The U.S. Department of Agriculture’s hearing to consider proposals to establish a Federal Milk Marketing Order for California began on September 22 in Clovis, Calif, and concluded today. Bob Yonkers, IDFA vice president and chief economist, attended the hearing and has provided this final update for members.

The U.S. Department of Agriculture hearing to consider proposals that would establish a Federal Milk Marketing Order (FMMO) for California concluded at noon Pacific time on November 18. This formal rulemaking hearing began on September 22 in Clovis, Calif., and continued for a total of 40 days over nine calendar weeks.

The next step of the process will be to finalize the official hearing transcript. A court reporter was present during the entire hearing to keep an official record. As of November 18, initial transcripts of each day of the hearing through October 16 have been posted to a USDA website. In addition, nearly 200 exhibits were introduced during the hearing (exhibits 1 through 74 are currently available here).

The transcripts from the entire hearing are expected to be available online on or before December 31.

The USDA Administrative Law Judge (ALJ) who presided over the hearing requested that proponents of proposals 1 and 2 submit proposed corrections to the transcript by January 15, 2016. The proposed corrections will be publicly available, and other interested parties may then submit by February 5 their proposed corrections, which will also be publicly available.

Once the proposed corrections have been submitted, anyone can submit objections to any proposed corrections. Finally, the ALJ will decide which, if any, corrections will be allowed and certify the transcript no later than March 1.

Next Steps

The next step will be for interested parties to submit opening post-hearing briefs, which will be due on or before March 31. Among the reasons to file a post-hearing brief would be to highlight points that certain witnesses made at the hearing or to present legal arguments, including points regarding the scope of the language in the 2014 Farm Bill that authorized California producers to petition for a FMMO. These opening post-hearing briefs will be made publicly available by USDA and then interested parties will have until May 16 to submit reply briefs.

At that point it will be up to USDA to review the hearing record consisting of the transcript and exhibits, as well as all the post-hearing and reply briefs, and determine what to do next.

  • USDA could decide that the hearing record does not support establishing a FMMO for California and terminate this process.
  • Alternatively, USDA could decide the hearing record supported the adoption of one of the two full FMMO proposals considered at the hearing (proposal 1 submitted by three cooperatives -- Dairy Farmers of America Inc., Land O’Lakes Inc., and California Dairies Inc. – or proposal 2 submitted by the Dairy Institute of California).
  • USDA would also need to decide whether to include some or all of the other two proposals considered at the hearing (proposal 3 from the California Producer Handlers Association and proposal 4 from Ponderosa Dairy), both of which addressed only specific parts of an entire FMMO.
  • However, USDA could also decide that the hearing record supported a hybrid proposal with elements of more than one of the four proposals considered.

If USDA decides a FMMO is appropriate for California, it will issue a proposed rule consistent with that finding, perhaps sometime in late 2016 or early the following year. Interested parties would likely have 60 days to submit comments on that proposed rule. USDA would then reconsider the proposed rule in light of those comments and propose a final rule, probably sometime in mid-2017; (note that USDA could, in light of comments received on the proposed rule, terminate the proceeding at this point).

The proposed final rule would require passage by a two-thirds majority of the dairy producers that USDA determines would be subject to receiving regulated minimum milk prices under the proposed California FMMO (which could include some dairy producers located outside of the state of California). It’s possible that each of the co-ops could decide to vote en bloc for their members or allow each of their member producers to vote individually. 

If approved, USDA would announce an effective date to begin enforcing the provisions of a California FMMO. Previously, USDA has noted that there would likely be a transition period from California state milk price regulation to a California FMMO:

How Long to Implement?

How long would it take to implement a new Federal order for California? Changing from a state-operated program to a federal order would be a significant shift. While there are similarities between the state and federal systems, sufficient time would need to be provided for an orderly transition. USDA would likely work with the industry and the California Department of Food and Agriculture to ensure timely implementation. (See USDA’s “Questions and Answers on a potential proposal for a California Federal milk marketing order” for more details.)

Members with questions may contact Yonkers at byonkers@idfa.org.