Department of Agriculture, Agricultural Marketing Service: Milk in the New England and Other Marketing Areas--Order Amending the Orders

Published by the Government Accountability Office on 1999-09-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting Office                               Office of the General Counsel
Washington, DC 20548


          September 16, 1999

          The Honorable Richard G. Lugar
          The Honorable Tom Harkin
          Ranking Minority Member
          Committee on Agriculture, Nutrition, and Forestry
          United States Senate

          The Honorable Larry Combest
          The Honorable Charles W. Stenholm
          Ranking Minority Member
          Committee on Agriculture
          House of Representatives

          Subject: Department of Agriculture, Agricultural Marketing Service: Milk in the New
                   England and Other Marketing Areas; Order Amending the Orders

          Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
          major rule promulgated by the Department of Agriculture, entitled “Milk in the New
          England and Other Marketing Areas; Order Amending the Orders” (DA-97-12). We
          received the rule on September 2, 1999. It was published in the Federal Register as a
          final rule on September 1, 1999. 64 Fed. Reg. 47898.

          The final rule consolidates the current 31 federal milk marketing orders into 11
          orders in compliance with the 1996 Farm Bill (Pub. L. 104-127), which mandated that
          the current federal milk marketing orders be consolidated into between 10 and 14
          orders. The rule also sets forth, among other changes, a replacement for the Class I
          price structure and replaces the basic formula price with a multiple component
          pricing system.

          Enclosed is our assessment of Agriculture’s compliance with the procedural steps
          required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.
          Our review indicates that Agriculture complied with the applicable requirements.

          If you have any questions about this report, please contact James W. Vickers,
          Assistant General Counsel, at (202) 512-8210. The official responsible for GAO

evaluation work relating to the subject matter of the rule is Larry Dyckman, Director,
Food and Agriculture Issues. Mr. Dyckman can be reached at (202) 512-5138.

Sincerely yours,

Robert P. Murphy
General Counsel


cc: Ms. Kathleen A. Merrigan
    Agricultural Marketing Service
    Department of Agriculture

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        ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                              ISSUED BY THE
                       DEPARTMENT OF AGRICULTURE,
                       ORDER AMENDING THE ORDERS"

(i) Cost-benefit analysis

A cost-benefit analysis was conducted based on the 6-year period from 2000 to 2005
which showed that the all-market average Class I differential is reduced an estimated
$0.29 per hundredweight. Since the Class I price mover is based on the higher of
the Class III or Class IV value, the Class I price is expected to average down only
$0.19 per hundredweight. As a result, milk used in Class I products is estimated to
increase an average of 42.1 million pounds annually for the 2000-2005 period. Even
though consumption of Class I products increases, price decreases result in
$80.4 million less costs annually to consumers and less revenue to dairy farmers
delivering to federal order markets. However, primarily because of the increase in
the Class II price, consumers spend $77.6 million more for manufactured dairy
products even though 34.1 million pounds less federal order milk is sold in
manufactured products.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607, and 609

The Department of Agriculture considered the economic impact of the reforms
contained in the final rule on small entities and prepared a final regulatory flexibility
analysis which was included in the final decision published in the Federal Register.
64 Fed. Reg. 16034. The analysis discusses the steps taken to minimize the impact on
small entities while adhering to the stated objectives of the rule. The Department
attempted to balance the interests of the small producer and the small processor in
drafting the final rule.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

The final rule does not impose either an intergovernmental or private sector mandate
of over $100 million per year, as defined in the Unfunded Mandates Act of 1995.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The final rule was issued using the notice and comment procedures contained at
5 U.S.C. 553. On January 30, 1998, a Notice of Proposed Rulemaking was published
in the Federal Register. 63 Fed. Reg. 4802. Subsequently, the time period for the
receipt of comments was extended. 63 Fed. Reg. 12417.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The information collection requirements contained in the final rule were previously
approved by the Office of Management and Budget under OMB control number 0581-
0032, effective through September 30, 2001.

Statutory authorization for the rule

The final rule was issued under the authority of section 143 of the Federal
Agriculture Improvement and Reform Act of 1996, Pub. L. 104-127, April 4, 1996.

Executive Order No. 12866

The final rule was reviewed under the Order and found to be an “economically
significant” regulatory action and approved by the Office of Management and Budget
as complying with the requirements of the Order.

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