USDA clears the way for California FMMO

Cows are milked at VanderWoude Dairy near Merced, Calif. An analysis of California's move to a federal marketing order shows the system has resolved the price disparity and brought other changes to the industry.

After a disappointing delay in the process of establishing a federal milk marketing order for California, the state’s dairymen can look forward to a final decision soon.

On Friday, a judicial officer appointed by USDA to keep the process safe from legal challenges, ratified the hearing record and put the process back on track.

That process started with a petition to USDA by three dairy cooperatives in February 2015. It was disrupted in February when two Supreme Court cases involving the Securities and Exchange Commission called into question the appointments of administrative law judges in federal agencies.

While the case did not involve USDA directly, the outcome could call into question the appointment of the administrative law judge who presided over the California FMMO process.

If the court were to find administrative law judges in the cases were not appointed properly under the Constitution, it could implicate the FMMO and make it vulnerable to legal challenges.

Instead of moving forward with a final decision, USDA decided to appoint a judicial officer — who is not subject to the appointments clause in the Constitution — to review the FMMO hearing record.

Stephen Vaden, an attorney with USDA’s office of general counsel, said last month the cautious route USDA is taking would only delay the process one to four months.

If USDA had ignored the potential threat to the appointment of its administrative law judge and the court ruled against the Securities and Exchange Commission, the FMMO could have been vacated by the court, he said.

That would set the process back to square one and push potential implementation of the FMMO back three years, he said.

Ratification of the record by the judicial officer clears the way to move forward, said Geoff Vanden Heuvel, board member and economic consultant for Milk Producers Council.

The delay was disappointing, but USDA cured the problem in less than 30 days, he said.

“We expect news soon, he said.

That news will be the final decision on how the FMMO would operate and what producers will be voting on in a referendum to approve an FMMO for the state, he said.

Establishing an FMMO for California has been a long road, rooted in producers’ frustration with milk prices significantly below prices in other states and the state’s failure to adequately address the issue.

Producers have petitioned the California Department of Food and Agriculture for years to make changes to the state’s pricing system. With little to no success, they turned to the federal order system three years ago in the hope of securing equitable prices.

Capital Press is waiting on a reply from USDA on when a final decision might be issued. Vaden said last month if ratification went smoothly, an order for California could be implemented by November.

“We look forward to the process continuing to move forward as soon as possible so California producers can have some certainty in their future,” said Annie AcMoody, director of economic policy for Western United Dairymen.

Recommended for you