106TH CONGRESS

1ST SESSION H. R. 1402

AN ACT

To require the Secretary of Agriculture to implement the Class I milk price structure known as

Option 1A as part of the implementation of thefinal rule to consolidate Federal milk marketingorders.
106TH CONGRESS

1ST SESSION H. R. 1402

AN ACT

To require the Secretary of Agriculture to implement the

Class I milk price structure known as Option 1A as

part of the implementation of the final rule to consolidate

Federal milk marketing orders.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 1402 EH

1 SECTION 1. REQUIRED USE OF OPTION 1A AS PRICE

2 STRUCTURE FOR CLASS I MILK UNDER CON3 SOLIDATED FEDERAL MILK MARKETING OR4 DERS.

5 (a) USE OF OPTION 1A.—In implementing the final

6 decision for the consolidation and reform of Federal milk

7 marketing orders, as required by section 143 of the Fed8 eral Agriculture Improvement and Reform Act of 1996 (7

9 U.S.C. 7253), the Secretary of Agriculture shall price

10 fluid or Class I milk under the orders using the Class I

11 price differentials identified as Option 1A ‘‘Location-Spe12 cific Differentials Analysis’’ in the proposed rule published

13 in the Federal Register on January 30, 1998 (63 Fed.

14 Reg. 4802, 4809), except that the Secretary shall include

15 the corrections and modifications to such Class I differen16 tials made by the Secretary through April 2, 1999.

17 (b) EFFECT ON IMPLEMENTATION SCHEDULE.—The

18 requirement to use Option 1A in subsection (a) does not

19 modify or delay the time period for actual implementation

20 of the final decision as part of Federal milk marketing

21 orders specified in section 738 of the Agriculture, Rural

22 Development, Food and Drug Administration, and Re23 lated Agencies Appropriations Act, 1999 (as contained in

24 section 101(a) of division A of Public Law 105–277; 112

25 Stat. 2681–30).

26 (c) IMPLEMENTATION OF REQUIREMENT.—
3

•HR 1402 EH

1 (1) EXPEDITED IMPLEMENTATION.—The Sec2 retary of Agriculture shall comply with subsection

3 (a) as soon as practicable after the date of the en4 actment of this Act. The requirement to use the Op5 tion 1A described in such subsection shall not be

6 subject to—

7 (A) the notice and hearing requirements of

8 section 8c(3) of the Agricultural Adjustment

9 Act (7 U.S.C. 608c(3)), reenacted with amend10 ments by the Agricultural Marketing Agreement

11 Act of 1937, or the notice and comment provi12 sions of section 553 of title 5, United States

13 Code;

14 (B) a referendum conducted by the Sec15 retary of Agriculture pursuant to subsections

16 (17) or (19) of such section 8c;

17 (C) the Statement of Policy of the Sec18 retary of Agriculture effective July 24, 1971

19 (36 Fed. Reg. 13804), relating to notices of

20 proposed rulemaking and public participation in

21 rulemaking; and

22 (D) chapter 35 of title 44, United States

23 Code (commonly known as the ‘‘Paperwork Re24 duction Act’’).
4

•HR 1402 EH

1 (2) EFFECT ON MINIMUM MILK PRICES.—If the

2 Secretary of Agriculture announces minimum prices

3 for milk under Federal milk marketing orders pursu4 ant to section 1000.50 of title 7, Code of Federal

5 Regulations, before the date on which the Secretary

6 first complies with subsection (a), the minimum

7 prices so announced before that date shall be the

8 only applicable minimum prices under Federal milk

9 marketing orders for the months for which the

10 prices have been announced.

11 SEC. 2. NECESSITY OF USING FORMAL RULEMAKING TO DE12 VELOP PRICING METHODS FOR CLASS III

13 AND CLASS IV MILK; MODIFIED MANUFAC14 TURING ALLOWANCE FOR CHEESE.

15 (a) CONGRESSIONAL FINDING.—The Class III and

16 Class IV pricing formulas included in the final decision

17 for the consolidation and reform of Federal milk mar18 keting orders, as published in the Federal Register on

19 April 2, 1999 (64 Fed. Reg. 16025), do not adequately

20 reflect public comment on the original proposed rule pub21 lished in the Federal Register on January 30, 1998 (63

22 Fed. Reg. 4802), and are sufficiently different from the

23 proposed rule and any comments submitted with regard

24 to the proposed rule that further emergency rulemaking

25 is merited.
5

•HR 1402 EH

1 (b) FORMAL RULEMAKING.—

2 (1) REQUIRED.—The Secretary of Agriculture

3 shall conduct rulemaking, on the record after an op4 portunity for an agency hearing, to reconsider the

5 Class III and Class IV pricing formulas included in

6 the final decision referred to in subsection (a).

7 (2) IMPLEMENTATION.—A final decision on the

8 formula shall be implemented not later than 10

9 months after the date of the enactment of this Act.

10 (3) EFFECT OF COURT ORDER.—The actions

11 authorized by this subsection are intended to ensure

12 the timely publication and implementation of new

13 pricing formulas for Class III and Class IV milk. In

14 the event that the Secretary is enjoined or otherwise

15 restrained by a court order from implementing the

16 final decision under paragraph (2), the length of

17 time for which that injunction or other restraining

18 order is effective shall be added to the time limita19 tions specified in paragraph (2) thereby extending

20 those time limitations by a period of time equal to

21 the period of time for which the injunction or other

22 restraining order is effective.

23 (c) FAILURE TO TIMELY COMPLETE RULE24 MAKING.—If the Secretary of Agriculture fails to imple25 ment new Class III and Class IV pricing formulas within
6

•HR 1402 EH

1 the time period required under subsection (b)(2) (plus any

2 additional period provided under subsection (b)(3)), the

3 Secretary may not assess or collect assessments from milk

4 producers or handlers under section 8c of the Agricultural

5 Adjustment Act (7 U.S.C. 608c), reenacted with amend6 ments by the Agricultural Marketing Agreement Act of

7 1937, for marketing order administration and services

8 provided under such section after the end of that period

9 until the pricing formulas are implemented. The Secretary

10 may not reduce the level of services provided under that

11 section on account of the prohibition against assessments,

12 but shall rather cover the cost of marketing order adminis13 tration and services through funds available for the Agri14 cultural Marketing Service of the Department.

15 (d) EFFECT ON IMPLEMENTATION SCHEDULE.—

16 Subject to subsection (e), the requirement for additional

17 rulemaking in subsection (b) does not modify or delay the

18 time period for actual implementation of the final decision

19 referred to in subsection (a) as part of Federal milk mar20 keting orders, as such time period is specified in section

21 738 of the Agriculture, Rural Development, Food and

22 Drug Administration, and Related Agencies Appropria23 tions Act, 1999 (as contained in section 101(a) of division

24 A of Public Law 105–277; 112 Stat. 2681–30).
7

•HR 1402 EH

1 (e) MODIFIED MANUFACTURING ALLOWANCE FOR

2 CHEESE.—

3 (1) MODIFICATION OF ALLOWANCE.—Pending

4 the implementation of new pricing formulas for

5 Class III and Class IV milk as required by sub6 section (b), the Secretary of Agriculture shall modify

7 the formula used for determining Class III prices, as

8 contained in the final decision referred to in sub9 section (a), to replace the manufacturing allowance

10 of 17.02 cents per pound of cheese each place it ap11 pears in that formula with an amount equal to 14.7

12 cents per pound of cheese.

13 (2) EXPEDITED IMPLEMENTATION.—The Sec14 retary of Agriculture shall implement the modified

15 formula as soon as practicable after the date of the

16 enactment of this Act. Implementation and use of

17 the modified formula shall not be subject to—

18 (A) the notice and hearing requirements of

19 section 8c(3) of the Agricultural Adjustment

20 Act (7 U.S.C. 608c(3)), reenacted with amend21 ments by the Agricultural Marketing Agreement

22 Act of 1937, or the notice and comment provi23 sions of section 553 of title 5, United States

24 Code;
8

•HR 1402 EH

1 (B) a referendum conducted by the Sec2 retary of Agriculture pursuant to subsections

3 (17) or (19) of such section 8c;

4 (C) the Statement of Policy of the Sec5 retary of Agriculture effective July 24, 1971

6 (36 Fed. Reg. 13804), relating to notices of

7 proposed rulemaking and public participation in

8 rulemaking; and

9 (D) chapter 35 of title 44, United States

10 Code (commonly known as the ‘‘Paperwork Re11 duction Act’’).

12 (3) EFFECT ON MINIMUM MILK PRICES.—If the

13 Secretary of Agriculture announces minimum prices

14 for milk under Federal milk marketing orders pursu15 ant to section 1000.50 of title 7, Code of Federal

16 Regulations, before the date on which the Secretary

17 first implements the modified formula, the minimum

18 prices so announced before that date shall be the

19 only applicable minimum prices under Federal milk

20 marketing orders for the months for which the

21 prices have been announced.

22 SEC. 3. ONE-YEAR EXTENSION OF CURRENT MILK PRICE

23 SUPPORT PROGRAM.

24 (a) EXTENSION OF PROGRAM.—Subsection (h) of

25 section 141 of the Agricultural Market Transition Act (7
9

•HR 1402 EH

1 U.S.C. 7251) is amended by striking ‘‘1999’’ both places

2 it appears and inserting ‘‘2000’’.

3 (b) CONTINUATION OF CURRENT PRICE SUPPORT

4 RATE.—Subsection (b)(4) of such section is amended by

5 striking ‘‘year 1999’’ and inserting ‘‘years 1999 and

6 2000’’.

7 (c) ELIMINATION OF RECOURSE LOAN PROGRAM FOR

8 PROCESSORS.—Section 142 of the Agricultural Market

9 Transition Act (7 U.S.C. 7252) is repealed.

10 SEC. 4. DAIRY FORWARD PRICING PROGRAM.

11 The Agricultural Adjustment Act (7 U.S.C. 601 et

12 seq.), reenacted with amendments by the Agricultural

13 Marketing Agreement Act of 1937, is amended by adding

14 at the end the following new section:

15 ‘‘SEC. 23. DAIRY FORWARD PRICING PILOT PROGRAM.

16 ‘‘(a) PILOT PROGRAM REQUIRED.—Not later than 90

17 days after the date of the enactment of this section, the

18 Secretary of Agriculture shall establish a temporary pilot

19 program under which milk producers and cooperatives are

20 authorized to voluntarily enter into forward price con21 tracts with milk handlers.

22 ‘‘(b) MINIMUM MILK PRICE REQUIREMENTS.—Pay23 ments made by milk handlers to milk producers and co24 operatives, and prices received by milk producers and co-
10

•HR 1402 EH

1 operatives, under the forward contracts shall be deemed

2 to satisfy—

3 ‘‘(1) all regulated minimum milk price require4 ments of paragraphs (B) and (F) of subsection (5)

5 of section 8c; and

6 ‘‘(2) the requirement of paragraph (C) of such

7 subsection regarding total payments by each han8 dler.

9 ‘‘(c) MILK COVERED BY PILOT PROGRAM.—The pilot

10 program shall apply only with respect to the marketing

11 of federally regulated milk that—

12 ‘‘(1) is not classified as Class I milk or other13 wise intended for fluid use; and

14 ‘‘(2) is in the current of interstate or foreign

15 commerce or directly burdens, obstructs, or affects

16 interstate or foreign commerce in federally regulated

17 milk.

18 ‘‘(d) DURATION.—The authority of the Secretary of

19 Agriculture to carry out the pilot program shall terminate

20 on December 31, 2004. No forward price contract entered

21 into under the program may extend beyond that date.

22 ‘‘(e) STUDY AND REPORT ON EFFECT OF PILOT

23 PROGRAM.—

24 ‘‘(1) STUDY.—The Secretary of Agriculture

25 shall conduct a study on forward contracting be-
11

•HR 1402 EH

1 tween milk producers and cooperatives and milk

2 handlers to determine the impact on milk prices paid

3 to producers in the United States. To obtain infor4 mation for the study, the Secretary may use the au5 thorities available to the Secretary under section 8d,

6 subject to the confidentiality requirements of sub7 section (2) of such section.

8 ‘‘(2) REPORT.—Not later than April 30, 2002,

9 the Secretary shall submit to the Committee on Ag10 riculture, Nutrition and Forestry of the Senate and

11 the Committee on Agriculture of the House of Rep12 resentatives a report containing the results of the

13 study.’’.

Passed the House of Representatives September 22,

1999.

Attest:

Clerk.