Requirement of Enabling Legislation
    Pub. L. 104-127(5) states that:

    [b]fore the end of each fiscal year that a Compact price
regulation is in effect, the Northeast Interstate Dairy Compact
Commission shall compensate the Commodity Credit Corporation for the
cost of any purchases of milk and milk products by the Corporation
that result from the projected rate of increase in milk production
for the fiscal year within the Compact region in excess of the
projected national average rate of the increase in milk production,
as determined by the Secretary [of Agriculture].

    7 U.S.C. sec. 7256(5). Accordingly, the Compact Commission
requested comment on:

    The most appropriate means to account for the Compact
Commission's responsibility to reimburse the Commodity Credit
Corporation (CCC) for CCC purchases attributable to an increase in
milk production in the New England region above the national average
rate of increase.\116\

    \116\ 62 CFR 12252.
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    Although the comments received were few in number, they were
sufficient to permit the Commission to address this issue.
    For example, Wellington et al indicated the view that the
appropriate response for the Commission was simply to monitor
production levels and take action only if current circumstances changed
markedly.\117\ The comment is based on the assertion that the rate of
increase in regional production is unlikely to exceed the rate of
increase in national production. In the event of an unexpected change
in circumstances, these commenters suggested a plan for the Commission
to retain funds sufficient to cover any CCC purchases.
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    \117\ 3/31/97 WC at 10-11.
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    Statistical data and projections support the position set forth by
these commenters. According to statistical data submitted, the national
production average increased at a rate of 0.8768 percent between 1991
and 1996.\118\ Production in the region increased 0.7121 percent over
the same five-year time period.\119\ According to projections, national
production in1997 is expected to increase at a rate of between 1 and
2.07 percent. Regional production, however, for 1997 is projected to
increase at a rate of only 0.6 percent, a rate that is significantly
lower than the proposed projected national rate of increased
production.\120\
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    \118\ National Agricultural Statistics Service, Milk Production
Summary.
    \119\ New England Agricultural Statistics, 1995-1996, ``Milk
Production'', page 68.
    \120\ Northeast Regional Dairy Outlook Conference, November 6,
1996; Milk Production Worksheet and Food and Agricultural Policy
Research Institute Staff Report #1-96, page 86.
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    The Commission notes that the CCC made no purchases of surplus milk
in fiscal year 1996 or 1997. Therefore, in light of the comments
submitted, the Commission agrees that action that is appropriate and
necessary under these circumstances is presently limited to monitoring.
The Commission concludes further, however, that it must be prepared in
case production increases in an unexpected manner, and CCC purchases
occur.
    Accordingly, for each month price regulation is in place, in
consultation with the United States Secretary of Agriculture, the
Compact Commission will monitor the regional and national rates of
production to determine whether the regional rate of increased
production is within 0.25 percent of the national rate of increased
production. If production does increase within this range, then for
each such month, the Commission will estimate the potential cost of CCC
surplus purchases of surplus which might occur should the rate of
regional rate of increased production exceed the national rate. The
Commission will retain a portion of the proceeds of the price
regulation sufficient to cover such estimated cost, as necessary.
    After the date of termination of the Compact Over-Order Price
Regulation, if the Commission has retained any proceeds of the price
regulation and no compensation has been made to the CCC for surplus
purchases, the Commission will provide pro rata refunds to all pooled
producers. The amount of each producer's refund will account for the
marketing's of milk by each producer and the regulated price for such
milk in effect for each month in which proceeds were retained.
    If, after the date of termination, compensation has been made to
the CCC and proceeds of the price regulation still remain, the
Commission will provide refunds as follow: (1) A pooled producer shall
become eligible to receive a refund by submitting to the Commission
documentation that the producer did not increase marketing's of milk
during the time that the price regulation was in effect as compared to
the same period during the previous calendar year. Such documentation
shall be filed with the Commission not later than 45 days after the
date of termination of the over-order price regulation. (2) The
Commission shall calculate the amount of refund to be provided to each
eligible producer by taking into account the total amount of retained
proceeds, the total marketing's of milk by all producers eligible for
refunds, and the total amount of marketing's by each eligible producer.
    Finally, the Commission notes, in accordance with 7 U.S.C.
7256(b)(5), that it is not required to take any action with respect to
the CCC prior to its promulgation of a price regulation.