11609 1 2 3 4 5 6 7 8 9 NATIONAL FEDERAL MILK MARKETING ORDER 10 PRICING FORMULA HEARING 11 12 DOCKET NO.: 23-J-0067; AMS-DA-23-0031 13 14 Before the Honorable Jill Clifton, Judge 15 16 ---o0o--- 17 18 Carmel, Indiana 19 January 30, 2024 20 21 ---o0o--- 22 23 24 25 26 Reported by: 27 MYRA A. PISH, RPR, C.S.R. Certificate No. 11613 28 11610 1 A P P E A R A N C E S: 2 FOR THE USDA ORDER FORMULATION AND ENFORCEMENT DIVISION, USDA-AMS DAIRY PROGRAM: 3 Erin Taylor 4 Todd Wilson Brian Hill 5 Michelle McMurtray 6 FOR THE MILK INNOVATION GROUP: 7 Ashley Vulin 8 FOR THE NATIONAL MILK PRODUCERS FEDERATION: 9 Nicole Hancock Brad Prowant 10 FOR SELECT MILK PRODUCERS, INC.: 11 Ryan Miltner 12 FOR INTERNATIONAL DAIRY FOODS ASSOCIATION: 13 Steve Rosenbaum 14 FOR THE AMERICAN FARM BUREAU FEDERATION: 15 Danny Munch 16 17 ---o0o--- 18 19 20 (Please note: Appearances for all parties are subject to 21 change daily, and may not be reported or listed on 22 subsequent days' transcripts.) 23 24 ---o0o--- 25 26 27 28 11611 1 M A S T E R I N D E X 2 SESSIONS 3 TUESDAY, JANUARY 30, 2024 PAGE 4 MORNING SESSION 11,614 5 6 ---o0o--- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11612 1 M A S T E R I N D E X 2 WITNESSES IN CHRONOLOGICAL ORDER 3 WITNESSES: PAGE 4 Kyle Powell: 5 Direct Examination by Mr. Rosenbaum 11,617 Cross-Examination by Mr. Miltner 11,622 6 Cross-Examination by Mr. Hancock 11,624 Cross-Examination by Ms. Taylor 11,626 7 Danny Munch: 8 Voir Dire by Mr. Miltner 11,635 9 Cross-Examination by Ms. Vulin 11,645 Cross-Examination by Mr. Rosenbaum 11,651 10 Cross-Examination by Mr. Miltner 11,653 Cross-Examination by Ms. Hancock 11,661 11 Cross-Examination by Ms. Taylor 11,665 12 ---o0o--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11613 1 M A S T E R I N D E X 2 INDEX OF EXHIBITS 3 IN CHRONOLOGICAL ORDER: 4 NO. DESCRIPTION I.D. EVD. 5 504 IDFA-68 11,617 11,632 6 505 AFBF-6 11,638 11,666 7 506 NMPF-114 11,668 11,679 8 507 IDFA-69 11,672 11,679 9 508 MIG-68 11,673 11,679 10 509 SELECT-10 11,674 11,679 11 510 MDIA-3 11,677 11,679 12 511 NAJ-10 11,678 11,679 13 14 ---o0o--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11614 1 TUESDAY, JANUARY 30, 2024 -- MORNING SESSION 2 THE COURT: Let's go back on record. 3 We're back on the record. It's 2024, January 30, 4 it's a Tuesday, approximately 8:01 a.m. This is the 49th 5 day of this hearing. 6 Are there any preliminary matters before we 7 proceed with evidence? 8 I see none. 9 I know we'll return later in the day to some of 10 the discussion we had yesterday about the post-hearing 11 responsibilities of parties who want to file proposed 12 transcript corrections and proposed findings, conclusions, 13 and briefs. I did want to follow up with one detail. 14 I mentioned yesterday that it is permissible to 15 e-mail the Hearing Clerk with your documents. I forgot 16 about the problems with the size of the documents that you 17 are probably going to send, which can be blocked by 18 internal firewalls or whatever. 19 So what I intend to do, I'm going to give the 20 contact information for the Hearing Clerk now. 21 But I'm also, when I get back to the office, going 22 to meet with the Hearing Clerk, whose name is Caroline 23 Hill, no relationship to Brian Hill. Both are extremely 24 competent and have a great deal of responsibility. I have 25 never seen Caroline Hill dance, but I suspect she's good. 26 The reason I want to consult is so that I can send 27 out a written document that you will all have that 28 proposes the alternatives you can use to get your 11615 1 documents filed with the Hearing Clerk by the deadlines. 2 So here is the contact information, it's just at 3 stopgap for you to have before I get specific instructions 4 from the Hearing Clerk and send them to you. 5 First of all, there's only one Hearing Clerk at 6 USDA, and that Hearing Clerk is located in the USDA 7 headquarters in Washington, D.C., and the zip code there 8 is 20250-9203. Now, the 9203 is not a Post Office code, 9 it's an internal code for our headquarters in Washington, 10 D.C., to help the mail handling for the different agencies 11 that are housed there. 12 So the mailing address for the Hearing Clerk is: 13 Hearing Clerk, United States Department of Agriculture, 14 Stop 9203, South Building, 1031-S, 1400 Independence 15 Avenue Southwest, Washington, D.C., 20250-9203. 16 The e-mail address for filing with the Hearing 17 Clerk is -- and e-mail addresses, you know, can be 18 uppercase, lower case, a combination of the two, it's not 19 fatal if you capitalize letters or even fail to -- but 20 this is the e-mail address: SM.OHA.HearingClerk@USDA.gov. 21 The phone number is 1-202-720-4443. The fax number -- and 22 these faxes are received electronically in the inbox of 23 the Hearing Clerk, you don't have to worry about whether 24 someone's at the fax machine -- the fax number is 25 1-844-325-6940. 26 So as I have indicated, you may choose to use none 27 of that in filing depending on how the Hearing Clerk 28 instructs you as to the best way to submit your materials 11616 1 for filing, particularly if the documents are large. So I 2 will get that information put in an order very soon after 3 I get back to the office. 4 Are there any questions about what I have said so 5 far? 6 There are none. 7 I have some exhibits here. 8 Who will be the next witness? 9 MR. ROSENBAUM: Steve Rosenbaum for the 10 International Dairy Foods Association. 11 We'd call Mr. Kyle Powell to the stand. 12 THE COURT: Welcome, Mr. Powell. 13 You may be seated and make yourself comfortable. 14 In a moment we'll test to see how close you need to be to 15 that microphone. 16 And for now, I'd like you to state and spell your 17 name. 18 THE WITNESS: Kyle Powell, K-Y-L-E, P-O-W-E-L-L. 19 THE COURT: Have you previously testified in this 20 proceeding? 21 THE WITNESS: I have not testified. 22 THE COURT: I'd like to swear you in. 23 KYLE POWELL, 24 Being first duly sworn, was examined and 25 testified as follows: 26 THE COURT: Mr. Rosenbaum, I'm looking at 27 exhibits. 28 MR. ROSENBAUM: Yes, Your Honor. I have placed 11617 1 before you, and distributed, a document marked as IDFA 2 Exhibit 68, which we would ask be marked with the next 3 Hearing Exhibit number. 4 THE COURT: Is the next number 504? It is. 5 Marking this Exhibit 504. 6 (Thereafter, Exhibit Number 504 was marked 7 for identification.) 8 DIRECT EXAMINATION 9 BY MR. ROSENBAUM: 10 Q. Mr. Powell, you have before you the document that 11 has now been marked as Hearing Exhibit 504, which is also 12 IDFA Exhibit 68. 13 Is this document your written testimony today? 14 A. Yes, it is. 15 Q. Could you please read the statement into the 16 record? 17 A. Yes. Good morning. My name is Kyle Powell, and 18 I'm the vice president of procurement for Lakeview Farms, 19 LLC. I have been in the food industry my entire 20 professional career. I spent 17 years with the Kroger 21 Company in Cincinnati, Ohio, and three years with Dairy 22 Farmers of America in Kansas City, Kansas, prior to 23 Lakeview Farms. I have a bachelor of science degree in 24 food agribusiness from The Ohio State University and a 25 master of business administration (finance) from Miami 26 University of Ohio. 27 In my current role I oversee all procurement 28 functions within Lakeview Farms. Lakeview Farms is a food 11618 1 processor with headquarters in West Chester, Ohio, 2 production facilities in Delphos, Ohio. Lakeview Farms 3 produces Class II end use products such as refrigerated 4 dips, pudding, and kefir. 5 The increase of $0.86 a hundredweight to $1.56 a 6 hundredweight will affect how processors purchase Class II 7 dairy milk-based products and, most importantly, how 8 retailers pass on new costs to customers. 9 Dairy costs within Class II are typically passed 10 through to the customer. With the increase in the 11 Class II differential, these costs will move right to the 12 customer. On-shelf retail pricing will reflect the change 13 in the price of farm milk which could significantly impact 14 the omnichannel strategy, specifically retail and online. 15 While producers may benefit from a greater pool 16 draw, consumers will feel less inclined to buy multiples 17 or become repeat consumers if prices become higher. 18 Class II product sales generally benefit from consumer 19 behavior where multiple purchases are made within a 20 household visit, for example, yogurt, pudding, cottage 21 cheese, sour cream. Increases in the Class II 22 differential combined with the higher premiums due to 23 elevated demand within Class II could limit households 24 consuming these goods. 25 The increase in farm milk differential has the 26 ability to negatively disrupt the entire dairy supply 27 chain. The extra costs could affect two primary aspects 28 of commercial Class II processor production: The 11619 1 innovation and domestic dairy usage. 2 During COVID, innovation took a backseat as food 3 and feedstock processors scrambled to keep material moving 4 through the omnichannel. The logjam of innovation 5 continues to lag as some inputs continue to be in short 6 supply and higher costs. Should differential increase 7 another $0.86 a hundredweight, for example 200%, 8 processors will accelerate ways to save on costs of goods. 9 Processors are challenged by retail merchandisers every 10 year to cut costs while typically passing on dairy costs. 11 Other fat sources have been used to replace dairy fat in 12 the past with successful commercialization, for example, 13 palm, soy. 14 Retailers are asking for more oil-based 15 formulations to offset the price volatility of dairy fat. 16 Overall consumer tolerance of substitute dairy fats will 17 cross when the price of non-standard identity dairy 18 properties, for example, dairy dips, dairy desserts, 19 exceeds the value to the customer. Should innovation ramp 20 up without using Class II dairy, U.S. dairy should 21 continue to expect to be left behind on cutting edge 22 innovations, for example, coffee creamers, half and half. 23 Liquid inputs typically are more desirable in 24 spoonable Class II retail product. 25 THE COURT: And just so the transcript is correct, 26 would you spell "spoonable" for us? 27 THE WITNESS: Yes. S-P-O-O-N-A-B-L-E. 28 THE COURT: Thank you. 11620 1 THE WITNESS: Mouth feel and solubility of dry 2 ingredients are sensory traits picked up in the trials. 3 Should dairy inputs be the strategic decision for 4 processors, savvy buyers will arbitrage the market to the 5 best of their availability. 6 Arbitrage opportunities could limit annualized 7 agreements for Class II milk suppliers, leaving them to 8 ship to balancing plants rather than a higher value 9 Class II sale. Processors will look up to pile up -- pile 10 on NFDM in times of surplus and purchase condensed skim 11 milk at less than desired premium levels. The possible 12 increase in formula non-fat solids would be a bigger 13 option for processors. The opportunity to arbitrage could 14 lessen the impact of the increased regulated pool value of 15 Class II. 16 Given the possible paths processors can take, I 17 challenge the increased pool value of 122 million. In 18 AMFB's proposal it does not appear to address new pool 19 benefit as a net value. The possible increased appetite 20 for dairy substitutes should be quantified with an overall 21 impact, both near- and long-term. 22 Further, Class II's -- Class II skim saw an 23 increase of overages of over 30% during COVID-19 due to 24 the incredible demand within the retail space. This is an 25 example of a true premium allowing the economics of the 26 environment to set the price as demand surged. Setting 27 non-market differentials does not set up a healthy 28 supply/demand price relationship. 11621 1 Class II is one of, if not the number one, most 2 innovative spaces within the dairy complex. The 3 opportunities for growth are endless if costs are under 4 control and remain competitive with alternatives. We have 5 seen the erosion of natural dairy in end use process [sic] 6 erode over the years, for example, cheese dips, dairy 7 dips, dairy desserts, due to costs. I urge the USDA to 8 keep the current Class II differential with no changes in 9 order to support the growth and innovation of U.S. dairy. 10 BY MR. ROSENBAUM: 11 Q. Thank you very much for your statement. 12 I just wanted to follow up on one particular 13 statement you make on page 2, where you say that, and I'll 14 quote it, "Retailers are asking for more oil-based 15 formulations to offset the price volatility of dairy fat." 16 Is that a real-world phenomenon that you 17 personally experience? 18 A. Yes, I have experienced that. 19 MR. ROSENBAUM: Your Honor, the witness is 20 available for cross-examination. 21 THE COURT: Mr. Powell, do you want to leave a 22 particular address for Lakeview Farms, like, a mailing 23 address? 24 THE WITNESS: Yes, I can -- I can leave one before 25 I leave. I don't have it right here. 26 THE COURT: All right. Would you please present 27 that to the Agricultural Marketing Service table, any of 28 these people that are on the first row directly across 11622 1 from me -- 2 THE WITNESS: Of course. 3 THE COURT: -- so that they will have that for 4 their records in case some mailing needs to go out, hard 5 copy. 6 THE WITNESS: Yes. 7 THE COURT: All right. Great. 8 Who would like to begin cross-examination of 9 Mr. Powell? 10 CROSS-EXAMINATION 11 BY MR. MILTNER: 12 Q. Good morning, Mr. Powell. 13 A. Good morning. 14 Q. My name is Ryan Miltner. I represent Select Milk 15 Producers, which is a cooperative with farms in Ohio, 16 Michigan, and Indiana, as well as in the Southwest, and I 17 believe we have a couple of farms within about 15 miles of 18 Delphos, so they are almost neighbors. 19 A. Uh-huh. 20 Q. I noticed in your statement you said that you are 21 in charge of procurement for Lakeview Farms. 22 Do you purchase fresh milk to bring into your 23 plant to make your Class II products? 24 A. Yes, we do. 25 Q. Do you source your -- your milk from a cooperative 26 supply, or from a broker, or direct from a farm? Where do 27 you get your milk from? 28 A. Proprietary. As far as where we buy -- actually 11623 1 source the milk from, I would rather not share. 2 Q. Okay. Do you know if the milk that you purchase 3 is pooled on a Federal Order? 4 A. I cannot answer that. 5 Q. Do you know if Lakeview Farms pays the regulated 6 Class II price for the milk that it uses in its products? 7 A. Could you ask the question again, please? 8 Q. Sure. I don't want to know specifically what you 9 pay for your milk, but do you know if the price you pay is 10 the regulated Class II price? 11 A. We pay Class II pricing for our milk. 12 Q. Do you always pay above the Class II price for 13 your milk? 14 A. I can't answer that. 15 Q. Is that because you don't know or because that's 16 proprietary? 17 A. Proprietary. Yes. 18 Q. You mentioned on page 2 of your statement, and 19 Mr. Rosenbaum asked about customers' desires for oil-based 20 formulations to offset the price volatility of dairy fat. 21 Some processors have testified in this hearing that they 22 use hedging or risk management tools to, you know, address 23 that price risk or similar price risks. 24 Does Lakeview Farms use hedging tools to lock in a 25 price for butterfat? 26 A. We use many risk management tools, yes, including 27 hedging. 28 Q. Do you utilize tools through the CME or any other 11624 1 exchanges similar? 2 A. We do. 3 MR. MILTNER: Thank you. Appreciate it. 4 CROSS-EXAMINATION 5 BY MS. HANCOCK: 6 Q. Good morning, Mr. Powell. 7 On page 2 of Exhibit 504 -- 8 THE COURT: Ms. Hancock, identify yourself, 9 please. 10 MS. HANCOCK: Nicole Hancock for National Milk. 11 BY MS. HANCOCK: 12 Q. On page 2 of Exhibit 504 you talk about what would 13 happen if the price -- if the Class II differential is 14 increased, and you said that processors will have to 15 accelerate ways to save on costs of goods. 16 Can you describe the ways in which a processor can 17 save on expenses? 18 A. Due to the increased cost of milk in general or 19 just -- just in general, anything we purchase? 20 Q. Well, I took your statement to say that if your 21 cost of goods went up, that as a processor you would have 22 to find other ways to save on costs to offset that; is 23 that fair? 24 A. That's fair. 25 Q. Okay. And I'm just wondering if you can give me 26 some examples on the ways in which you would save on 27 costs. What are some things that you can control as a 28 processor that would allow you to save on some costs? 11625 1 A. So depending on the supply chain as a whole, there 2 are ways to save from a formulation standpoint, 3 potentially, operationally, logistically. I think when 4 you are looking at savings, it's not binary, right? It's 5 the entire supply chain. 6 Where buyers evaluate the risk and opportunity, 7 they look for the increases of that particular piece of 8 the supply chain that it's -- that sees costs increasing. 9 If it's more the cost of goods bucket, there's more of a 10 direct focus on cost of goods. If it's an operational 11 opportunity, labor, et cetera, then there's more focus on 12 operational side. 13 So in this particular statement, if there is an 14 increase in cost of goods, especially on the cost of goods 15 that's a very high percentage of the formulation, then 16 there are evaluations on how you purchase that input more 17 efficiently. 18 Q. Okay. So is it fair to say that if the cost of 19 milk, the cost of your procurement of the raw milk goes 20 up, that you look to the totality of your business 21 operations to see if there are ways in which you can build 22 in efficiency to save or offset those expenses? 23 A. I would say -- I would say if the cost of raw milk 24 went up, we would evaluate options in the supply chain and 25 understand if there is any value that would offset that 26 within our supply chain or a supply chain. If the supply 27 chain cannot absorb or cannot reduce costs, then the cost 28 of goods or the input that is preceding the higher cost 11626 1 would have to have more scrutiny, which would be supply, 2 looking at different types of supply, looking at different 3 types of innovation, up into -- and not including but 4 considering substitutes. 5 Q. And if you weren't able to find those efficiencies 6 within your own operational expenses, another way in which 7 you could capture that increase in costs would be to 8 increase your price to your consumer -- to your customers 9 as well? 10 A. I would think that that would be -- so we would 11 offset the increase by increasing price to customers. And 12 as I said in the statement, that would be something that 13 would be a detriment not only to a processor, but also the 14 industry. 15 Q. Okay. Still an option for you as a handler, 16 though; is that fair? 17 A. That's an option, yes. 18 MS. HANCOCK: Thank you so much for your time. 19 THE COURT: Are there any other cross-examination 20 questions for Mr. Powell before I call on the Agricultural 21 Marketing Service for questions? 22 I see no one. I invite the Agricultural Marketing 23 Service to ask questions. 24 CROSS-EXAMINATION 25 BY MS. TAYLOR: 26 Q. Thank you. Good morning. 27 A. Good morning. 28 Q. Thank you so much for coming to testify today. 11627 1 Just a few questions. 2 You discussed a little about with Mr. Miltner 3 about whether milk was pooled or not, but I -- I wanted to 4 ask about the plant. 5 Do you know if the plant is a pool plant or 6 non-pool plant? 7 A. I believe it's a non-pool plant. 8 Q. Okay. 9 A. But I -- 10 Q. Okay. 11 A. -- I would need to verify that. 12 Q. Okay. And so if that's the case, does your -- 13 your supply has the option to be pooled; is that correct? 14 A. I believe so, yes. 15 Q. Okay. You mentioned to Mr. Rosenbaum that you do 16 have experience in the fact that retailers are asking for 17 more oil-based formulations, and I was wondering if you 18 could just expand on that for the record, what you have 19 seen in your own experience. 20 A. So in my experience, oil-based or -- or oil -- oil 21 products, such as soy and palm, have been introduced into 22 dairy items, specifically dairy -- specific dairy items to 23 offset costs and price. Also, from a price -- from a 24 hedging perspective, just from a more predictable price, 25 because there's liquidity in this market, especially the 26 soy market. 27 So with -- with the increase, especially on the 28 fat side, more introductions have -- more innovation 11628 1 discussions, more commercialization opportunities have 2 come down the pipeline for more of a soy-, palm-based 3 product to offset more of a traditional dairy-based 4 product. 5 Q. Okay. And in your experience, do those things 6 switch back and forth, or once the formulation is made to 7 switch to an oil-based product, it stays that way? 8 A. So I can think of -- I can think of both. I can 9 think of both where product shifts back and forth, excuse 10 me, more -- maybe more of a commoditized-type item. 11 Q. What would be a more commoditized-type item? 12 A. More like a powder-based product. 13 Q. Okay. 14 A. And then on the retail side, if -- if the products 15 and the pricing sticks and the sensory meets the appetite 16 of the customer, typically there isn't going back. 17 Q. Okay. On page 2 at the bottom paragraph, and I 18 just want to make sure the record's clear what you mean by 19 this. You say, "Arbitrage opportunities could limit 20 annualized agreements for Class II milk suppliers." 21 What do you mean by limiting "annualized 22 agreements"? 23 A. So if there are more opportunities, if there is 24 more innovation to -- to subsidize formulations with 25 non-fat, for example, then there would be -- there could 26 be less opportunities for producers to have contracted 27 agreements with their -- with their end users, with their 28 customers. 11629 1 Q. So they -- so as a buyer, you would buy less? 2 A. We would buy less raw milk, correct. Potentially. 3 Q. And then on the next page you talk about, 4 "Class II skim saw an increase of overages of over 30% 5 during COVID-19 due to the incredible demand." 6 What do you mean by increase in overages? 7 A. Premiums, excuse me. Premiums. 8 Q. So the products all -- premiums in the price at 9 the retail level? 10 A. No, no, I'm sorry. At the purchasing level, at 11 the input level from farm -- or from -- from B2B, 12 processor to the plant, balancing plant to the processor. 13 So the premiums -- 14 Q. I'm not sure I'm getting that. 15 A. So the Class II premium, the Class II premium on 16 condensed skim milk, for example -- 17 Q. Okay. 18 A. -- or for farm milk, as an example, increases in 19 those premiums were up in the range of 30% during -- 20 during COVID. 21 Q. And I just want to make sure because everyone 22 talks about premiums differently, and overages in the 23 Federal Order world means different than what you have 24 stated there. 25 The premium is what you pay to your seller of 26 milk? 27 A. That's right. 28 Q. Who you buy from? 11630 1 A. Premium plus class. 2 Q. Yeah. So for us it would maybe be like an 3 over-order premium? 4 A. Exactly. 5 Q. Okay. 6 A. Exactly right. Yes. Overage was the wrong term. 7 Q. Okay. 8 THE COURT: Do you want that changed in the record 9 copy? Do you want -- 10 THE WITNESS: Yes. 11 THE COURT: -- "overages" to be changed to 12 "over-order premiums"? 13 THE WITNESS: Yes. That makes more sense in 14 relation to this particular case, yes. 15 THE COURT: Understood. 16 So I would ask that the record copy be changed 17 accordingly. We're in Exhibit 504, page 3. We're in the 18 top paragraph. And when you find the "30%," then back up, 19 and instead of the word "overages," the phrase will be 20 "over-order premiums." 21 Thank you. 22 BY MS. TAYLOR: 23 Q. My last question. You talk about Class II being 24 the most innovative space, showing the most opportunities 25 for growth. 26 Could you just kind of expand on -- on, from your 27 experience, that innovation and growth that you have seen 28 in the Class II market? 11631 1 A. Yeah. I think specifically, and a little bit of 2 conjecture here, but specifically, non-dairy creamers. 3 The explosiveness across that fluid milk aisle, where, you 4 know, you have items such as half and half that is a 5 standalone item. Innovation hasn't been there on the 6 dairy side. It's all been on, let's say, oil-based kind 7 of coffee creamers I think is a huge example of the growth 8 in a sector that dairy has kind of been left behind. 9 And in retail outlets, creamers are in the dairy space, 10 taking up dairy doors. If that's -- that's the biggest 11 example that I have from an innovation standpoint. 12 Q. So the Class II products that compete with other 13 non-dairy-based, what would be considered Class II 14 products? 15 A. Yes. 16 Q. Okay. 17 A. Yes. 18 MS. TAYLOR: I think that's it from AMS. Thank 19 you for your time. 20 BY MS. TAYLOR: 21 Q. Actually, I got reminded about one quick question, 22 I don't know why I didn't ask this. 23 Lakeview Farms, would they be considered a small 24 business? Do you know how many employees you employ? 25 A. Over a thousand. So we have one plant. Of 26 course, the Delphos, Ohio, plant is our major facility. 27 We do have other plants that process salsas. 28 Q. Okay. 11632 1 MS. TAYLOR: Thank you. 2 MR. ROSENBAUM: Steve Rosenbaum. 3 I would ask that Hearing Exhibit 504 be admitted 4 into evidence. 5 THE COURT: Is there any objection? 6 There is none. I admit into evidence IDFA 7 Exhibit 68, marked Exhibit 504. 8 MR. ROSENBAUM: Thank you, Your Honor. 9 (Thereafter, Exhibit Number 504 was received 10 into evidence.) 11 THE COURT: Mr. Powell, is there anything you 12 would like to add before you step down? 13 THE WITNESS: No, thank you. 14 THE COURT: Thank you so much for being here and 15 testifying. 16 Let's go off record while a document is being 17 distributed. 18 We're off record at 8:33. 19 (An off-the-record discussion took place.) 20 THE COURT: Let's go back on record. 21 We're back on record at 8:34. 22 MR. MUNCH: Thank you. My name is Danny Munch. 23 I'm with the American Farm Bureau Federation. 24 We would like to -- I would like to read a letter 25 into the record. I'm not really sure the most appropriate 26 way, but if I should go up to the stand. I'm here myself, 27 so I'll be representing myself. 28 THE COURT: All right. I would like you to be 11633 1 sworn in as a witness, and then we'll find out how we 2 handle the exhibit. 3 So please take a seat in the witness stand and 4 state and spell your name. 5 THE WITNESS: Daniel Munch, D-A-N-I-E-L, 6 M-U-N-C-H. 7 MR. ROSENBAUM: Your Honor, could I be heard just 8 a moment? 9 THE COURT: You may. 10 MR. ROSENBAUM: Because I have an objection to 11 this. This is Steve Rosenbaum. 12 THE COURT: Would you wait just a minute for your 13 objection. 14 MR. ROSENBAUM: Yes, Your Honor. 15 THE COURT: I'm going to swear him in. 16 MR. ROSENBAUM: Yes. 17 THE WITNESS: And I have testified before, so I 18 don't know if -- 19 THE COURT: Thank you. You remain sworn. 20 DANIEL MUNCH, 21 Having been previously sworn, was examined 22 and testified as follows: 23 THE COURT: Mr. Rosenbaum. 24 MR. ROSENBAUM: Your Honor, the document that 25 Mr. Munch is about to read was distributed at 7:40 or so, 26 a.m., this morning. I actually wasn't copied, but it was 27 passed on to me. 28 As I understand this document, it is a request for 11634 1 an omission of the issuance of a recommended decision with 2 respect to a specific proposal and that the Secretary skip 3 a recommended decision and go to a -- directly to a final 4 decision. 5 The regulation about this issue is 900.12, which 6 says in subpart (d) -- which discusses the issuance of a 7 recommended decision, (d), which is called "omission of 8 recommended decision," reads, and I quote: "The procedure 9 provided in this section" -- referring to the issuance of 10 recommended decision -- "may be omitted only if the 11 Secretary finds on the basis of the record that due and 12 timely execution of his functions imperatively and 13 unavoidably requires such omission," period, end quote. 14 Your Honor, I -- I believe that if a party was 15 going to seek that relief, then they should have requested 16 it contemporaneously with the proposal itself so that 17 other parties would be on notice that they should 18 introduce into the record evidence as to why the due and 19 timely execution of his function does not imperatively and 20 unavoidably require the omission of a recommended 21 decision. 22 But appearing now, on the last day, day 49 of the 23 hearing, to make the request, when all of my witnesses 24 have been heard, and I believe there are no other 25 witnesses intending to testify in this hearing, I believe 26 this is an inappropriate and untimely request. And 27 therefore, I object to it being made at this time. 28 THE COURT: Thank you, Mr. Rosenbaum. 11635 1 Before I hear from you, Mr. Miltner, does anyone 2 want to voir dire this witness about how he acquired this 3 document, what his participation in preparing it was, if 4 any? Does anyone want to ask those questions? 5 Mr. Miltner. 6 MR. MILTNER: Thank you. Your Honor, I did want 7 to ask the witness a couple questions along those lines, 8 which I'll do, and then perhaps address Mr. Rosenbaum's 9 objections. 10 I'm Ryan Miltner. I represent Select Milk. 11 VOIR DIRE-EXAMINATION 12 BY MR. MILTNER: 13 Q. Mr. Munch, I believe from your previous testimony, 14 you are employed as an economist with the Farm Bureau; is 15 that correct? 16 A. That is correct. 17 Q. And when you testified before, you were testifying 18 as a representative of that organization, correct? 19 A. That is correct. 20 Q. Was your testimony at that time endorsed by the 21 leadership of the Farm Bureau and your Board of Directors? 22 A. Yes. 23 Q. And can you tell us who Samuel -- is it Kieffer? 24 A. Yes. 25 Q. And it's spelled, for the record, K-I-E-F-F-E-R. 26 Can you tell us about his role with American Farm 27 Bureau Federation. 28 A. Yes. So Sam is my boss's boss, so Roger's boss. 11636 1 He leads the public policy department at American Farm 2 Bureau, so that means he leads our lobbying team, as well 3 as our economist team and a team of legislative affairs 4 administrative group. 5 So in terms of hierarchy, it goes President, Zippy 6 Duvall; Joby Young; and then Sam Kieffer would fall under 7 the next tier. 8 THE COURT: Would you spell those names? 9 THE WITNESS: Zippy Duvall, Z-I-P-P-Y, 10 D-U-V-A-L-L. And then Joby Young, J-O-B-Y, Y-O-U-N-G. 11 BY MR. MILTNER: 12 Q. Would Mr. Kieffer have been involved in the 13 development and the approval of the statements that you 14 made prior to this today? 15 A. Yes. 16 Q. And what role, if any, did you have in developing 17 this letter which Mr. Kieffer signed? 18 A. So yesterday I drafted the letter in this room, 19 and then it went through a clearance process, which 20 included Roger Cryan, my boss, and Sam Kieffer. 21 MR. MILTNER: I don't have any questions further 22 on the voir dire of the witness, Your Honor. 23 THE COURT: Does anyone else want to voir dire the 24 witness about his involvement and preparation of this 25 proposed exhibit? 26 MS. VULIN: No, Your Honor. I just want to note 27 for the record -- Ashley Vulin with the Milk Innovation 28 Group -- that the Milk Innovation Group joins with IDFA's 11637 1 objection to the admission of the letter in consideration 2 of the emergency procedures. 3 THE COURT: On the same grounds? 4 MS. VULIN: Yes, Your Honor. 5 THE COURT: Before I get to further comments on 6 the exhibit itself, does anyone else want to voir dire 7 this witness about his involvement in the preparation of 8 it? 9 I see no one. 10 I'll continue to hear comments on whether or not 11 it should be considered. 12 MR. MILTNER: Your Honor, for the record, my -- my 13 client, Select Milk Producers, does not have a position 14 right now on whether omission of a recommended decision is 15 appropriate or not. 16 However, the regulation cited by Mr. Rosenbaum is 17 clear that it is the Secretary's decision as to whether a 18 recommended decision may be omitted. It is also the 19 Secretary's obligation to find on the basis of the record 20 as to whether the omission of a recommended decision is 21 proper. 22 The timing of Mr. Munch's statement, certainly, I 23 think, bears on the Secretary's decision. However, it 24 seems to me that an interested party, regardless of the 25 time at which they make their request and present their 26 arguments to USDA, should not matter in terms of their 27 ability to make those arguments. 28 And I assume that when Mr. Munch is finished 11638 1 presenting his statement, everyone here can ask questions 2 about timing and impacts and evidence and all of those 3 things, and ultimately it is the Secretary's obligation to 4 weigh the evidence in the record and make a determination 5 about whether it is proper to omit the decision. But to 6 prevent a witness from offering an explanation as to why 7 that might be proper, I think, is erroneous. 8 I would also suggest that as you look at the 9 provisions of 900.12(d), it seems to me that the Secretary 10 could, on his own volition, decide to omit a recommended 11 decision based on the evidence in the record, even if no 12 one here in this proceeding decided to explicitly ask for 13 its omission. 14 And so the arguments that Mr. Rosenbaum raises on 15 behalf of his client as to why a recommended decision 16 might not be properly omitted are certainly arguments that 17 can be made on brief, and my client may end up aligning 18 with him on that point after consideration and direction 19 from our board. But I think for purposes of the 20 proceeding, it's appropriate to let Mr. Munch present his 21 statement. 22 Thank you. 23 THE COURT: Who else would like to be heard on the 24 issue of what I do with the proposed exhibit? 25 I'm going to start by giving it a number. I'm 26 going to call this the next number, which is 505. 27 (Thereafter, Exhibit Number 505 was marked 28 for identification.) 11639 1 THE COURT: So I am marking the document as 2 Exhibit 505. It is also known as AFBF-6. 3 Would anyone else like to be heard? 4 MR. HILL: Brian Hill, USDA. Dairy Division is 5 not objecting to this document, and I'll just leave it at 6 that. 7 THE COURT: All right. First of all, it's not my 8 decision to make what to do with the document. I agree 9 that this is going to be considered at a later stage of 10 the proceeding, after the hearing is over. I have had 11 just a glance to look at Title 7 of the Code of Federal 12 Regulations 900.12, the "Administrator's recommended 13 Decision," and so forth. All of that will happen long 14 after I have certified the transcript. 15 Normally I would just reject the exhibit and say 16 it's part of the record as a rejected exhibit and not 17 require anyone to cross-examine with so little notice. 18 But I think at this stage of the proceeding, I'm 19 going to allow the witness to read into the record his 20 Exhibit 505, he has familiarity with it, he wrote it, and 21 then got the approval of two levels of supervisory 22 authority in his organization. So he's well-qualified as 23 the witness to present it. So I'm going to allow him to 24 read it into the record. 25 And then I will, again, invite any specific 26 objections to be required to cross-examine under these 27 circumstances. 28 And as I have said, I make no decision with regard 11640 1 to what to do with it, except to decide whether to admit 2 it or reject it. So I'll do that after I allow the 3 witness to be heard and to be cross-examined. 4 So all of that means you may proceed with reading 5 the record -- reading into the record the document. But I 6 would like to you read all of it, beginning with the date, 7 to whom it is addressed, every word of it, if you would 8 please, and also, on what letterhead it is prepared. 9 MR. MUNCH: Yes. So the letterhead is American 10 Farm Bureau Federation. Our address is listed, 600 11 Maryland Avenue Southwest, Suite 1000W, Washington, D.C., 12 20024. The date, January 30th, 2024. 13 It is written out to The Honorable Thomas J. 14 Vilsack, Secretary, U.S. Department of Agriculture, 200A 15 Whitten Building, 1400 Independence Avenue Southwest, 16 Washington, D.C., 20250; and Ms. Dana H. Coale, Deputy 17 Administrator, Dairy Program, Agricultural Marketing 18 Service, U.S. Department of Agriculture, 1400 Independence 19 Avenue Southwest, Washington, D.C., 20250. 20 And the title line is: Request for emergency 21 return to "Higher-of" Class I mover. 22 So I'll go ahead and read it now: 23 Dear Secretary Vilsack and Ms. Coale, 24 On behalf of Farm Bureau members across the 25 country, I would like to express our appreciation for the 26 U.S. Department of Agriculture's continuing efforts to 27 help provide price stability and transparency to dairy 28 farmers. We all understand the challenges that face U.S. 11641 1 dairy farm families year in and year out and their 2 critical role in the well-being of our nation. 3 While Farm Bureau appreciates the value of the 4 full hearing process for amending Federal Milk Marketing 5 Orders, ongoing milk price spreads have driven 6 persistently negative impacts on dairy farmers from the 7 current average-of Class I mover formula. Therefore, the 8 American Farm Bureau Federation requests emergency 9 implementation of the previous higher-of Class I mover 10 formula to buffer dairy farmers from further losses during 11 this comprehensive and extensive regulatory amendment 12 process. 13 The 2018 Farm Bill included a provision that 14 swapped the higher of the Advanced Class III or IV skim 15 milk price formula for the simple average of Advanced 16 Class III and IV skim milk formulas, plus $0.74, intended 17 to produce a roughly equal, long-term Class I milk price. 18 This statutory change was made at the request of dairy 19 processors and dairy cooperatives and was intended as a 20 revenue-neutral way to improve risk management 21 opportunities for beverage milk. It was not based on a 22 hearing record of demonstrated need. 23 Disruptive market conditions during the recent 24 pandemic exposed and exacerbated a temporary but serious 25 shortage of block cheddar cheese production, very high 26 Class III values, and a huge imbalance between Class III 27 and Class IV prices, leading to over 700 million in 28 Class I revenue losses to producers in the 11 Federal 11642 1 Order pools in 2020 alone. This, along with the delay 2 associated with advanced pricing, resulted in 3 manufacturing milk prices higher than the market blends, 4 leading to massive depooling of producer milk by 5 manufacturing plants to capture those higher market 6 prices. 7 These large negative producer price differentials 8 created significant disparities among the milk checks of 9 different groups of farmers. These losses in pool value 10 have continued through 2023 as Class IV prices have become 11 the driver of the dairy market and the gap between 12 Class III and Class IV prices has flipped but remained 13 large, with no end in sight. 14 As of December 2023, cumulative pool losses have 15 surpassed 1 billion since the formula went into effect in 16 May of 2019, including pool losses of 50 million in 17 November of 2023 and 38 million in December of 2023. 18 Dairy farmers with pooled milk face ongoing threats of 19 decreased milk checks linked to the current Class I mover 20 formula. 21 Last week, on Tuesday, January 23rd, AFBF's 22 grassroots delegates from across the nation, representing 23 all types of farmers, ranchers, and agricultural 24 producers, gathered at American Farm Bureau's annual 25 meeting in Salt Lake City to represent the interests of 26 nearly 6 million member families. During this session, 27 these selected community leaders are tasked with 28 reviewing, revising, and reaffirming existing national 11643 1 policy positions, and approving policy on new issues and 2 topics. 3 In the dairy section, our delegates unanimously 4 reaffirmed the following AFBF policy statement: 5 "We support: Revisions to the FMMO, 6 including fluid milk pricing, progress 7 through the normal channels at USDA that will 8 provide thorough economic analysis and public 9 hearings for producers to be engaged, rather 10 than through legislative override. However, 11 given the circumstances of the Class I mover 12 changes in the 2018 Farm Bill, we support 13 returning to the Class I milk mover formula 14 to the higher-of Class III or IV in the most 15 expedient manner possible." 16 AFBF respects the FMMO amendment process. Our 17 delegates expressed clear support for revisions occurring 18 through the normal regulatory process at USDA. In this 19 special case, however, the higher-of Class I mover 20 formula, which was a direct result of a previous thorough 21 FMMO hearing process discussion, and approved by a 22 referendum of dairy farmers, was replaced without a public 23 hearing process due to an act of Congress. This approach 24 resulted in an outcome that unintentionally harmed our 25 dairy farmers' ability to break even during a time defined 26 by volatile, unforgiving market conditions. Given that 27 USDA previously had concluded that the higher-of was an 28 appropriate formula for the Class I mover, we believe it 11644 1 is reasonable to request a return to this previous vetted 2 determination as soon as possible. 3 We note that the FMMO hearing process is only in 4 step 5 of a 12-step process before changes would 5 potentially go into effect for our dairy farmers. With 6 nearly 90 million in pool-related losses in the previous 7 two months alone, any additional month under the current 8 formula regime poses a threat to dairy farmers' 9 livelihoods. By our reckoning, an emergency decision 10 could speed implementation by six months or more. 11 We are aware of the possible impact a formula 12 change may have on current futures contracts and risk 13 management practices. If USDA believes that there should 14 be delay in implementing a change to the Class I mover, 15 better to start the clock sooner than later. 16 The comprehensive process of amending Federal 17 Orders, though important, means dairy farmers remain stuck 18 with current pricing regulations until USDA publishes a 19 final rule. Current marketing -- current market dynamics 20 underscore the need for FMMO modernization. The current 21 Class I mover was a well-intentioned policy misstep that 22 has reduced dairy farmers' checks, with little relief in 23 sight. Emergency implementation of the higher-of Class I 24 mover formula will help buffer against persistent losses 25 associated with mistaken and outdated policies that have 26 left dairy farmers struggling to make ends meet. 27 Thank you all -- thank you for all you do for 28 American agriculture. 11645 1 Most respectfully signed, Samuel A. Kieffer, Vice 2 President of Public Policy. 3 And I would also note, for pool data from all 11 4 orders to be given official notice through December 2024. 5 I know most of that data had already been recognized, but 6 in case it was not. 7 THE COURT: Okay. Who would like to begin 8 examination? 9 CROSS-EXAMINATION 10 BY MS. VULIN: 11 Q. Sorry. Can you just state again what you wanted 12 official notice of? 13 A. Pool data from all 11 orders, just to make sure 14 that November and December are included, since the 15 hearing's been going on since September. 16 Q. Sorry. Can you just state with specificity the 17 entirety of the request? I'm just having trouble tracking 18 exactly what you are asking. 19 A. So in calculating the $50 million pool loss in 20 November, and $38 million pool loss in December, you 21 basically use the difference between the higher-of and the 22 average-of plus $0.74 formula, and apply it to the Class I 23 utilization or pooled milk value. 24 So we just want that utilization, those pounds 25 that were pooled in those two months, to be recognized. 26 Q. And that will be part of -- and I think I didn't 27 identify myself, so Ashley Vulin with the Milk Innovation 28 Group. 11646 1 And that request is part of American Farm Bureau's 2 official notice request? It will be? 3 A. If it was not -- if that data was not already 4 officially -- given official notice previously, we wanted 5 to make sure that it was. We think it was, but I haven't 6 been here for a couple of weeks, so... 7 It is not on this document, though. 8 Q. And did you do the calculations to get to the 9 50 million? 10 A. I did. Yes. 11 Q. And do you have those calculations and that data 12 to submit here today? 13 A. I can if -- I have an Excel file if people would 14 like that. 15 Q. But you haven't submitted it so far with your 16 letter? 17 A. No. It -- we have submitted in previous -- in 18 some of our previous exhibits, basically the previous 19 months. It's just since then we have the November and 20 December data. So in a previous testimony we put forth, 21 we had the same calculations, just not yet for November 22 and December. 23 Q. And I think you may have said December 2024, so 24 just to clarify. 25 A. Oh, 2023. 26 Q. And did AFBF file at the outset of the hearing any 27 request that the hearing be conducted on the -- on an 28 emergency basis? 11647 1 A. Not to my knowledge, no. 2 Q. Why not? 3 A. So our policy has been, since January 2023, our 4 convention last year, to switch back to the higher-of in 5 as expedient a manner as possible. At that time, we 6 had -- and in this particular case we have support to 7 switch back through a legislative change as well. 8 So we were pursuing efforts in the Farm Bill, as 9 well as separate legislative efforts, which as many in the 10 room know have stalled. There may be new Farm Bill 11 discussions starting in a couple of months, but the 12 timeline has shifted given what we saw in November with 13 what happened with the Speaker's House race and just 14 delays in Congress. 15 So the pathway that we, our members, once thought 16 was going to be the fastest, may not have been the 17 fastest. 18 So we are also pursuing it through this hearing, 19 and our members reaffirmed last week that they think we 20 should attempt another -- the most expedient approach, 21 which is now asking for emergency. 22 So basically, because of the change in timeline 23 for the legislative approaches, our members have found it 24 that this is now the appropriate time to ask for emergency 25 request. 26 Q. Okay. So let me -- I'm going to summarize just to 27 make sure I'm tracking. 28 So AFBF had believed they could successfully 11648 1 bypass this change through legislative means, correct? 2 And when that became no longer likely, or if AFBF saw that 3 it was not as likely to be successful as they had 4 originally thought, now you are returning to the hearing 5 process to expedite this process because you don't believe 6 you could be successful on the legislative side as quickly 7 as you had hoped? 8 A. I would not use the word "bypass." Our members 9 were very supportive and active in the previous hearing 10 process, and they participated in the referendum that USDA 11 put out that approved the higher-of. They believe that 12 that was bypassed in the 2018 Farm Bill, so switching back 13 legislatively could -- in their mind, is not considered a 14 bypass, it's just going back to what they previously 15 affirmed through a comprehensive regulatory process. 16 Our -- again, our policy as listed there says, 17 "the most expedient manner possible," so that's what we 18 are pursuing. 19 Q. So I'm fine to avoid the word "bypass." But the 20 intent was regardless of how this hearing proceeded or the 21 outcome of the hearing, it was AFBF's goal to obtain 22 legislative authority to return to the higher-of as 23 opposed to through the hearing process? 24 A. Yes. If that was the most expedient process, that 25 was our goal to switch back, mainly because this process 26 could take up to two years, and that means two years where 27 farmers are still under that regimen. So even if USDA 28 comes up with -- depending on what the final rule is, and 11649 1 we do have policy that allows us some flexibility, and 2 if -- you know, what other formula we may support, but 3 it's mainly to protect farmers during this lull period 4 where we have a hearing and -- and no change has been 5 implemented yet. 6 Q. It was always possible the legislative route was 7 not going to be successful, correct? 8 A. Correct. 9 Q. But despite that, AFBF didn't seek that the 10 hearing proceed on an emergency basis? 11 A. Not at that time, no. 12 Q. And these same issues existed at the time the 13 hearing began, correct? 14 A. Correct. It was uncertain whether or not they 15 would have continued at the magnitude that they have. 16 And I would also note, just the interactions we 17 have had at our convention from our dairy farmers, very 18 emotional, lots of communications to us about how this is 19 still impacting them. So the priority has increased with 20 time as well. 21 Q. And I know Mr. Rosenbaum issued an objection. But 22 I was not clear from your letter what it is you are asking 23 USDA to do, because it does not explicitly state that USDA 24 should omit a recommended decision, or that USDA should 25 designate the hearing to proceed on an emergency basis, 26 which given that that applies to the notice period has 27 long passed. 28 So can you clarify for me what is it specifically 11650 1 you are asking USDA to do with this letter? 2 A. To my knowledge, we are not asking for an 3 omittance of a final decision through this current 4 process, but we are just asking for emergency 5 implementation in the meantime of the -- of the higher-of 6 so that farmers can be protected in the meantime. 7 Q. Sorry, you said "final decision," so -- and I just 8 want to be clear for the record. 9 AFBF is not asking USDA to omit a recommended 10 decision in this letter? 11 A. Correct. 12 Q. And AFBF is not asking that the hearing as an -- 13 as an entire proceeding proceed on an emergency basis, 14 correct? 15 A. No. This is exclusively asking for emergency 16 implementation of higher-of. I'm not familiar with how 17 that would fit in legally, in my background or knowledge, 18 but it -- for that specific one, we don't want to override 19 or -- or interrupt any of the other proceeding at all. 20 It's for this point in time, as quickly as possible, on 21 emergency basis, implement the higher-of. 22 Q. Are you asking USDA to implement the higher-of 23 before it reaches a recommended decision? 24 A. That is the emergency request, yes. 25 Q. On what basis? Legal basis? 26 A. I am -- I -- I have no expertise in commenting on 27 that. 28 Q. And you are not sure if legally USDA is permitted 11651 1 to make a change prior to any recommended decision or 2 final decision? 3 A. My superiors with experience in dairy have said 4 that this has occurred in the past, that emergency 5 requests within the Federal Order hearing process have 6 been made. 7 And I would also note that the Secretary has acted 8 on this exact issue and provided funding through a 9 different program, the Pandemic Market Volatility 10 Assistance Program, to basically protect farmers through 11 this process. 12 So the Secretary has acted on an emergency basis, 13 perhaps not only through a formula change, but in a way to 14 buffer farmers from these disruptions. 15 MS. VULIN: So, Your Honor, then, I would, given 16 that clarification, amend MIG's objection to any request 17 or granting of any request to bypass both the recommended 18 and the final decision, as absolutely in contravention of 19 7 CFR Section 900 and the due process rights of all 20 participants in this hearing. 21 Nothing further. Thank you. 22 MR. ROSENBAUM: Steve Rosenbaum for the 23 International Dairy Foods Association. 24 CROSS-EXAMINATION 25 BY MR. ROSENBAUM: 26 Q. So -- so that the record is clear, witnesses for 27 the Farm Bureau have included Dr. Cryan and yourself, 28 correct? 11652 1 A. Correct. 2 Q. And as I'm looking at it -- 3 THE COURT: I'm not knowing why your voice keeps 4 getting softer. 5 MR. ROSENBAUM: All right. 6 THE WITNESS: And several dairy farmers as well. 7 BY MR. ROSENBAUM: 8 Q. And I'm looking at the -- at the schedule of 9 testimony. It appears to me that Mr. -- Dr. Cryan 10 testified first on August 28; testified again on 11 September 5th; testified again on October 3rd; and then 12 you also testified somewhere in there, correct? 13 A. Correct. 14 Q. And did you or he at any of those occasions 15 indicate a request for an emergency implementation of this 16 proposal? 17 A. We did not, in previous testimony, request 18 emergency implementation. 19 I believe, however, Roger did mention at one point 20 that our policy is a return to the higher-of in -- as 21 expedient as possible. But, no, not in an emergency 22 basis. 23 Q. And, in fact, when you -- you're aware that this 24 hearing began, procedurally, as a result of a submission 25 by National -- by NMPF, as well as by IDFA and Wisconsin 26 Cheese Makers Association for a hearing? Are you aware of 27 that? 28 A. Yes. 11653 1 Q. And are you aware that USDA issued a public notice 2 inviting others to submit proposals of their own? 3 A. Yes. 4 Q. And are you aware at that time American Farm 5 Bureau indicated in response their support for the 6 National Milk's proposal to return to the higher-of? 7 A. Yes. 8 Q. And are you aware that in that submission, 9 American Farm Bureau made no reference to that being 10 implemented on an emergency basis? 11 A. No, but we were both also pursuing the change 12 legislatively. 13 MR. ROSENBAUM: That's all I have, Your Honor. 14 CROSS-EXAMINATION 15 BY MR. MILTNER: 16 Q. This is Ryan Miltner again, representing Select 17 Milk Producers. 18 Mr. Munch, I think you said you're not a lawyer, 19 correct? 20 A. That is correct. 21 Q. And despite your background, have you done a lot 22 with the procedural regulations regarding the Federal 23 Orders? 24 A. Not the procedural, no. I was not around in 25 previous amendment processes. 26 Q. Well -- 27 THE COURT: How old are you, young man? 28 THE WITNESS: 26. 11654 1 THE COURT: Thank you. 2 BY MR. MILTNER: 3 Q. I think I was 26 in my first Federal Order. 4 So despite your presence or not your presence in 5 those -- developing those regulations, do you have a lot 6 of familiarity with what we call Part 900 of the 7 regulations? 8 A. I personally do not. Roger would have much more 9 familiarity than I would. 10 Q. Okay. So when I hear someone say, "We want a 11 hearing or a proposal handled on an emergency basis," I 12 understand that to mean that the Secretary will omit a 13 recommended decision and issue a tentative final decision 14 on that issue, and if there are other issues in the 15 hearing, they will continue to have a recommended decision 16 and proceed down a regular process. 17 When you say you want something handled on an 18 emergency basis, is that -- do you have that same 19 understanding I do or is yours different? 20 A. I would say my personal understanding was 21 different in that our members thought there was a way that 22 they could temporarily, or on emergency basis, implement a 23 change, or the Secretary can authorize that under 24 emergency situation. From that legal perspective, I -- I 25 don't know. 26 Q. Is it your members' desire to move back to the 27 higher-of as quickly as possible without regard to the 28 mechanism that they get there? 11655 1 A. Correct. 2 Q. And so from the Secretary's perspective, if the 3 only way he and his staff were able to do that, that would 4 be to omit a recommended decision; is that what your 5 members want? 6 A. Yes. 7 Q. And if there's another way that could include a 8 recommended decision, your members would be okay with 9 that, too? 10 A. Yes. 11 Q. Now, when you testified about -- and maybe it was 12 Roger, I forget -- but when American Farm Bureau testified 13 about returning to the higher-of, do you recall what 14 the -- what the spread between Class III and IV was at 15 that time? 16 A. Not off the top of my head. I do know in the past 17 two years the spread has been higher than $1.48 for the 18 majority of the time. Which, when the spread is more than 19 $1.48, or double that $0.74 mover, it results in pool 20 losses for those that remain pooled in the order. 21 Q. Okay. So when you say "the spread," you are 22 talking about the spread between Class III and Class IV? 23 A. Correct. 24 Q. And there are advanced issues there, but generally 25 if Class III and Class IV deviate by more than $1.48, that 26 harms your members? 27 A. Correct. 28 Q. It harms all dairy farmers that are pooled, 11656 1 correct? 2 A. Correct. 3 Q. Now, if in August the Class III and IV spread was 4 $1 -- I'm sorry -- about $1.80, does that sound about 5 right? 6 A. I'll take your word for it. 7 Q. Okay. And if in September it was about $0.70, 8 does that sound correct? 9 A. I'll take your word for -- I know there -- there 10 were several months in the period that we analyzed where 11 the spread was smaller than $1.48, but accumulated across 12 months, it still ended up negative for producers. 13 Q. Now, have you looked at what that spread is 14 recently in recent months? 15 A. I believe when I checked it yesterday, there was 16 still a negative value over -- I'll have to look at my 17 numbers again, but I believe the spread was still fairly 18 high. 19 Q. Maybe to the tune of 3 or $4? 20 A. That sounds about right. 21 Q. And for October, November, December, the numbers 22 were about that range, 3 to $4 or more than $4? 23 A. Yes. 24 Q. Okay. Now, from your statement, and from the 25 letter, I understand that even though American Farm 26 Bureau's policy hasn't changed, the specific call of your 27 members from your annual meeting to ask for emergency 28 consideration just happened in the last week or two? 11657 1 A. Yes. The reaffirmation of that policy, yes. 2 Q. You mentioned that you had talked with several 3 Farm Bureau dairy farmers about how this is impacting 4 them. I wonder if you could share a little bit more about 5 that. 6 A. Yeah. So we have quite a few workshops at our 7 convention, and one of them is a dairy market policy 8 session, so there was a number of our dairy farmers in 9 that room. 10 And I went through, gave basically an update on 11 this process, so -- and some of the Dairy Market Coverage 12 and other issues. And afterwards, you know, you can tell 13 the room was sort of somber when you provide the changes 14 in the licensed dairy herds across the country, and -- and 15 there was a lot of emotion in the room afterwards. Folks 16 basically came up and said their neighbors are closing and 17 they continue to see the decline in dairy farms in their 18 areas, and are really just wondering what Farm Bureau can 19 do to help buffer against those closures. 20 So it's really a last cry for help that I saw in 21 the room, of they don't really know what to do anymore. 22 And they have -- you know, they see this process, it's 23 very complicated. They don't necessarily understand what 24 their place is in the process a lot of the time. They 25 respect a lot of us that are working hard to get there, 26 but sometimes not having an immediate answer or fix really 27 hits home. 28 But it -- it continues from -- from the technical 11658 1 aspect to impacting their milk checks, the ones that 2 remain pooled. They are facing the highest interest 3 expenses they have ever faced. Production expenses in 4 many cases, yes, have declined, but not to the extent to 5 cover some of these other increases, interest expenses. 6 So they are still working with very small margins 7 and -- and are facing closure. A lot of our members are 8 facing the hard decision of whether to sell their cattle 9 or not. 10 So kind of a longwinded answer, but a little 11 window into what our members mentioned last week. 12 Q. Did any of them offer you any thoughts on whether 13 their decision to sell their cattle or not would be 14 affected by whether some change to the Class I mover takes 15 six months from now to get a decision, or a year from now 16 to get a decision, or 18 months from now to get a 17 decision? 18 A. I would say more of a sense or a perception that 19 there is a positive outcome coming soon. A lot of our 20 members are just concerned that that might not happen 21 soon. So if there is a whisper of hope, I guess you can 22 say, or sort of an optimistic change that they can see 23 coming, it sort of fuels to say, hey, you know, maybe -- 24 maybe we can hang on a bit longer and -- and -- and work 25 this out. 26 So I think it's more of, in the short run, do they 27 see things getting better or are things going to kind of 28 stay the way they are. So a tentative information that 11659 1 said, hey, they will implement this on an emergency basis 2 helps -- helps the confidence and the perception piece of 3 it, which is a very big part of it as well. 4 Q. I want to -- I'd like you to help me with an 5 example and make sure my understanding is the same as 6 yours. 7 You said that if the difference between Class III 8 and Class IV exceeds $1.48, then that means producers 9 receive less money under the current Class I mover formula 10 than under the higher-of, correct? 11 A. For producers that have pooled milk, yes. 12 Q. Thank you. 13 And so let's just say that that spread was $3.48. 14 That means that there's a $2 difference, but you average 15 it, so that means the Class I price would be $1 lower 16 under the current formulas than under the higher-of. 17 Is that your understanding? 18 A. Yes. 19 Q. So if that's just the Class I price, and you are 20 in an order with 75% Class I utilization, somewhere in 21 Florida or the Southeast, that $0.75 on all of your milk, 22 that producer is probably not receiving, correct? 23 A. Correct. 24 Q. And even in orders where there might be 25% 25 Class I utilization, that would be $0.25 on all of their 26 milk for that month that they are not receiving, correct? 27 A. Correct. 28 Q. As part of your job as an economist, do you look 11660 1 at the Class III and IV futures at all? 2 A. I do occasionally. Dairy is one of many issues 3 that I cover, so it's generally more looking into the 4 policy aspects. But I do occasionally look at those, yes. 5 Q. Have you or anyone at Farm Bureau done anything to 6 try to forecast whether that spread between Class III and 7 Class IV will persist over the next several months or what 8 it looks like for the year? 9 A. Roger and I have both kind of agreed that this 10 sort of switch to the Class IV price driving the market is 11 going to persist, which is basically how we have briefed 12 our members and part of the reason why they continue to 13 push for this so hard is because we don't think this is 14 going to change soon. 15 Q. So you don't think that Class IV being higher than 16 Class III will change? 17 A. Not in the short run, no. 18 Q. Okay. Now, what about the spread between 19 Class III and Class IV, do you expect that that spread 20 will be more than $1.48? 21 A. So in the short run, we still expect there to be a 22 large spread between those two prices. 23 Q. There was some testimony about this issue earlier 24 in the hearing that perhaps a lot of this issue was 25 specifically related to the COVID disruptions and the Food 26 Box Program and large commercial purchases of cheese. 27 As you have seen the dairy markets post-COVID and 28 post-Food Box Program, do you think that those really are 11661 1 the drivers or is there something else going on? 2 A. Well, and that kind of goes back to some of my 3 testimony. In 2020, we saw the 700 million in pool 4 losses, and now in December, we have crossed 1.05 billion 5 in pool losses. So those market dynamics have continued 6 to negatively impact farmers because of that formula 7 change. 8 Is that what you are asking? 9 Q. Well, that's your answer, and I'll take it. 10 So it seems to me that what your analysis and what 11 your statement says is that the financial detriment to 12 farmers as a result of the current Class I formula isn't 13 solely the result of a black swan market shock event? 14 A. Correct. And that's part of the reason we have 15 actually -- you know, this has picked up steam again, 16 because some of our farmers were waiting to see, you know, 17 how the market shifts, and they just -- basically, years 18 later, it's still an issue. So that's another one of the 19 driving forces for why we're asking for this now and why 20 it came up again last week at our annual meeting. 21 MR. MILTNER: Thank you for that additional 22 context. 23 CROSS-EXAMINATION 24 BY MS. HANCOCK: 25 Q. Nicole Hancock with National Milk. 26 Good morning. I just want to say thanks for being 27 here and taking what is obviously the brunt of a lot of 28 tough questions. 11662 1 I just want to clarify. You know, of all of the 2 things that -- that you were talking about with your 3 members, is it fair to say that the higher-of is of 4 paramount importance to them and the most immediate relief 5 that they are seeking? 6 A. Yes. 7 And just to add a little bit of extra context. We 8 had our Federal Milk Marketing Order forum in October of 9 2022. Many in the room were involved in that. And part 10 of that was to achieve consensus across the industry: 11 Processors, co-ops, farmers. And the number one item that 12 came out of that conference was switching back to the 13 higher-of. There was unanimous consent from all the 14 tables that were participating in that event. 15 So for that reason and for the reasons we have 16 mentioned, that remains the number one priority of our 17 dairy farmers. 18 Q. And back when we were talking about higher-of, and 19 that seems like a very long time ago now, we got some 20 historical context about how the higher-of changed over 21 legislatively to the average-of. And I think it was 22 pretty clear then that it was -- the intent that it was 23 revenue neutral, as you mention in your letter in 24 Exhibit 505. 25 Is that your members' -- is that part of the 26 impetus that your members have come to you to ask for this 27 relief? 28 A. Whether or not that it would have been revenue 11663 1 neutral? 2 Q. Yeah. Because it was intended to be revenue 3 neutral and it's turned out not to be? 4 A. And it's not, yes. 5 Q. And in -- in the -- in the process of getting that 6 historical context, what we know is that the producers 7 actually went to the processors and asked for a 8 collaborative or a unified approach to bring to the USDA 9 to return to the higher-of. 10 And do you -- in your -- do you recall what it was 11 that was the response of the processors when the producers 12 went to them? 13 A. I do not. 14 Q. Okay. Well, I think that what we heard is that 15 the processors refused to provide that kind of unified 16 position with the producers to return to that neutral 17 position. And since then we have heard that, in the 18 differentials, that the producers should be trusting the 19 processors to just negotiate through an over-order premium 20 that increased in price. 21 Did you hear that testimony? 22 A. I did. 23 Q. Is there anything in -- in the experience that the 24 producers have had with respect to the higher-of that 25 would inform them as to whether they could trust the 26 processors to negotiate those over-order premiums? 27 A. I would just -- you know, our members have 28 continuously sort of -- and part of the reason that I 11664 1 guess American Farm Bureau's gotten so involved in this is 2 just because the perception of a lack of trust between 3 them and the processors going on, and them not really 4 knowing where their price comes from. There's been a lot 5 of concern about, you know, how their milk check is 6 calculated. You know, that's one of the proposals that 7 American Farm Bureau put in place, is more uniform, clear 8 milk checks. 9 So there's -- there's a perception that things in 10 the milk check have been manipulated. Perception. 11 Doesn't necessarily mean in all cases that it's happening, 12 but there's perception of mistrust. 13 So if there are ways that we can build back the 14 trust, and one of those ways that our farmers are talking 15 about is switching back to the higher-of, it's easier for 16 our farmers to understand that calculation and -- and has 17 shown to be, in the most current of times, more 18 advantageous. 19 I don't know if that answered your question, 20 but -- 21 Q. And -- and you understand that the producers have 22 asked you to make this request of the Secretary because 23 they feel like it's critical to their survival? 24 A. Absolutely. 25 Q. Okay. 26 MS. HANCOCK: Thank you so much for your time 27 today. 28 THE WITNESS: Thank you. 11665 1 THE COURT: Does anyone else wish to ask questions 2 before I call on the Agricultural Marketing Service for 3 their questions? 4 I see no one. I do invite the Agricultural 5 Marketing Service. 6 CROSS-EXAMINATION 7 BY MS. TAYLOR: 8 Q. Good morning. 9 A. Hi, Erin. 10 Q. Thank you for coming back to testify today. 11 A. No problem. 12 Q. Just a quick question. How often are your 13 policy -- is your policy book updated? 14 A. So it's updated every year in January. We have a 15 national convention, and our members -- the whole book 16 gets reapproved. So they might not edit every single 17 policy, but they -- everything has to be reapproved. And 18 if they do, they will vote on new policy, things of that 19 nature. 20 Q. Okay. So you weren't able to come here earlier in 21 the hearing to testify on this particular issue? 22 A. No. Not that it was reaffirmed and made a 23 priority, no. 24 MS. TAYLOR: Okay. That's my only question. I do 25 want to thank you for testifying and for Farm Bureau's 26 participation in the proceeding. So thank you. 27 THE WITNESS: Thank you. 28 And if I may, as the last witness, I would like to 11666 1 thank our judge and our court reporter for their time. We 2 know they have been out here a long time, so if we could 3 give them a hand. 4 And also just to AMS and everybody in the room, I 5 know myself and a few of the young folks that have been 6 involved have really appreciated the expertise of the 7 people in the room. We might be doing this in 20 years 8 again, so it's good to have some of the folks in the room 9 to learn from. 10 And thanks to Mike Brown for getting us printouts. 11 He, at the last minute, got us some printouts, so we 12 appreciate his time as well. 13 MR. BROWN: May I say that I did it because you 14 were going to testify anyway, and it just made it 15 expedient, so we can all get out of here. 16 THE WITNESS: Thank you. 17 MR. BROWN: Thank you for your support and 18 testimony. 19 THE COURT: All right. Thank you so much. You 20 may step down. 21 Over objection, I do admit into evidence 22 Exhibit 505, also marked AFBF-6. 23 (Thereafter, Exhibit Number 505 was received 24 into evidence.) 25 THE COURT: And now let's take a 15-minute break. 26 Please be back and ready to go at 9:45. 27 (Whereupon, a break was taken.) 28 THE COURT: Let's go back on record. 11667 1 We're back on record at 9:46. 2 Who will be the next witness? 3 MS. TAYLOR: We're out of witnesses. 4 THE COURT: I know we have one because I have 5 exhibits. 6 MS. TAYLOR: Your Honor, I don't think we have 7 witnesses left to testify. I think what you have are 8 everyone's -- or some of the official notice lists that we 9 need to discuss. 10 THE COURT: Excellent. 11 Would you like to begin the topic? Or should I 12 call on one of the attorneys that submitted them? 13 MS. TAYLOR: Yeah. These are not USDA exhibits, 14 but I think next on our list was to discuss what everyone 15 wanted to have officially noticed, and for you to rule on 16 that. 17 THE COURT: All right. Who would like to begin? 18 MR. PROWANT: Your Honor, Bradley Prowant for 19 National Milk. 20 We submitted -- since we're submitting these 21 exhibits -- 22 THE COURT: You're not talking to the mic. 23 Swallow it. 24 MR. PROWANT: Swallow it? 25 THE COURT: Pretend like you're -- it's a musical 26 term. Right? It's a musical term. 27 MR. PROWANT: Got it. I will get up in this mic. 28 (Court Reporter clarification.) 11668 1 MR. PROWANT: How's this? We need more Brad in 2 this hearing. 3 We have submitted Exhibit NMPF-114. I don't know 4 if we needed to title it that, but we would just ask that 5 it be marked as an exhibit. I think for expediency, to 6 avoid reading all of the titles and URLs into the record, 7 we're submitting these exhibits. 8 THE COURT: Good. I'm going to give it number 9 506. 10 (Thereafter, Exhibit Number 506 was marked 11 for identification.) 12 MR. PROWANT: Okay. 13 THE COURT: 506. 14 Is there any objection to my taking official 15 notice of the items that are contained in 16 Exhibit NMPF-114, also marked as Exhibit 506? 17 MR. HILL: I -- oh, I do have one question, and 18 it's with Number 7, which is the CASS, C-A-S-S, linehaul 19 index data. And I'm not sure that this is appropriate for 20 official notice. It's not a matter of technical, 21 scientifical [sic], commercial fact of established 22 character. It appears to be a private company's 23 aggregated data from maybe a survey or something or the 24 other. 25 So I think I would object to that portion, 26 Number 7, CASS Line Haul Index Data, 2005 to 2023. 27 THE COURT: All right. What I'll do, when I am 28 reviewing the record and looking at transcript corrections 11669 1 and so forth, I will look at that and others. And I'm 2 glad we have the place where the data can be found. It 3 may have been referenced in testimony. And it may not be 4 worthy of official notice, but it still might be useful 5 that we have your cite. So thank you for that. 6 Is there any other comment by anyone about what's 7 in Exhibit 506? 8 MS. VULIN: Your Honor, Number 6, which is the 9 Original May and Final June Proposed Class I Differentials 10 by NMPF, are already admitted as exhibits in the hearing, 11 Exhibits 300 and 301. 12 So to the extent they are documents posted on the 13 USDA website, I don't per se have an objection to their 14 being officially noticed, but they are already admitted as 15 exhibits, and so I don't think appropriate or necessary to 16 also have them be officially noticed. 17 THE COURT: Thank you. 18 I'll probably take official notice regardless, but 19 I appreciate the additional information, and I might well 20 include that in my certification of transcript. 21 MR. PROWANT: Your Honor, if I could just briefly 22 respond to both those points, going in reverse order. 23 The reason for requesting for official notice of 24 the differentials as submitted by NMPF is because 25 Exhibits 300 and 301 are MIG exhibits, they aren't 26 exhibits of NMPF. 27 And Your Honor may recall -- trying to swallow 28 it -- that is a bad record -- talking about the mic, 11670 1 Myra -- Your Honor may recall that MIG was submitting 2 exhibits with NMPF data, and we were very clear that we 3 wanted those clearly marked as MIG exhibits. So this is 4 an attempt to encompass what NMPF actually submitted to 5 AMS as part of requesting this hearing. 6 Your Honor, with regard to the CASS Line Haul 7 Index, Your Honor can certainly review that and determine 8 whether or not you think it is reliable. I would note 9 that under 900.8(5) [sic]: "Official notice may be taken 10 of such matters as are judicially noticed by courts," or 11 as Mr. Hill mentioned, "of other matter of technical, 12 scientific, or commercial fact." 13 The types of facts that are usually taken notice 14 of by courts are adjudicative facts, which are simply 15 facts as opposed to legislative facts, which are facts 16 that get into policymaking and rulemaking and lawmaking. 17 The Line Haul Index is just raw data about 18 trucking costs. It's not anything suggesting how the 19 Secretary should or should not act in this case. So -- so 20 we would say that that's a -- an acceptable thing of which 21 to take official notice. 22 But obviously we'll leave the final determination 23 to Your Honor. 24 THE COURT: Thank you. 25 MR. PROWANT: Your Honor, the source of that 26 request -- bear with me for a moment, I'll get the exhibit 27 number -- was Exhibit 310 at page 14 in the testimony of 28 Jeff Sims. 11671 1 THE COURT: Good. Thank you. I think it's very 2 helpful to have it. Often when people were talking about 3 transportation costs, they were asking on what information 4 they were relying, and I think it's a useful item. 5 All right. Who would like to speak next? 6 MR. ROSENBAUM: Steve Rosenbaum for the 7 International Dairy Foods Association. 8 I just do have a procedural question. Is -- is 9 the notion that for those -- just using the National Milk 10 as an example -- for the various items as to which no one 11 has raised a question, are those deemed to have been 12 officially noticed or is there a -- just trying to 13 understand the process a bit. 14 THE COURT: It's really helpful when we have this 15 opportunity to acquaint me with where I might look. I'm 16 going to deal with the request for official notice in the 17 transcript corrections, and I'll take official notice 18 there. So I'm going to check all these out. So presume 19 nothing at this point. 20 MR. ROSENBAUM: Thank you, Your Honor, for that 21 clarification. 22 Your Honor, we have provided a document which 23 appears on the letterhead of my law firm, which I believe 24 you have a copy of. 25 (Court Reporter clarification.) 26 MR. ROSENBAUM: That's it, Your Honor. Thank you. 27 And I guess I should give that maybe an IDFA 28 exhibit number to begin with. So that would be IDFA 11672 1 Exhibit 69. 2 THE COURT: IDFA-69, and it will be 507. 3 (Thereafter, Exhibit Number 507 was marked 4 for identification.) 5 MR. ROSENBAUM: And, Your Honor, this document 6 sets forth the materials for which IDFA is requesting that 7 official notice be taken. 8 THE COURT: Does anyone have any comments or 9 questions about the items in Exhibit 507? 10 MR. HILL: Brian Hill, USDA, OGC. 11 I would like Mr. Rosenbaum, if you could, if you 12 look at Number 13, could you kind of give us a little 13 background on that? It looks like a chart. I'm not sure 14 where the information comes from. Is it aggregated 15 information of the government? I'm not sure, and I want 16 to have that clarified. 17 MR. ROSENBAUM: Yes, that's exactly what it is. 18 It's an aggregation of the federal fund rate, which is a 19 rate set by the United States Government. 20 MR. HILL: So these are basically government -- 21 it's government data just put together in a -- 22 MR. ROSENBAUM: Precisely right. 23 MR. HILL: Okay. 24 THE COURT: Are there any comments or questions 25 about Exhibit 507? 26 All right. Who would next like to speak? 27 MS. VULIN: Ashley Vulin with the Milk Innovation 28 Group. 11673 1 We submitted a document -- a document entitled 2 "Milk Innovation Group Request for Official Notice." We 3 also omitted the MIG specific exhibit number, but for 4 clarity would ask that it be marked as MIG Exhibit 68. 5 THE COURT: Good. And I am calling it 508. 6 (Thereafter, Exhibit Number 508 was marked 7 for identification.) 8 MS. VULIN: And, Your Honor, just for clarity. To 9 the extent that we'll receive a ruling on documents that 10 receive official notice, will that come before the 11 briefing deadline? Is that expected, so we know which of 12 these we can incorporate into our briefs? 13 THE COURT: You know, I'm hoping to beat that 14 briefing deadline. I'll be working very hard. 15 MS. VULIN: Thank you. 16 THE COURT: I realize you need it. But just 17 assume for the purpose of briefing, just assume, if I have 18 not finished the certification of the transcript, that 19 everything you want in, is in. 20 MS. VULIN: Thank you, Your Honor, that's helpful. 21 THE COURT: All right. Mr. Miltner. 22 MR. MILTNER: Thank you, Your Honor. 23 I circulated by e-mail two documents. I do have 24 them here, and I will give them to Your Honor and USDA and 25 participants. 26 THE COURT: Let's go off record while these are 27 distributed. 28 (An off-the-record discussion took place.) 11674 1 THE COURT: Let's go back on record. 2 We're back on record at 10:00. 3 Mr. Miltner, I'm looking at the first document 4 entitled "Select Milk Producers, Inc." 5 How would you like that marked. 6 MR. MILTNER: Your Honor, I think that would be 7 Select-10. 8 THE COURT: All right. And it will also be 9 Exhibit 509. 10 (Thereafter, Exhibit Number 509 was marked 11 for identification.) 12 MR. MILTNER: Thank you very much. 13 That document includes references to several 14 publications, all from the United States Department of 15 Agriculture, most of which were referenced in testimony 16 from Select's witnesses or in their statements. There 17 were a few that were referenced in the course of the 18 hearing, and I think a couple others that are new. But 19 they are all United States Department of Agriculture 20 documents, with the relevant websites provided. 21 THE COURT: Excellent. I'll start with this one. 22 Is there any question for Mr. Miltner or any 23 objection with regard to Select-10, also marked 24 Exhibit 509? 25 MR. ROSENBAUM: Steve Rosenbaum for the 26 International Dairy Foods Association. 27 I have a comment about Hearing Exhibit 509, and 28 this also actually applies to Hearing Exhibit 508, which 11675 1 is the MIG document. 2 In both cases they have cited Federal Register 3 publications of decisions made by USDA in the past. I 4 don't -- it's certainly not -- it is my clear 5 understanding that a decision by USDA published in the 6 Federal Register does not have to be officially noticed in 7 order for it to be cited in a brief. It's functionally 8 the equivalent of, if you will, citing a court decision in 9 a brief to a court. 10 And so I don't have any objection, per se, to 11 their being on these lists, but I do think we should have 12 clarity that it's not required to have submitted such 13 decisions for official notice in order for them to be 14 cited. 15 THE COURT: Let me tell you how helpful it is to 16 have an URL with your computer to have the electronic 17 version and push that button to have it called up. It's 18 very, very helpful. So if someone has done it for the 19 convenience of those utilizing all these materials, I'm 20 all for it. And I agree that it's not necessary, but it's 21 very helpful. 22 MR. ROSENBAUM: I think Your Honor is suggesting 23 it behooves us to put that in the brief as well, and I 24 will take that to heart. 25 THE COURT: Yes. 26 MR. ROSENBAUM: Thank you. 27 THE COURT: Very good. 28 Ms. Vulin. 11676 1 MS. VULIN: Thank you, Your Honor. Ashley Vulin 2 with the Milk Innovation Group. 3 I agree with Mr. Rosenbaum, it is the functional 4 equivalent of citing to a statute, right? Or some other 5 legal document that -- that we can readily cite without 6 official notice. 7 For MIG, we wanted to ensure that we included in 8 this list specific Federal Register cites that were 9 incorporated in testimony or otherwise relied upon in 10 exhibits introduced so that they were, as Your Honor said, 11 readily available. 12 But similar to the California regulation cited on 13 the second page, included for clarity of record, but agree 14 that had it not been included, it would not prohibit MIG 15 or any other entity from citing to a -- to a similar type 16 legal source absent official notice already being granted. 17 THE COURT: Mr. Miltner, is there anything else 18 you would like to say about Select Exhibit 10, also marked 19 Exhibit 509? 20 MR. MILTNER: Other than to note that Ms. Vulin's 21 statements about citing those Federal Register postings 22 that were referenced in testimony, that was the intent, 23 not to be all encompassing, but to provide references to 24 those that were utilized in testimony. 25 THE COURT: Very good. 26 And, Mr. Miltner, the other document? 27 MR. MILTNER: Yes. The other document, Your 28 Honor, is on the letterhead of Dan Smith who's appeared in 11677 1 the hearing representing the Maine Dairy Industry 2 Association. He is not here this week. He doesn't have 3 any witnesses this week. And he asked if I would do the 4 courtesy of providing the record the documents that the 5 Maine Dairy Industry Association would like Your Honor to 6 take official notice of, so those are reflected. They are 7 two documents, publications of the USDA, and the citations 8 to where they can be found online are included. And I 9 believe this would be document MDIA-3. 10 MR. HILL: That's correct. 11 THE COURT: And I'm marking it also as 12 Exhibit 510. 13 (Thereafter, Exhibit Number 510 was marked 14 for identification.) 15 THE COURT: 510. 16 Is there any objection or any questions for 17 Mr. Miltner with regard to MDIA-3, also marked 18 Exhibit 510? 19 And I appreciate the courtesy of both Mr. Smith 20 and Mr. Miltner in getting this to me. It's very helpful. 21 Mr. Rosenbaum. 22 Let's go off record briefly while this document is 23 being distributed. It is 10:06. 24 (An off-the-record discussion took place.) 25 THE COURT: Let's go back on record. 26 We're back on record at 10:07. 27 Mr. Rosenbaum. 28 MR. ROSENBAUM: Yes, Your Honor. I'm now -- Steve 11678 1 Rosenbaum for the International Dairy Foods Association. 2 I'm now basically performing the same service that 3 Mr. Miltner provided. And as they say, I -- as a matter 4 of courtesy, I have provided a copy of National 5 All-Jersey's request for official notice. Their 6 representative, Mr. Vetne, is not here, and he circulated 7 this copy and asked that it be provided to the Court. 8 This would be, I think, NAJ-10. 9 THE COURT: NAJ-10. 10 MR. ROSENBAUM: NA, as in apple, NAJ-10. 11 THE COURT: All right. NAJ, for National 12 All-Jersey, 10, and I have marked it also as Exhibit 511. 13 (Thereafter, Exhibit Number 511 was marked 14 for identification.) 15 MR. ROSENBAUM: Obviously I'm not sponsoring this, 16 I'm simply providing it to Your Honor. 17 THE COURT: Thank you. 18 Does anyone have any comments about it? 19 All right. I see none. 20 I also appreciate this courtesy. I realize what 21 we're doing now, taking lists of requests for official 22 notice, is not similar function to taking in witness 23 testimony. 24 Ms. Vulin. 25 MS. VULIN: One typo. I believe Footnote 1, which 26 says "old copies of the Federal Register since the 1040s 27 are available by year." I believe it should say 1940s. 28 Probably not critical, but wanted to note. 11679 1 THE COURT: Where are you, Ms. Vulin? 2 MS. VULIN: Footnote 1, Your Honor. 3 And Mr. Miltner notes it could be 1840s. I 4 haven't checked. 5 THE COURT: Oh, I see. 6 MS. VULIN: But I'm pretty sure it's not the 7 1040s. 8 THE COURT: Thank you. That's Footnote 1 on 9 page 1 of Exhibit 511. 10 For now I'm putting a question mark by 1040s. I'm 11 sure Mr. Vetne will chuckle. 12 All right. Are there any other documents listing, 13 but not in an exclusive way or an exhaustive way, items 14 for which official notice is requested and we have the 15 courtesy of an easy way to find the website? 16 All right. I see no comments. 17 I do admit into evidence for this special purpose, 18 Exhibits 506, 507, 508, 509, 510, and 511. 19 (Thereafter, Exhibit Numbers 506, 507, 508, 20 509, 510, and 511 were received into 21 evidence.) 22 THE COURT: And I note that the record also 23 probably includes other items for which official notice 24 was taken. And when I compile the list, I will use a 25 shorthand method. For example, I would refer to 26 Exhibit 511, and all the items in that except for, and the 27 "except for" would be things for which I do not take 28 official notice. So I won't be trying to type these 11680 1 things into my transcript certification, but they will be 2 referenced. And in addition, I will reference those items 3 that were officially noticed in the transcript that are 4 not included in these. 5 All right. Is there anything further on this 6 particular topic? 7 I see nothing further. 8 So now do we go to the topic of how counsel would 9 like to submit their proposed findings and conclusions and 10 briefs? All at once on the last -- or all at once before 11 the deadline, the last day being April 1, 2024, a Monday, 12 because the 60 days landed on a weekend. 13 So do you want to do it in stages where there's an 14 earlier deadline for your initial brief so that every 15 party would have an opportunity to file a response brief, 16 or are you content with one brief coming in, and it 17 doesn't have to be as late as April 1st, but that's the 18 last date, it needs to be by 4:30 Eastern Time, received 19 by the Hearing Clerk? Not sent, received. 20 MS. HANCOCK: Your Honor, Nicole Hancock with 21 National Milk. 22 It's our preference to just have one brief due 23 April 1st. 24 MR. ROSENBAUM: Steve Rosenbaum, International 25 Dairy Foods Association. 26 That is also our preference. 27 MS. VULIN: Likewise for the Milk Innovation 28 Group. Thank you. 11681 1 MR. MILTNER: Select concurs. 2 THE COURT: Does anyone else want to be heard? 3 There is no one. 4 In accordance with Title 7 of the Code of Federal 5 Regulations Section 900.27, all parties must file by this 6 deadline in order to have their proposed findings and 7 conclusions and briefs considered. That deadline is 8 April 1, 2024. No late -- received by the Hearing Clerk 9 no later than 4:30 p.m. I recommend being early. But 10 when you get your items sent in whatever way fits what the 11 Hearing Clerk has requested, please verify with the 12 Hearing Clerk that it was received. 13 And I recommend that you also file, as you would 14 anything else in this proceeding, in the normal way with 15 the Agricultural Marketing Service, so that they will have 16 it simultaneously with your -- or simultaneously or 17 earlier than your Hearing Clerk copy. 18 We talked yesterday about the other deadline 19 that's contained in Title 7 of the Code of Federal 20 Regulations Section 900.27, and that's the request for 21 transcript corrections. And as we noted, that deadline 22 does not begin to run today, that deadline begins to run 23 when all of the transcript is available. And the date 24 when that occurs will be posted on the AMS website, 25 together with the calculation of the 30th day so that 26 people know their deadline for filing, again, with the 27 Hearing Clerk, again by 4:30 p.m. Eastern Time. 28 What other legal items or any other issues need to 11682 1 come before us with regard to this milk hearing? 2 MS. TAYLOR: I don't have any issues to bring up. 3 Just for courtesy for those listening, as well as 4 here, AMS will make sure that the hearing web page 5 reflects the proper deadlines for the briefing schedule 6 and when the transcripts go up, and will provide 7 information on the Hearing Clerk's address and e-mail, 8 et cetera, so that can be accessible to all who would like 9 to file corrections and briefs. 10 THE COURT: Excellent. 11 Mr. Miltner. 12 MR. MILTNER: When we adjourned the hearing back 13 in October, AMS was kind enough to update a spreadsheet of 14 the exhibits to cross-reference the designated number, 15 Select-8, with the Hearing Exhibit number. 16 If they have the opportunity to do so as we 17 adjourn today, that would be appreciated, so we ensure 18 that we are citing to the correct documents. 19 MS. TAYLOR: We will do that. And it will have 20 all the exhibits on it. 21 And we will not be -- just so everyone knows, 22 renumbering the links of the exhibits with the official 23 exhibit numbers on the website, but you will have a 24 spreadsheet you can look at so you can find the right 25 exhibits. 26 THE COURT: Excellent. 27 MR. HILL: Brian Hill, USDA, OGC. 28 I do want to just read on to the record Proposal 11683 1 Number 22 submitted by Dairy Program, Agricultural 2 Marketing Service: To make such changes as may be 3 necessary to make the respective Marketing Orders conform 4 with any amendments thereto that may result from this 5 hearing for the obvious purposes. 6 Thank you, Your Honor. 7 THE COURT: Is there anything further that anyone 8 wants to bring before the Secretary in this milk hearing? 9 I see no response. 10 So it is my pleasure, at 10:18 a.m. on 2024, 11 January 30, to determine that this hearing has ended. 12 (Whereupon, the proceedings were concluded.) 13 ---o0o--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11684 1 STATE OF CALIFORNIA ) ) ss 2 COUNTY OF FRESNO ) 3 4 I, MYRA A. PISH, Certified Shorthand Reporter, do 5 hereby certify that the foregoing pages comprise a full, 6 true and correct transcript of my shorthand notes, and a 7 full, true and correct statement of the proceedings held 8 at the time and place heretofore stated. 9 10 DATED: February 20, 2024 11 FRESNO, CALIFORNIA 12 13 14 15 16 MYRA A. PISH, RPR CSR Certificate No. 11613 17 18 19 20 21 22 23 24 25 26 27 28