II
Calendar No. 284
106TH CONGRESS
1ST SESSION
H. R. 1402
IN THE SENATE OF THE UNITED STATES
SEPTEMBER 24, 1999
Received; read twice and ordered placed on the calendar
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. REQUIRED USE OF OPTION 1A AS PRICE
STRUCTURE FOR CLASS I MILK UNDER CON-
SOLIDATED FEDERAL MILK MARKETING OR-
DERS.
(a) USE OF OPTION 1A.—In implementing the final
decision for the consolidation and reform of Federal milk
marketing orders, as required by section 143 of the Fed-
eral Agriculture Improvement and Reform Act of 1996 (7
U.S.C. 7253), the Secretary of Agriculture shall price
fluid or Class I milk under the orders using the Class I
price differentials identified as Option 1A ‘‘Location-Spe-
cific Differentials Analysis’’ in the proposed rule published
in the Federal Register on January 30, 1998 (63 Fed.
Reg. 4802, 4809), except that the Secretary shall include
the corrections and modifications to such Class I differen-
tials made by the Secretary through April 2, 1999.
(b) EFFECT ON IMPLEMENTATION SCHEDULE.—The
requirement to use Option 1A in subsection (a) does not
modify or delay the time period for actual implementation
of the final decision as part of Federal milk marketing
orders specified in section 738 of the Agriculture, Rural
Development, Food and Drug Administration, and Re-
lated Agencies Appropriations Act, 1999 (as contained in
section 101(a) of division A of Public Law 105–277; 112
Stat. 2681–30).
(c) IMPLEMENTATION OF REQUIREMENT.—
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(1) EXPEDITED IMPLEMENTATION.—The Sec-
retary of Agriculture shall comply with subsection
(a) as soon as practicable after the date of the en-
actment of this Act. The requirement to use the Op-
tion 1A described in such subsection shall not be
subject to—
(A) the notice and hearing requirements of
section 8c(3) of the Agricultural Adjustment
Act (7 U.S.C. 608c(3)), reenacted with amend-
ments by the Agricultural Marketing Agreement
Act of 1937, or the notice and comment provi-
sions of section 553 of title 5, United States
Code;
(B) a referendum conducted by the Sec-
retary of Agriculture pursuant to subsections
(17) or (19) of such section 8c;
(C) the Statement of Policy of the Sec-
retary of Agriculture effective July 24, 1971
(36 Fed. Reg. 13804), relating to notices of
proposed rulemaking and public participation in
rulemaking; and
(D) chapter 35 of title 44, United States
Code (commonly known as the ‘‘Paperwork Re-
duction Act’’).
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(2) EFFECT ON MINIMUM MILK PRICES.—If the
Secretary of Agriculture announces minimum prices
for milk under Federal milk marketing orders pursu-
ant to section 1000.50 of title 7, Code of Federal
Regulations, before the date on which the Secretary
first complies with subsection (a), the minimum
prices so announced before that date shall be the
only applicable minimum prices under Federal milk
marketing orders for the months for which the
prices have been announced.
SEC. 2. NECESSITY OF USING FORMAL RULEMAKING TO DE-
VELOP PRICING METHODS FOR CLASS III
AND CLASS IV MILK; MODIFIED MANUFAC-
TURING ALLOWANCE FOR CHEESE.
(a) CONGRESSIONAL FINDING.—The Class III and
Class IV pricing formulas included in the final decision
for the consolidation and reform of Federal milk mar-
keting orders, as published in the Federal Register on
April 2, 1999 (64 Fed. Reg. 16025), do not adequately
reflect public comment on the original proposed rule pub-
lished in the Federal Register on January 30, 1998 (63
Fed. Reg. 4802), and are sufficiently different from the
proposed rule and any comments submitted with regard
to the proposed rule that further emergency rulemaking
is merited.
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(b) FORMAL RULEMAKING.—
(1) REQUIRED.—The Secretary of Agriculture
shall conduct rulemaking, on the record after an op-
portunity for an agency hearing, to reconsider the
Class III and Class IV pricing formulas included in
the final decision referred to in subsection (a).
(2) IMPLEMENTATION.—A final decision on the
formula shall be implemented not later than 10
months after the date of the enactment of this Act.
(3) EFFECT OF COURT ORDER.—The actions
authorized by this subsection are intended to ensure
the timely publication and implementation of new
pricing formulas for Class III and Class IV milk. In
the event that the Secretary is enjoined or otherwise
restrained by a court order from implementing the
final decision under paragraph (2), the length of
time for which that injunction or other restraining
order is effective shall be added to the time limita-
tions specified in paragraph (2) thereby extending
those time limitations by a period of time equal to
the period of time for which the injunction or other
restraining order is effective.
(c) 
FAILURE
TO
TIMELY
COMPLETE
RULE-
MAKING.—If the Secretary of Agriculture fails to imple-
ment new Class III and Class IV pricing formulas within
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the time period required under subsection (b)(2) (plus any
additional period provided under subsection (b)(3)), the
Secretary may not assess or collect assessments from milk
producers or handlers under section 8c of the Agricultural
Adjustment Act (7 U.S.C. 608c), reenacted with amend-
ments by the Agricultural Marketing Agreement Act of
1937, for marketing order administration and services
provided under such section after the end of that period
until the pricing formulas are implemented. The Secretary
may not reduce the level of services provided under that
section on account of the prohibition against assessments,
but shall rather cover the cost of marketing order adminis-
tration and services through funds available for the Agri-
cultural Marketing Service of the Department.
(d) EFFECT
ON IMPLEMENTATION SCHEDULE.—
Subject to subsection (e), the requirement for additional
rulemaking in subsection (b) does not modify or delay the
time period for actual implementation of the final decision
referred to in subsection (a) as part of Federal milk mar-
keting orders, as such time period is specified in section
738 of the Agriculture, Rural Development, Food and
Drug Administration, and Related Agencies Appropria-
tions Act, 1999 (as contained in section 101(a) of division
A of Public Law 105–277; 112 Stat. 2681–30).
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(e) MODIFIED MANUFACTURING ALLOWANCE
FOR
CHEESE.—
(1) MODIFICATION OF ALLOWANCE.—Pending
the implementation of new pricing formulas for
Class III and Class IV milk as required by sub-
section (b), the Secretary of Agriculture shall modify
the formula used for determining Class III prices, as
contained in the final decision referred to in sub-
section (a), to replace the manufacturing allowance
of 17.02 cents per pound of cheese each place it ap-
pears in that formula with an amount equal to 14.7
cents per pound of cheese.
(2) EXPEDITED IMPLEMENTATION.—The Sec-
retary of Agriculture shall implement the modified
formula as soon as practicable after the date of the
enactment of this Act. Implementation and use of
the modified formula shall not be subject to—
(A) the notice and hearing requirements of
section 8c(3) of the Agricultural Adjustment
Act (7 U.S.C. 608c(3)), reenacted with amend-
ments by the Agricultural Marketing Agreement
Act of 1937, or the notice and comment provi-
sions of section 553 of title 5, United States
Code;
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(B) a referendum conducted by the Sec-
retary of Agriculture pursuant to subsections
(17) or (19) of such section 8c;
(C) the Statement of Policy of the Sec-
retary of Agriculture effective July 24, 1971
(36 Fed. Reg. 13804), relating to notices of
proposed rulemaking and public participation in
rulemaking; and
(D) chapter 35 of title 44, United States
Code (commonly known as the ‘‘Paperwork Re-
duction Act’’).
(3) EFFECT ON MINIMUM MILK PRICES.—If the
Secretary of Agriculture announces minimum prices
for milk under Federal milk marketing orders pursu-
ant to section 1000.50 of title 7, Code of Federal
Regulations, before the date on which the Secretary
first implements the modified formula, the minimum
prices so announced before that date shall be the
only applicable minimum prices under Federal milk
marketing orders for the months for which the
prices have been announced.
SEC. 3. ONE-YEAR EXTENSION OF CURRENT MILK PRICE
SUPPORT PROGRAM.
(a) EXTENSION OF PROGRAM.—Subsection (h) of
section 141 of the Agricultural Market Transition Act (7
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U.S.C. 7251) is amended by striking ‘‘1999’’ both places
it appears and inserting ‘‘2000’’.
(b) CONTINUATION OF CURRENT PRICE SUPPORT
RATE.—Subsection (b)(4) of such section is amended by
striking ‘‘year 1999’’ and inserting ‘‘years 1999 and
2000’’.
(c) ELIMINATION OF RECOURSE LOAN PROGRAM FOR
PROCESSORS.—Section 142 of the Agricultural Market
Transition Act (7 U.S.C. 7252) is repealed.
SEC. 4. DAIRY FORWARD PRICING PROGRAM.
The Agricultural Adjustment Act (7 U.S.C. 601 et
seq.), reenacted with amendments by the Agricultural
Marketing Agreement Act of 1937, is amended by adding
at the end the following new section:
‘‘SEC. 23. DAIRY FORWARD PRICING PILOT PROGRAM.
‘‘(a) PILOT PROGRAM REQUIRED.—Not later than 90
days after the date of the enactment of this section, the
Secretary of Agriculture shall establish a temporary pilot
program under which milk producers and cooperatives are
authorized to voluntarily enter into forward price con-
tracts with milk handlers.
‘‘(b) MINIMUM MILK PRICE REQUIREMENTS.—Pay-
ments made by milk handlers to milk producers and co-
operatives, and prices received by milk producers and co-
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operatives, under the forward contracts shall be deemed
to satisfy—
‘‘(1) all regulated minimum milk price require-
ments of paragraphs (B) and (F) of subsection (5)
of section 8c; and
‘‘(2) the requirement of paragraph (C) of such
subsection regarding total payments by each han-
dler.
‘‘(c) MILK COVERED BY PILOT PROGRAM.—The pilot
program shall apply only with respect to the marketing
of federally regulated milk that—
‘‘(1) is not classified as Class I milk or other-
wise intended for fluid use; and
‘‘(2) is in the current of interstate or foreign
commerce or directly burdens, obstructs, or affects
interstate or foreign commerce in federally regulated
milk.
‘‘(d) DURATION.—The authority of the Secretary of
Agriculture to carry out the pilot program shall terminate
on December 31, 2004. No forward price contract entered
into under the program may extend beyond that date.
‘‘(e) STUDY AND REPORT ON EFFECT OF PILOT
PROGRAM.—
‘‘(1) STUDY.—The Secretary of Agriculture
shall conduct a study on forward contracting be-
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tween milk producers and cooperatives and milk
handlers to determine the impact on milk prices paid
to producers in the United States. To obtain infor-
mation for the study, the Secretary may use the au-
thorities available to the Secretary under section 8d,
subject to the confidentiality requirements of sub-
section (2) of such section.
‘‘(2) REPORT.—Not later than April 30, 2002,
the Secretary shall submit to the Committee on Ag-
riculture, Nutrition and Forestry of the Senate and
the Committee on Agriculture of the House of Rep-
resentatives a report containing the results of the
study.’’.
Passed the House of Representatives September 22,
1999.
Attest:
JEFF TRANDAHL,
Clerk.