAN ................................................................................................................................................ TX 48353 3.30 

NUECES .............................................................................................................................................. TX 48355 4.60 

OCHILTREE ........................................................................................................................................ TX 48357 2.50 

OLDHAM ............................................................................................................................................. TX 48359 2.50 

ORANGE ............................................................................................................................................. TX 48361 4.80 

PALO PINTO ....................................................................................................................................... TX 48363 3.30 

PANOLA .............................................................................................................................................. TX 48365 4.00 

PARKER .............................................................................................................................................. TX 48367 3.70 

PARMER ............................................................................................................................................. TX 48369 2.50 

PECOS ................................................................................................................................................ TX 48371 3.30 

POLK ................................................................................................................................................... TX 48373 4.60 

POTTER .............................................................................................................................................. TX 48375 2.50 

PRESIDIO ............................................................................................................................................ TX 48377 2.90 

RAINS .................................................................................................................................................. TX 48379 3.70 

RANDALL ............................................................................................................................................ TX 48381 2.50 

REAGAN .............................................................................................................................................. TX 48383 3.30 

REAL ................................................................................................................................................... TX 48385 4.00 

RED RIVER ......................................................................................................................................... TX 48387 3.70 

REEVES .............................................................................................................................................. TX 48389 2.90 

REFUGIO ............................................................................................................................................ TX 48391 4.60 

ROBERTS ........................................................................................................................................... TX 48393 2.50 

ROBERTSON ...................................................................................................................................... TX 48395 4.00 

ROCKWALL ......................................................................................................................................... TX 48397 3.70 

RUNNELS ............................................................................................................................................ TX 48399 3.30 

RUSK ................................................................................................................................................... TX 48401 4.00 

SABINE ................................................................................................................................................ TX 48403 4.60 

SAN AUGUSTINE ............................................................................................................................... TX 48405 4.60 

SAN JACINTO ..................................................................................................................................... TX 48407 4.60 

SAN PATRICIO ................................................................................................................................... TX 48409 4.60 

SAN SABA ........................................................................................................................................... TX 48411 3.60 

SCHLEICHER ...................................................................................................................................... TX 48413 3.60 

SCURRY .............................................................................................................................................. TX 48415 2.90 

SHACKELFORD .................................................................................................................................. TX 48417 3.30 

SHELBY ............................................................................................................................................... TX 48419 4.60 

SHERMAN ........................................................................................................................................... TX 48421 2.50 

SMITH .................................................................................................................................................. TX 48423 3.70 

SOMERVELL ....................................................................................................................................... TX 48425 3.70 

STARR ................................................................................................................................................. TX 48427 4.60 

STEPHENS ......................................................................................................................................... TX 48429 3.30 

STERLING ........................................................................................................................................... TX 48431 3.30 

STONEWALL ....................................................................................................................................... TX 48433 2.90 

SUTTON .............................................................................................................................................. TX 48435 3.60 

SWISHER ............................................................................................................................................ TX 48437 2.50 

TARRANT ............................................................................................................................................ TX 48439 3.70 

TAYLOR .............................................................................................................................................. TX 48441 3.30 

TERRELL ............................................................................................................................................. TX 48443 3.30 

TERRY ................................................................................................................................................. TX 48445 2.60 

THROCKMORTON .............................................................................................................................. TX 48447 3.30 

TITUS .................................................................................................................................................. TX 48449 3.70 

TOM GREEN ....................................................................................................................................... TX 48451 3.30 

TRAVIS ................................................................................................................................................ TX 48453 4.00 

TRINITY ............................................................................................................................................... TX 48455 4.60 

TYLER ................................................................................................................................................. TX 48457 4.80 

UPSHUR .............................................................................................................................................. TX 48459 3.70 

UPTON ................................................................................................................................................ TX 48461 3.30 

UVALDE .............................................................................................................................................. TX 48463 4.00 

VAL VERDE ........................................................................................................................................ TX 48465 3.60 

VAN ZANDT ........................................................................................................................................ TX 48467 3.70 

VICTORIA ............................................................................................................................................ TX 48469 4.60 

WALKER .............................................................................................................................................. TX 48471 4.60 

WALLER .............................................................................................................................................. TX 48473 4.60 

WARD .................................................................................................................................................. TX 48475 2.90 

WASHINGTON .................................................................................................................................... TX 48477 4.30 

WEBB .................................................................................................................................................. TX 48479 4.30 

WHARTON .......................................................................................................................................... TX 48481 4.60 

WHEELER ........................................................................................................................................... TX 48483 2.60 

WICHITA .............................................................................................................................................. TX 48485 2.90 

WILBARGER ....................................................................................................................................... TX 48487 2.90 

WILLACY ............................................................................................................................................. TX 48489 4.60 

WILLIAMSON ...................................................................................................................................... TX 48491 4.00 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95578 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

WILSON ............................................................................................................................................... TX 48493 4.30 

WINKLER ............................................................................................................................................ TX 48495 2.90 

WISE .................................................................................................................................................... TX 48497 3.30 

WOOD ................................................................................................................................................. TX 48499 3.70 

YOAKUM ............................................................................................................................................. TX 48501 2.60 

YOUNG ................................................................................................................................................ TX 48503 3.30 

ZAPATA ............................................................................................................................................... TX 48505 4.30 

ZAVALA ............................................................................................................................................... TX 48507 4.00 

BEAVER .............................................................................................................................................. UT 49001 2.40 

BOX ELDER ........................................................................................................................................ UT 49003 2.00 

CACHE ................................................................................................................................................ UT 49005 2.20 

CARBON ............................................................................................................................................. UT 49007 2.20 

DAGGETT ........................................................................................................................................... UT 49009 2.30 

DAVIS .................................................................................................................................................. UT 49011 2.20 

DUCHESNE ......................................................................................................................................... UT 49013 2.20 

EMERY ................................................................................................................................................ UT 49015 2.30 

GARFIELD ........................................................................................................................................... UT 49017 2.30 

GRAND ................................................................................................................................................ UT 49019 2.30 

IRON .................................................................................................................................................... UT 49021 2.40 

JUAB .................................................................................................................................................... UT 49023 2.20 

KANE ................................................................................................................................................... UT 49025 2.40 

MILLARD ............................................................................................................................................. UT 49027 2.30 

MORGAN ............................................................................................................................................. UT 49029 2.20 

PIUTE .................................................................................................................................................. UT 49031 2.30 

RICH .................................................................................................................................................... UT 49033 2.20 

SALT LAKE ......................................................................................................................................... UT 49035 2.20 

SAN JUAN ........................................................................................................................................... UT 49037 2.30 

SANPETE ............................................................................................................................................ UT 49039 2.20 

SEVIER ................................................................................................................................................ UT 49041 2.30 

SUMMIT ............................................................................................................................................... UT 49043 2.20 

TOOELE .............................................................................................................................................. UT 49045 2.20 

UINTAH ............................................................................................................................................... UT 49047 2.30 

UTAH ................................................................................................................................................... UT 49049 2.20 

WASATCH ........................................................................................................................................... UT 49051 2.20 

WASHINGTON .................................................................................................................................... UT 49053 2.50 

WAYNE ................................................................................................................................................ UT 49055 2.30 

WEBER ................................................................................................................................................ UT 49057 2.20 

ADDISON ............................................................................................................................................ VT 50001 4.30 

BENNINGTON ..................................................................................................................................... VT 50003 4.50 

CALEDONIA ........................................................................................................................................ VT 50005 4.30 

CHITTENDEN ...................................................................................................................................... VT 50007 4.30 

ESSEX ................................................................................................................................................. VT 50009 4.20 

FRANKLIN ........................................................................................................................................... VT 50011 4.20 

GRAND ISLE ....................................................................................................................................... VT 50013 4.20 

LAMOILLE ........................................................................................................................................... VT 50015 4.30 

ORANGE ............................................................................................................................................. VT 50017 4.30 

ORLEANS ............................................................................................................................................ VT 50019 4.20 

RUTLAND ............................................................................................................................................ VT 50021 4.30 

WASHINGTON .................................................................................................................................... VT 50023 4.30 

WINDHAM ........................................................................................................................................... VT 50025 4.50 

WINDSOR ........................................................................................................................................... VT 50027 4.50 

ACCOMACK ........................................................................................................................................ VA 51001 4.80 

ALBEMARLE ....................................................................................................................................... VA 51003 4.50 

ALLEGHANY ....................................................................................................................................... VA 51005 4.50 

AMELIA ................................................................................................................................................ VA 51007 4.80 

AMHERST ........................................................................................................................................... VA 51009 4.50 

APPOMATTOX .................................................................................................................................... VA 51011 4.80 

ARLINGTON ........................................................................................................................................ VA 51013 4.60 

AUGUSTA ........................................................................................................................................... VA 51015 4.30 

BATH ................................................................................................................................................... VA 51017 4.50 

BEDFORD ........................................................................................................................................... VA 51019 4.80 

BLAND ................................................................................................................................................. VA 51021 4.80 

BOTETOURT ....................................................................................................................................... VA 51023 4.80 

BRUNSWICK ....................................................................................................................................... VA 51025 5.20 

BUCHANAN ......................................................................................................................................... VA 51027 4.80 

BUCKINGHAM .................................................................................................................................... VA 51029 4.80 

CAMPBELL .......................................................................................................................................... VA 51031 4.80 

CAROLINE .......................................................................................................................................... VA 51033 4.80 

CARROLL ............................................................................................................................................ VA 51035 5.20 

CHARLES CITY .................................................................................................................................. VA 51036 5.20 

CHARLOTTE ....................................................................................................................................... VA 51037 4.80 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95579 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

CHESTERFIELD ................................................................................................................................. VA 51041 4.80 

CLARKE .............................................................................................................................................. VA 51043 4.30 

CRAIG ................................................................................................................................................. VA 51045 4.80 

CULPEPER ......................................................................................................................................... VA 51047 4.50 

CUMBERLAND .................................................................................................................................... VA 51049 4.80 

DICKENSON ....................................................................................................................................... VA 51051 4.80 

DINWIDDIE .......................................................................................................................................... VA 51053 5.20 

ESSEX ................................................................................................................................................. VA 51057 4.80 

FAIRFAX .............................................................................................................................................. VA 51059 4.60 

FAUQUIER .......................................................................................................................................... VA 51061 4.50 

FLOYD ................................................................................................................................................. VA 51063 5.20 

FLUVANNA .......................................................................................................................................... VA 51065 4.50 

FRANKLIN COUNTY ........................................................................................................................... VA 51067 4.80 

FREDERICK ........................................................................................................................................ VA 51069 4.30 

GILES .................................................................................................................................................. VA 51071 4.80 

GLOUCESTER .................................................................................................................................... VA 51073 5.20 

GOOCHLAND ...................................................................................................................................... VA 51075 4.80 

GRAYSON ........................................................................................................................................... VA 51077 5.20 

GREENE .............................................................................................................................................. VA 51079 4.50 

GREENSVILLE .................................................................................................................................... VA 51081 5.20 

HALIFAX .............................................................................................................................................. VA 51083 5.20 

HANOVER ........................................................................................................................................... VA 51085 4.80 

HENRICO ............................................................................................................................................ VA 51087 4.80 

HENRY ................................................................................................................................................ VA 51089 5.20 

HIGHLAND .......................................................................................................................................... VA 51091 4.30 

ISLE OF WIGHT .................................................................................................................................. VA 51093 5.20 

JAMES CITY ....................................................................................................................................... VA 51095 5.20 

KING AND QUEEN ............................................................................................................................. VA 51097 4.80 

KING GEORGE ................................................................................................................................... VA 51099 4.80 

KING WILLIAM .................................................................................................................................... VA 51101 4.80 

LANCASTER ....................................................................................................................................... VA 51103 5.20 

LEE ...................................................................................................................................................... VA 51105 4.80 

LOUDOUN ........................................................................................................................................... VA 51107 4.40 

LOUISA ................................................................................................................................................ VA 51109 4.50 

LUNENBURG ...................................................................................................................................... VA 51111 5.20 

MADISON ............................................................................................................................................ VA 51113 4.50 

MATHEWS .......................................................................................................................................... VA 51115 5.20 

MECKLENBURG ................................................................................................................................. VA 51117 5.20 

MIDDLESEX ........................................................................................................................................ VA 51119 5.20 

MONTGOMERY .................................................................................................................................. VA 51121 4.80 

NELSON .............................................................................................................................................. VA 51125 4.50 

NEW KENT .......................................................................................................................................... VA 51127 5.20 

NORTHAMPTON ................................................................................................................................. VA 51131 4.80 

NORTHUMBERLAND ......................................................................................................................... VA 51133 4.80 

NOTTOWAY ........................................................................................................................................ VA 51135 4.80 

ORANGE ............................................................................................................................................. VA 51137 4.50 

PAGE ................................................................................................................................................... VA 51139 4.30 

PATRICK ............................................................................................................................................. VA 51141 5.20 

PITTSYLVANIA ................................................................................................................................... VA 51143 5.20 

POWHATAN ........................................................................................................................................ VA 51145 4.80 

PRINCE EDWARD .............................................................................................................................. VA 51147 4.80 

PRINCE GEORGE .............................................................................................................................. VA 51149 5.20 

PRINCE WILLIAM ............................................................................................................................... VA 51153 4.50 

PULASKI .............................................................................................................................................. VA 51155 4.80 

RAPPAHANNOCK ............................................................................................................................... VA 51157 4.50 

RICHMOND ......................................................................................................................................... VA 51159 4.80 

ROANOKE ........................................................................................................................................... VA 51161 4.80 

ROCKBRIDGE ..................................................................................................................................... VA 51163 4.50 

ROCKINGHAM .................................................................................................................................... VA 51165 4.30 

RUSSELL ............................................................................................................................................ VA 51167 4.80 

SCOTT ................................................................................................................................................. VA 51169 4.80 

SHENANDOAH ................................................................................................................................... VA 51171 4.30 

SMYTH ................................................................................................................................................ VA 51173 5.20 

SOUTHAMPTON ................................................................................................................................. VA 51175 5.20 

SPOTSYLVANIA ................................................................................................................................. VA 51177 4.50 

STAFFORD ......................................................................................................................................... VA 51179 4.50 

SURRY ................................................................................................................................................ VA 51181 5.20 

SUSSEX .............................................................................................................................................. VA 51183 5.20 

TAZEWELL .......................................................................................................................................... VA 51185 4.80 

WARREN ............................................................................................................................................. VA 51187 4.30 

WASHINGTON .................................................................................................................................... VA 51191 5.20 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95580 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

WESTMORELAND .............................................................................................................................. VA 51193 4.80 

WISE .................................................................................................................................................... VA 51195 4.80 

WYTHE ................................................................................................................................................ VA 51197 5.20 

YORK ................................................................................................................................................... VA 51199 5.20 

ALEXANDRIA CITY ............................................................................................................................. VA 51510 4.50 

BRISTOL CITY .................................................................................................................................... VA 51520 5.20 

BUENA VISTA CITY ........................................................................................................................... VA 51530 4.50 

CHARLOTTESVILLE CITY ................................................................................................................. VA 51540 4.50 

CHESAPEAKE CITY ........................................................................................................................... VA 51550 5.20 

COLONIAL HEIGHTS CITY ................................................................................................................ VA 51570 4.80 

COVINGTON CITY .............................................................................................................................. VA 51580 4.50 

DANVILLE CITY .................................................................................................................................. VA 51590 5.20 

EMPORIA CITY ................................................................................................................................... VA 51595 5.20 

FAIRFAX CITY .................................................................................................................................... VA 51600 4.50 

FALLS CHURCH CITY ........................................................................................................................ VA 51610 4.50 

FRANKLIN CITY .................................................................................................................................. VA 51620 5.20 

FREDERICKSBURG CITY .................................................................................................................. VA 51630 4.50 

GALAX CITY ....................................................................................................................................... VA 51640 5.20 

HAMPTON CITY ................................................................................................................................. VA 51650 5.20 

HARRISONBURG CITY ...................................................................................................................... VA 51660 4.30 

HOPEWELL CITY ............................................................................................................................... VA 51670 5.20 

LEXINGTON CITY ............................................................................................................................... VA 51678 4.50 

LYNCHBURG CITY ............................................................................................................................. VA 51680 4.80 

MANASSAS CITY ............................................................................................................................... VA 51683 4.50 

MANASSAS PARK CITY .................................................................................................................... VA 51685 4.50 

MARTINSVILLE CITY ......................................................................................................................... VA 51690 5.20 

NEWPORT NEWS CITY ..................................................................................................................... VA 51700 5.20 

NORFOLK CITY .................................................................................................................................. VA 51710 5.20 

NORTON CITY .................................................................................................................................... VA 51720 4.80 

PETERSBURG CITY ........................................................................................................................... VA 51730 5.20 

POQUOSON CITY .............................................................................................................................. VA 51735 5.20 

PORTSMOUTH CITY .......................................................................................................................... VA 51740 5.20 

RADFORD CITY .................................................................................................................................. VA 51750 4.80 

RICHMOND CITY ................................................................................................................................ VA 51760 4.80 

ROANOKE CITY ................................................................................................................................. VA 51770 4.80 

SALEM CITY ....................................................................................................................................... VA 51775 4.80 

STAUNTON CITY ................................................................................................................................ VA 51790 4.30 

SUFFOLK CITY ................................................................................................................................... VA 51800 5.20 

VIRGINIA BEACH CITY ...................................................................................................................... VA 51810 5.20 

WAYNESBORO CITY ......................................................................................................................... VA 51820 4.30 

WILLIAMSBURG CITY ........................................................................................................................ VA 51830 5.20 

WINCHESTER CITY ........................................................................................................................... VA 51840 4.30 

ADAMS ................................................................................................................................................ WA 53001 2.20 

ASOTIN ............................................................................................................................................... WA 53003 2.20 

BENTON .............................................................................................................................................. WA 53005 2.20 

CHELAN .............................................................................................................................................. WA 53007 2.40 

CLALLAM ............................................................................................................................................ WA 53009 2.40 

CLARK ................................................................................................................................................. WA 53011 2.70 

COLUMBIA .......................................................................................................................................... WA 53013 2.20 

COWLITZ ............................................................................................................................................. WA 53015 2.40 

DOUGLAS ........................................................................................................................................... WA 53017 2.40 

FERRY ................................................................................................................................................. WA 53019 2.40 

FRANKLIN ........................................................................................................................................... WA 53021 2.20 

GARFIELD ........................................................................................................................................... WA 53023 2.20 

GRANT ................................................................................................................................................ WA 53025 2.20 

GRAYS HARBOR ................................................................................................................................ WA 53027 2.40 

ISLAND ................................................................................................................................................ WA 53029 2.40 

JEFFERSON ....................................................................................................................................... WA 53031 2.40 

KING .................................................................................................................................................... WA 53033 2.70 

KITSAP ................................................................................................................................................ WA 53035 2.40 

KITTITAS ............................................................................................................................................. WA 53037 2.40 

KLICKITAT ........................................................................................................................................... WA 53039 2.20 

LEWIS .................................................................................................................................................. WA 53041 2.40 

LINCOLN ............................................................................................................................................. WA 53043 2.40 

MASON ................................................................................................................................................ WA 53045 2.40 

OKANOGAN ........................................................................................................................................ WA 53047 2.40 

PACIFIC ............................................................................................................................................... WA 53049 2.40 

PEND OREILLE .................................................................................................................................. WA 53051 2.40 

PIERCE ............................................................................................................................................... WA 53053 2.40 

SAN JUAN ........................................................................................................................................... WA 53055 2.40 

SKAGIT ................................................................................................................................................ WA 53057 2.40 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95581 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

SKAMANIA .......................................................................................................................................... WA 53059 2.40 

SNOHOMISH ....................................................................................................................................... WA 53061 2.40 

SPOKANE ........................................................................................................................................... WA 53063 2.40 

STEVENS ............................................................................................................................................ WA 53065 2.40 

THURSTON ......................................................................................................................................... WA 53067 2.40 

WAHKIAKUM ....................................................................................................................................... WA 53069 2.40 

WALLA WALLA ................................................................................................................................... WA 53071 2.20 

WHATCOM .......................................................................................................................................... WA 53073 2.40 

WHITMAN ............................................................................................................................................ WA 53075 2.20 

YAKIMA ............................................................................................................................................... WA 53077 2.20 

BARBOUR ........................................................................................................................................... WV 54001 4.30 

BERKELEY .......................................................................................................................................... WV 54003 4.30 

BOONE ................................................................................................................................................ WV 54005 4.50 

BRAXTON ........................................................................................................................................... WV 54007 4.30 

BROOKE ............................................................................................................................................. WV 54009 4.00 

CABELL ............................................................................................................................................... WV 54011 4.30 

CALHOUN ........................................................................................................................................... WV 54013 4.30 

CLAY ................................................................................................................................................... WV 54015 4.30 

DODDRIDGE ....................................................................................................................................... WV 54017 4.30 

FAYETTE ............................................................................................................................................. WV 54019 4.50 

GILMER ............................................................................................................................................... WV 54021 4.30 

GRANT ................................................................................................................................................ WV 54023 4.30 

GREENBRIER ..................................................................................................................................... WV 54025 4.50 

HAMPSHIRE ....................................................................................................................................... WV 54027 4.30 

HANCOCK ........................................................................................................................................... WV 54029 4.00 

HARDY ................................................................................................................................................ WV 54031 4.30 

HARRISON .......................................................................................................................................... WV 54033 4.30 

JACKSON ............................................................................................................................................ WV 54035 4.30 

JEFFERSON ....................................................................................................................................... WV 54037 4.30 

KANAWHA ........................................................................................................................................... WV 54039 4.30 

LEWIS .................................................................................................................................................. WV 54041 4.30 

LINCOLN ............................................................................................................................................. WV 54043 4.50 

LOGAN ................................................................................................................................................ WV 54045 4.50 

MCDOWELL ........................................................................................................................................ WV 54047 4.80 

MARION .............................................................................................................................................. WV 54049 4.00 

MARSHALL ......................................................................................................................................... WV 54051 4.00 

MASON ................................................................................................................................................ WV 54053 4.30 

MERCER ............................................................................................................................................. WV 54055 4.80 

MINERAL ............................................................................................................................................. WV 54057 4.10 

MINGO ................................................................................................................................................. WV 54059 4.50 

MONONGALIA .................................................................................................................................... WV 54061 4.10 

MONROE ............................................................................................................................................. WV 54063 4.80 

MORGAN ............................................................................................................................................. WV 54065 4.30 

NICHOLAS .......................................................................................................................................... WV 54067 4.50 

OHIO .................................................................................................................................................... WV 54069 4.00 

PENDLETON ....................................................................................................................................... WV 54071 4.30 

PLEASANTS ........................................................................................................................................ WV 54073 4.00 

POCAHONTAS .................................................................................................................................... WV 54075 4.50 

PRESTON ........................................................................................................................................... WV 54077 4.10 

PUTNAM .............................................................................................................................................. WV 54079 4.30 

RALEIGH ............................................................................................................................................. WV 54081 4.50 

RANDOLPH ......................................................................................................................................... WV 54083 4.30 

RITCHIE .............................................................................................................................................. WV 54085 4.30 

ROANE ................................................................................................................................................ WV 54087 4.30 

SUMMERS .......................................................................................................................................... WV 54089 4.80 

TAYLOR .............................................................................................................................................. WV 54091 4.30 

TUCKER .............................................................................................................................................. WV 54093 4.30 

TYLER ................................................................................................................................................. WV 54095 4.00 

UPSHUR .............................................................................................................................................. WV 54097 4.30 

WAYNE ................................................................................................................................................ WV 54099 4.50 

WEBSTER ........................................................................................................................................... WV 54101 4.50 

WETZEL .............................................................................................................................................. WV 54103 4.00 

WIRT .................................................................................................................................................... WV 54105 4.30 

WOOD ................................................................................................................................................. WV 54107 4.00 

WYOMING ........................................................................................................................................... WV 54109 4.80 

ADAMS ................................................................................................................................................ WI 55001 2.90 

ASHLAND ............................................................................................................................................ WI 55003 2.80 

BARRON ............................................................................................................................................. WI 55005 2.80 

BAYFIELD ........................................................................................................................................... WI 55007 2.80 

BROWN ............................................................................................................................................... WI 55009 2.90 

BUFFALO ............................................................................................................................................ WI 55011 2.80 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95582 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

BURNETT ............................................................................................................................................ WI 55013 2.80 

CALUMET ............................................................................................................................................ WI 55015 2.90 

CHIPPEWA .......................................................................................................................................... WI 55017 2.80 

CLARK ................................................................................................................................................. WI 55019 2.80 

COLUMBIA .......................................................................................................................................... WI 55021 2.90 

CRAWFORD ........................................................................................................................................ WI 55023 2.90 

DANE ................................................................................................................................................... WI 55025 2.90 

DODGE ................................................................................................................................................ WI 55027 2.90 

DOOR .................................................................................................................................................. WI 55029 2.90 

DOUGLAS ........................................................................................................................................... WI 55031 2.80 

DUNN .................................................................................................................................................. WI 55033 2.80 

EAU CLAIRE ....................................................................................................................................... WI 55035 2.80 

FLORENCE ......................................................................................................................................... WI 55037 2.80 

FOND DU LAC .................................................................................................................................... WI 55039 2.90 

FOREST .............................................................................................................................................. WI 55041 2.80 

GRANT ................................................................................................................................................ WI 55043 2.90 

GREEN ................................................................................................................................................ WI 55045 2.90 

GREEN LAKE ...................................................................................................................................... WI 55047 2.90 

IOWA ................................................................................................................................................... WI 55049 2.90 

IRON .................................................................................................................................................... WI 55051 2.80 

JACKSON ............................................................................................................................................ WI 55053 2.80 

JEFFERSON ....................................................................................................................................... WI 55055 2.90 

JUNEAU .............................................................................................................................................. WI 55057 2.90 

KENOSHA ........................................................................................................................................... WI 55059 3.10 

KEWAUNEE ........................................................................................................................................ WI 55061 2.90 

LA CROSSE ........................................................................................................................................ WI 55063 2.90 

LAFAYETTE ........................................................................................................................................ WI 55065 2.90 

LANGLADE .......................................................................................................................................... WI 55067 2.90 

LINCOLN ............................................................................................................................................. WI 55069 2.80 

MANITOWOC ...................................................................................................................................... WI 55071 2.90 

MARATHON ........................................................................................................................................ WI 55073 2.90 

MARINETTE ........................................................................................................................................ WI 55075 2.90 

MARQUETTE ...................................................................................................................................... WI 55077 2.90 

MENOMINEE ....................................................................................................................................... WI 55078 2.90 

MILWAUKEE ....................................................................................................................................... WI 55079 3.10 

MONROE ............................................................................................................................................. WI 55081 2.90 

OCONTO ............................................................................................................................................. WI 55083 2.90 

ONEIDA ............................................................................................................................................... WI 55085 2.80 

OUTAGAMIE ....................................................................................................................................... WI 55087 2.90 

OZAUKEE ............................................................................................................................................ WI 55089 3.10 

PEPIN .................................................................................................................................................. WI 55091 2.80 

PIERCE ............................................................................................................................................... WI 55093 2.80 

POLK ................................................................................................................................................... WI 55095 2.80 

PORTAGE ........................................................................................................................................... WI 55097 2.90 

PRICE .................................................................................................................................................. WI 55099 2.80 

RACINE ............................................................................................................................................... WI 55101 3.10 

RICHLAND .......................................................................................................................................... WI 55103 2.90 

ROCK .................................................................................................................................................. WI 55105 2.90 

RUSK ................................................................................................................................................... WI 55107 2.80 

ST. CROIX ........................................................................................................................................... WI 55109 2.80 

SAUK ................................................................................................................................................... WI 55111 2.90 

SAWYER ............................................................................................................................................. WI 55113 2.80 

SHAWANO .......................................................................................................................................... WI 55115 2.90 

SHEBOYGAN ...................................................................................................................................... WI 55117 2.90 

TAYLOR .............................................................................................................................................. WI 55119 2.80 

TREMPEALEAU .................................................................................................................................. WI 55121 2.80 

VERNON ............................................................................................................................................. WI 55123 2.90 

VILAS ................................................................................................................................................... WI 55125 2.80 

WALWORTH ....................................................................................................................................... WI 55127 3.10 

WASHBURN ........................................................................................................................................ WI 55129 2.80 

WASHINGTON .................................................................................................................................... WI 55131 2.90 

WAUKESHA ........................................................................................................................................ WI 55133 2.90 

WAUPACA ........................................................................................................................................... WI 55135 2.90 

WAUSHARA ........................................................................................................................................ WI 55137 2.90 

WINNEBAGO ...................................................................................................................................... WI 55139 2.90 

WOOD ................................................................................................................................................. WI 55141 2.90 

ALBANY ............................................................................................................................................... WY 56001 2.40 

BIG HORN ........................................................................................................................................... WY 56003 2.40 

CAMPBELL .......................................................................................................................................... WY 56005 2.40 

CARBON ............................................................................................................................................. WY 56007 2.40 

CONVERSE ......................................................................................................................................... WY 56009 2.40 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95583 

County/parish/city State FIPS code 

Class I 

differential 

adjusted for 

location 

CROOK ................................................................................................................................................ WY 56011 2.40 

FREMONT ........................................................................................................................................... WY 56013 2.40 

GOSHEN ............................................................................................................................................. WY 56015 2.40 

HOT SPRINGS .................................................................................................................................... WY 56017 2.40 

JOHNSON ........................................................................................................................................... WY 56019 2.40 

LARAMIE ............................................................................................................................................. WY 56021 2.50 

LINCOLN ............................................................................................................................................. WY 56023 2.20 

NATRONA ........................................................................................................................................... WY 56025 2.40 

NIOBRARA .......................................................................................................................................... WY 56027 2.40 

PARK ................................................................................................................................................... WY 56029 2.20 

PLATTE ............................................................................................................................................... WY 56031 2.40 

SHERIDAN .......................................................................................................................................... WY 56033 2.40 

SUBLETTE .......................................................................................................................................... WY 56035 2.20 

SWEETWATER ................................................................................................................................... WY 56037 2.40 

TETON ................................................................................................................................................. WY 56039 2.20 

UINTA .................................................................................................................................................. WY 56041 2.20 

WASHAKIE .......................................................................................................................................... WY 56043 2.40 

WESTON ............................................................................................................................................. WY 56045 2.40 

■ 5. Amend § 1000.76 by 

■ a. Removing the words ‘‘and § 1135.11 

of this chapter’’ wherever they appear; 

and 

■ b. Revising and republishing 

paragraphs (a)(2) through (4) and 

paragraph (c). 

The revisions and republications read 

as follows: 

§ 1000.76 Payments by a handler 

operating a partially regulated distributing 

plant. 

* * * * * 

(a) * * * 

(2) For orders with multiple 

component pricing, compute a Class I 

differential price by subtracting Class III 

price from the current month’s 

applicable Class I price. Multiply the 

pounds remaining after the computation 

in paragraph (a)(1)(iii) of this section by 

the amount by which the Class I 

differential price exceeds the producer 

price differential, both prices to be 

applicable at the location of the partially 

regulated distributing plant except that 

neither the adjusted Class I differential 

price nor the adjusted producer price 

differential shall be less than zero; 

(3) For orders with skim milk and 

butterfat pricing, multiply the remaining 

pounds by the amount by which the 

applicable Class I price exceeds the 

uniform price, both prices to be 

applicable at the location of the partially 

regulated distributing plant except that 

neither the adjusted Class I price nor the 

adjusted uniform price differential shall 

be less than the lowest announced class 

price; and 

(4) Unless the payment option 

described in paragraph (d) of this 

section is selected, add the amount 

obtained from multiplying the pounds 

of labeled reconstituted milk included 

in paragraph (a)(1)(iii) of this section by 

any positive difference between the 

applicable Class I price at the location 

of the partially regulated distributing 

plant (less $1.00 if the reconstituted 

milk is labeled as such) and the Class IV 

price. 

* * * * * 

(c) The operator of a partially 

regulated distributing plant that is 

subject to marketwide pooling of returns 

under a milk classification and pricing 

program that is imposed under the 

authority of a State government shall 

pay on or before the 25th day after the 

end of the month (except as provided in 

§ 1000.90) to the market administrator 

for the producer-settlement fund an 

amount computed as follows: after 

completing the computations described 

in paragraphs (a)(1)(i) and (ii) of this 

section, determine the value of the 

remaining pounds of fluid milk 

products disposed of as route 

disposition in the marketing area by 

multiplying the hundredweight of such 

pounds by the amount, if greater than 

zero, that remains after subtracting the 

State program’s class prices applicable 

to such products at the plant’s location 

from the applicable Federal order Class 

I price at the location of the plant. 

* * * * * 

PART 1001—MILK IN THE 

NORTHEAST MARKETING AREA 

■ 6. The authority citation for part 1001 

continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 7. Amend § 1001.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraph (i) as 

paragraph (j); and 

■ c. Adding new paragraph (i). 

The revision and addition read as 

follows: 

§ 1001.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (i) of this section 

and subtracting from that total amount 

the value computed in paragraph (j) of 

this section. Unless otherwise specified, 

the skim milk, butterfat, and the 

combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(i) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95584 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

PART 1005—MILK IN THE 

APPLACHIAN MARKETING AREA 

■ 8. The authority citation for part 1005 

continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 9. Amend § 1005.51 by revising 

paragraph (a) and removing and 

reserving paragraph (b) to read as 

follows: 

§ 1005.51 Class I differential, adjustments 

to Class I prices, and Class I price. 

(a) The Class I differential shall be the 

differential established for Mecklenburg 

County, North Carolina, which is 

reported in § 1000.52 of this chapter. 

The Class I price shall be the price 

computed pursuant to § 1000.50(a) of 

this chapter for Mecklenburg County, 

North Carolina. 

(b) [Reserved] 

■ 10. Amend § 1005.60 by: 

■ a. Revising the introductory text and 

paragraph (a); 

■ b. Removing paragraph (g); 

■ c. Redesignating paragraph (f) as 

paragraph (g); and 

■ d. Adding new paragraph (f). 

The revisions and addition read as 

follows: 

§ 1005.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (f) of this section 

and subtracting from that total amount 

the value computed in paragraph (g) of 

this section. Receipts of nonfluid milk 

products that are distributed as labeled 

reconstituted milk for which payments 

are made to the producer-settlement 

fund of another Federal order under 

§ 1000.76(a)(4) or (d) of this chapter 

shall be excluded from pricing under 

this section. 

(a) Multiply the pounds of skim milk 

and butterfat in producer milk that were 

classified in each class pursuant to 

§ 1000.44(c) of this chapter by the 

applicable skim milk and butterfat 

prices, and add the resulting amounts; 

* * * * * 

(f) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1006—MILK IN THE FLORIDA 

MARKETING AREA 

■ 11. The authority citation for part 

1006 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 12. Amend § 1006.51 by revising 

paragraph (a), removing and reserving 

paragraph (b), and removing paragraph 

(c) to read as follows: 

§ 1006.51 Class I differential, adjustments 

to Class I prices, and Class I price. 

(a) The Class I differential shall be the 

differential established for Hillsborough 

County, Florida, which is reported in 

§ 1000.52 of this chapter. The Class I 

price shall be the price computed 

pursuant to § 1000.50(a) of this chapter 

for Hillsborough County, Florida. 

(b) [Reserved] 

■ 13. Amend § 1006.60 by: 

■ a. Revising the introductory text and 

paragraph (a); 

■ b. Removing paragraphs (g) through 

(i); 

■ c. Redesignating paragraph (f) as 

paragraph (g); and 

■ d. Adding new paragraph (f). 

The revisions and addition read as 

follows: 

§ 1006.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (f) of this section 

and subtracting from that total amount 

the value computed in paragraph (g) of 

this section. Receipts of nonfluid milk 

products that are distributed as labeled 

reconstituted milk for which payments 

are made to the producer-settlement 

fund of another Federal order under 

§ 1000.76(a)(4) or (d) of this chapter 

shall be excluded from pricing under 

this section. 

(a) Multiply the pounds of skim milk 

and butterfat in producer milk that were 

classified in each class pursuant to 

§ 1000.44(c) of this chapter by the 

applicable skim milk and butterfat 

prices, and add the resulting amounts; 

* * * * * 

(f) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1007—MILK IN THE SOUTHEAST 

MARKETING AREA 

■ 14. The authority citation for part 

1007 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 15. Amend § 1007.51 by revising 

paragraph (a) and removing and 

reserving paragraph (b) to read as 

follows: 

§ 1007.51 Class I differential, adjustments 

to Class I prices, and Class I price. 

(a) The Class I differential shall be the 

differential established for Fulton 

County, Georgia, which is reported in 

§ 1000.52 of this chapter. The Class I 

price shall be the price computed 

pursuant to § 1000.50(a) of this chapter 

for Fulton County, Georgia. 

(b) [Reserved] 

■ 16. Amend § 1007.60 by: 

■ a. Revising the introductory text and 

paragraph (a); 

■ b. Removing paragraph (g); 

■ c. Redesignating paragraph (f) as 

paragraph (g); and 

■ d. Adding new paragraph (f). 

The revisions and addition read as 

follows: 

§ 1007.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (f) of this section 

and subtracting from that total amount 

the value computed in paragraph (g) of 

this section. Receipts of nonfluid milk 

products that are distributed as labeled 

reconstituted milk for which payments 

are made to the producer-settlement 

fund of another Federal order under 

§ 1000.76(a)(4) or (d) of this chapter 

shall be excluded from pricing under 

this section. 

(a) Multiply the pounds of skim milk 

and butterfat in producer milk that were 

classified in each class pursuant to 

§ 1000.44(c) of this chapter by the 

applicable skim milk and butterfat 

prices, and add the resulting amounts; 

* * * * * 

(f) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95585 

PART 1030—MILK IN THE UPPER 

MIDWEST MARKETING AREA 

■ 17. The authority citation for part 

1030 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 18. Amend § 1030.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraphs (j) and (k) 

as paragraphs (k) and (l); and 

■ c. Adding new paragraph (j). 

The revision and addition read as 

follows: 

§ 1030.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (j) of this section 

and subtracting from that total amount 

the values computed in paragraphs (k) 

and (l) of this section. Unless otherwise 

specified, the skim milk, butterfat, and 

the combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(j) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1032—MILK IN THE CENTRAL 

MARKETING AREA 

■ 19. The authority citation for part 

1032 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 20. Amend § 1032.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraph (j) as 

paragraph (k); and 

■ c. Adding new paragraph (j). 

The revision and addition read as 

follows: 

§ 1032.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (j) of this section 

and subtracting from that total amount 

the value computed in paragraph (k) of 

this section. Unless otherwise specified, 

the skim milk, butterfat, and the 

combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(j) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1033—MILK IN THE MIDEAST 

MARKETING AREA 

■ 21. The authority citation for part 

1033 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 22. Amend § 1033.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraph (j) as 

paragraph (k); and 

■ c. Adding new paragraph (j). 

The revision and addition read as 

follows: 

§ 1033.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (j) of this section 

and subtracting from that total amount 

the value computed in paragraph (k) of 

this section. Unless otherwise specified, 

the skim milk, butterfat, and the 

combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(j) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1051—MILK IN THE CALIFORNIA 

MARKETING AREA 

■ 23. The authority citation for part 

1051 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 24. Amend § 1051.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraph (i) as 

paragraph (j); and 

■ c. Adding new paragraph (i). 

The revision and addition read as 

follows: 

§ 1051.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (i) of this section 

and subtracting from that total amount 

the value computed in paragraph (j) of 

this section. Unless otherwise specified, 

the skim milk, butterfat, and the 

combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 


ddrumheller on DSK120RN23PROD with PROPOSALS3
95586 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(i) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1124—MILK IN THE PACIFIC 

NORTHWEST MARKETING AREA 

■ 25. The authority citation for part 

1124 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 26. Amend § 1124.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraph (i) as 

paragraph (j); and 

■ c. Adding new paragraph (i). 

The revision and addition read as 

follows: 

§ 1124.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (i) of this section 

and subtracting from that total amount 

the value computed in paragraph (j) of 

this section. Unless otherwise specified, 

the skim milk, butterfat, and the 

combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(i) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1126—MILK IN THE 

SOUTHWEST MARKETING AREA 

■ 27. The authority citation for part 

1126 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 28. Amend § 1126.60 by: 

■ a. Revising the introductory text; 

■ b. Redesignating paragraph (j) as 

paragraph (k); and 

■ c. Adding new paragraph (j). 

The revision and addition read as 

follows: 

§ 1126.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (j) of this section 

and subtracting from that total amount 

the value computed in paragraph (k) of 

this section. Unless otherwise specified, 

the skim milk, butterfat, and the 

combined pounds of skim milk and 

butterfat referred to in this section shall 

result from the steps set forth in 

§ 1000.44(a), (b), and (c) of this chapter, 

respectively, and the nonfat components 

of producer milk in each class shall be 

based upon the proportion of such 

components in producer skim milk. 

Receipts of nonfluid milk products that 

are distributed as labeled reconstituted 

milk for which payments are made to 

the producer-settlement fund of another 

Federal order under § 1000.76(a)(4) or 

(d) of this chapter shall be excluded 

from pricing under this section. 

* * * * * 

(j) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1131—MILK IN THE ARIZONA 

MARKETING AREA 

■ 29. The authority citation for part 

1131 continues to read as follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

■ 30. Amend § 1131.60 by: 

■ a. Revising the introductory 

paragraph; 

■ b. Redesignating paragraph (f) as 

paragraph (g); and 

■ c. Adding new paragraph (f). 

The revision and addition read as 

follows: 

§ 1131.60 Handler’s value of milk. 

For the purpose of computing a 

handler’s obligation for producer milk, 

the market administrator shall 

determine for each month the value of 

milk of each handler with respect to 

each of the handler’s pool plants and of 

each handler described in § 1000.9(c) of 

this chapter with respect to milk that 

was not received at a pool plant by 

adding the amounts computed in 

paragraphs (a) through (f) of this section 

and subtracting from that total amount 

the value computed in paragraph (g) of 

this section. Receipts of nonfluid milk 

products that are distributed as labeled 

reconstituted milk for which payments 

are made to the producer-settlement 

fund of another Federal order under 

§ 1000.76(a)(4) or (d) of this chapter 

shall be excluded from pricing under 

this section. 

* * * * * 

(f) Compute an adjustment for eligible 

Class I producer milk pursuant to 

§ 1000.43(e) of this chapter by 

multiplying the Class I skim milk price 

adjuster computed in § 1000.50(r) of this 

chapter by the pounds of skim milk 

eligible in Class I. 

* * * * * 

PART 1170—DAIRY PRODUCT 

MANDATORY REPORTING 

■ 31. The authority citation for part 

1170 continues to read as follows: 

Authority: 7 U.S.C. 1637–1637b, as 

amended by Pub. L. 106–532, 114 Stat. 2541; 

Pub. L. 107–171, 116 Stat. 207; and Pub. L. 

111–239, 124 Stat. 2501. 

■ 32. Revise and republish § 1170.8(a) to 

read as follows: 

§ 1170.8 Price reporting specifications. 

* * * * * 

(a) Specifications for Cheddar Cheese 

Prices: 

(1) Variety: Cheddar cheese. 

(2) Style: 40-pound blocks. 

(3) Age: Not less than 4 days or more 

than 30 days on date of sale. Exclude 

cheese that will be aged. 

(4) Grade: Product meets Wisconsin 

State Brand or USDA Grade A or better 

standards. 

(5) Color: Colored and within the 

color range of 6–8 on the National 

Cheese Institute color chart. 

(6) Packaging: Price should reflect 

cheese wrapped in a sealed, airtight 

package in corrugated or solid 

fiberboard containers with a reinforcing 


ddrumheller on DSK120RN23PROD with PROPOSALS3
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Proposed Rules 95587 

6First and last section of order. 

7Name of order. 

8Appropriate CFR part number. 

9Next consecutive section number. 

10Appropriate representative period for the order. 

inner liner or sleeve. Exclude all other 

packaging costs from the reported price. 

(7) Exclude: Intra-company sales, 

resales of purchased cheese, forward 

pricing sales (sales in which the selling 

price was set [not adjusted] 30 or more 

days before the transaction was 

completed), cheese produced under 

faith-based close supervision and 

marketed at a higher price than the 

manufacturer’s wholesale market price 

for the basic commodity (for example, 

kosher cheese produced with a rabbi on 

site who is actively involved in 

supervision of the production process), 

sales under the Dairy Export Incentive 

Program or other premium-assisted sales 

(for example, export assistance sales 

through the Cooperatives Working 

Together program), and cheese certified 

as organic by a USDA-accredited 

certifying agent. 

* * * * * 

[Note: The following will not appear 

in the Code of Federal Regulations.] 

Marketing Agreement Regulating the 

Handling of Milk in Certain Marketing 

Areas 

The parties hereto, in order to 

effectuate the declared policy of the Act, 

and in accordance with the rules of 

practice and procedure effective 

thereunder (7 CFR part 900), desire to 

enter into this marketing agreement and 

do hereby agree that the provisions 

referred to in paragraph I hereof as 

augmented by the provisions specified 

in paragraph II hereof, shall be and are 

the provisions of this marketing 

agreement as if set out in full herein. 

I. The findings and determinations, 

order relative to handling, and the 

provisions of §§ ___to___,6 all inclusive, 

of the order regulating the handling of 

milk in the___7 marketing area (7 CFR 

part___) 8 which is annexed hereto; and 

II. The following provisions: § ___9

Record of milk handled and 

authorization to correct typographical 

errors. 

(a) Record of milk handled. The 

undersigned certifies that he/she 

handled during the month of_____,10___ 

hundredweight of milk covered by this 

marketing agreement. 

(b) Authorization to correct 

typographical errors. The undersigned 

hereby authorizes the Deputy 

Administrator, or Acting Deputy 

Administrator, Dairy Programs, 

Agricultural Marketing Service, to 

correct any typographical errors which 

may have been made in this marketing 

agreement. 

Effective date. This marketing 

agreement shall become effective upon 

the execution of a counterpart hereof by 

the Secretary in accordance with 

§ 900.14(a) of the aforesaid rules of 

practice and procedure. 

In Witness Whereof, the contracting 

handlers, acting under the provisions of 

the Act, for the purposes and subject to 

the limitations herein contained and not 

otherwise, have hereunto set their 

respective hands and seals. 

Signature 

By (Name) lllllllllllllll

(Title) lllllllllllllllll

(Address) llllllllllllllll

(Seal) llllllllllllllllll

Attest llllllllllllllllll

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2024–27228 Filed 11–29–24; 8:45 am] 

BILLING CODE P 


ddrumheller on DSK120RN23PROD with PROPOSALS3