[Federal Register Volume 63, Number 196 (Friday, October 9, 1998)]
[Proposed Rules]
[Pages 54383-54385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27179]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1065
[DA-98-10]
Milk in the Nebraska-Western Iowa Marketing Area; Proposed
Suspension of Certain Provisions of the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed suspension of rule.
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SUMMARY: This document invites written comments on a proposal to
suspend 11 counties from the marketing area definition of the Nebraska-
Western Iowa Federal milk marketing order (Order 65) for the period of
November 1, 1998, through December 31, 1999. The action was requested
by Gillette Dairy (Gillette) of Rapid City, South Dakota, which
contends the suspension is necessary to maintain its milk supply and to
remain competitive in selling fluid milk products in the marketing
area.
DATES: Comments must be submitted on or before November 9, 1998.
ADDRESSES: Comments (two copies) should be filed with the USDA/AMS/
Dairy Programs, Order Formulation Branch, Room 2971, South Building,
P.O. Box 96456, Washington, DC 20090-6456. Comments may be faxed to
(202) 690-0552 or e-mailed to OFB__FMMO__Comments@usda.gov. Reference
should be given to the title of action and docket number.
FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing
Specialist, USDA/AMS/Dairy Programs, Order Formulation Branch, Room
2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202)
720-9368, e-mail address clifford__m__carman@usda.gov.
SUPPLEMENTARY INFORMATION: The Department is issuing this proposed rule
in conformance with Executive Order 12866.
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. If adopted, this proposed rule will not preempt any state or
local laws, regulations, or policies, unless they present an
irreconcilable conflict with the rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), provides that administrative proceedings must be
exhausted before parties may file suit in court. Under section
608c(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 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
[[Page 54384]]
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.
Small Business Consideration
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.), the Agricultural Marketing Service is considering the economic
impact of this action on small entities. For the purpose of the
Regulatory Flexibility Act, a dairy farm is considered a ``small
business'' if it has an annual gross revenue of less than $500,000, and
a dairy products manufacturer is a ``small business'' if it has fewer
than 500 employees. For the purposes of determining which dairy farms
are ``small businesses,'' the $500,000 per year criterion was used to
establish a production guideline of 326,000 pounds per month. Although
this guideline does not factor in additional monies that may be
received by dairy producers, it should be an inclusive standard for
most ``small'' dairy farmers. For purposes of determining a handler's
size, if the plant is part of a larger company operating multiple
plants that collectively exceed the 500-employee limit, the plant will
be considered a large business even if the local plant has fewer than
500 employees.
For the month of April 1998, which is the most recent
representative month, 1,649 dairy farmers were producers under Order
65. Of these producers, 1,573 producers (i.e., 95%) were considered
small businesses having monthly milk production under 326,000 pounds. A
further breakdown of the monthly milk production of the producers on
the order during April 1998 was as follows: 1,001 produced less than
100,000 pounds of milk; 445 produced between 100,000 and 200,000; 127
produced between 200,000 and 326,000; and 76 produced over 326,000
pounds. During the same month, eight handlers were pooled under the
order. One was considered a small business.
Pursuant to authority contained in the Agricultural Marketing
Agreement Act of 1937, as amended (7 U.S.C. 601-674), this proposal
would suspend 11 counties in the western panhandle of Nebraska from the
marketing area definition of Order 65. The Nebraska counties are
Banner, Box Butte, Cheyenne, Dawes, Deuel, Garden, Kimball, Morrill,
Scotts Bluff, Sheridan, and Sioux.
Gillette, the proponent of the proposed action, estimates that its
sales in the counties represent 65% to 70% of total fluid milk sales in
the 11 counties. Gillette explains that a loss of sales in an
unregulated marketing area has resulted in its regulation under Order
65 without any appreciable increase in sales in the Order's marketing
area. The handler contends the proposed action is necessary to maintain
its milk supply and to remain competitive in selling fluid milk
products in the marketing area.
Gillette was pooled under Order 65 during the months of January
through May 1998. For the period of February through May 1998, Order 65
price data shows that the average uniform price to producers was $13.34
per hundredweight. If Gillette would not have been a regulated handler
under Order 65 during this period, the average uniform price to
producers would have been about $13.31 per hundredweight. Thus, the
regulation of Gillette for the February through May 1998 period
resulted in an increase in the average uniform price of 3 to 4 cents
per hundredweight.
There are three handlers other than Gillette that possibly have
sales into the 11 Nebraska counties. The handlers are Meadow Gold of
Lincoln, Nebraska; Roberts Dairy in Omaha, Nebraska; and Meadow Gold in
Greeley, Colorado. Roberts Dairy hauls milk for Nebraska Dairy, Inc.,
which is a distribution facility that is owned by the same principal
company that owns Gillette. However, the dairy appears to be a separate
entity from Gillette. Market information indicates that if these three
handlers have sales into the 11 counties the volume is relatively
small. Because these handlers have relatively small sales, if any, into
the 11 counties, the proposed rule is projected to not have a
significant economic impact. The exact impact of the proposed rule on
these handlers would be dependent upon the specific sales the handlers
chose to pursue.
The July 1996 population estimate and the December 1992 fluid milk
per capita consumption data show that the 11 Nebraska counties
represent a small amount of the population and fluid milk consumption
in the State of Nebraska and in the entire Order 65 marketing area. The
11 counties represent about 6% of the population and fluid milk
consumption in the State of Nebraska and about 5% of the population and
fluid milk consumption in the Order 65 marketing area.
Gillette was a fully regulated handler under the Black Hills, South
Dakota, Federal milk marketing order prior to its termination at the
request of the Black Hills Milk Producers. After termination of the
Black Hills order, Gillette for some time was a partially regulated
handler under three Federal milk marketing orders: Eastern South Dakota
(Order 76), Eastern Colorado (Order 137), and Order 65. From January
1998 through May 1998, Gillette was a fully regulated handler under
Order 65 because its fluid milk sales in the marketing area represented
more than 15 percent of its receipts.
When Gillette was a partially regulated handler, it paid to the
producers supplying its plant at least the full Class use value of its
milk each month. Thus, Gillette had no further obligation to the
producer settlement funds of the orders under which it was a partially
regulated handler. However, as a fully regulated handler, Gillette is
required to pay the difference between its Class use value and the
marketwide Class use value to the Order 65 producer settlement fund.
This payment, Gillette contends, increases its cost for milk and
reduces the amount it can pay its producers.
A review of the current reporting requirements was completed
pursuant to the paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35),
and it was determined that this proposed suspension would have little
impact on reporting, recordkeeping, or other compliance requirements
because these would remain almost identical to the current system. No
new forms would need to be proposed.
No other burdens are expected to fall upon the dairy industry as a
result of overlapping Federal rules. This proposed regulation does not
duplicate, overlap or conflict with any existing Federal rules.
Interested parties are invited to submit comments on the probable
regulatory and informational impact of this proposed rule on small
entities. Specifically, interested parties should address the potential
impact of the proposed action on both Order 65 producers and producers
who supply Gillette as well as the competition that exists for fluid
milk sales in the 11 counties between regulated and unregulated
handlers. Also, parties may suggest modifications of this proposal for
the purpose of tailoring their applicability to small businesses.
Notice is hereby given that, pursuant to the provisions of the
Agricultural Marketing Agreement Act, the suspension of the following
provisions of the order regulating the handling of milk in the
Nebraska-Western Iowa Federal milk marketing area is being considered
for the period of November 1, 1998, through December 31, 1999:
In Sec. 1065.2, the words ``Banner, Box Butte, Cheyenne, Dawes,
Deuel, Garden, Kimball, Morrill, Scotts Bluff, Sheridan, Sioux''.
[[Page 54385]]
All persons who want to submit written data, views or arguments
about the proposed suspension should send two copies of their views to
the USDA/AMS/Dairy Programs, Order Formulation Branch, Room 2971, South
Building, P.O. Box 96456, Washington, DC 20090-6456, by the 30th day
after publication of this notice in the Federal Register. The comment
period is limited to 30 days due to the request for immediate action by
the proponent of this proposed action.
All written submissions made pursuant to this notice will be made
available for public inspection in the Dairy Programs during regular
business hours (7 CFR 1.27(b)).
Statement of Consideration
The proposed rule would suspend 11 counties from the marketing area
definition of the Nebraska-Western Iowa Federal milk marketing order.
The counties, which are located in the western panhandle of Nebraska,
include Banner, Box Butte, Cheyenne, Dawes, Deuel, Garden, Kimball,
Morrill, Scotts Bluff, Sheridan, and Sioux.
The July 1996 population estimate, which represents the most recent
population statistics, shows that the total population for the Order 65
marketing area is 2,000,529 (i.e., 412,167 for Iowa counties and
1,588,362 for Nebraska counties). The population estimate for the
entire State of Nebraska is 1,652,093, while the population for the 11
Nebraska counties is 91,194. In addition, the December 1992 Federal
Milk Order Statistics Report (Per Capita Sales of Fluid Milk Products
in Federal Order Markets) indicates that the Nebraska fluid milk per
capita consumption is about 20 pounds per person per month. It is
estimated that the fluid milk consumption per month within the 11
Nebraska counties is 1,823,880 (20 lbs. * 91,194).
The July 1996 population estimate and the December 1992 fluid milk
per capita consumption data show that the 11 Nebraska counties
represent a small amount of the population and fluid milk consumption
in the State of Nebraska and in the entire Order 65 marketing area. The
11 counties represent about 6% of the population and fluid milk
consumption in the State of Nebraska and about 5% of the population and
fluid milk consumption in the Order 65 marketing area.
Gillette was a fully regulated handler under the Black Hills, South
Dakota, Federal milk marketing order prior to its termination at the
request of the Black Hills Milk Producers. After termination of the
Black Hills order, Gillette for some time was a partially regulated
handler under three Federal milk marketing orders: Eastern South Dakota
(Order 76), Eastern Colorado (Order 137), and Order 65. From January
1998 through May 1998, Gillette was a fully regulated handler under
Order 65 because its fluid milk sales in the marketing area represented
more than 15 percent of its receipts.
When Gillette was a partially regulated handler, it paid to the
producers supplying its plant at least the full Class use value of its
milk each month. Thus, Gillette had no further obligation to the
producer settlement funds of the orders under which it was a partially
regulated handler. However, as a fully regulated handler, Gillette is
required to pay the difference between its Class use value and the
marketwide Class use value to the Order 65 producer settlement fund.
This payment, Gillette contends, increases its cost for milk and
reduces the amount it can pay its producers.
According to Gillette, marketing conditions in Order 65 have
changed significantly since the order was promulgated. Gillette
estimates that its sales in the 11 counties represent 65% to 70% of
total fluid milk sales in the counties. Gillette explains that a loss
of sales in an unregulated marketing area has resulted in its
regulation under Order 65 because such sales represented at least 15
percent of its receipts, but without any appreciable increase in sales
in the Order's marketing area. Furthermore, the handler states that
since its milk supply comes from the Black Hills Milk Producers there
is no balancing of milk supply for the plant from Order 65 or any other
Federal milk marketing order.
Black Hills Milk Producers also requested that the counties be
removed from the Order 65 marketing area definition. The cooperative
representing the producers explained that it is dependent on Gillette's
survival. It states that the regulation of Gillette under Order 65 has
caused its producers hardship by costing them as much as $1.00 per
hundredweight during some months. According to the cooperative, this
cost results from an agreement that it has with Gillette in which it
refunds to Gillette an amount equal to half of the handler's obligation
to the producer settlement fund when Gillette is fully regulated.
Although the producers pay this amount to Gillette, Order 65 price data
for the February through May 1998 period indicates that their monthly
pay prices were above the Order 65 uniform price.
The Federal Order Reform Proposed Rule, which was issued on January
21, 1998 (63 FR 4802), recommended excluding the 11 Nebraska counties
from the consolidated Central order. The recommendation currently is
under consideration. However, Gillette has requested that the proposed
action be considered immediately.
Accordingly, it may be appropriate to suspend the aforesaid
provisions for the period of November 1, 1998, through December 31,
1999.
List of Subjects in 7 CFR Part 1065
Milk marketing orders.
The authority citation for 7 CFR Part 1065 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Dated: September 23, 1998.
Richard M. McKee,
Deputy Administrator, Dairy Programs.
[FR Doc. 98-27179 Filed 10-8-98; 8:45 am]
BILLING CODE 3410-02-P
