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Federal Register / Vol. 86, No. 167 / Wednesday, September 1, 2021 / Rules and Regulations
Forms for donations made. However, there is limited funding for this program so prompt submission may be beneficial to EDOs. The EDO also must provide adequate documentation, which should be available through its normal business records, to verify the eligible distributor received the donated eligible dairy products. Such documentation could include, but is not limited to, processing and shipping records, bills of lading, storage records, or receiving records from the eligible distributor. As specified in 1147.208, AMS will only collect the information and documentation needed to verify the EDOs reimbursement claim.
Section 762d4 of the CAA allows the Secretary to make retroactive reimbursements to EDOs that donated eligible dairy products before their Plans are approved. Eligible dairy products donated through the MDRP are eligible for supplemental reimbursement through DDP for donations made on or after January 1, 2020. The statute also provides for retroactive reimbursement for donations made through DDP prior to Plan approval, though a specific retroactive date is not provided. To gain administrative efficiencies and streamline the two programs, donations of eligible dairy products through DDP
beginning on the same date also will be eligible for reimbursement. Partnerships will need to submit Plan and Certification Forms for approval prior to submitting a Reimbursement Form for donations made prior to Plan approval.
Accordingly, 1147.106a3 provides for donations of eligible dairy products beginning on January 1, 2020, to be eligible for reimbursement under this program. As described above, total reimbursement for donations made from January 1, 2020 through December 27, 2020, is capped at $50 million.
As authorized by section 762d3B
of the CAA, AMS may verify the accuracy of supporting documentation with spot checks and audits under 1147.206.
Under section 762d2A of the CAA, the Secretary shall set a reimbursement price that reflects the cost of the milk required to make the donated eligible dairy product, is between the FMMO Class I and Class IV
minimum prices for the month of production, is sufficient to avoid food waste, and does not interfere with the commercial marketing of milk or dairy products. Section 1147.108 provides for reimbursement of three separate cost factors: 1 Input costfresh fluid milk or bulk dairy commodity product milkequivalent cost; 2 manufacturing cost of converting fluid milk into a product;

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and 3 transportation cost from the processing plant to the eligible distributor. Section 1147.108a provides that reimbursements will be the sum of the three cost factors.
For the first of these factors, input cost, processors purchasing and processing fresh fluid milk products raw milk, skim milk, cream, or concentrated fluid products, will be reimbursed at the applicable FMMO
minimum classified skim and butterfat values. Processors purchasing bulk dairy commodity products for further processing into eligible dairy products will be reimbursed at the applicable FMMO minimum classified skim and butterfat values for the fluid milk equivalent contained in the bulk product.
That value will be determined by the milks end use Class I for fluid milk products, Class II for soft products such as yogurt, Class III for cheese products, and Class IV for butter and powder products pursuant to 7 CFR 1000.40
and the applicable classified price in effect for the month of production pursuant to 7 CFR 1000.50.
The manufacturing cost for processing fluid milk is represented by the applicable FMMO make allowances contained in 7 CFR 1000.50. The DDP
will use the FMMO make allowances in the Class III and IV price formulas to reflect manufacturing costs for Class III
and IV products, as they are based on surveyed cost data of wholesale Class III
and IV products and are generally accepted by industry stakeholders as appropriate cost estimates. For Class I
and II products, however, the Department lacks data on manufacturing costs. As such, the lowest make allowance, Class IV, will be the representative manufacturing cost for Class I and II products. It is reasonable to expect that Class I and II products have different manufacturing costs than Class IV products due to different processing requirements. USDA is seeking comments on manufacturing costs for these classes of products. If submitted data demonstrates that actual Class I and II manufacturing costs differ significantly from the Class IV make allowance, then the Class I and II
manufacturing costs could be amended in the final rule. If the public comment period results in updated make allowances for Class I and Class II
products, the amended make allowances will not be retroactive to the effective date of this rule.
As explained in the Background section, the program will not reimburse additional processing costs for bulk products purchased and further processed. Processors purchasing bulk
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dairy commodity products for further processing will receive the same manufacturing cost reimbursement as described above. When these processors buy bulk product, it is on a per-pound basis. It is reasonable to assume the price they paid for the bulk product represented both the fluid milk value which they are being reimbursed for as described earlier and the cost to convert the fluid milk into the bulk commodity. Therefore, eligible dairy products made from bulk dairy commodity products also will be eligible for manufacturing cost reimbursement.
The transportation cost reimbursement will be based on the U.S.
monthly average diesel fuel price 8 for the month the donation was made, a fuel economy factor of 6.1 miles per gallon,9 and the shortest hard-surface distance from the plant that processed the donated eligible dairy product to the eligible distributors physical distribution location. These factors are based on relevant government transportation statistics which are similar to those used in FMMOs with transportation credits, the Appalachian 10 and Southeast 11 Orders Transportation reimbursement will only be paid if the EDO incurred the transportation cost, which will be verified on audit.
Section 762h of the CAA requires the Secretary to make supplemental reimbursements to EDOs receiving reimbursements under the MDRP from January 1, 2020, to the date when DDP
program funds are no longer available.
AMS recognizes an EDO under MDRP
will also be eligible under DDP. Further, eligible dairy products under MDRP
also qualify as eligible dairy products under DDP notably, fluid milk products. Since DDP reimburses at a higher rate than MDRP, a supplemental reimbursement is needed to properly use funds for and fulfill the purposes of both programs. Section 1147.109
provides the process AMS will follow to make a supplemental reimbursement to EDOs receiving reimbursement under MDRP. An EDO with an already approved Plan under MDRP does not need to apply to DDP. AMS will automatically reimburse the eligible 8 U.S. Energy Information Administration EIA, 2021; Gasoline and Diesel Fuel Update for August 16, 2021. https www.eia.gov/petroleum/gasdiesel/
, accessed August 23, 2021.
9 United States Department of Transportation, 2021; Combination Truck Fuel Consumption Data.
https www.bts.gov/browse-statistical-productsand-data/freight-facts-and-figures/combinationtruck-fuel-consumption, accessed August 23, 2021.
10 7 CFR 1005.82 and 1005.83.
11 7 CFR 1007.82 and 1007.83.

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