[Federal Register Volume 60, Number 169 (Thursday, August 31, 1995)]
[Rules and Regulations]
[Pages 45574-45578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21653]
[[Page 45573]]
_______________________________________________________________________
Part III
Department of Agriculture
_______________________________________________________________________
Agricultural Marketing Service
_______________________________________________________________________
7 CFR Part 1040
Milk in the Southern Michigan Marketing Area; Order Amending Order;
Final Rule
Federal Register / Vol. 60, No. 169 / Thursday, August 31, 1995 /
Rules and Regulations
[[Page 45574]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1040
[Docket No. AO-225-A45-R01; DA-92-10]
Milk in the Southern Michigan Marketing Area; Order Amending
Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Southern Michigan Federal milk
marketing order based on industry proposals considered at public
hearings. This rule adopts a multiple component pricing (MCP) plan for
pricing milk on the basis of its butterfat and protein components and a
``fluid carrier'' residual. The plan includes adjustments to the
producer protein price based on the somatic cell count of producer
milk. This rule also adopts amendments to certain shipping percentages
and increases the maximum allowable administrative and marketing
service assessment rates. The amended order has been approved by more
than two-thirds of the producers in the market who were eligible to
have their milk pooled during the representative month for voting
purposes.
EFFECTIVE DATE: October 1, 1995.
FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing
Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room
2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202)
720-4829.
SUPPLEMENTARY INFORMATION: This administrative rule 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.
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the
Agency to examine the impact of a proposed rule on small entities.
Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural
Marketing Service has certified that this action will not have a
significant economic impact on a substantial number of small entities.
The amended order will promote more orderly marketing of milk by
producers and regulated handlers.
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This action is not intended to have a retroactive
effect. This rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674) (the 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 file 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 and requesting a modification of an order or to
be exempted from the order. 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 is the
handler's 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.
Prior documents in this proceeding:
Notice of Hearing: Issued December 3, 1992; published December 10,
1992 (57 FR 58418).
Supplemental Notice of Hearing: Issued January 19, 1993; published
January 29, 1993 (58 FR 6447).
Recommended Decision: Issued November 29, 1993; published December
6, 1993 (58 FR 64176).
Notice of Reopened Hearing: Issued February 18, 1994; published
February 24, 1994 (59 FR 8874).
Extension of Time for Filing Briefs: Issued April 6, 1994;
published April 13, 1994 (59 FR 17497).
Emergency Partial Final Decision: Issued May 12, 1994; published
May 23, 1994 (59 FR 26603).
Final Rule: Issued June 22, 1994; published June 29, 1994 (59 FR
33418).
Revised Recommended Decision: Issued December 2, 1994; published
December 14, 1994 (59 FR 64464).
Extension of Time for Filing Exceptions: Issued January 18, 1995;
published January 24, 1995 (60 FR 4571).
Final Decision: Issued August 11, 1995; published August 18, 1995
(60 FR 43066).
Findings and Determinations
The findings and determinations hereinafter set forth supplement
those that were made when the Southern Michigan order was first issued
and when it was amended. The previous findings and determinations are
hereby ratified and confirmed, except where they may conflict with
those set forth herein.
(a) Findings upon the basis of the hearing record. 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), a public hearing was held upon
certain proposed amendments to the tentative marketing agreement and to
the order regulating the handling of milk in the Southern Michigan
marketing area.
Upon the basis of the evidence introduced at such hearing and the
record thereof, it is found that:
(1) The said order as hereby amended, and all of the terms and
conditions thereof, will tend to effectuate the declared policy of the
Act;
(2) The parity prices of milk, as determined pursuant to section 2
of the Act, are not reasonable in view of the price of feeds, available
supplies of feeds, and other economic conditions which affect market
supply and demand for milk in the marketing area. The minimum prices
specified in the order, as hereby amended, are such prices as will
reflect the aforesaid factors, insure a sufficient quantity of pure and
wholesome milk, and be in the public interest;
(3) The said order, as hereby amended, regulates the handling of
milk in the same manner as, and is applicable only to persons in the
respective classes of industrial and commercial activity specified in,
a marketing agreement upon which a hearing has been held; and
(4) It is hereby found that the necessary expense of the market
administrator for the maintenance and functioning of such agency will
require the payment by each handler, as his pro rata share of such
expense, 4 cents per hundredweight or such lesser amount as the
Secretary may prescribe, with respect to milk specified in
Sec. 1040.85.
(b) Determinations. It is hereby determined that:
(1) The refusal or failure of handlers (excluding cooperative
associations specified in section 8c(9) of the Act) of more than 50
percent of the milk which is marketed within the marketing area to sign
a proposed marketing agreement tends to prevent the effectuation of the
declared policy of the Act;
(2) The issuance of this order amending the order is the only
practical means pursuant to the declared policy of the Act of advancing
the interests of producers as defined in the respective order as hereby
amended; and
[[Page 45575]]
(3) The issuance of the order amending the order is approved or
favored by at least two-thirds of the producers who during the
determined representative period were engaged in the production of milk
for sale in the marketing area.
List of Subjects in 7 CFR Part 1040
Milk marketing orders.
Order Relative to Handling
It is therefore ordered, that on and after the effective date
hereof, the handling of milk in the Southern Michigan marketing area
shall be in conformity to and in compliance with the terms and
conditions of the order, as amended, and as hereby further amended, as
follows:
PART 1040--MILK IN THE SOUTHERN MICHIGAN MARKETING AREA
1. The authority citation for 7 CFR Part 1040 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 1040.7 is amended by adding paragraphs (b)(5)(iii) and
(b)(7) to read as follows:
Sec. 1040.7 Pool Plant.
* * * * *
(b) * * *
(5) * * *
(iii) Partially regulated distributing plants that are neither
other order plants, producer-handler plants, nor exempt plants and from
which there is route disposition in consumer-type packages or dispenser
units in the marketing area during the month.
* * * * *
(7) The shipping percentages determined pursuant to paragraphs
(b)(1) or (b)(6) of this section may be increased or decreased by the
market administrator if the market administrator finds that such
revision is necessary to encourage needed shipments or to prevent
uneconomic shipments. Before making such a finding, the market
administrator shall investigate the need for revision either on the
market administrator's own initiative or at the request of interested
parties. If the investigation shows that a revision of the shipping
requirements might be appropriate, the market administrator shall issue
a notice stating that the revision is being considered and invite data,
views, and arguments. Any request for revision of shipping percentages
shall be filed with the market administrator no later than the 15th day
of the month prior to the month for which the requested revision is
desired to be effective.
* * * * *
3. Section 1040.30 is amended by revising paragraphs (a) and (c),
and removing paragraph (d), to read as follows:
Sec. 1040.30 Reports of receipts and utilization.
* * * * *
(a) Each handler described in Sec. 1040.9 (a), (b), and (c) shall
report for each of its operations the following information:
(1) Product pounds, pounds of butterfat, pounds of protein, and the
value of the somatic cell adjustment contained in or represented by:
(i) Receipts of producer milk, including producer milk diverted by
the handler, and
(ii) Receipts of milk from handlers described in Sec. 1040.9(c).
(2) Product pounds and pounds of butterfat contained in:
(i) Receipts by transfer or diversion of bulk fluid milk products;
(ii) Receipts of fluid milk products not included in (a)(1) or
(a)(2)(i) of this section and bulk fluid cream products from any
source;
(iii) Receipts of other source milk; and
(iv) Inventories at the beginning and end of the month of fluid
milk products and products specified in Sec. 1040.40(b)(1).
(3) The utilization or disposition of all milk, filled milk, and
milk products required to be reported pursuant to this paragraph.
(4) Such other information with respect to the receipts and
utilization of skim milk, butterfat, milk protein, and somatic cell
information, as the market administrator may prescribe.
* * * * *
(c) Each handler not specified in paragraphs (a) and (b) of this
section shall report with respect to its receipts and utilization of
milk, filled milk, and milk products in such manner as the market
administrator may prescribe.
4. Section 1040.31 is amended by revising paragraph (a) to read as
follows:
Sec. 1040.31 Payroll reports.
(a) On or before the 20th day after the end of each month, each
handler described in Sec. 1040.9(a), (b), and (c) shall report to the
market administrator its producer payroll for such month, in the detail
prescribed by the market administrator, showing for each producer:
(1) The producer's name and address;
(2) The total pounds of milk received from such producer, with its
protein and butterfat percentage;
(3) The total pounds of butterfat contained in the producer's milk;
(4) The total pounds of protein contained in the producer's milk;
(5) The somatic cell count of the producer's milk;
(6) The amount, or the rate per hundredweight, or rate per pound of
component, the somatic cell adjustment to the protein price, the gross
amount due, the amount and nature of any deductions, and the net amount
paid.
* * * * *
5. Section 1040.41 is amended by revising the second sentence of
paragraph (c) to read as follows:
Sec. 1040.41 Shrinkage.
* * * * *
(c) * * * If the operator of the plant to which the milk is
delivered purchases such milk on the basis of weights determined by
farm bulk tank calibration, with protein and butterfat tests and
somatic cell counts determined from farm bulk tank samples, the
applicable percentage for the cooperative association shall be zero.
6. Section 1040.50 is amended by revising the section heading,
introductory text and paragraph (a), and adding paragraphs (e) through
(l), to read as follows:
Sec. 1040.50 Class and component prices.
Subject to the provisions of Sec. 1040.52, the class prices per
hundredweight of milk containing 3.5 percent butterfat and the
component prices per hundredweight or per pound for the month shall be
as follows:
(a) Class I price. The Class I price shall be the basic formula
price for the second preceding month plus $1.75.
* * * * *
(e) Class I differential price. The Class I differential price
shall be the difference between the current month's Class I and Class
III price (this price may be negative).
(f) Class II differential price. The Class II differential price
shall be the difference between the current month's Class II and Class
III price (this price may be negative).
(g) Class III-A differential price. The Class III-A differential
price shall be the difference between the current month's Class III-A
and Class III price (this price may be negative).
(h) Skim milk price. The skim milk price per hundredweight, rounded
to the nearest cent, shall be the Class III price less an amount
computed by multiplying the butterfat differential by 35.
(i) Butterfat price. The butterfat price per pound, rounded to the
nearest one-hundredth cent, shall be the Class III price plus an amount
computed by multiplying the butterfat differential by
[[Page 45576]]
965 and dividing the resulting amount by one hundred.
(j) Protein price. The protein price per pound, rounded to the
nearest one-hundredth cent, shall be 1.32 times the average monthly
price per pound for 40-pound block Cheddar cheese on the National
Cheese Exchange as reported by the Department.
(k) Fluid carrier price. The fluid carrier price per hundredweight,
rounded to the nearest whole cent, shall be the Class III price, less
the sum of the butterfat price times 3.5 and the protein price times
the average protein test of the basic formula price as reported by the
Department for the month (this price may be negative).
(l) Somatic cell adjustment. For each producer, an adjustment to
the protein price for the somatic cell count of the producer's milk
shall be determined by multiplying the constant associated with the
appropriate somatic cell count interval in the following table by the
simple average price for the month of 40-pound blocks of Cheddar cheese
at the National Cheese Exchange as reported by the Department. If a
handler has not determined a monthly average somatic cell count, it
will be determined by the market administrator.
------------------------------------------------------------------------
Constants for
computing the
Somatic cell counts somatic cell
adjustment
------------------------------------------------------------------------
1 to 50,000.............................................. .078125
51,000 to 100,000........................................ .062500
101,000 to 150,000....................................... .046875
151,000 to 200,000....................................... .031250
201,000 to 250,000....................................... .015625
251,000 to 300,000....................................... .0078125
301,000 to 350,000....................................... .000000
351,000 to 400,000....................................... .000000
401,000 to 450,000....................................... -.0078125
451,000 to 500,000....................................... -.015625
501,000 to 550,000....................................... -.0234375
551,000 to 600,000....................................... -.031250
601,000 to 650,000....................................... -.0390625
651,000 to 700,000....................................... -.046875
701,000 to 750,000....................................... -.062500
751,000 and above........................................ -.078125
------------------------------------------------------------------------
7. Section 1040.53 is revised to read as follows:
Sec. 1040.53 Announcement of class and component prices.
On or before the 5th day of the month, the market administrator
shall announce the following prices and any other price information
deemed appropriate:
(a) The Class I price for the following month;
(b) The Class II price for the following month;
(c) The Class III price for the preceding month;
(d) The Class III-A price for the preceding month;
(e) The skim milk price for the preceding month;
(f) The butterfat price for the preceding month;
(g) The protein price for the preceding month;
(h) The fluid carrier price for the preceding month;
(i) The butterfat differential for the preceding month;
8. The section heading in Sec. 1040.60 and the undesignated
centerheading preceding it, the introductory text, and paragraphs (a)
and (f) are revised to read as follows:
Producer Price Differential
Sec. 1040.60 Handler's value of milk.
For the purpose of computing a handler's obligation for producer
milk, the market administrator shall determine for each month the value
of milk of each handler with respect to each of the handler's pool
plants and of each handler described in Sec. 1040.9 (b) and (c), as
follows:
(a) Calculate the following values:
(1) Multiply the total hundredweight of producer milk in Class I as
determined pursuant to Sec. 1040.44(c) by the Class I differential
price for the month;
(2) Add an amount obtained by multiplying the total hundredweight
of producer milk in Class II as determined pursuant to Sec. 1040.44(c)
by the Class II differential price for the month;
(3) Add an amount obtained by multiplying the total hundredweight
of producer milk eligible to be priced as Class III-A by the Class III-
A differential price for the month;
(4) Add an amount obtained by multiplying the hundredweight of skim
milk in Class I as determined pursuant to Sec. 1040.44(a) by the skim
milk price;
(5) Add an amount obtained by multiplying the pounds of skim milk
in Class II and Class III as determined pursuant to Sec. 1040.44(a) by
the average protein content of producer skim milk received by the
handler, and multiplying the resulting pounds of protein by the protein
price for the month computed pursuant to Sec. 1040.50(j) and adjusted
pursuant to Sec. 1040.50(l) for the weighted average somatic cell
content of the handler's receipts of milk; and
(6) Add a fluid carrier value calculated as follows: Subtract from
the pounds of skim milk allocated to Class II and Class III pursuant to
Sec. 1040.44(a) the protein pounds contained therein, determined by
multiplying the pounds of skim milk in Class II and Class III by the
average protein content of producer skim milk received by the handler;
then multiply the resulting pounds (in hundredweight) of fluid carrier
by the fluid carrier price.
* * * * *
(f) Add an amount obtained from multiplying the Class I
differential price applicable at the location of the nearest
unregulated supply plants from which an equivalent volume was received
by the pounds of skim milk and butterfat in receipts of concentrated
fluid milk products assigned to Class I pursuant to Sec. 1040.43(e) and
Sec. 1040.44(a)(7)(i) and the pounds of skim milk and butterfat
subtracted from Class I pursuant to Sec. 1040.44(a)(11) and the
corresponding steps of Sec. 1040.44(b), excluding such skim milk and
butterfat in receipts of bulk fluid milk products from an unregulated
supply plant to the extent that an equivalent amount of skim milk or
butterfat disposed of to such plant by handlers fully regulated under
any Federal milk order is classified and priced as Class I milk and is
not used as an offset for any other payment obligation under any order;
* * * * *
9. Section 1040.61, including the section heading, is revised to
read as follows:
Sec. 1040.61 Producer price differential.
For each month the market administrator shall compute a producer
price differential per hundredweight of milk received from producers as
follows:
(a) Combine into one total for all handlers:
(1) The values computed pursuant to Sec. 1040.60 (a)(1), (a)(2),
(a)(3) and (b) through (i) for all handlers who made reports pursuant
to Sec. 1040.30 for the month and who made payments pursuant to
Sec. 1040.71 for the preceding month;
(2) Add the values computed pursuant to Sec. 1040.60 (a)(4),
(a)(5), and (a)(6); and subtract the values obtained by multiplying the
handlers' total pounds of protein and total hundredweight of fluid
carrier contained in such milk by their respective prices;
(3) Add an amount equal to the total value of the applicable
location adjustments computed pursuant to Sec. 1040.75(a)(1); and
(4) Add an amount equal to not less than one-half of the
unobligated balance in the producer-settlement fund.
(b) Divide the aggregate value computed pursuant to paragraph (a)
of this section by the sum of the following:
(1) The total hundredweight of producer milk; and
[[Page 45577]]
(2) The total hundredweight for which a value is computed pursuant
to Sec. 1040.60(f).
(c) Subtract not less than 6 cents nor more than 7 cents per
hundredweight. The result shall be the ``producer price differential.''
10. Section 1040.62 is revised to read as follows:
Sec. 1040.62 Announcement of producer prices.
On or before the 11th day after the end of each month, the market
administrator shall announce the following prices and information:
(a) The producer price differential;
(b) The protein price;
(c) The fluid carrier price;
(d) The butterfat price;
(e) The average butterfat content and protein content of producer
milk; and
(f) The statistical uniform price for milk containing 3.5 percent
butterfat, computed by combining the Class III price and the producer
price differential.
11. A new section 1040.63 is added under the new center heading
``Producer Price Differential'' to read as follows:
Sec. 1040.63 Value of producer milk.
The value of producer milk shall be the sum of:
(a) The producer price differential computed pursuant to
Sec. 1040.61 and adjusted for location pursuant to Sec. 1040.75,
multiplied by the total hundredweight of producer milk received from
the producer;
(b) The butterfat price computed pursuant to Sec. 1040.50(i),
multiplied by the total pounds of butterfat contained in the producer
milk received from the producer;
(c) The protein price computed pursuant to Sec. 1040.50(j),
adjusted for somatic cell count pursuant to Sec. 1040.50(l), multiplied
by the total pounds of protein contained in the producer milk received
from the producer; and
(d) The fluid carrier price computed pursuant to Sec. 1040.50(k),
multiplied by the total hundredweight of fluid carrier contained in the
producer milk received from the producer.
12. Section 1040.71 is amended by revising paragraphs (a)(1) and
(a)(2) to read as follows:
Sec. 1040.71 Payments to the producer-settlement fund.
(a) * * *
(1) The total value of milk of the handler for such month as
determined pursuant to Sec. 1040.60.
(2) The sum of:
(i) An amount obtained by multiplying the total hundredweight of
producer milk as determined pursuant to Sec. 1040.44(c) by the producer
price differential, excluding any applicable location adjustment
pursuant to Sec. 1040.75(a)(3);
(ii) An amount obtained by multiplying the total pounds of protein
contained in producer milk by the protein price adjusted pursuant to
Sec. 1040.50(l) for the weighted average somatic cell content of the
handler's receipts of milk;
(iii) An amount obtained by multiplying the total hundredweight of
fluid carrier contained in producer milk by the fluid carrier price;
and
(iv) An amount obtained by multiplying the pounds of skim milk and
butterfat for which a value was computed pursuant to Sec. 1040.60(f) by
the producer price differential.
* * * * *
13. Section 1040.73 is amended by revising the first sentence of
paragraph (a), paragraph (b)(1)(ii), and paragraph (c), to read as
follows:
Sec. 1040.73 Payments to producers and to cooperative associations.
(a) Except as provided by paragraph (b) of this section, on or
before the 15th day of each month, each handler (except a cooperative
association) shall pay each producer for milk received from the
producer during the preceding month not less than the value determined
pursuant to Sec. 1040.63 adjusted by the location differential pursuant
to Sec. 1040.75, less the payment made pursuant to paragraph (d) of
this section. * * *
(b) * * *
(1) * * *
(ii) The total pounds of butterfat, total pounds of protein, and
total pounds of fluid carrier contained in the producer's milk, and the
average somatic cell count of the producer's milk;
* * * * *
(c) On or before the 13th day after the end of each month, each
handler shall pay a cooperative association which is a handler with
respect to milk received by the handler from a pool plant operated by
such cooperative association, or by bulk tank delivery pursuant to
Sec. 1040.9(c), not less than an amount computed pursuant to
Sec. 1040.63.
* * * * *
14. Section 1040.74 is revised to read as follows:
Sec. 1040.74 Butterfat differential.
The butterfat differential, rounded to the nearest one-tenth cent,
shall be 0.138 times the current month's butter price less 0.0028 times
the preceding month's average pay price per hundredweight, at test, for
manufacturing grade milk in Minnesota and Wisconsin, using the ``base
month'' series, adjusted pursuant to Sec. 1040.51 (a) through (e), as
reported by the Department. The butter price means the simple average
for the month of the Chicago Mercantile Exchange, Grade A butter price
as reported by the Department.
15. Section 1040.75 is amended by revising paragraphs (a)(1) and
(c), to read as follows:
Sec. 1040.75 Plant location adjustments for producers and on nonpool
milk.
(a) * * *
(1) May deduct from the producer price differential the rate per
hundredweight applicable pursuant to Sec. 1040.52(a)(1) or (2) for the
location of the plant at which the milk was first physically received.
* * * * *
(c) For purposes of computation pursuant to Secs. 1040.71 and
1040.72, the statistical uniform price shall be adjusted at the rates
set forth in Sec. 1040.52 applicable at the location of the nonpool
plant from which the other source milk was received except that the
statistical uniform price, so adjusted, shall not be less than the
Class III price.
16. Section 1040.76 is amended by revising paragraph (a)(4) and the
third sentence of paragraph (b)(1)(ii), to read as follows:
Sec. 1040.76 Payments by handler operating a partially regulated
distributing plant.
* * * * *
(a) * * *
(4) Multiply the remaining pounds by the amount by which the Class
I differential price exceeds the producer price differential, both
prices to be applicable at the location of the partially regulated
distributing plant (but not to be less than the Class III price); and
* * * * *
(b) * * *
(1) * * *
(ii) * * * Any such transfers remaining after the above allocation
which are classified in Class I and for which a value is computed for
the handler operating the partially regulated distributing plant
pursuant to Sec. 1040.60 shall be priced at the statistical uniform
price (or at the weighted average price if such is provided) of the
respective order regulating the handling of milk at the transferee-
plant, with such statistical uniform price adjusted to the location of
the nonpool plant (but not to be less than the lowest class price of
the respective order), except that transfers
[[Page 45578]]
of reconstituted skim milk in filled milk shall be priced at the lowest
class price of the respective order; and
* * * * *
Sec. 1040.85 [Amended]
17. In Sec. 1040.85 the introductory text is amended by removing
the words ``2 cents'' and adding in their place the words ``4 cents''.
Sec. 1040.86 [Amended]
18. In Sec. 1040.86 paragraph (a) is amended by removing the words
``5 cents'' and adding in their place the words ``7 cents''.
Dated: August 28, 1995
Patricia Jensen,
Acting Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 95-21653 Filed 8-30-95; 8:45 am]
BILLING CODE 3410-02-P
