Establishment of a Milk Donation Reimbursement Program
| Published date | 05 September 2019 |
| Citation | 84 FR 46653 |
| Record Number | 2019-19090 |
| Section | Rules and Regulations |
| Court | Agricultural Marketing Service |
Federal Register, Volume 84 Issue 172 (Thursday, September 5, 2019)
[Federal Register Volume 84, Number 172 (Thursday, September 5, 2019)]
[Rules and Regulations]
[Pages 46653-46661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19090]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 84, No. 172 / Thursday, September 5, 2019 /
Rules and Regulations
[[Page 46653]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1146
RIN 0581-AD87
[Doc. No. AMS-DA-19-0001]
Establishment of a Milk Donation Reimbursement Program
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule establishes the Milk Donation Reimbursement Program.
Under the program, eligible dairy organizations that account to a
Federal milk marketing order marketwide pool and incur qualified
expenses related to certain fluid milk product donations may apply for
and receive limited reimbursements to cover those expenses. A provision
of the 2018 Farm Bill requires establishment of this program. The
program is intended to reduce food waste and provide nutrition
assistance to individuals in low-income groups.
DATES: Effective: September 16, 2019.
FOR FURTHER INFORMATION CONTACT: Emily DeBord, Marketing Specialist,
AMS Dairy Program, USDA; 1400 Independence Avenue SW, Room 2958-S,
Washington, DC 20250; telephone: (202) 720-5567; email: [email protected].
SUPPLEMENTARY INFORMATION: A provision of the Agricultural Improvement
Act of 2018 (Pub. L. 115-334) (2018 Farm Bill) repealed the Dairy
Product Donation Program specified in Section 1431 of the Agricultural
Act of 2014 (Pub. L. 113-79) (2014 Farm Bill) and amended title I,
subtitle D, part III of the 2014 Farm Bill to require establishment of
the Milk Donation Program.
Section 1601(c)(2)(A) of the 2014 Farm Bill provides for the
promulgation of the regulations to implement the Dairy Product Donation
Program to be made without regard to the notice and comment
requirements of the Administrative Procedure Act (APA), 5 U.S.C. 553.
Section 1701 of the 2018 Farm Bill extends that Congressional direction
to the establishment of a milk donation program to replace the Dairy
Product Donation Program. AMS, therefore, is issuing this final rule
without prior notice or public comment.
Amended section 1431 of the 2014 Farm Bill (amended statute)
authorizes the Secretary of Agriculture (Secretary) to establish a
program to reimburse eligible dairy organizations for a portion of the
value of fluid milk products they donate to eligible non-profit
organizations for distribution to individuals in low-income groups. The
Secretary delegated authority to establish and administer this program
to the Agricultural Marketing Service (AMS). This rule outlines the
provisions of the new Milk Donation Reimbursement Program (MDRP)
codified at 7 CFR part 1146. Program provisions are intended to
encourage the donation of fluid milk products to provide nutrition
assistance to individuals in low-income groups and to reduce food
waste.
Background
Under Federal milk marketing orders (FMMOs), regulated milk
handlers receiving dairy farmers' milk account to a marketwide pool on
their end-use classification of the milk. FMMO milk end-use
classifications are generally as follows: Class I for beverage fluid
milk products such as whole, skim, nonfat, and flavored milks; Class II
for soft products such as yogurt and ice cream; Class III for
spreadable and hard cheeses; and Class IV for butter and evaporated,
condensed, and non-fat dried milk. Class I milk products typically
carry the highest value in the marketplace. Monthly FMMO classified
prices reflect surveyed end-product wholesale market prices. An FMMO
generally requires that classified values for pooled milk be accounted
for and paid to individual farmers or cooperative associations of
farmers on the basis of a uniform, or average, price. Thus, all
eligible dairy farmers whose milk is pooled share in the marketwide
use-values of milk by regulated handlers.
FMMOs consider all packaged milk product deliveries to be
commercial transactions and require regulated handlers to account to
the FMMO pool at the Class I value for milk in all unreturned
deliveries of packaged fluid milk products. Regulated handlers who
elect to donate packaged fluid milk are required to account to a pool
for milk contained in donated fluid milk products at Class I values.
Thus, handlers may have found dumping surplus milk a more financially
sound alternative than donation because they would avoid an FMMO pool
obligation. Under the MDRP outlined in this rule, eligible handlers who
account to FMMO pools and donate packaged fluid milk products to
eligible non-profit organizations may claim reimbursements for all or
part of the FMMO cost difference between the Class I value at the
plant, and the lowest classified value for the month. Under the
provisions of the MDRP, handlers may not claim reimbursements for other
costs related to donating fluid milk products, such as the costs for
processing, bottling, and transporting donated milk. The intent of the
MDRP is to encourage handlers to make donations to food assistance
programs and reduce food waste.
As provided by the amended statute (Sec. 1431(j)), total program
funding in fiscal year 2019 is $9 million, and $5 million for each
fiscal year thereafter. Using 2018 average FMMO classified prices and
the weighted average FMMO Class I differential, AMS estimates that, had
the program been in place in fiscal year 2018, $9 million could have
reimbursed eligible distributors for milk donations of approximately 28
million gallons of fresh fluid milk (assuming a reimbursement rate of
100 percent of the difference between the Class I price and the lowest
classified price). AMS further estimates that 28 million gallons of
fresh fluid milk represented less than 0.6 percent of all FMMO Class I
sales during 2018.
Program Provisions
This rule outlines the provisions of the MDRP established as
required by the amended statute.
Definitions
The amended statute includes definitions for terms used in the
statute. Similarly, Sec. 1146.1 of the rule provides definitions of
those terms as they are used in the new program. Key terms are
``eligible dairy organization,'' ``eligible
[[Page 46654]]
distributor,'' ``eligible milk,'' ``eligible partnership,'' and
``participating partnership.''
Eligible dairy organization. The amended statute specifies that a
dairy organization eligible to participate in the program is a dairy
farmer, either individually or as part of a cooperative, or a dairy
processor, that accounts to an FMMO pool and incurs qualified expenses
by accounting to the pool for fluid milk product donations. See Sec.
1431(a)(1)(A) and (B). Under FMMOs, only producer cooperatives acting
as handlers by receiving the milk of dairy farmers and delivering it to
regulated processing plants and handlers who operate regulated dairy
processing plants must account to the marketwide pools. See 7 CFR
1000.9. Only handlers regulated under an FMMO are required to account
to the pool at FMMO classified prices for all their Class I (fluid
milk) purchases. Therefore, to ensure reimbursements requested under
the program are properly applied only to qualified expenses, Sec.
1146.1 defines ``eligible dairy organization'' as a dairy farmer
cooperative or a dairy processor that accounts to the FMMO marketwide
pool and incurs qualified expenses described in Sec. 1146.108.
Eligible distributor. The amended statute specifies a distributor
eligible to receive donated milk under the program must be a public or
private non-profit organization able to distribute donated milk. See
Sec. 1431(a)(2). Section 1146.1 of the rule likewise defines ``eligible
distributor'' as a public or private non-profit organization that
distributes donated eligible milk. Under the new program, participating
non-profit organizations are required to verify their non-profit status
and affirm they have appropriate facilities and processes for
distributing donated milk to individuals in low-income groups.
Eligible milk. The amended statute specifies only Class I fluid
milk products produced and processed in the United States are eligible
for donation to eligible distributors and reimbursements under the
program. See Sec. 1431(a)(3). As explained earlier, ``Class I'' is the
FMMO classification for fluid milk products intended for use as
beverages, such as whole, skim, nonfat, and flavored milks. See 7 CFR
1000.15. The amended statute requires eligible milk under the program
be produced and processed in the United States. See Sec. 1431(a)(3).
For use under the program, eligible milk must meet the commodity
specifications and processing and packaging standards as provided in
the commodity specification documents maintained on the AMS website, as
required in Sec. 1146.3 of the rule and discussed later in this
document. Section 1146.1 of the rule defines ``eligible milk'' as Class
I fluid milk products produced and processed in the United States
meeting the commodity specifications referenced in Sec. 1146.3.
Eligible partnership. The amended statute specifies participation
in the MDRP requires application for the program by a partnership
between an eligible dairy organization and an eligible distributor. See
Sec. 1431(a)(4). Each partnership is required to submit a joint Milk
Donation and Distribution Plan (Plan) containing information about
their respective roles to AMS. Requiring the parties to apply as a
partnership ensures that all aspects of the program requirements will
be met, and an agreed-upon structure will be in place when eligible
milk is available for donation and distribution. Thus, Sec. 1146.1 of
the rule defines ``eligible partnership'' as a partnership between an
eligible dairy organization and an eligible distributor.
AMS recognizes some eligible dairy organizations may have
processing plants in more than one location and each may be regulated
under different FMMOs. As well, eligible distributors may have more
than one distribution site, for example, several food pantries operated
by one umbrella organization. Thus, under Sec. 1146.102(a) of the
rule, the eligible partnership can submit one Plan to cover multiple
plants and/or distribution points as long as only one eligible dairy
organization and one eligible distributor are represented. Individual
eligible dairy organizations and eligible distributors can also form
other partnerships, but they are required to submit separate Plans for
each partnership.
Participating partnership. The amended statute specifies that a
participating partnership is one whose Plan has been approved by AMS.
See Sec. 1431(a)(5). Once an eligible partnership's Plan has been
approved by AMS pursuant to Sec. 1146.104 of the rule, the partnership
is considered a participant in the MDRP. Documentation from both
partners will be necessary to validate claims by the eligible dairy
organization for reimbursement under the program, as specified in Sec.
1146.106. Thus, Sec. 1146.1 of the rule defines ``participating
partnership'' as an eligible partnership for which AMS has approved a
Milk Donation and Distribution Plan for eligible milk under Sec.
1146.104.
Additional terms necessary for administration of the program are
defined in Sec. 1146.1.
Commodity Specifications
As with AMS programs related to commodity purchases, the commodity
specifications for fluid milk products under the MDRP are contained in
a separate document available on the AMS website. Maintaining the
specifications as an online document allows AMS to keep the
specifications current and provide updated links to other relevant
industry references, such as AMS's current Commercial Item Description
for fluid milk products,\1\ the U.S. Food and Drug Administration's
(FDA) Grade A Pasteurized Milk Ordinance,\2\ and FDA's Interstate Milk
Shippers List.\3\ These references provide guidance pertaining to the
proper identification, manufacture, packaging, transportation, and
storage of fluid milk products. The dairy industry is familiar with
these references and the frequency with which they can be revised,
sometimes several times each year. Therefore, Sec. 1146.3(a) of the
rule provides that eligible milk donations must meet the commodity
specifications in effect on the date the milk is shipped from the
processor to the eligible distributor, and Sec. 1146.3(b) requires AMS
to maintain current commodity specifications for donated milk on its
website.
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\1\ https://www.ams.usda.gov/sites/default/files/media/CIDMilkFluid.pdf, accessed August 29, 2019.
\2\ https://www.fda.gov/downloads/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/Milk/UCM612027.pdf; accessed
August 29, 2019.
\3\ https://www.fda.gov/Food/GuidanceRegulation/FederalStateFoodPrograms/ucm2007965.htm#sld, accessed August 29,
2019.
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Program Eligibility and Participation
Section 1146.100 of the rule provides that an eligible dairy
organization must be a member of a participating partnership to be
eligible for reimbursements under the MDRP. As explained in the
Definitions section above, a participating partnership is one whose
Plan has been approved by AMS. Program reimbursements cannot exceed 100
percent of the eligible dairy organization's qualified expenses.
The amended statute requires the Secretary to review Plans at least
annually and determine whether to approve those Plans. See Sec.
1431(c)(2). Further, the amended statute requires the Secretary to, at
least annually, preapprove an amount for reimbursement of qualified
expenses under each Plan based on an assessment of the Plan's
feasibility and the extent to which the Plan advances the purposes of
the program. See Sec. 1431(f)(1). Finally, Sec. 1431(c)(1) of the
amended statute specifies the information that
[[Page 46655]]
eligible partnerships must supply with their Plans. Sections 1146.102
and 1146.104 of the rule address these statutory requirements and are
described in detail below.
Section 1146.102 of the rule outlines requirements for submission
of Plans to AMS in order to be considered for the program. Eligible
partnerships must apply or reapply for program participation each
fiscal year by the deadline announced by AMS to be assured of
consideration. Eligible partnerships must estimate the amount of
eligible milk the dairy organization partner will donate to the
distributor partner for distribution to persons in low-income groups.
Such amounts should include planned milk donations that a dairy
organization might make on an anticipated schedule, as well as plans
for contingency donations the dairy organization might make under
certain situations, such as when the distributor partner identifies a
specific need for additional milk donations. Plans submitted to AMS for
program approval must include a signed affirmation regarding the
partnership's ability to supply, transport, store, and distribute
eligible donated milk products consistent with the requirements in the
commodity specifications under Sec. 1146.3 of the rule. Finally, the
eligible partnership is required to propose the rate at which qualified
expenses under the program will be reimbursed to the eligible dairy
organization member. Such information will enable AMS to determine
whether each partnership's Plan is feasible and likely to fulfill the
statutory purposes of the program. As specified in Sec. 1146.208 of
the rule, AMS will only collect information deemed necessary to
determine whether an eligible partnership's Plan should be approved.
All proprietary business information submitted will be used only for
the purposes of the program and will be kept confidential by AMS.
Section 1146.104 of the rule specifies the process AMS will use to
review applications to the program and determine whether to approve
Plans submitted by eligible partnerships. Within 45 days of the
application deadline, AMS will review the Plans, determine whether to
approve or disapprove them, and notify the eligible partnership of
AMS's determination. In making determinations, AMS will consider under
Sec. 1146.104(a)(1) the total amount of funding available for the
program each fiscal year. The amended statute specifies that the
Secretary shall use $9 million dollars to carry out the provisions of
the program for fiscal year 2019, and $5 million dollars for each
fiscal year thereafter. See Sec. 1431(j). Under Sec. 1146.104(a)(2),
AMS will consider the feasibility of each Plan by determining whether
available funding will cover the total amount of donations at the
reimbursement rate proposed by the partnership. As well, AMS will
review the information submitted by the partnership, including the
signed confirmation that the partnership can meet the requirements
related to proper processing, transport, and storage of donated milk
products until they are distributed. Under Sec. 1146.104(a)(3), AMS
will consider the extent to which the Plan would advance the statutory
purposes of the MDRP, namely whether it would encourage the donation of
eligible milk, provide nutrition assistance to individuals in low-
income groups, and reduce food waste. See amended statute at Sec.
1431(f)(B)(ii). Finally, the amended statute specifies that preference
will be given to eligible partnerships where the dairy organization
provides funding and in-kind contributions in addition to the eligible
milk donations for which the dairy organization will seek
reimbursement. See Sec. 1431(f)(2). Section 1146.104(a)(4) incorporates
that factor for Plan consideration.
Under Sec. 1146.104(b) of the rule, participating partnerships can
apply for continued program participation in subsequent fiscal years
and can either notify AMS that there are no changes to the previous
fiscal year's Plan, or they can submit a revised Plan for
consideration. Section 1431(f)(2) of the amended statute specifies that
preference will be given to eligible partnerships who provide funding
and in-kind contributions in addition to the donations for which they
are reimbursed. Accordingly, Sec. 1146.104(b) of the rule allows for
participating partnerships desiring to continue in the program to
submit additional information about funding and in-kind donations the
dairy organization partner made during the previous fiscal year.
Section 1146.104(c) of the rule provides that AMS will determine
whether to approve new or continuing Plans for all or a portion of each
Plan's proposed donations and reimbursements, depending on the amount
of funds available for allocation to all participating partnerships
during the fiscal year. In their Plans, partnerships will include a
rate at which they propose to be reimbursed for milk donations. For
example, the Plan may request reimbursement at a rate of 75 percent of
the difference between Class I and the lowest class price for eligible
milk in each month they make donations. Upon Plan approval, AMS will
specify the approved rate, as well as the total amount the partnership
can receive in reimbursements during the fiscal year. The approved
total amount will be dependent upon the number of approved program
partnerships and available funding. The partnership may submit
reimbursement claims any time during the fiscal year or up to 90 days
after the close of the fiscal year. Once the partnership's
reimbursements for the year reach the total dollar amount approved for
that partnership, reimbursements under their Plan will not be approved
for the remainder of the fiscal year, unless an adjustment or increase
is provided as described below.
The amended statute specifies that the Secretary shall adjust or
increase amounts approved for reimbursement based on performance and
demand. See Sec. 1431(f)(3)(A). Section 1146.104(d) of the rule
provides that AMS will review the status of each approved Plan during
the applicable fiscal year. AMS may adjust the amount of reimbursements
available under a participating partnership's Plan based on the
partnership's performance under their Plan to date, the availability of
program funds, or changes in demand for fluid milk donations. For
example, in the aftermath of a hurricane that displaces numerous
people, AMS could determine that demand for milk donations may increase
in that area and AMS could make adjustments to the Plans of
participating partnerships in the affected area to allow for additional
reimbursements to support increased milk donations, if the partnerships
are willing to do so. In another example, during its routine review of
approved Plans, AMS might observe that one partnership has been unable
to donate the amount of eligible milk it originally estimated because
the distributor partner's food pantry closed. Under Sec.
1146.104(d)(2) of the rule, AMS could reduce that partnership's
approved reimbursement amount and reassign the unused funds to another
participating partnership who has indicated it is interested in making
additional donations. AMS will provide affected participating
partnerships 30 days' notice prior to adjusting their approved Plans.
The amended statute further requires the Secretary to establish a
procedure for participating partnerships to request increases to the
amount approved for reimbursement under their Plans based on changes in
conditions. See Sec. 1431(f)(3)(B). Section 1146.104(e) of the rule
establishes the process for making such requests. To support requests
for increases in reimbursement amounts, participating partnerships are
required
[[Page 46656]]
to submit information about the change in conditions that would warrant
increases. The partnership is required to indicate whether it is
seeking a long-term increase to address a permanent change in
conditions, such as the addition of a second food pantry by the
distributor partner, or whether it is seeking only a short-term
increase to address a temporary change in conditions. Examples of
temporary changes in conditions might include a plant receiving excess
milk during the spring flush or a plant being temporarily shut down.
AMS will notify the requester within 30 days of its determination
regarding the requested increase, which will be based on AMS's
evaluation of the reported change in conditions and the availability of
funds.
Additionally, if a natural disaster or other unforeseen event
occurs during the fiscal year, AMS may accept new Plan applications in
order to facilitate donations to meet an immediate need. In this case,
AMS may choose to publish the opportunity to accept new Plans, or a
partnership can request AMS review a new Plan. New Plans must meet the
criteria under Sec. 1146.102 of the rule, and approval is subject to
available remaining program fiscal year funds.
Under Sec. 1146.104(e)(3) of the rule, AMS can give interim
approval of the requested increase and approve incremental increases to
the approved reimbursement amount prior to making a final determination
regarding the increase, as authorized under Section 1431(f)(3)(B)(ii)
of the amended statute.
Reimbursements and Qualified Expenses
Section 1431(d) of the amended statute specifies that the Secretary
shall reimburse the eligible dairy organization member of a
participating partnership for qualified expenses under the program on
receipt of appropriate documentation. Section 1146.106(a) of the rule
provides the process and describes the necessary information and
documentation AMS will require to verify the dairy organization's
claims for reimbursement. For each month in which the dairy
organization makes donations and submits claims for reimbursement, the
dairy organization must report the amount of eligible milk donated to
the eligible distributor, the location of the plant where the milk was
processed, the dates the donated milk was shipped to and received by
the eligible distributor, and the applicable FMMO milk prices for that
location for the month the milk was pooled on an FMMO. The dairy
organization must also provide adequate documentation to verify the
eligible distributor received the donated milk. Such documentation
could include, but is not limited to, processing and shipping records,
bills of lading, storage records, and receiving records from the
eligible distributor. As specified in Sec. 1146.208 of the rule, AMS
will only collect the information and documentation needed to verify
the dairy organization's claims for reimbursement. Under FMMOs, the
United States Department of Agriculture (USDA) is required to keep all
proprietary business information, confidential.\4\ Confidentiality of
such information is extended to its use in administering the MDRP.
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\4\ See 7 U.S.C. 608d(2).
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Section 1146.106(b) of the rule specifies that a participating
partnership can submit reimbursement requests anytime up to 90 days
after the close of the fiscal year. Under Sec. 1146.106(c), AMS will
review, process, and issue payments for reimbursement claims on a
quarterly basis. Under Sec. 1146.106(d), AMS will return incomplete
claims to the submitter so they can be completed and resubmitted. As
authorized by the amended statute (Sec. 1431(d)(2)(B)), AMS may verify
the accuracy of documentation submitted with reimbursement claims with
spot checks and audits under Sec. 1146.206 of the rule.
Section 1431(e) of the amended statute specifies the amount of
reimbursement that can be claimed for qualified expenses under the
program. As explained in the Background section of this document, only
the dairy organization's expenses related to its FMMO pool obligation
can be reimbursed under the MDRP. Reimbursement rates are limited to no
more than 100 percent of the difference between the Class I milk price
at the plant location where the donated milk was processed and the
lowest classified milk price for the applicable month (either Class III
or Class IV). Section 1146.108(a) of the rule provides that
reimbursements will be determined by multiplying the following: [the
amount of eligible milk donated] times [the approved rate for
reimbursement determined pursuant to Sec. Sec. 1146.102(d) and
1146.104(c)] times [the difference in the Class I price at the
processing plant location and the lowest FMMO classified price (either
Class III or Class IV) for the month the donation occurred]. Total
reimbursements for a fiscal year cannot exceed the amount approved by
AMS for each participating partnership.
Administrative Provisions
The amended statute requires the Secretary to publicize
opportunities to participate in the MDRP. See Sec. 1431(h).
Accordingly, Sec. 1146.200 of the rule requires AMS to publish notices
inviting interested parties to apply for program participation on the
AMS website. AMS will announce the total amount of funding available
for each fiscal year and will specify the format for submitting
applications for new or continuing program participation. If, after its
review and approval of the applications submitted, AMS determines that
additional funds are available for the fiscal year, it will publicize
further announcements and invitations on its website.
Section 1431 (j) of the amended statute specifies that program
funds are to remain available until expended. Under Sec. 1146.202 of
the rule, if reimbursement monies remain after all fiscal year
reimbursement claims have been approved and distributed, the remaining
monies will remain available to fund reimbursement claims in subsequent
fiscal years.
The amended statute prohibits the sale of eligible milk products
donated under the MDRP back into commercial markets and specifies that
eligible distributors who violate that prohibition will not be eligible
for future participation in the program. See Sec. 1431(g). Section
1146.204 of the rule implements the statutory prohibition and penalty
for violation.
Section 1431(i) of the amended statute directs the Secretary to
conduct appropriate reviews or audits to ensure the integrity of the
MDRP. Section 1431(d)(2)(B) of the amended statute further authorizes
the Secretary to verify the accuracy of documentation submitted with
claims for reimbursement through spot checks and audits. Section
1146.206 of the rule provides that AMS will verify that the donated
milk for which reimbursement is being sought was pooled on an FMMO. The
section further provides for the review, audit, and spot checks of
information submitted.
As mentioned in the above discussions, Sec. 1146.208 of the rule
requires AMS to maintain confidentiality regarding information it
collects to administer the program, and to use the information only for
program purposes.
Finally, Sec. 1146.210 of the rule specifies that milk products
sold or donated under any other USDA commodity purchase or donation
program are not eligible for reimbursement under the MDRP. From time to
time, USDA may purchase fluid milk products for use in nutrition
assistance programs or other uses, but vendors are compensated for
those
[[Page 46657]]
purchases through funding under those program provisions. One of the
main purposes of the MDRP is to reduce food waste by encouraging the
donation of additional milk to similar outlets. Thus, eligible dairy
organizations who have received compensation for milk purchases under
other USDA programs may not receive reimbursements for the same milk
under the MDRP.
Paperwork Reduction Act
Section 1601(c)(2)(B) of the 2014 Farm Bill provides that the
administration of the Dairy Product Donation Program shall be made
without regard to the Paperwork Reduction Act (PRA), 44 U.S.C. Chapter
35. Section 1701 of the 2018 Farm Bill extends that Congressional
direction to the establishment of the MDRP replacing the Dairy Product
Donation Program. Thus, any information collection conducted for the
MDRP is not subject to the PRA.
Implementation of this program will place information collection
requirements on participating entities. AMS estimates twenty
partnerships will be involved in the program during each fiscal year.
Each participating partnership will be required to submit a Milk
Donation and Reimbursement Plan. Claims will be processed quarterly,
thus participating partnerships can submit four Reimbursement Claim
Forms per year. AMS estimates it will take participating partnerships 2
hours per year to complete a Milk Donation and Reimbursement Plan Form,
and 6 hours per year to complete the Reimbursement Claim Form (1.5
hours each reporting quarter). Assuming the reporting burden will be
completed by an administrative assistant employee, at an hourly salary
rate of $20, AMS estimates an annual reporting cost of $160 per
participating partnership, for a total annual program reporting cost of
$3,200 (assuming 20 participating partnerships).
E-Government Act
USDA is committed to complying with the E-Government Act (44 U.S.C.
3601, et seq.) by promoting 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.
The application and reimbursements can be filed though
www.ams.usda.gov/mdrp.
Executive Orders 12866 and 13771
AMS is issuing this rule in conformance with Executive Order
12866--Regulatory Planning and Review, which directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits, including potential economic, environmental, public
health and safety effects, distributive impacts, and equity.
AMS considered alternative methods for allocating available funds
under the program, including whether to allocate reimbursements equally
across all the geographic areas of the United States covered by FMMOs
or to target specific regions in need of milk donations. Ultimately AMS
determined that because the primary purpose of the program is to reduce
waste associated with the disposition of surplus milk, the industry
would be best served by allowing those who are more likely to have
surplus milk and who are in a position to make donations to apply for
the program without consideration of geographic location.
This rule has been designated a significant regulatory action under
Executive Order 12866. This rule is not expected to have any quantified
cost or benefits, rather the rule is expected to result in transfers
consistent with the following table:
Table 1--Accounting Statement
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Primary Discount rate
estimate Year dollar (percent) Period covered
----------------------------------------------------------------------------------------------------------------
Benefits--
Annualized Monetized ($millions/ 0 2019 7 FY 2019-2023
year).
0 2019 3
Costs--
Annualized Monetized ($millions/ 0 2019 7 FY 2019-2023
year).
0 2019 3
Transfers--From the Federal
Government to an eligible
partnership
Annualized Monetized ($millions/ $6.33 2019 7 FY 2019-2023
year).
$6.02 2019 3
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As the program is voluntary, eligible partnerships are expected to
only participate if their individual circumstances deem it beneficial.
The transfers will be reimbursements in the form of Federal payments to
program participants to help offset costs associated with eligible milk
donations.
This rule is not subject to the requirements of E.O. 13771 because
this rule results in no more than de minimis costs.
AMS does not anticipate this program will impact milk prices. Milk
donated to non-profit organizations to feed needy people is already
priced under the FMMO system. Implementation of this program will not
change FMMO milk prices as it relates to donated milk. Furthermore,
this program is expected to have a negligible impact on retail milk
sales. Typically, needy populations that receive nutrition assistance
from non-profit organizations do not buy milk at retail outlets.
Consequently, fluid milk donations through this program are not
expected to become a substitution for retail milk sales.
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule as defined by 5 U.S.C. 804(2).
Regulatory Flexibility Analysis
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601, et seq.), AMS considered the
economic impact of the action on small entities. Accordingly, AMS has
prepared this final 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. Small dairy farm businesses have
been defined by the Small Business Administration (SBA) (13 CFR
121.601) as those businesses having annual gross receipts of less than
$750,000. The SBA's definition of small agricultural service firms,
which includes handlers that are regulated under FMMOs, varies
depending on the product manufactured. Small fluid beverage
[[Page 46658]]
milk product manufacturers are defined as having 1,000 or fewer
employees.
The milk of 31,435 U.S. dairy farms was pooled on an FMMO for the
month of December 2018. AMS estimates that 28,920 dairy farms, or 92
percent, would be considered small businesses. Dairy farmers of all
sizes whose milk is pooled on an FMMO may benefit from the program
because it will encourage donations of milk which will be pooled on an
FMMO at its Class I value.
During December 2018 there were 233 regulated fluid milk processing
plants (distributing plants) pooling Class I milk on an FMMO. AMS
estimates 18 percent were operated by dairy-farmer cooperatives, while
the remaining were independently owned. AMS assumes that fluid milk
processing plants, whether cooperative or independently owned, are the
entities most likely to qualify as eligible dairy organizations under
the MDRP, as they are regulated and typically have FMMO pool
obligations. AMS estimates 120 different entities operated the 233
fluid milk processing plants pooling milk in December 2018. AMS
believes 120 to be the universe of fluid milk processing plants
eligible to participate in the MDRP. Of the 120, 63 percent would be
considered small businesses, based on their numbers of employees.
Participating in the MDRP will not unduly or disproportionately
burden small fluid milk processing plants. All entities, regardless of
size, can apply for the program if they incur qualified expenses as
defined by program provisions. Program provisions are administered
without regard for business size. Small fluid milk processing plants
not accounting to an FMMO pool have no obligations that would qualify
as reimbursable expenses under the MDRP and are not eligible to
participate.
The definition of an eligible distributor is a public or non-profit
organization that distributes donated milk. AMS was unable to obtain
reliable data regarding the size of public or private non-profit
organizations distributing food for nutrition assistance. Therefore,
the business sizes of eligible distributors could not be estimated.
Eligible distributors, regardless of size, can voluntarily participate
in the MDRP if they are able to form a partnership with an eligible
dairy organization. The voluntary nature of the program allows any
eligible distributor to stop participating if they find the program
causes an undue or disproportionate burden.
AMS has determined establishment of this program will not have a
significant economic impact on a substantial number of small entities.
Program provisions will be applied uniformly to both large and small
businesses and are not expected to unduly or disproportionately burden
small entities.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175--Consultation and Coordination with Indian Tribal
Governments. Executive Order 13175 requires Federal agencies to consult
and coordinate with tribes on a government-to-government basis on: (1)
Policies that have tribal implications, including regulations,
legislative comments, or proposed legislation; and (2) other policy
statements or actions that have substantial direct effects on one or
more Indian tribes, on the relationship between the Federal Government
and Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
The Office of Tribal Relations (OTR) has reviewed this rule and
determined that consultation is not required at this time. If a tribe
requests consultation AMS will work with the OTR to ensure meaningful
consultation is provided where changes, additions, and modifications
identified herein are not expressly mandated by Congress.
Executive Order 12988
This rule has been reviewed under Executive Order 12988--Civil
Justice Reform. This final rule may have retroactive effect because
milk donations made during fiscal year 2019 prior to the effective date
of the rule may be eligible for reimbursement if the eligible
partnership's fiscal year 2019 Plan is approved for reimbursements and
if the partnership meets all other program requirements. Fiscal year
2019 extends from October 1, 2018, to September 30, 2019. Milk
donations made prior to October 1, 2018, are not eligible for
reimbursement under the program. There are no administrative procedures
that must be exhausted prior to judicial challenges to the provisions
of this rule.
Effective Date
The APA requires the publication of a substantive rule 30 days
before its effective date, unless the rule grants or recognizes an
exemption or relieves a restriction (5 U.S.C. 553(d)(1)), or the agency
finds good cause for excepting the rule from the 30-day notice
requirement (5 U.S.C. 553(d)(3).) AMS finds that it is unnecessary and
contrary to the public interest to postpone the effective date of this
rule for 30 days after publication in the Federal Register. The
Congressional mandate to establish the program specifies funding for
the 2019 fiscal year, which began October 1, 2018. To take full
advantage of the program, participants will need as much time as
possible to submit Plans and receive approval from AMS. Furthermore,
participation in the program is intended to reduce food waste by
offering milk handlers alternative outlets for excess milk, which is
produced primarily in the spring and summer months due to the normal
seasonal variations in milk production. It would be contrary to the
public interest to delay implementation of the MDRP, thereby
potentially delaying donations of milk to food assistance programs and
prolonging food waste. Moreover, postponing the effective date of the
final rule for 30 days is unnecessary to allow for adjustment of
behavior because participation in the program is voluntary. Therefore,
good cause exists for making this rule effective 10 days after
publication in the Federal Register.
List of Subjects in 7 CFR Part 1146
Milk, Donations, Reporting and recordkeeping requirements.
0
For the reasons set forth in the preamble, 7 CFR Subtitle B Chapter X
is amended by adding part 1146 to read as follows:
PART 1146--MILK DONATION REIMBURSEMENT PROGRAM
Subpart A--General Provisions
Sec.
1146.1 Definitions.
1146.3 Commodity specifications.
Subpart B--Program Participation
1146.100 Program eligibility.
1146.102 Milk donation and distribution plans.
1146.104 Review and approval.
1146.106 Reimbursement claims.
1146.108 Reimbursement calculation.
Subpart C--Administrative Provisions
1146.200 Opportunities to participate.
1146.202 Rollover of fiscal year funds.
1146.204 Prohibition on resale of products.
1146.206 Enforcement.
1146.208 Confidentiality.
1146.210 Milk for other programs.
Authority: Sec. 1431, Pub. L. 113-79, 128 Stat. 695, as amended.
Subpart A--General Provisions
Sec. 1146.1 Definitions.
AMS means the Agricultural Marketing Service of the United States
Department of Agriculture.
[[Page 46659]]
Eligible dairy organization means a dairy farmer cooperative or a
dairy processor that
(1) Is regulated under a Federal milk marketing order (FMMO);
(2) Accounts to the FMMO marketwide pool; and
(3) Incurs qualified expenses described in Sec. 1146.108.
Eligible distributor means a public or private non-profit
organization that distributes donated eligible milk.
Eligible milk means Class I fluid milk products produced and
processed in the United States that meet the specifications referenced
in Sec. 1146.3.
Eligible partnership means a partnership between an eligible dairy
organization and an eligible distributor.
Fiscal year means the twelve-month period beginning October 1 of
any year and ending September 30 of the following year.
Participating partnership means an eligible partnership for which
AMS has approved a Milk Donation and Distribution Plan (Plan) for
eligible milk under Sec. 1146.104.
Program means the Milk Donation Reimbursement Program established
in this part.
Secretary means the Secretary of the United States Department of
Agriculture or a representative authorized to act in the Secretary's
stead.
Sec. 1146.3 Commodity specifications.
(a) Eligible milk donations must meet the commodity specifications
pursuant to (b) in effect on the date the milk products are shipped
from the plant.
(b) AMS shall maintain on its website current commodity
specifications for fluid milk products eligible for donation and
reimbursement under the Milk Donation Reimbursement Program.
Subpart B--Program Participation
Sec. 1146.100 Program eligibility.
An eligible dairy organization must be a member of a participating
partnership pursuant to Sec. 1146.1 to be eligible to receive
reimbursements for qualified expenses related to voluntary fluid milk
donations, subject to the requirements and limitations specified in
Sec. Sec. 1146.102 and 1146.104.
Sec. 1146.102 Milk donation and distribution plans.
New and continuing program participants must submit completed Milk
Donation and Distribution Plans to AMS in the form and manner
established by AMS prior to the published deadline to be eligible for
program consideration. The completed Milk Donation and Distribution
Plans must -
(a) Include the physical location(s) of the eligible dairy
organization's processing plant(s) and the eligible distributor's
distribution site(s);
(b) Include an affirmation signed by both eligible partners
regarding the partnership's ability to supply, transport, store, and
distribute donated milk products consistent with the commodity
specifications under Sec. 1146.3;
(c) Include an estimate of the quantity of eligible milk that the
eligible dairy organization plans to donate each year, based on -
(1) Preplanned donations and
(2) Contingency plans to address unanticipated donations; and
(d) Describe the rate at which the eligible dairy organization will
be reimbursed, not to exceed 100 percent of qualified expenses pursuant
to Sec. 1146.108.
Sec. 1146.104 Review and approval.
(a) Program application and review. Within 45 days of the announced
application deadline, AMS will review all timely submitted applications
and notify applicants regarding approval or disapproval for program
participation during the applicable fiscal year. AMS's review will
include the following considerations:
(1) Total annual funds available for program administration,
including an appropriate reserve to cover costs related to increases in
milk prices and emergencies including, but not limited to, natural
disasters;
(2) The feasibility of the Milk Donation and Distribution Plan;
(3) The extent to which the Milk Donation and Distribution Plan -
(i) Promotes the donation of eligible milk,
(ii) Provides nutrition assistance to individuals in low-income
groups, and
(iii) Reduces food waste; and
(4) The amount of funding and in-kind contributions the eligible
dairy organization plans to provide to the eligible distributor in
addition to the donations for which it will seek reimbursements.
(b) Continued program participation. Within 45 days of the
announced application deadline, AMS will review and notify applicants
regarding approval or disapproval of all timely submitted requests for
continued program participation. AMS's review of requests for continued
program participation will be based on consideration of the factors in
paragraphs (a) and (b)(1) through (3) of this section:
(1) Eligible partnerships requesting continued program
participation for a subsequent fiscal year can include information
about the extent to which they provided funding and in-kind
contributions in addition to eligible milk donations for which they
were reimbursed through the program for the previous fiscal year.
(2) If there are no changes to the eligible partnership's approved
Milk Donation and Distribution Plan from the previous fiscal year, the
eligible partnership must request that AMS consider the partnership's
previously approved Plan and provide the additional information
described in paragraph (b)(1) of this sectoin, if applicable.
(3) If there are changes to the eligible partnership's approved
Milk Donation and Distribution Plan from the previous fiscal year, the
eligible partnership must submit a new Plan as described in paragraph
(a) and provide the additional information described in paragraph
(b)(1) of this section, if applicable.
(c) Plan approval. Subject to the provisions in paragraph (a) of
this section, AMS will determine whether to approve new and continuing
Milk Donation and Distribution Plans for all or a proportion of each
Plan's proposed donations and reimbursements. For each approved Plan,
AMS will determine:
(1) A reimbursement rate applicable to each claim for reimbursement
during the fiscal year, and
(2) A total dollar amount available for reimbursement during the
fiscal year.
(d) Adjustments. AMS will review the activity of approved Milk
Donation and Distribution Plans during the fiscal year to determine
whether adjustments should be made to the reimbursement amounts
approved under paragraph (c) of this section.
(1) Determinations about adjustments will be based on -
(i) The participating partnership's performance,
(ii) Availability of program funds, and
(iii) Demand for eligible milk donations.
(2) AMS will provide 30 days' notice to participating partnerships
prior to adjusting reimbursement amounts in their respective approved
Milk Donation and Distribution Plans.
(e) Request for increase. Eligible partnerships with approved Milk
Donation and Distribution Plans during any fiscal year may request an
increase in the amount of reimbursement approved under paragraph (c) of
this section based on changes in conditions.
(1) Requests for an increase must be submitted to AMS in the manner
and form established by AMS, and must -
[[Page 46660]]
(i) Describe the change in conditions that would warrant an
increase in reimbursement,
(ii) Indicate whether the requested increase is intended to be a
long-term revision to the eligible partnership's approved Milk Donation
and Distribution Plan or a short-term increase to respond to temporary
conditions, and
(iii) Specify the amount of increased reimbursement requested.
(2) Within 30 days of receipt, AMS will review the request for an
increase and will notify the requester regarding approval or
disapproval of the request. AMS's determination about whether such an
increase is feasible will be based on its evaluation of the factors
described in paragraph (e)(1) of this section and the availability of
funds.
(3) Based on the change in conditions identified by the requester,
AMS will determine whether to provide interim approval of an increase
requested under paragraph (e)(1) of this section and an incremental
increase to the amount of reimbursement approved under paragraph (c) of
this section prior to making a final determination regarding approval
of the requested increase.
Sec. 1146.106 Reimbursement claims.
(a) In order for the eligible dairy organization partner to receive
reimbursements for qualified expenses pursuant to Sec. 1146.108, the
participating partnership must submit a report and appropriate
supporting documentation to AMS.
(1) For each month of the fiscal year pertaining to an approved
Milk Donation and Distribution Plan (including the months prior to
AMS's review and approval of the Plan), the report must include:
(i) The amount of eligible milk donated to the eligible
distributor;
(ii) The location of the plant where the donated milk was
processed;
(iii) The date the donated milk was shipped from the plant where
the milk was processed;
(iv) The date the donated milk was received by the eligible
distributor; and
(v) The applicable announced Federal milk marketing order prices
for the month the milk was pooled:
(A) The Class I price at the plant location where the milk was
processed; and
(B) The lowest classified price (either Class III or Class IV).
(2) Appropriate documentation to support the report required in
paragraph (a)(1) of this section may include, but is not limited to,
copies of processing records, shipping records, bills of lading,
warehouse receipts, distribution records, or other documents that
demonstrate the reported amount of eligible milk was processed,
donated, and distributed in accordance to the approved Milk Donation
and Distribution Plan and as reported in the eligible dairy
organization's report.
(b) Reimbursement requests may be submitted to AMS at any time
during the fiscal year and for up to 90 days after the close of the
fiscal year.
(c) AMS will review and process reimbursement requests on a
quarterly basis, including those submitted by the last day of the month
following the end of each quarter of the fiscal year.
(d) Incomplete reimbursement requests will be returned to the
submitter for revision or completion and resubmission as necessary.
Sec. 1146.108 Reimbursement calculation.
(a) For each reimbursement claim submitted by a participating
partnership, the amount of reimbursement under Sec. 1146.106 shall be
the product of:
(1) The quantity of eligible milk donated by the eligible dairy
organization to the eligible distributor member of the participating
partnership;
(2) The rate described in the approved Milk Donation and
Distribution Plan under Sec. 1146.102(d); and
(3) The difference between the FMMO Class I price at the plant
location and the lowest classified price (either Class III or Class
IV), for the month in which the donation was pooled on a Federal Milk
Marketing Order.
(b) Expenses eligible for reimbursement under Sec. 1146.106 shall
not exceed the value that an eligible dairy organization incurred by
accounting to the Federal milk marketing order pool at the difference
between the announced Class I milk price at the location of the plant
where the milk was processed and the lower of the Class III or Class IV
milk price for the applicable month.
(c) Claim reimbursements are subject to the limitations specified
in paragraph (b) of this section.
(d) Total plan reimbursements are subject to the limitations
specified in Sec. 1146.104(c)(2).
Subpart C--Administrative Provisions
Sec. 1146.200 Opportunities to participate.
(a) AMS will announce opportunities to participate in the Milk
Donation Reimbursement Program and the amount of program funding
available for each fiscal year on the AMS website. The announcements
will include invitations for interested parties to submit new or
revised Milk Donation and Distribution Plans and will specify the
manner and form in which program applications should be submitted.
(b) If, after making approval determinations for the fiscal year
about each submitted program application, AMS determines that
additional reimbursement funds are available, AMS will publish an
announcement to that effect and invite further requests for Plan
approvals pursuant to Sec. 1146.104(a) through (c) or for increases in
reimbursement amounts pursuant Sec. 1146.104(e).
Sec. 1146.202 Rollover of fiscal year funds.
If reimbursement monies remain after all fiscal year reimbursement
claims have been approved and distributed, the remaining monies will be
available to fund reimbursement claims in subsequent fiscal years.
Sec. 1146.204 Prohibition on resale of products.
(a) Prohibition in general. An eligible distributor that receives
eligible milk products donated under the Milk Donation Reimbursement
Program may not sell the donated milk products back into commercial
markets.
(b) Prohibition on future participation. An eligible distributor
that AMS determines has violated the prohibition in paragraph (a) of
this section shall not be eligible for any future participation in the
Milk Donation Reimbursement Program.
Sec. 1146.206 Enforcement.
AMS will verify the donated milk for which reimbursement is sought
was pooled on a FMMO. AMS will also conduct spot checks, reviews, and
audits of the reports and documentation submitted pursuant to Sec.
1146.106(a) to verify their accuracy and to ensure the integrity of the
Milk Donation Reimbursement Program.
Sec. 1146.208 Confidentiality.
AMS will collect only that information deemed necessary to
administer the Milk Donation Reimbursement Program and will use the
information only for that purpose. AMS will keep all proprietary
business information collected under the program confidential.
Sec. 1146.210 Milk for other programs.
Milk sold or donated under other commodity or food assistance
programs administered by the United States Department of Agriculture is
not eligible for reimbursement under the Milk Donation Reimbursement
Program in this part.
[[Page 46661]]
Dated: August 29, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-19090 Filed 9-4-19; 8:45 am]
BILLING CODE 3410-02-P
