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USDA takes new steps in California milk marketing order

Agency hopes assigning a judicial officer to review previous hearings removes legal risk of certifying new milk marketing order.

News in recent weeks that the U.S. Department of Agriculture could not move forward with establishing a new federal milk marketing order (FMMO) in California because of an ongoing Supreme Court case has caused concern for stakeholders. However, they agency has determined a path that should delay action by just one to four months rather than a potential three years if a Supreme Court ruling does not go as desired.

The agency stated that it would delay the final decision for a California FMMO until after the U.S. Supreme Court rules on a challenge to the use of administrative law judges (ALJs) throughout federal government agencies. An ALJ was part of the process during 40 days of hearings regarding the establishment of the FMMO sought by California producers.

The main risk and concern to USDA is that if the Supreme Court’s ruling makes ALJ appointments unconstitutional, the California FMMO likely would be voided.

Stephen Vaden, lead at USDA’s Office of the General Counsel, explained in a conference call with stakeholders Tuesday that if the Supreme Court rules that ALJs can be used, the soonest implementation could happen is by October 2018. However, if the ruling goes the other way, the process for establishing the FMMO would start over from scratch, and the process wouldn’t be finalized for another three years.

Vaden said the agency decided that instead of playing “roulette” with a 50/50 chance of the Supreme Court ruling against the process, it would assign a judicial officer to look over all of the proceedings and ratify or request additional information as warranted.

The ratification option would allow the promulgation and implementation of the new marketing order come as soon as November 2018 if ratified as is, or by February 2019 if any additional information is required. Vaden said this path would offer a dramatic reduction in the legal risk regarding a potential constitutional challenge.

“We feel this is the best option in the interest of our producers because it will make certain what we do is in accord with the Constitution,” Vaden said. Producers would also not have to wait three years if the decision was wrong -- just an additional one to four months, depending on the judicial review officer’s actions.

Annie AcMoody, director of economist analysis at Western United Dairymen (WUD), said, “Removing the potential of having to start from scratch certainly took away the biggest risk to the process, but the delay remains, and the uncertainty of not seeing a final decision continues to hang over producers’ heads.”

WUD was part of a coalition that submitted a letter to Agriculture Secretary Sonny Perdue seeking an earlier release of the decision. AcMoody added, “We appreciate the secretary’s effort towards improving a tough situation, but we are still disappointed in the delay this is causing.”

WUD president Frank Mendonsa said he is extremely disappointed in the delay of the final decision. Recalling the numerous heartfelt testimonies from producers at the 2015 hearing, he pointed out that “milk prices in California are still as depressed today as they were over two years ago. While some tweaks have been made to the California formulas since then, there is hope in the producer community this could yield higher prices for California producers.”

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