Title 7--AGRICULTURE DEPARTMENT OF AGRICULTURE [7 PA. CODE CH. 59] Deletion of Grade AA Regulatory Standards for Milk [26 Pa.B. 5950] The Department of Agriculture (Department) amends Chapter 59 (relating to milk sanitation) by deleting all provisions that allow milk to be designated as Grade AA.
The statutory authority for this regulatory amendment is the act of July 2, 1935 (P. L. 589, No. 210) (31 P. S. §§ 645--660f), which authorizes the Department to regulate the production, processing, storage and packaging of milk to safeguard human health.
The current Grade AA standard for milk is in direct conflict with the requirements of the Nationwide compact under which Grade A milk moves unimpeded in interstate commerce. The regulatory amendment is necessary to keep Pennsylvania-produced milk and milk products competitive in interstate commerce.
The Commonwealth is a participant in the National Conference of Interstate Milk Shippers (NCIMS). The NCIMS is an organization created by the United States Food and Drug Administration Milk Safety Branch, state regulatory agencies and the Nation's dairy industry to standardize regulations to ensure the safety of the milk supply and to facilitate the interstate shipment of milk. Prior to NCIMS, individual states--and even individual municipalities--had established milk sanitation and testing requirements that impeded the flow of milk in interstate commerce. The NCIMS developed a uniform set of standards--the Grade A Pasteurized Milk Ordinance (Grade A PMO)--which, when adhered to by a member state, allow that state's milk to move in interstate commerce to other member states without those other member states imposing any further sanitation or testing requirements.
The Grade A PMO explicitly prohibits the use of super grade designations such as Grade AA with respect to milk produced by member states. The ultimate result of the Department's failure to eliminate the Grade AA standard for milk would be restrictions on Pennsylvania-produced milk and milk products in interstate commerce. Grade A milk represents over 90% of this Commonwealth's dairy output. Grade AA milk, by contrast, accounts for less than 5% of the Commonwealth's dairy output. On balance, the Department agrees the Grade AA standard for milk must be deleted to protect the Commonwealth's dairy industry.
Comments
Notice of proposed rulemaking was published at 26 Pa.B. 3546 (July 27, 1996), and provided for a 30-day public comment period.
Comments were received from a dairy operation that has been producing milk to meet Grade AA standards since 1994 and a dairy operation that supports the elimination of Grade AA standards. The House Agriculture and Rural Affairs Committee (House Committee) also offered comments.
The Independent Regulatory Review Commission (IRRC) offered no objections, comments or suggestions with respect to the proposed rulemaking.
A dairy operation that has been producing milk to meet Grade AA standards since 1994 raised the question: ''What do we tell our customers now that we can't sell Grade AA milk?'' The Department acknowledges that the elimination of Grade AA milk standards may, at the outset, cause some confusion in the marketplace as consumers who were familiar with the Grade AA designation on the containers of milk they purchase discover they can no longer purchase milk in containers bearing that designation. Any adverse impact should be blunted, to some extent, by the fact that no other containers of milk being offered for sale in this Commonwealth will bear the Grade AA designation.
The same dairy operation expressed apprehension that the family farms which ship milk to that operation might be hurt by the elimination of Grade AA milk standards. The dairy operation had paid these suppliers approximately $480,000 in quality premiums for Grade AA milk since 1994.
The Department responds that the dairy operation remains free to pay premiums for milk that exceeds Grade A standards. It is generally accurate that--all other factors being identical--milk with a lower bacterial count will keep longer than milk with a higher bacterial count. It is also generally accurate that bacterial count ultimately impacts upon the taste of milk. A dairy operation remains free to pay producers a premium based on this added value.
The same dairy operation expressed concern that it would be difficult to derive any economic benefit from producing milk that exceeds Grade A milk standards if it cannot express on its product labeling that the milk is somehow above average.
The Department responds that a milk producer remains free to put accurate, nonmisleading statements as to milk composition and testing on its milk container labeling.
Another dairy operation offered its support for the elimination of Grade AA milk standards.
The House Committee asked whether the Department believes it has fully pursued the alternative of amending the Grade A PMO to allow all participating states the option of voluntary Grade AA standards for milk. The Department responds that it has pursued this possibility and that the attainment of this revision to the Grade A PMO is not likely to occur in the foreseeable future. As a group, state regulatory agencies are concerned primarily with the safety of milk for human consumption--and not the keeping quality or taste of the milk. Milk produced in accordance with Grade A standards is safe.
The milk processor has a direct financial interest in producing milk that is of good taste and keeping quality. If a milk processor believes there is a benefit to be derived from testing milk more often than is called for under the Grade A PMO, it remains free to do so. It may not designate this milk Grade AA, though.
The House Committee offered its reluctant concurrence with the Department's proposed deletion of Grade AA milk standards:
. . .The committee does, however, recognize the fact that because of the substantial negative implications for the entire milk industry of the NCIMS ruling that Pennsylvania's Grade AA standards violate the Pasteurized Milk Ordinance, the department has very little choice but to proceed with this proposal. . .
When all factors are considered, we do acknowledge that the adverse impact of failing to repeal Grade AA standards far outweighs our reservations expressed herein. . .
For the reasons expressed in the proposed rulemaking and in this final rulemaking the Department deems it necessary to enter this order.
Fiscal Impact
Commonwealth
The amendments will impose no costs and have no fiscal impact upon the Commonwealth.
Political Subdivisions
The amendments will impose no costs and have no fiscal impact upon political subdivisions.
Private Sector
The amendments may impose some costs upon the Pennsylvania-based dairy processors that currently produce milk meeting Grade AA requirements. Although the amendments will decrease the testing costs borne by these dairy processors, these processors might suffer some short-term financial loss as consumers familiar with the Grade AA designation on milk containers encounter Grade A designations for the first time. It is not known whether these losses would be entirely offset by decreased testing costs.
The result of failing to proceed with these amendments would be to subject Pennsylvania-produced milk and milk products to embargoes or inspection requirements of other NCIMS member states. The adverse fiscal impact on this Commonwealth's dairy industry would be immediate and dramatic, and would far outweigh any adverse fiscal impact that the Commonwealth's Grade AA dairy processors might suffer as a result of these amendments.
General Public
The amendments will impose no costs and have no fiscal impact upon the general public.
Paperwork Requirements
The amendments will not result in an appreciable increase in paperwork.
Contact Person
Further information is available by contacting the Department of Agriculture, 2301 North Cameron Street, Harrisburg, Pa. 17110-9408, Attention: James Dell.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on July 16, 1996, the Department submitted a copy of the notice of proposed rulemaking published at 26 Pa.B. 3546, to IRRC and to the Chairpersons of the House and Senate Standing Committees on Agriculture and Rural Affairs for review and comment. In compliance with section 5(b.1) of the Regulatory Review, the Department also provided IRRC and the Committees with copies of the comments received, as well as other documentation.
In preparing these final-form regulations, the Department has considered the comments received from IRRC, the Committees and the public.
These final-form regulations were deemed approved by the Senate Committee and the House Committee on November 12, 1996, and were approved by IRRC on November 12, 1996, in accordance with section 5(c) of the Regulatory Review Act.
Findings
The Department finds that:
(1) Public notice of intention to adopt the final-form regulations encompassed by this order has been given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law and that the comments received were considered.
(3) Any modification made to these regulations in response to comments received did not enlarge the purpose of the proposed amendments published at 26 Pa.B. 3546.
(4) The amendments meets the requirements of Executive Order 1996-1, ''Regulatory Review and Promulgation.''
(5) The adoption of the amendments in the manner provided by this order is necessary and appropriate for the administration of the authorizing statute.
Order
The Department, acting under the authorizing statute, orders that:
(a) The regulations of the Department, 7 Pa. Code Chapter 59, are amended by amending §§ 59.1, 59.12, 59.52 and 59.310 to read as set forth at 26 Pa.B. 3546.
(b) The Secretary of Agriculture shall submit this order and 26 Pa.B. 3546 to the Office of General Counsel and the Office of Attorney General for approval as required by law.
(c) The Secretary of Agriculture shall certify this order and 26 Pa.B. 3546 and deposit them with the Legislative Reference Bureau as required by law.
(4) This order shall take effect upon publication in the Pennsylvania Bulletin.
CHARLES C. BROSIUS,
SecretaryFiscal Note: Fiscal Note 2-108 remains valid for the final adoption of the subject regulations.
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 26 Pa.B. 5915 (December 7, 1996).)
[Pa.B. Doc. No. 96-2088. Filed for public inspection December 13, 1996, 9:00 a.m.]
