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Notices Federal Register

14879

Vol. 62, No. 60

Friday, March 28, 1997

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

[DA–96–06]

Amplified Decision Regarding the

Northeast Interstate Dairy Compact

AGENCY: Agricultural Marketing Service.

ACTION: Notice.

SUMMARY: This notice announces the

Secretary of Agriculture’s amplified

decision concerning whether a

compelling public interest exists in the

Northeast Interstate Dairy Compact

Region, and whether implementation of

the Compact should be authorized. After

review of the record, the Secretary finds

that a compelling public interest exists

in the Compact region and continues to

authorize its implementation. The

Compact region consists of the States of

Connecticut, Maine, Massachusetts,

New Hampshire, Rhode Island and

Vermont.

EFFECTIVE DATE: March 20, 1997.

FOR FURTHER INFORMATION CONTACT:

Richard M. McKee, Director, USDA/

AMS/Dairy Division, Room 2968, South

Building, P.O. Box 96456, Washington,

DC 20090–6456 (202) 720–4392.

PRIOR DOCUMENTS: Notice Requesting

Comments on the Northeast Interstate

Dairy Compact: Issued April 30, 1996;

published May 3, 1996 (61 FR 19904).

Notice of Findings and Authority to

Implement the Northeast Interstate

Dairy Compact: Issued August 22, 1996;

published August 28, 1996 (61 FR

44290).

SUPPLEMENTARY INFORMATION: Section

147 of the 1996 Federal Agriculture

Improvement and Reform (FAIR) Act

(Pub. L. 104–127) establishes

Congressional consent for the Northeast

Interstate Dairy Compact (the Compact)

entered into by the States of

Connecticut, Maine, Massachusetts,

New Hampshire, Rhode Island, and

Vermont subject to several conditions.

The FAIR Act provides that ‘‘Based

upon a finding by the Secretary of a

compelling public interest in the

Compact region, the Secretary may grant

the States that have ratified the

Northeast Interstate Dairy Compact, as

of the date of enactment of this title, the

authority to implement the Northeast

Interstate Dairy Compact.’’ On August 8,

1996, the Secretary issued a Finding of

a compelling public interest and

authorized the Northeast Interstate

Diary Compact.

In complying with a court order, the

Secretary on March 20, 1997, issued the

following amplified decision concerning

his finding that a compelling public

interest exists in the Compact Region:

Decision of Secretary Dan Glickman on the

Northeast Interstate Dairy Compact

On August 9, 1996, I issued a statement on

the Northeast Interstate Dairy Compact (the

Compact) in which I found a compelling

public interest in the Compact region and

authorized implementation of the Compact.

Given my concerns about the possible

adverse effects of the Compact, I expressed

my expectation that the Compact

Commission (the Commission) would

implement and administer the Compact in a

way that would prevent such effects. I

indicated my intention to monitor the

Commission’s implementation of the

Compact and to take such steps as necessary,

including revocation of my authorization to

implement the Compact, if conditions

warranted such remedial action.

That decision was challenged by the Milk

Industry Foundation in Federal district court

for the District of Columbia. In a December

11, 1996, decision denying the plaintiff’s

request for a preliminary injunction, the

court found that my decision failed to

explain adequately the basis of the finding

that a compelling public interest exists in the

Compact region. The court also expressed its

view that I lacked the authority to revoke my

authorization to implement the Compact.

The Department of Agriculture (the

Department) subsequently requested that the

court stay further proceedings in the case to

allow me to amplify my earlier decision. On

February 3, 1997, the court issued an order

allowing me 45 days to issue a decision and

instructed the Department not to prejudge the

outcome of its review or be bound by any

prior determinations in this matter.

Following the court’s order, the

Department reevaluated the record, including

comments received in response to a Federal

Register notice the Department published on

May 3, 1996, seeking public comments on the

Compact from interested parties. This

decision is the outcome of that process.

The evidence in the record regarding the

economic condition of dairy farmers in the

Compact region is mixed. Many commenters

who support the Compact argued that the

Compact is necessary to maintain viable

dairy industry in the Compact region. Some

commenters also asserted that the Compact is

essential to the continued health of the

regional economy. They noted that the dairy

industry annually contributes $1.7 billion to

the region’s economy, and stated that, in

Vermont, it represents 70 percent of that

state’s agricultural economy. They also

argued that dairy farmers in the Compact

region are going out of business and that they

receive lower prices than dairy farmers in

other areas of the country.

Commenters who opposed the Compact

argued that the decline in the number of

dairy farmers in the Compact region has been

less than the national average. They also

argued that milk prices in the Compact

region are more favorable to dairy producers

than prices in other regions of the country,

and that the Compact is not warranted by

supply and demand conditions or any other

pertinent economic factors.

The Department’s analysis shows that

farm-gate milk prices in the Compact region,

adjusted for hauling, other charges, and

premiums, as well as net returns, average

below what producers in many other regions

of the country receive. On the other hand, the

decline in the number of dairy producers in

the Compact region in recent years has been

less than the national average. A review of

milk production since 1990 indicates that the

Compact region has maintained its share of

U.S. milk production, even though its dairy

producers have not grown in size as fast as

producers elsewhere.

One of the primary objectives of the

Compact is to help maintain the viability of

family-sized dairy farms in the Compact

region during the transition period from the

current milk marketing order regime to a

reformed order system mandated by the

Federal Agriculture Improvement and

Reform Act of 1996 (1996 Farm Bill). The

higher milk prices that would likely result

from the Compact would increase the

profitability of dairy farming and, in the short

term, reduce some of the financial pressure

on dairy producers in the Compact region.

Thus, while these higher prices may not alter

the long-term trend toward larger and

probably fewer dairy operations, because all

producers would benefit in direct proportion

to their size, the higher returns would, I am

convinced, provide a short-term benefit to

small dairy producers.

I believe that it is important to take

reasonable measures to preserve small family

farms, and I believe that most Americans, if

asked, would agree with this goal. The ideals

of family farmers, such as self-sufficiency,

independence, and working in balance with

nature, are deeply rooted in American history

and culture. Regrettably, however, the

number of small farms has steadily declined

over the years.
14880 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Notices

To some, the consolidation of agriculture is

a benign phenomenon that simply reflects

the efforts of farmers expanding their

operations to become more efficient and

more economically viable. To others,

however, the decline in number and increase

in size of farm operations reflect a disruption

of rural communities and an undesirable

concentration of economic power in the

hands of fewer producers, presaging the

eventual demise of small, independent

family farmers.

None of us involved in agricultural policy

has at hand a set of easy answers to these

vexing questions. During the same time that

significant structural changes in the

American agricultural system have occurred,

the system has continued to produce the

safest, most abundant and most affordable

food supply in the world. But I do not believe

that maintaining this food supply means that

agricultural production should or must be

dominated by large producers. America

wants and still needs the family farm.

This belief is obviously strongly held by

the people of the Compact region. Numerous

commenters argued that small dairy farms are

an important part of the character and culture

of their communities, and they have united

to take steps to preserve these farms by

approving the Compact. Commenters also

noted that the success of the Compact would

help to limit the continued conversion of

farmland to non-farm uses which threatens

the unique characteristics of New England

rural scenery.

I am convinced that small dairy farms are

an essential part of the character and culture

in the Compact region. These farms preserve

open spaces, sculpt the landscape, and

provide the land base for a wide diversity of

recreational pursuits. There is clearly

widespread support throughout the Compact

region to help prevent additional dairy

farmers from going out of business. I believe

that the Compact represents a cooperative

effort by consumers, processors, and

government representatives that will help

address this concern during the transition to

a reform milk marketing order system as

mandated by the 1996 Farm Bill.

However, I also share with all Americans

a commitment to helping those who are less

fortunate. In fact, some commenters opposed

the Compact because it could have adverse

effects on low-income people and could

increase the costs of government food

assistance programs. Indeed, in my earlier

decision, I specifically raised, concerns about

the effect of the Compact on consumers,

particularly low-income families, in the

Compact region.

I sought to address those concerns by

laying out my expectations regarding

implementation of the Compact, particularly

my insistence that the Commission provide

assistance to offset any increased burden on

low income families in the Compact region.

I also insisted that the Commission exercise

its authority to reimburse participants in the

Special Supplemental Nutrition Program for

Women, Infants, and Children (WIC) and

fulfill its obligation to reimburse the

Commodity Credit Corporation (CCC) for

purchases under the dairy price support

program, if warranted. At the time I

authorized the Compact, I indicated clearly

that I would closely monitor Compact

implementation. More importantly, I stated

that, if conditions indicated that a

compelling public interest in the region no

longer existed, I would revoke my

authorization.

I continue to be concerned about the

potential effect that imprudent Compact

implementation may have on low-income

families in the Compact region and it would

be wrong for me to ignore this issue.

Assisting dairy farmers in the Compact

region should not and need not come at the

expense of low-income people in the region.

I also expressed concerns about the

potential adverse effect of the Compact on

other dairy-producing regions, concerns

which were shared by a number of

commenters opposed to the Compact.

However, the Department’s analysis

concludes that milk production in the

Compact region is a small percentage of

overall national production, and that

potential adverse effects on milk prices

outside the Compact region, if any, are likely

to be very small. The Department has

concluded that the Compact can be

implemented so that it does not measurably

affect milk prices in other dairy producing

regions.

Commenters opposed to the Compact also

argued that it represents a form of regional

protectionism inconsistent with the more

market-oriented direction of other Federal

farm policies and inconsistent with the

current milk marketing order structure.

However, while the Compact may not move

in the direction of some other Federal farm

policies, it is consistent with efforts to

encourage more regional and local

responsibility for issues previously addressed

at the Federal level.

In addition, the Compact is a short-term

measure specifically confined by statute to

the transitional period during which the

Department will be moving to reform and

restructure milk marketing orders through a

rulemaking process. The Department began

this process last summer and is firmly

committed to meeting the deadline of April

4, 1999, contained in the 1996 Farm Bill. For

example, on March 7, 1997, the Department

released for public comment several

proposals regarding the fluid milk pricing

and other key provisions of milk marketing

orders, and additional proposals will be

issued in the near future.

Dairy policy is one of the most complex

areas of Federal agricultural policy. Changes

are regularly made to Federal policies and

programs to ensure that they reflect the latest

developments and appropriately balance all

of the various factors that must be

considered. The Compact can and should be

implemented with flexibility and careful

planning. Implementation that fails to reflect

the changing supply, demand, price and

competitive nature of the dairy industry

would not be in the public interest.

The Congress left to the Department’s

expertise and discretion the determination of

what might constitute a compelling public

interest in the Compact region. The

Department has concluded that such a

finding and authorization to implement the

Compact cannot be viewed as a one time

event based on a single snapshot in time.

Rather, the Department strongly believes that

the assessment of a compelling public

interest in the Compact region may well

change over time.

This Compact creates a policy-setting

Commission whose authorities are not

merely ministerial. Compact implementation

is a dynamic, on-going process, and the

Commission will function in a constantly

changing economic and sociological

environment. It is impossible to foresee how

the Commission will exercise its power

carrying out its broad responsibilities, or to

predict how conditions in the Compact

region will evolve. Facts and circumstances

that may currently justify authorization may

subsequently change to the extent that a

compelling public interest no longer exists in

the Compact region.

Given the shifting nature of the compelling

public interest test, the Department strongly

believes that the authority to withdraw or

revoke its authorization is an essential

element of any decision which finds that a

compelling public interest exists. While the

Department recognizes the court’s view that

I do not have the authority to revoke

authorization to implement the Compact, this

issue was neither thoroughly briefed nor

argued to the court, and the Department

respectfully disagrees.

For the foregoing reasons, I find that there

is a compelling public interest in the

Compact region and authorize

implementation of the Northeast Interstate

Dairy Compact. In authorizing the Compact’s

implementation, I have concluded that the

balance has been properly struck, given

current conditions. The Compact is a shortterm measure that, if implemented with

common-sense and sensitivity to the needs of

all affected persons and interests, can benefit

the dairy producers and all citizens in the

Compact region without producing adverse

side effects.

I recognize, however, that balancing all of

the factors involved here may not be an easy

task for the Commission. Therefore, the

Department is ready to assist the Commission

in implementing the Compact to achieve

these goals. In addition, I encourage the

elected officials of the Compact region to

work with the Commission to ensure that low

income people, the American taxpayers, and

other U.S. dairy producers are not adversely

affected by the implementation of the

Compact.

To ensure successful implementation of

the Compact in accordance with my decision,

the Department will continue to monitor the

Commission and will take all necessary steps

within its authority, including revocation, to

achieve these objectives. Additionally, as the

court observed, the Department may raise

concerns regarding the operation of the

Commission with Congress and, if necessary,

request that it revoke its consent to the

Compact.

Dated: March 24, 1997.

Shirley D. Watkins,

Acting Assistant Secretary, Marketing and

Regulatory Programs.

[FR Doc. 97–7865 Filed 3–27–97; 8:45 am]

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