2011-18393. Milk in the Mideast Marketing Area; Order To Terminate Proceeding on Proposed Amendments to Marketing Agreement and Order

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Termination of proceeding.

SUMMARY:

This action terminates a rulemaking proceeding that proposed to amend Class I prices for certain counties of the Mideast milk marketing area. Marketing conditions since the close of the hearing on the proposal have changed substantially, no longer warranting a change.

DATES:

The rulemaking proceeding is terminated as of July 23, 2011.

FOR FURTHER INFORMATION CONTACT:

Erin C. Taylor, Order Formulation and Enforcement, USDA/AMS/Dairy Programs, STOP 0231-Room 2971, 1400 Independence Avenue, SW., Washington, DC 20250-0231, [phone], e-mail address: [e-mail] mailto: [e-mail].

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.

This action terminates the rulemaking proceeding concerning Class I prices for the Mideast order. The proposal was considered at a public hearing held August 19-20, 2008. The Secretary issued a recommended decision on the proposed amendment on January 8, 2009, and it was published on January 14, 2009 (74 FR 1976).

Regulatory Flexibility Act and Paperwork Reduction Act

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that the termination of this proceeding will not have a significant economic impact on a substantial number of 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 $750,000, 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 $750,000 per year criterion was used to establish a production guideline of 500,000 pounds per month. Although this guideline does not factor in additional monies that may be received by a dairy farm operation, it should be an inclusive standard for most small dairy farms. 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.

During August 2008, the time of the hearing, there were 7,376 dairy farms pooled on the Mideast order. Of these, approximately 6,927 dairy farms (or 93.9 percent) were considered small businesses.

During August 2008, there were 53 handler operations associated with the Mideast order (27 fully regulated handlers, 9 partially regulated handlers, 2 producer-handlers and 15 exempt handlers). Of these, approximately 43 handlers (or 81 percent) were considered small businesses.

Minimum Class I prices are determined in all Federal milk marketing orders by adding a location specific differential, referred to as a “Class I differential,” to the higher of an advance Class III and Class IV price announced by USDA. The proposed amendments sought to increase the Class I prices in the southern tier of counties of the Mideast marketing area. Minimum Class I prices charged to regulated handlers are applied uniformly to both large and small entities.

Because this action terminates the rulemaking proceeding without amending the Class I prices of the Mideast marketing order, the economic conditions of small entities remain unchanged. This action does not change reporting, record keeping, or other compliance requirements.

Prior documents in this proceeding:

Notice of Hearing: Issued July 21, 2008; published July 24, 2008 (73 FR 43160).

Recommended Decision: Issued January 8, 2009; published January 14, 2009 (74 FR 1976).

Preliminary Statement

A public hearing was held upon proposed amendments to the marketing agreements and orders regulating the handling of milk in the Mideast marketing area. The hearing was held, 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), Cincinnati, Ohio, on August 19-20, 2008, pursuant to a notice of hearing issued July 21, 2008, and published in the Federal Register on July 24, 2008 (73 FR 43160).

Class I Prices

This action terminates the rulemaking concerning proposed amendments to the Class I prices of the Mideast marketing order. A proposal published in the hearing notice as Proposal 1 sought to increase the Class I prices up to $0.20 per hundredweight in 110 counties in the southern portion of the marketing area. USDA issued a recommended decision on January 8, 2009, recommending the adoption of Proposal 1, modified to recommend a $0.20 increase in the Class I price at Charleston, West Virginia.

The recommended decision was based on three primary factors: (1) The southern tier of counties in the Mideast marketing area is a deficit region that must rely on more distant milk to service its fluid distributing plants; (2) higher Class I prices brought about by providing higher Class I price adjustments in the Southeast, Appalachian and Florida marketing orders (southeastern orders) have resulted in more milk servicing those orders from farms located in the Mideast marketing area; and (3) transportation costs had increased such that the Class I differentials did not offer sufficient pricing incentives to cover the cost of transporting milk from reserve northern surplus regions to the deficit southern region of the marketing area.

As noted in almost all the exceptions to the recommended decision, marketing conditions since the close of the hearing have changed substantially no longer warranting a change in the Class I price surface of the Mideast marketing area. Exceptions filed on behalf of the proponents of Proposal 1 (Michigan Milk Producers Association, Inc., Foremost Farms USA Cooperative, Inc., National Farmers Organization Inc., and Dairy Farmers of America, Inc.) requested that USDA take no action.

Termination of Proceeding

In view of the foregoing, it is hereby determined that this proceeding with respect to proposed amendment to the Mideast order regarding Class I prices should be and is hereby terminated.

List of Subjects in 7 CFR Parts 1000 and 1033

• Milk marketing orders

The authority citation for 7 CFR Parts 1000 and 1033 continues to read as follows:

Authority: 7 U.S.C. 601-674, and 7253.

Dated: July 14, 2011.

David R. Shipman,

Acting Administrator, Agricultural Marketing Service.