01-26593. Milk in the Central Marketing Area; Notice of Hearing on Proposed Amendments to Tentative Marketing Agreement and Order

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule; Notice of public hearing on proposed rulemaking.

SUMMARY:

A public hearing is being held to consider proposals that would amend certain pooling and related provisions of the Central order. Proposals include amending the pool supply plant and pool supply plant system provisions of the order, eliminating the provision for a cooperative supply plant and amending the portion of the producer milk definition that specifies the percentage of a handler's milk that may be diverted to nonpool plants. Another proposed amendment to the order's pooling provisions would allow milk diverted to a nonpool plant before the producer's milk is delivered to a pool plant to be considered producer milk and allow the producer's milk to retain its association with the market for any months during which the handler fails to pool the producer's milk under any order. Other proposals would provide for establishing separate pooling provisions by state of origin for milk from areas outside the Central order marketing area, preventing the pooling of milk that is already pooled on a State marketwide order and increasing minimum partial payments to producers and cooperative associations. Proponents have requested that these issues be handled on an emergency basis.

DATES:

The hearing will convene at 8:30 a.m. on Wednesday, November 14, 2001.

ADDRESSES:

The hearing will be held at the Hilton Hotel-Kansas City Airport, 8801 N.W. 112th Street, Kansas City, Missouri 64153; [phone].

FOR FURTHER INFORMATION CONTACT:

Constance M. Brenner, Marketing Specialist, Order Formulation Branch, USDA/AMS/Dairy Programs, Room 2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, [phone], e-mail address [e-mail].

Persons requiring a sign language interpreter or other special accommodations should contact Bob Vander Linden at 913-495-9313 or Dave Stukenberg at 913-495-9326; email [e-mail] before the hearing begins.

SUPPLEMENTARY INFORMATION:

This administrative action is governed by the provisions of Sections 556 and 557 of Title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

Notice is hereby given of a public hearing to be held at the Hilton Hotel—Kansas City Airport, 8801 N.W. 112th Street, Kansas City, Missouri 64164; [phone]; beginning at 8:30 a.m., on Wednesday, November 14, 2001, with respect to proposed amendments to the tentative marketing agreement and to the order regulating the handling of milk in the Central marketing area.

The hearing is called pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900).

The purpose of the hearing is to receive evidence with respect to the economic and marketing conditions which relate to the proposed amendments, hereinafter set forth, and any appropriate modifications thereof, to the tentative marketing agreement and to the order.

Evidence also will be taken to determine whether emergency marketing conditions exist that would warrant omission of a recommended decision under the rules of practice and procedure (7 CFR 900.12(d)) with respect to any of the proposed amendments.

Actions under the Federal milk order program are subject to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This Act seeks to ensure that, within the statutory authority of a program, the regulatory and informational requirements are tailored to the size and nature of small businesses. For the purpose of the Act, a dairy farm is a “small business” if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a “small business” if it has fewer than 500 employees. Most parties subject to a milk order are considered as a small business. Accordingly, interested parties are invited to present evidence on the probable regulatory and informational impact of the hearing proposals on small businesses. Also, parties may suggest modifications of these proposals for the purpose of tailoring their applicability to small businesses.

The amendments to the rules proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have a retroactive effect. If adopted, the proposed amendments would not preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Agricultural Marketing Agreement Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 8c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing with the Secretary a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the Secretary would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has its principal place of business, has jurisdiction in equity to review the Secretary's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling.

Interested parties who wish to introduce exhibits should provide the Presiding Officer at the hearing with three copies of such exhibits for the Official Record. Also, it would be helpful if additional copies are available for the use of other participants at the hearing.

List of Subjects in 7 CFR Part 1032

• Milk marketing orders

PART 1032—[Amended]

The authority citation for 7 CFR Part 1032 continues to read as follows:

Authority: 7 U.S.C. 601-674.

The proposed amendments, as set forth below, have not received the approval of the Secretary of Agriculture.

Proposed by: Dairy Farmers of America, Prairie Farms Cooperative, and Swiss Valley Farms:

Proposal No. 1

Amend the pool supply plant provision to reduce the percentage of milk physically received at a supply plant that must be shipped to distributing plants during the fall months from 35 to 25 percent and from 25 to 20 percent during all other months of the year, with the fall months changed from September through November and January to August through November. In addition, handlers would not be able to use shipments under § 1000.9(c) or § 1032.13(c) to qualify plants located outside the marketing area. While qualifying shipments would be expanded to include shipments to any plant that is part of a distributing plant unit, they would also be limited by excluding shipments to distributing plants regulated under other Federal orders. These provisions are proposed to be amended to read as follows:

§ 1032.7

Pool Plant.

* * * * *

(c) A supply plant from which the quantity of bulk fluid milk products shipped to (and physically unloaded into) plants described in paragraph (c)(1) of this section is not less than 25 percent during the months of August through November and 20 percent in all other months of the Grade A milk received from dairy farmers (except dairy farmers described in § 1032.12(b)) and handlers described in § 1000.9(c), including milk diverted pursuant to § 1032.13, subject to the following conditions:

(1) Qualifying shipments may be made to plants described in paragraphs (a), (b) or (e) of this section.

(2) The operator of a pool plant located in the marketing area may include as qualifying shipments milk delivered directly from producer's farms pursuant to § 1000.9(c) or § 1032.13(c). Handlers may not use shipments pursuant to § 1000.9(c) or § 1032.13(c) to qualify plants located outside the marketing area.

(3) Concentrated milk transferred from the supply plant to a distributing plant for an agreed-upon use other than Class I shall be excluded from the supply plant's shipments in computing the supply plant's shipping percentage.

(4) No plant may qualify as a pool plant due to a reduction in the shipping percentage pursuant to paragraph (g) of this section unless it has been a pool supply plant during each of the immediately preceding 3 months.

* * * * *

Proposal No. 2

Remove the provision for a cooperative supply plant, as follows:

§ 1032.7

Pool Plant.

* * * * *

(d) Removed and reserved.

* * * * *

Proposal No. 3

Revise the provision for a system of supply plants by providing for increased shipping percentages (5 percent higher than for individual supply plants in the months of August through November and 3 percent higher in all other months) by adding a new paragraph (f)(1) and redesignating paragraphs § 1032.7(f)(1) through (4) as paragraphs § 1032.7(f)(2) through (5) to read as follows:

§ 1032.7

Pool plant.

* * * * *

(f) * * *

(1) The applicable percentage requirements for each unit shall be 30 percent for the months of August through November, and 23 percent in all other months.

* * * * *

Proposal No. 4

Amend the provision authorizing the market administrator to adjust shipping percentages to remove the reference to paragraph (d) by revising the first sentence of paragraph (g) to read as follows:

§ 1032.7

Pool Plant.

* * * * *

(g) The applicable shipping percentages of paragraphs (c) and (f) of this section may be increased or decreased, for all or part of the marketing area, by the market administrator if the market administrator finds that such adjustment is necessary to encourage needed shipments or to prevent uneconomic shipments.

* * * * *

Proposal No. 5

Relax the diversion limits for the fall months from 65 to 75 percent of producer receipts and change those months by including August and removing January; relax the diversion limits for the rest of the year from 75 to 80 percent of producer receipts. Diversion limits would apply to all months. Paragraph (d)(2) would read as follows:

§ 1032.13

Producer Milk.

* * * * *

(d) * * *

(2) The quantity of milk diverted to a nonpool plant by a pool plant operator or by a cooperative association pursuant to § 1000.9(c) may not exceed 75 percent of the producer milk receipts reported by the handler pursuant to § 1032.30 for the months of August through November and 80 percent of the remaining months' producer milk receipts reported by the handler pursuant to § 1032.30 provided that not less than 25 percent of such receipts in the months of August through November and 20 percent of the remaining months' receipts are delivered to plants described in § 1032.7(a), (b) and (e). These percentages are subject to any adjustments that may be made pursuant to § 1032.13(d)(5);

* * * * *

Proposal No. 6

Increase the partial payment rate to producers and cooperative associations from the lowest class price for the preceding month to 110 percent of that price in paragraphs (a)(1) and (c)(1) of § 1032.73 to read as follows:

§ 1032.73

Payments to producers and to cooperative associations.

(a) * * *

(1) Partial Payment. For each producer who has not discontinued shipments as of the date of this partial payment, payment shall be made so that it is received by each producer on or before the 26th day of the month (except as provided in § 1000.90) for milk received during the first 15 days of the month from the producer at not less than 110 percent times the lowest announced class price for the preceding month, less proper deductions authorized in writing by the producer.

* * * * *

(c) * * *

(1) For bulk fluid milk products and bulk fluid cream products received from a cooperative association in its capacity as the operator of a pool plant and for milk received from a cooperative association in its capacity as a handler pursuant to § 1000.9(c) during the first 15 days of the month, at not less than 110 percent times the lowest announced class prices per hundredweight for the preceding month;

* * * * *

Proposed by: Dairy Farmers of America:

Proposal No. 7

Amend the pool supply plant and producer milk definitions to require milk from “distant” locations to be reported by individual state units that would each be subject to the performance standards applicable to supply plants and producer milk in the applicable paragraphs in §§ 1032.7 and 1032.13 to read as follows:

§ 1032.7

Pool Plant.

* * * * *

(c) * * *

(4) If milk is delivered to a plant physically located outside the States of Colorado, Illinois, Iowa, Kansas, Minnesota (or certain designated counties), Missouri, Nebraska, Oklahoma, South Dakota and Wisconsin (or certain designated counties) by producers also located outside the area specified in this paragraph, producer receipts at such plant shall be organized by individual state units and each unit shall be subject to the following requirements:

(i) Each unit shall be reported separately pursuant to § 1032.30.

(ii) At least the required minimum percentage specified in § 1032.7(c) of the producer milk of each unit of the handler shall be delivered to plants described in § 1032.7 (a), (b) or (e), and such deliveries shall not be used by the handler in meeting the minimum shipping percentages required pursuant to § 1032.7(f); and

(iii) The percentages of 1032.7(c)(4) are subject to any adjustments that may be made pursuant to § 1032.7(g).

* * * * *

§ 1032.13

Producer Milk.

Subject to the conditions of paragraph (e) of this section, “producer milk” means the skim milk (or the skim equivalent of components of skim milk), including nonfat components, and butterfat in milk of a producer that is:

* * * * *

(e) Milk receipts from producers whose farms that are physically located outside the States of Colorado, Illinois, Iowa, Kansas, Minnesota (or certain designated counties), Missouri, Nebraska, Oklahoma, South Dakota and Wisconsin (or certain designated counties) such producers shall be organized by individual state units and each unit shall be subject to the following requirements:

(1) Each unit shall be reported separately pursuant to § 1032.30.

(2) For pooling purposes, each reporting unit must satisfy the shipping standards specified for a supply plant pursuant to § 1032.7(c), and such deliveries shall not be used by the handler in meeting the minimum shipping percentages required pursuant to § 1032.13(d)(2); and

(3) The percentages of § 1032.13(d)(2) are subject to any adjustments that may be made pursuant to § 1032.13(d)(5).

Proposed by: Anderson-Erickson Dairy Company, Associated Milk Producers, Inc., Family Dairies USA, First District Association, Foremost Farms, Swiss Valley Dairy, Milwaukee Cooperative Milk Producers, Manitowoc Milk Producers Cooperative, and Mid-West Dairymen's Company:

Proposal No. 8

Amend paragraph (d)(6) of the “Producer Milk” definition to exclude milk that is pooled under any other marketwide equalization pool to read as follows:

§ 1032.13

Producer milk.

* * * * *

(d) * * *

(6) Provided, however, that diverted milk pursuant to this paragraph shall not include milk subject to the minimum pricing provisions of another federal order or milk which qualifies for inclusion and participation in a marketwide equalization pool under a milk classification and pricing program imposed under the authority of a State government.

Proposed by: Associated Milk Producers Inc., Foremost Farms USA, Land O'Lakes, First District Association, Family Dairies USA, Midwest Dairymen's Co., Manitowoc Milk Producers Cooperative, and Milwaukee Cooperative Milk Producers:

Proposal No. 9

Amend paragraph (d)(1) of the “Producer Milk” definition to allow milk diverted to a nonpool plant before the producer's milk is delivered to a pool plant to be considered producer milk and allow the producer's milk to retain its association with the market for any months during which the handler fails to pool the producer's milk under any order to read as follows:

§ 1032.13

Producer Milk.

* * * * *

(d) * * *

(1) Milk of a dairy farmer shall not be eligible for diversion unless at least one day's production of such dairy farmer has been physically received as producer milk at a pool plant during the first month the dairy farmer is a producer and the dairy farmer has continuously retained producer status since that time. If a dairy farmer loses producer status under the order in this part (except as a result of a temporary loss of Grade A approval or as a result of the handler of the dairy farmer's milk failing to pool the milk under any order), the dairy farmer's milk shall not be eligible for diversion unless milk of the dairy farmer has been physically received as producer milk at a pool plant.

Proposed by: Dairy Programs, Agricultural Marketing Service:

Proposal No. 10

Make such changes as may be necessary to make the entire marketing agreement and the order conform with any amendments thereto that may result from this hearing.

Copies of this notice of hearing and the order may be procured from the Market Administrator of the Central Marketing Area or from the Hearing Clerk, Room 1083, South Building, United States Department of Agriculture, Washington, DC 20250, or may be inspected there.

Copies of the transcript of testimony taken at the hearing will not be available for distribution through the Hearing Clerk's Office. If you wish to purchase a copy, arrangements may be made with the reporter at the hearing.

From the time that a hearing notice is issued and until the issuance of a final decision in a proceeding, Department employees involved in the decision-making process are prohibited from discussing the merits of the hearing issues on an ex parte basis with any person having an interest in the proceeding. For this particular proceeding, the prohibition applies to employees in the following organizational units:

Office of the Secretary of Agriculture

Office of the Administrator, Agricultural Marketing Service

Office of the General Counsel

Dairy Programs, Agricultural Marketing Service (Washington office) and the Office of the Market Administrator of the Central Milk Marketing Area

Procedural matters are not subject to the above prohibition and may be discussed at any time.

Dated: October 17, 2001.

Kenneth C. Clayton,

Associate Administrator, Agricultural Marketing Service.