97-20458. Milk in the Texas Marketing Area; Suspension of Certain Provisions of the Order  

  • [Federal Register Volume 62, Number 149 (Monday, August 4, 1997)]
    [Rules and Regulations]
    [Pages 41810-41812]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-20458]
    
    
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    DEPARTMENT OF AGRICULTURE
    
    Agricultural Marketing Service
    
    7 CFR Part 1126
    
    [DA-97-06]
    
    
    Milk in the Texas Marketing Area; Suspension of Certain 
    Provisions of the Order
    
    AGENCY: Agricultural Marketing Service, USDA.
    
    ACTION: Final rule; suspension.
    
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    SUMMARY: This document continues the suspension of segments of the pool 
    plant and producer milk definitions of the Texas order for a two-year 
    period. Associated Milk Producers, Inc., a cooperative association that 
    represents producers who supply milk to the market, requested 
    continuation of the current suspension with a change to the producer 
    diversion provision. Continuation of the suspension currently in effect 
    is necessary to ensure that dairy farmers who have historically 
    supplied the Texas market will continue to have their milk priced under 
    the Texas order without incurring costly and inefficient movements of 
    milk.
    
    EFFECTIVE DATE: August 1, 1997, through July 31, 1999.
    
    FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing 
    Specialist, USDA/AMS/Dairy Division, 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: Prior document in this proceeding:
        Notice of Proposed Suspension: Issued May 7, 1997; published May 
    13, 1997 (62 FR 26255).
        Notice of Revised Proposed Suspension: Issued June 23, 1997; 
    published June 27, 1997 (62 FR 34676).
        The Department is issuing this final rule in conformance with 
    Executive Order 12866.
        This final rule has been reviewed under Executive Order 12988, 
    Civil Justice Reform. This rule 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), 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 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.
    
    Small Business Consideration
    
        In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
    seq.), the Agricultural Marketing Service has considered the economic 
    impact of this action on small entities and has certified that this 
    rule 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 $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 March 1997, the milk of 1,805 producers was pooled 
    on the Texas Federal milk order. Of these producers, 1,350 producers 
    were below the 326,000-pound production guideline and are considered 
    small businesses. During this same period, there were 24 handlers 
    operating pool plants under the Texas order. Five of these handlers 
    would be considered small businesses.
        This rule continues the suspension of segments of the pool plant 
    and producer milk definitions under the Texas order. This rule lessens 
    the regulatory impact of the order on certain milk handlers and tends 
    to ensure that dairy farmers continue to have their milk priced under 
    the order and thereby receive the benefits that accrue from such 
    pricing. Additionally, this rule will not increase the regulatory 
    burden on handlers since the suspension has been in effect during the 
    prior two-year period. The suspension will continue to provide handlers 
    the flexibility needed to move milk supplies in the most efficient 
    manner and to eliminate costly and inefficient movements of milk that 
    would be made solely for the purpose of pooling the milk of dairy 
    farmers who have historically supplied the market.
    
    Preliminary Statement
    
        This order of suspension is issued pursuant to the provisions of 
    the Agricultural Marketing Agreement Act and of the order regulating 
    the handling of milk in the Texas marketing area.
        Notice of proposed rulemaking was published in the Federal Register 
    on May 7, 1997 (62 FR 26255), concerning a proposed suspension of 
    certain provisions of the order. A revised proposed suspension was 
    issued on June 23, 1997, and published in the Federal Register on June 
    27, 1997 (62 FR 34676). Interested persons were
    
    [[Page 41811]]
    
    afforded opportunity to file written data, views and arguments thereon.
        Two comments in opposition to the revised proposed suspension and 
    in support of the continuance of the existing suspension, one comment 
    in opposition to the proposed suspension, and one comment in support of 
    the revised proposed suspension were received.
        After consideration of all relevant material, including the 
    proposal in the notice, the comments received, and other available 
    information, it is hereby found and determined that for the months of 
    August 1, 1997, through July 31, 1999, the following provisions of the 
    order do not tend to effectuate the declared policy of the Act:
        1. In Sec. 1126.7(d) introductory text, the words ``during the 
    months of February through July'' and the words ``under paragraph (b) 
    or (c) of this section''.
        2. In Sec. 1126.7(e) introductory text, the words ``and 60 percent 
    or more of the producer milk of members of the cooperative association 
    (excluding such milk that is received at or diverted from pool plants 
    described in paragraphs (b), (c), and (d) of this section) is 
    physically received during the month in the form of a bulk fluid milk 
    product at pool plants described in paragraph (a) of this section 
    either directly from farms or by transfer from plants of the 
    cooperative association for which pool plant status under this 
    paragraph has been requested''.
        3. In Sec. 1126.13(e)(1), the words ``and further, during each of 
    the months of September through January not less than 15 percent of the 
    milk of such dairy farmer is physically received as producer milk at a 
    pool plant''.
        4. In Sec. 1126.13, paragraph (e)(2).
        5. In Sec. 1126.13(e)(3), the sentence ``The total quantity of milk 
    so diverted during the month shall not exceed one-third of the producer 
    milk physically received at such pool plant during the month that is 
    eligible to be diverted by the plant operator;'.
    
    Statement of Consideration
    
        This rule continues the suspension of segments of the pool plant 
    and producer milk provisions under the Texas order. This suspension 
    will be in effect from August 1, 1997, through July 31, 1999. The 
    current suspension will expire on July 31, 1997. This rule continues 
    the suspension of: (1) The 60 percent delivery standard for pool plants 
    operated by cooperatives; (2) the diversion limitation applicable to 
    cooperative associations; (3) the limits on the amount of milk that a 
    pool plant operator may divert to nonpool plants; (4) the shipping 
    standards that must be met by supply plants to be pooled under the 
    order; and (5) the individual producer performance standards that must 
    be met in order for a producer's milk to be eligible for diversion to a 
    nonpool plant.
        A comment received from Associated Milk Producers Inc. (AMPI) to 
    the May 7, 1997, proposed suspension supports the continuation of the 
    suspension with a change to the producer milk diversion provision. 
    AMPI, a cooperative association that represents a substantial number of 
    dairy farmers who supply the Texas market, states that the change to 
    the current suspension is necessary to achieve orderly marketing 
    conditions within the Texas marketing area. The suspension currently in 
    effect eliminates any diversion limit on the Texas market. However, 
    according to the cooperative, by modifying the existing suspension as 
    noticed in the revised proposed suspension, cooperative diversions 
    would be limited to an amount equal to deliveries made to pool plants 
    by these associations. The cooperative argues that this assures a more 
    distinct association with the Class I market than the current 
    suspension and limits ``pool riding.'' Furthermore, AMPI states that as 
    the New Mexico/West Texas and Texas markets coalesce, inter-market 
    movements create the need for pooling requirements that are 
    unrestrictive. However, these requirements must also allow reserve 
    locations to serve their function in the marketplace and also preserve 
    the integrity of the market.
        Comments opposing the modification of the current suspension and in 
    support of the existing suspension were submitted by Premier Milk, 
    Inc., and Lone Star Milk Producers, L.C., two small cooperative 
    associations representing producers who pool their milk on the Texas 
    order. The cooperatives state that AMPI's revised proposal increases 
    the difficulty of marketing milk on the Texas order because the 
    proposed diversion limitation would reduce Premier's and Lone Star's 
    opportunities to divert milk. The two cooperatives contend that 
    presently in the Texas order a very limited amount of milk can be sold 
    to pool plants by small cooperatives because the larger cooperatives 
    either own or have full supply contracts with almost all of the pool 
    plants in the Texas order.
        A comment submitted by The Kroger Co. (Kroger), a handler operating 
    a pool distributing plant regulated under the Texas order, opposes a 
    continuance of the suspension of the pool plant and producer 
    definitions which are currently in effect. Kroger states that the 
    current suspension has eliminated the need for producers and pool 
    supply plants to service the fluid milk market and continue to enjoy 
    the benefits of association with the Texas order. Furthermore, the 
    handler contends that current marketing conditions justify the denial 
    of continuation of the suspension. Kroger argues that current supply 
    conditions indicate that local milk supplies will be needed to meet the 
    demand of fluid milk sales and states that the suspended provisions 
    discourage the availability of local milk to meet the needs of fluid 
    milk handlers. Therefore, in order to assure consumers an adequate 
    supply of milk at a reasonable cost, according to the handler, the 
    suspension should not be continued.
        Continuation of the current suspension is necessary to ensure that 
    dairy farmers who have historically supplied the Texas market will 
    continue to have their milk priced under the Texas order, thereby 
    receiving the benefits that accrue from such pooling. In addition, the 
    suspension will continue to provide handlers the flexibility needed to 
    move milk supplies in the most efficient manner and to eliminate costly 
    and inefficient movements of milk that would be made solely for the 
    purpose of pooling the milk of dairy farmers who have historically 
    supplied the market.
        Marketing conditions have not significantly changed since 1995 when 
    the current suspension was issued. There is no indication that adequate 
    local fluid milk supplies will not be available to service the needs of 
    handlers in the Texas marketing area. Although the Class I utilization 
    of producer milk has increased to 51.73% for the July 1996 through June 
    1997 period as compared to 45.38% in the previous July through June 
    period, this Class I utilization has not increased to the level where 
    it is difficult to obtain an adequate supply of milk.
        Currently the Federal milk marketing order program is undergoing an 
    extensive review as mandated by the Federal Agriculture Improvement and 
    Reform Act of 1996. All provisions of milk orders, including the 
    producer and pool plant definitions, are being examined as part of 
    Federal order reform. However, while this process is underway, 
    marketing conditions in the Texas order warrant the continuance of the 
    existing suspension to ensure the orderly marketing of milk.
        Accordingly, it is appropriate to suspend the aforesaid provisions 
    beginning August 1, 1997, through July 31, 1999.
    
    [[Page 41812]]
    
        It is hereby found and determined that thirty days' notice of the 
    effective date hereof is impractical, unnecessary and contrary to the 
    public interest in that:
        (a) The suspension is necessary to reflect current marketing 
    conditions and to assure orderly marketing conditions in the marketing 
    area, in that such rule is necessary to permit the continued pooling of 
    the milk of dairy farmers who have historically supplied the market 
    without the need for making costly and inefficient movements of milk;
        (b) This suspension does not require of persons affected 
    substantial or extensive preparation prior to the effective date; and
        (c) Notice of proposed rulemaking was given interested parties and 
    they were afforded opportunity to file written data, views or arguments 
    concerning this suspension. Two comments supporting the current 
    suspension and opposing the revised proposed suspension, one comment 
    supporting the revised proposed suspension, and one comment opposing 
    the proposed suspension were received.
        Therefore, good cause exists for making this order effective less 
    than 30 days from the date of publication in the Federal Register.
    
    List of Subjects in 7 CFR Part 1126
    
        Milk marketing orders.
    
        For the reasons set forth in the preamble, 7 CFR Part 1126 is 
    amended as follows:
    
    PART 1126--MILK IN THE TEXAS MARKETING AREA
    
        1. The authority citation for 7 CFR part 1126 continues to read as 
    follows:
    
        Authority: 7 U.S.C. 601-674.
    
    
    Sec. 1126.7  [Suspended in part]
    
        2. In Sec. 1126.7(d) introductory text, the words ``during the 
    months of February through July'' and the words ``under paragraph (b) 
    or (c) of this section'' are suspended.
        3. In Sec. 1126.7(e) introductory text, the words ``and 60 percent 
    or more of the producer milk of members of the cooperative association 
    (excluding such milk that is received at or diverted from pool plants 
    described in paragraphs (b), (c), and (d) of this section) is 
    physically received during the month in the form of a bulk fluid milk 
    product at pool plants described in paragraph (a) of this section 
    either directly from farms or by transfer from plants of the 
    cooperative association for which pool plant status under this 
    paragraph has been requested'' are suspended.
    
    
    Sec. 1126.13  [Suspended in part]
    
        4. In Sec. 1126.13(e)(1), the words ``and further, during each of 
    the months of September through January not less than 15 percent of the 
    milk of such dairy farmer is physically received as producer milk at a 
    pool plant'' are suspended.
        5. Section 1126.13(e)(2) is suspended.
        6. In Sec. 1126.13(e)(3), the sentence ``The total quantity of milk 
    so diverted during the month shall not exceed one-third of the producer 
    milk physically received at such pool plant during the month that is 
    eligible to be diverted by the plant operator;'' is suspended.
    
        Dated: July 29, 1997.
    Michael V. Dunn,
    Assistant Secretary, Marketing and Regulatory Programs.
    [FR Doc. 97-20458 Filed 8-1-97; 8:45 am]
    BILLING CODE 3410-02-U
    
    
    

Document Information

Published:
08/04/1997
Department:
Agricultural Marketing Service
Entry Type:
Rule
Action:
Final rule; suspension.
Document Number:
97-20458
Dates:
August 1, 1997, through July 31, 1999.
Pages:
41810-41812 (3 pages)
Docket Numbers:
DA-97-06
PDF File:
97-20458.pdf
CFR: (2)
7 CFR 1126.7
7 CFR 1126.13