[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1998 Edition]
[From the U.S. Government Printing Office]


[[Page i]]

          7



          Agriculture



          PARTS 1000 TO 1199

          Milk Orders
                         Revised as of January 1, 1998

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT
          AS OF JANUARY 1, 1998

          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration
          as a Special Edition of
          the Federal Register






[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1998



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 7:
      Subtitle B--Regulations of the Department of 
                                                                                Agriculture--Continued:

    Chapter X--Agricultural Marketing Service (Marketing 
        Agreements and Orders; Milk), Department of 
        Agriculture...........................................       5
  Finding Aids:
    Table of CFR Titles and Chapters..........................     901
    Alphabetical List of Agencies Appearing in the CFR........     917
    List of CFR Sections Affected.............................     927



[[Page iv]]


      


----------------------------------------------------------------

   Cite this Code:  CFR

   To cite the regulations in this volume use title, part and
   section number. Thus,  7 CFR 1000.1 refers to title 7, part
   1000, section 1.

----------------------------------------------------------------


[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 1998), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I), and Acts Requiring Publication 
in the Federal Register (Table II). A list of CFR titles, chapters, and 
parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call 202-512-1800, 
M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2233, 24 hours 
a day. For payment by check, write to the Superintendent of Documents, 
Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO 
Customer Service call 202-512-1803.

ELECTRONIC SERVICES

    The texts of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Weekly Compilation 
of Presidential Documents and the 1995 Privacy Act Compilation are 
available in electronic format at www.access.gpo.gov/nara/index.html. 
For more information, contact Electronic Information Dissemination 
Services, U.S. Government Printing Office. Phone 202-512-1530, or 888-
293-6498 (toll-free). E-mail, [email protected].

[[Page vii]]

    The Office of the Federal Register maintains a free electronic 
bulletin board service, FREND (Federal Register Electronic News 
Delivery), for public law numbers, Federal Register finding aids, and 
related information. To access by modem: phone, 202-275-0920.
    In addition, the Federal Register's public inspection list and table 
of contents are also available on the National Archives and Records 
Administration's Fax-on-Demand system. Phone, 301-713-6905.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 1998.



[[Page ix]]



                               THIS TITLE

    Title 7--Agriculture is composed of fifteen volumes. The parts in 
these volumes are arranged in the following order: parts 1-26, 27-52, 
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-
1599, 1600-1899, 1900-1939, 1940-1949, 1950-1999, and part 2000 to end. 
The contents of these volumes represent all current regulations codified 
under this title of the CFR as of January 1, 1998.

    The Food and Consumer Service current regulations in the volume 
containing parts 210-299, include the Child Nutrition Programs and the 
Food Stamp Program. The regulations of the Federal Crop Insurance 
Corporation are found in the volume containing parts 400-699.

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199. Part 900--General Regulations is carried as a note in the 
volume containing parts 1000-1199, as a convenience to the user.

    Redesignation tables appear in the Finding Aids section of the 
volumes containing parts 210-299 and parts 1600-1899.

    For this volume, Gwendolyn J. Henderson was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]




[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1000 to 1199)

  --------------------------------------------------------------------
                                                                    Part

  SUBTITLE B--Regulations of the Department of Agriculture-- Continued:


Chapter X--Agricultural Marketing Service (Marketing 
  Agreements and Orders; Milk), Department of Agriculture...        1000

[[Page 3]]

  Subtitle B--Regulations of the Department of Agriculture (Continued)

[[Page 4]]

[GRAPHIC] [TIFF OMITTED] TC18SE91.000



[[Page 5]]



                CHAPTER X--AGRICULTURAL MARKETING SERVICE






                 (Marketing Agreements and Orders; Milk)






                        DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
900             General regulations [Note]..................           7
1000            General provisions of Federal milk marketing 
                    orders..................................          36
1001            Milk in the New England marketing area......          39
1002            Milk in New York-New Jersey marketing area..          69
1004            Milk in the Middle Atlantic marketing area..         109
1005            Milk in the Carolina marketing area.........         138
1006            Milk in Upper Florida marketing area........         166
1007            Milk in the Southeast marketing area........         189
1011            Milk in the Tennessee Valley marketing area.         219
1012            Milk in Tampa Bay marketing area............         220
1013            Milk in Southeastern Florida marketing area.         242
1030            Milk in Chicago Regional marketing area.....         265
1032            Milk in Southern Illinois-Eastern Missouri 
                    marketing area..........................         294
1033            Milk in the Ohio Valley marketing area......         318
1036            Milk in the Eastern Ohio-Western 
                    Pennsylvania marketing area.............         347
1040            Milk in Southern Michigan marketing area....         375
1044            Milk in Michigan Upper Peninsula marketing 
                    area....................................         402
1046            Milk in Louisville-Lexington-Evansville 
                    marketing area..........................         419
1049            Milk in the Indiana marketing area..........         447
1050            Milk in Central Illinois marketing area.....         477
1051-1063

  [Reserved]

1064            Milk in the Greater Kansas City marketing 
                    area....................................         501
1065            Milk in the Nebraska-Western Iowa marketing 
                    area....................................         525
1068            Milk in the Upper Midwest marketing area....         555
1076            Milk in Eastern South Dakota marketing area.         584
1079            Milk in the Iowa marketing area.............         609

[[Page 6]]

1093-1097

  [Reserved]

1106            Milk in Southwest Plains marketing area.....         637
1108-1120

  [Reserved]

1124            Milk in the Pacific Northwest marketing area         667
1125

[Reserved]

1126            Milk in the Texas marketing area............         696
1131            Milk in Central Arizona marketing area......         725
1132

[Reserved]

1134            Milk in the Western Colorado marketing area.         749
1135            Milk in the Southwestern Idaho-Eastern 
                    Oregon marketing area...................         772
1136

[Reserved]

1137            Milk in the Eastern Colorado marketing area.         796
1138            Milk in the New Mexico-West Texas marketing 
                    area....................................         820
1139            Milk in the Great Basin marketing area......         846
1150            Dairy promotion program.....................         873
1151-1159

  [Reserved]

1160            Fluid milk promotion program................         884
1161-1199

  [Reserved]

[[Page 7]]



                                  NOTE

    CFR part 900, the general regulations with respect to marketing 
 agreements and orders, is herein set forth for convenience of users of 
                              this volume.



PART 900--GENERAL REGULATIONS

   Subpart--Rules of Practice and Procedure Governing Proceedings to 
           Formulate Marketing Agreements and Marketing Orders
   


Sec.
900.1  Words in the singular form.
900.2  Definitions.
900.3  Proposals.
900.4  Institution of proceeding.
900.5  Docket number.
900.6  Judges.
900.7  Motions and requests.
900.8  Conduct of the hearing.
900.9  Oral and written arguments.
900.10  Certification of the transcript.
900.11  Copies of the transcript.
900.12  Administrator's recommended decision.
900.13  Submission to Secretary.
900.13a  Decision by Secretary.
900.14  Execution of and issuance of marketing agreements and marketing 
          orders.
900.15  Filing; extensions of time; effective date of filing; and 
          computation of time.
900.16  Ex Parte communications.
900.17  Additional documents to be filed with hearing clerk.
900.18  Hearing before Secretary.

Subpart--Rules of Practice Governing Proceedings on Petitions To Modify 
                 or To Be Exempted From Marketing Orders

900.50  Words in the singular form.
900.51  Definitions.
900.52  Institution of proceeding.
900.52a  Answer to petition.
900.52b  Amended pleadings.
900.53  Withdrawal of petition.
900.54  Docket number.
900.55  Judges.
900.56  Consolidated hearings.
900.57  Intervention.
900.58  Prehearing conferences.
900.59  Motions and requests.
900.60  Oral hearings before judge.
900.61  Depositions.
900.62  Subpenas.
900.63  Fees and mileage.
900.64  The Administrative Law Judge's Decision.
900.65  Appeals to Secretary: transmittal of record.
900.66  Consideration of appeal by the Secretary and issuance of final 
          order.
900.67  [Reserved]
900.68  Applications for reopening hearings; for rehearings or 
          rearguments of proceedings; or for reconsideration of orders.
900.69  Filing; service; extensions of time; effective date of filing; 
          and computation of time.
900.70  Applications for interim relief.
900.71  Hearing before Secretary.

Subpart--Supplemental Rules of Practice for Marketing Orders, Marketing 
 Agreements, and Requirements Issued Pursuant to 7 U.S.C. 608b(b) and 7 
            U.S.C. 608e Covering Fruits, Vegetables, and Nuts

900.80  Words in the singular form.
900.81  Definitions.
900.82  Stipulation procedures.

Subpart--Procedure Governing Meetings To Arbitrate and Mediate Disputes 
                Relating to Sales of Milk or Its Products

900.100  Words in the singular form.
900.101  Definitions.
900.102  Filing of applications for mediation or arbitration.
900.103  Application for mediation.
900.104  Inquiry by the Administrator.
900.105  Notification.
900.106  Assignment of mediator.
900.107  Meetings.
900.108  Mediator's report.
900.109  Mediation agreement.
900.110  Application for arbitration.
900.111  Inquiry by the Administrator.
900.112  Notification.
900.113  Submission.
900.114  Designation of arbitrator.
900.115  Hearing.
900.116  Award.
900.117  Approval of award.
900.118  Costs.

                   Subpart--Miscellaneous Regulations

900.200  Definitions.
900.201  Investigation and disposition of alleged violations.
900.210  Disclosures of information.
900.211  Penalties.

   Subpart--Procedure for Conduct of Referenda to Determine Producer 
   Approval of Milk Marketing Orders To Be Made Effective Pursuant to 
        Agricultural Marketing Agreement Act of 1937, as Amended

900.300  General.
900.301  Definitions.
900.302  Associations eligible to vote.
900.303  Conduct of referendum.
900.304  Who may vote.
900.305  Duties of referendum agent.
900.306  Notice of the referendum.

[[Page 8]]

900.307  Time for voting.
900.308  Tabulation of ballots.
900.309  Confidential information.
900.310  Supplementary instructions.
900.311  Submittals or requests.

Subpart--Procedure for Determining the Qualification ofCooperative Milk 
                         Marketing Associations

900.350  General statement.
900.351  Applications for qualification.
900.352  Confidential information.
900.353  Qualification standards.
900.354  Inspection and investigation.
900.355  Annual reporting.
900.356  Listing of qualified associations.
900.357  Denial of application; suspension or revocation of 
          determination of qualification.

   Subpart--Procedure for the Conduct of Referenda in Connection With 
   Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the 
        Agricultural Marketing Agreement Act of 1937, as Amended

900.400  General.
900.401  Definitions.
900.402  Voting.
900.403  Instructions.
900.404  Subagents.
900.405  Ballots.
900.406  Referendum report.
900.407  Confidential information.

                       Subpart--Public Information

Availability of Program Information, Staff Manuals and Instructions, and 
                            Related Material

900.500  General.
900.501  Public inspection and copying.
900.502  Indexes.
900.503  Requests for records.
900.504  Appeals.

                     Subpart--Information Collection

900.600  General.
900.601  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

    Source:  25 FR 5907, June 28, 1960, unless otherwise noted.

   Subpart--Rules of Practice and Procedure Governing Proceedings to 
           Formulate Marketing Agreements and Marketing Orders

    Authority:  Sec. 10, 48 Stat. 37, as amended; 7 U.S.C. 610.


Sec. 900.1  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.


Sec. 900.2  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73d Congress (48 Stat. 
31), as amended and as reenacted and amended by the Agricultural 
Marketing Agreement Act of 1937 (50 Stat. 246), as amended.
    (b) The term Department means the United States Department of 
Agriculture.
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.
    (d) The terms Administrative Law Judge or Judge means any 
administrative law judge appointed pursuant to 5 U.S.C. 3105, and 
assigned to conduct the proceeding.
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) [Reserved]
    (g) The term ``Federal Register'' means the publication provided for 
by the Act of July 26, 1935 (49 Stat. 500), and acts supplementary 
thereto and amendatory thereof.
    (h) The term hearing means that part of the proceeding which 
involves the submission of evidence.
    (i) The term marketing agreement means any marketing agreement or 
any amendment thereto which may be entered into pursuant to section 8b 
of the Act.
    (j) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the Act, and after 
notice and hearing as required by said section.
    (k) The term proceeding means a proceeding upon the basis of which a 
marketing agreement may be entered into or a marketing order may be 
issued.
    (l) The term hearing clerk means the hearing clerk, United States 
Department of Agriculture, Washington, DC.
[25 FR 5907, June 28, 1960, as amended at 26 FR 7796, Aug. 22, 1961; 28 
FR 579, Jan. 23, 1963; 37 FR 8059, Apr. 25, 1972; 38 FR 29798, Oct. 29, 
1973]


Sec. 900.3  Proposals.

    (a) A marketing agreement or a marketing order may be proposed by 
the Secretary or by any other person. If any person other than the 
Secretary proposes a marketing agreement or marketing order, he shall 
file with the Administrator a written application, together with at 
least four copies of the proposal, requesting the Secretary to hold a

[[Page 9]]

hearing upon the proposal. Upon receipt of such proposal, the 
Administrator shall cause such investigation to be made and such 
consideration thereof to be given as, in his opinion, are warranted. If 
the investigation and consideration lead the Administrator to conclude 
that the proposed marketing agreement or marketing order will not tend 
to effectuate the declared policy of the Act, or that for other proper 
reasons a hearing should not be held on the proposal, he shall deny the 
application, and promptly notify the applicant of such denial, which 
notice shall be accompanied by a brief statement of the grounds for the 
denial.
    (b) If the investigation and consideration lead the Administrator to 
conclude that the proposed marketing agreement or marketing order will 
tend to effectuate the declared policy of the Act, or if the Secretary 
desires to propose a marketing agreement or marketing order, he shall 
sign and cause to be served a notice of hearing, as provided in this 
subpart.


Sec. 900.4  Institution of proceeding.

    (a) Filing and contents of the notice of hearing. The proceeding 
shall be instituted by filing the notice of hearing with the hearing 
clerk. The notice of hearing shall contain a reference to the authority 
under which the marketing agreement or marketing order is proposed; 
shall define the scope of the hearing as specifically as may be 
practicable; shall contain either the terms or substance of the proposed 
marketing agreement or marketing order or a description of the subjects 
and issues involved and shall state the industry, area, and class of 
persons to be regulated, the time and place of such hearing, and the 
place where copies of such proposed marketing agreement or marketing 
order may be obtained or examined. The time of the hearing shall not be 
less than 15 days after the date of publication of the notice in the 
Federal Register, as provided in this subpart, unless the Administrator 
shall determine that an emergency exists which requires a shorter period 
of notice, in which case the period of notice shall be that which the 
Administrator may determine to be reasonable in the circumstances: 
Provided, That, in the case of hearings on amendments to marketing 
agreements or marketing orders, the time of the hearing may be less than 
15 days but shall not be less than 3 days after the date of publication 
of the notice in the Federal Register.
    (b) Giving notice of hearing and supplemental publicity. (1) The 
Administrator shall give or cause to be given notice of hearing in the 
following manner:
    (i) By publication of the notice of hearing in the Federal Register;
    (ii) By mailing a true copy of the notice of hearing to each of the 
persons known to the Administrator, to be interested therein;
    (iii) By issuing a press release containing the complete text or a 
summary of the contents of the notice of hearing and making the same 
available to such newspapers in the area proposed to be subjected to 
regulation as reasonably will tend to bring the notice to the attention 
of the persons interested therein;
    (iv) By forwarding copies of the notice of hearing addressed to the 
governors of such of the several States of the United States and to 
executive heads of such of the Territories and possessions of the United 
States as the Administrator, having due regard for the subject matter of 
the proposal and the public interest, shall determine, should be 
notified.
    (2) Legal notice of the hearing shall be deemed to be given if 
notice is given in the manner provided by paragraph (b)(1)(i) of this 
section; and failure to give notice in the manner provided in paragraph 
(b)(1)(ii), (iii), and (iv) of this section shall not affect the 
legality of the notice.
    (c) Record of notice and supplemental publicity. There shall be 
filed with the hearing clerk or submitted to the judge at the hearing an 
affidavit or certificate of the person giving the notice provided in 
(b)(1)(iii) and (iv) of this section. In regard to the provisions 
relating to mailing in (b)(1)(ii) of this section, a determination by 
the Administrator that such provisions have been complied with shall be 
filed with the hearing clerk or submitted to the judge at the hearing. 
In the alternative, if notice is not given in the manner provided in 
(b)(1)(ii), (iii), and (iv) of this section there shall be filed with 
the hearing clerk or submitted to the judge at the hearing a 
determination by the Administrator that such notice is impracticable, 
unnecessary, or contrary to the public interest with a brief statement 
of the reasons for such determination. Determinations by the 
Administrator as herein provided shall be final.


Sec. 900.5  Docket number.

    Each proceeding, immediately following its institution, shall be 
assigned a docket number by the hearing clerk and thereafter the 
proceeding may be referred to by such number.


Sec. 900.6  Judges.

    (a) Assignment. No judge who has any pecuniary interest in the 
outcome of a proceeding shall serve as judge in such proceeding.
    (b) Powers of judges. Subject to review by the Secretary, as 
provided elsewhere in this subpart, the judge, in any proceeding, shall 
have power to:
    (1) Rule upon motions and requests;
    (2) Change the time and place of hearing, and adjourn the hearing 
from time to time or from place to place;
    (3) Administer oaths and affirmations and take affidavits;

[[Page 10]]

    (4) Examine and cross-examine witnesses and receive evidence;
    (5) Admit or exclude evidence;
    (6) Hear oral argument on facts or law;
    (7) Do all acts and take all measures necessary for the maintenance 
of order at the hearing and the efficient conduct of the proceeding.
    (c) Who may act in absence of judge. In case of the absence of the 
judge or his inability to act, the powers and duties to be performed by 
him under this part in connection with a proceeding may, without 
abatement of the proceeding unless otherwise ordered by the Secretary, 
be assigned to any other judge.
    (d) Disqualification of judge. The judge may at any time withdraw as 
judge in a proceeding if he deems himself to be disqualified. Upon the 
filing by an interested person in good faith of a timely and sufficient 
affidavit of personal bias or disqualification of a judge, the Secretary 
shall determine the matter as a part of the record and decision in the 
proceeding, after making such investigation or holding such hearings, or 
both, as he may deem appropriate in the circumstances.


Sec. 900.7  Motions and requests.

    (a) General. All motions and requests shall be filed with the 
hearing clerk, except that those made during the course of the hearing 
may be filed with the judge or may be stated orally and made a part of 
the transcript.
    Except as provided in Sec. 900.15(b) such motions and requests shall 
be addressed to, and ruled on by, the judge if made prior to his 
certification of the transcript pursuant to Sec. 900.10 or by the 
Secretary if made thereafter.
    (b) Certification to Secretary. The judge may in his discretion 
submit or certify to the Secretary for decision any motion, request, 
objection, or other question addressed to the judge.


Sec. 900.8  Conduct of the hearing.

    (a) Time and place. The hearing shall be held at the time and place 
fixed in the notice of hearing, unless the judge shall have changed the 
time or place, in which event the judge shall file with the hearing 
clerk a notice of such change, which notice shall be given in the same 
manner as provided in Sec. 900.4 (relating to the giving of notice of 
the hearing): Provided, That, if the change in time or place of hearing 
is made less than 5 days prior to the date previously fixed for the 
hearing, the judge, either in addition to or in lieu of causing the 
notice of the change to be given, shall announce, or cause to be 
announced, the change at the time and place previously fixed for the 
hearing.
    (b) Appearances--(1) Right to appear. At the hearing, any interested 
person shall be given an opportunity to appear, either in person or 
through his authorized counsel or representative, and to be heard with 
respect to matters relevant and material to the proceeding. Any 
interested person who desires to be heard in person at any hearing under 
these rules shall, before proceeding to testify, state his name, 
address, and occupation. If any such person is appearing through a 
counsel or representative, such person or such counsel or representative 
shall, before proceeding to testify or otherwise to participate in the 
hearing, state for the record the authority to act as such counsel or 
representative, and the names and addresses and occupations of such 
person and such counsel or representative. Any such person or such 
counsel or representative shall give such other information respecting 
his appearance as the judge may request.
    (2) Debarment of counsel or representative. Wherever, while a 
proceeding is pending before him, the judge finds that a person, acting 
as counsel or representative for any person participating in the 
proceeding, is guilty of unethical or unprofessional conduct, the judge 
may order that such person be precluded from further acting as counsel 
or representative in such proceeding. An appeal to the Secretary may be 
taken from any such order, but the proceeding shall not be delayed or 
suspended pending disposition of the appeal: Provided, That the judge 
may suspend the proceeding for a reasonable time for the purpose of 
enabling the client to obtain other counsel or other representative.
    In case the judge has ordered that a person be precluded from 
further acting as counsel or representative in the proceeding, the 
judge, within a reasonable time thereafter shall submit to the Secretary 
a report of the facts and circumstances surrounding such order and shall 
recommend what action the Secretary should take respecting the 
appearance of such person as counsel or representative in other 
proceedings before the Secretary. Thereafter the Secretary may, after 
notice and an opportunity for hearing, issue such order, respecting the 
appearance of such person as counsel or representative in proceedings 
before the Secretary, as the Secretary finds to be appropriate.
    (3) Failure to appear. If any interested person fails to appear at 
the hearing, he shall be deemed to have waived the right to be heard in 
the proceeding.
    (c) Order of procedure. (1) The judge shall, at the opening of the 
hearing prior to the taking of testimony, have noted as part of the 
record the notice of hearing as filed with the Office of the Federal 
Register and the affidavit or certificate of the giving of notice or the 
determination provided for in Sec. 900.4(c).
    (2) Evidence shall then be received with respect to the matters 
specified in the notice of the hearing in such order as the judge shall 
announce.
    (d) Evidence--(1) In general. The hearing shall be publicly 
conducted, and the testi

[[Page 11]]

mony given at the hearing shall be reported verbatim.
    Every witness shall, before proceeding to testify, be sworn or make 
affirmation. Cross-examination shall be permitted to the extent required 
for a full and true disclosure of the facts.
    When necessary, in order to prevent undue prolongation of the 
hearing, the judge may limit the number of times any witness may testify 
to the same matter or the amount of corroborative or cumulative 
evidence.
    The judge shall, insofar as practicable, exclude evidence which is 
immaterial, irrelevant, or unduly repetitious, or which is not of the 
sort upon which responsible persons are accustomed to rely.
    (2) Objections. If a party objects to the admission or rejection of 
any evidence or to any other ruling of the judge during the hearing, he 
shall state briefly the grounds of such objection, whereupon an 
automatic exception will follow if the objection is overruled by the 
judge. The transcript shall not include argument or debate thereon 
except as ordered by the judge. The ruling of the judge on any objection 
shall be a part of the transcript.
    Only objections made before the judge may subsequently be relied 
upon in the proceeding.
    (3) Proof and authentication of official records or documents. An 
official record or document, when admissible for any purpose, shall be 
admissible as evidence without the production of the person who made or 
prepared the same. Such record or document shall, in the discretion of 
the judge, be evidenced by an official publication thereof or by a copy 
attested by the person having legal custody thereof and accompanied by a 
certificate that such person has the custody.
    (4) Exhibits. All written statements, charts, tabulations, or 
similar data offered in evidence at the hearing shall, after 
identification by the proponent and upon satisfactory showing of the 
authenticity, relevancy, and materiality of the contents thereof, be 
numbered as exhibits and received in evidence and made a part of the 
record. Such exhibits shall be submitted in quadruplicate and in 
documentary form. In case the required number of copies is not made 
available, the judge shall exercise his discretion as to whether said 
exhibits shall, when practicable, be read in evidence or whether 
additional copies shall be required to be submitted within a time to be 
specified by the judge. If the testimony of a witness refers to a 
statute, or to a report or document (including the record of any 
previous hearing) the judge, after inquiry relating to the 
identification of such statute, report, or document, shall determine 
whether the same shall be produced at the hearing and physically be made 
a part of the evidence as an exhibit, or whether it shall be 
incorporated into the evidence by reference. If relevant and material 
matter offered in evidence is embraced in a report or document 
(including the record of any previous hearing) containing immaterial or 
irrelevant matter, such immaterial or irrelevant matter shall be 
excluded and shall be segregated insofar as practicable, subject to the 
direction of the judge.
    (5) Official notice. Official notice may be taken of such matters as 
are judicially noticed by the courts of the United States and of any 
other matter of technical, scientific or commercial fact of established 
character: Provided, That interested persons shall be given adequate 
notice, at the hearing or subsequent thereto, of matters so noticed and 
shall be given adequate opportunity to show that such facts are 
inaccurate or are erroneously noticed.
    (6) Offer of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the transcript. The offer of proof shall consist of a 
brief statement describing the evidence to be offered. If the evidence 
consists of a brief oral statement or of an exhibit, it shall be 
inserted into the transcript in toto. In such event, it shall be 
considered a part of the transcript if the Secretary decides that the 
judge's ruling in excluding the evidence was erroneous. The judge shall 
not allow the insertion of such evidence in toto if the taking of such 
evidence will consume a considerable length of time at the hearing. In 
the latter event, if the Secretary decides that the judge erred in 
excluding the evidence, and that such error was substantial, the hearing 
shall be reopened to permit the taking of such evidence.
[25 FR 5907, June 28, 1960, as amended at 37 FR 1103, Jan. 25, 1972]


Sec. 900.9  Oral and written arguments.

    (a) Oral argument before judge. Oral argument before the judge shall 
be in the discretion of the judge. Such argument, when permitted, may be 
limited by the judge to any extent that he finds necessary for the 
expeditious disposition of the proceeding and shall be reduced to 
writing and made part of the transcript.
    (b) Briefs, proposed findings and conclusions. The judge shall 
announce at the hearing a reasonable period of time within which 
interested persons may file with the hearing clerk proposed findings and 
conclusions, and written arguments or briefs, based upon the evidence 
received at the hearing, citing, where practicable, the page or pages of 
the transcript of the testimony where such evidence appears. Factual 
material other than that adduced at the hearing or subject to official 
notice shall not be alluded to therein, and, in any case, shall not be 
considered in the formulation of the marketing agreement

[[Page 12]]

or marketing order. If the person filing a brief desires the Secretary 
to consider any objection made by such person to a ruling of the judge, 
as provided in Sec. 900.8(d), he shall include in the brief a concise 
statement concerning each such objection, referring where practicable, 
to the pertinent pages of the transcript.


Sec. 900.10  Certification of the transcript.

    The judge shall notify the hearing clerk of the close of a hearing 
as soon as possible thereafter and of the time for filing written 
arguments, briefs, proposed findings and proposed conclusions, and shall 
furnish the hearing clerk with such other information as may be 
necessary. As soon as possible after the hearing, the judge shall 
transmit to the hearing clerk an original and three copies of the 
transcript of the testimony and the original and all copies of the 
exhibits not already on file in the office of the hearing clerk. He 
shall attach to the original transcript of testimony his certificate 
stating that to the best of his knowledge and belief, the transcript is 
a true transcript of the testimony given at the hearing except in such 
particulars as he shall specify; and that the exhibits transmitted are 
all the exhibits as introduced at the hearing with such exceptions as he 
shall specify. A copy of such certificate shall be attached to each of 
the copies of the transcript of testimony. In accordance with such 
certificate the hearing clerk shall note upon the official record copy, 
and cause to be noted on other copies, of the transcript each correction 
detailed therein by adding or crossing out (but without obscuring the 
text as originally transcribed) at the appropriate place any words 
necessary to make the same conform to the correct meaning, as certified 
by the judge. The hearing clerk shall obtain and file certifications to 
the effect that such corrections have been effected in copies other than 
the official record copy.


Sec. 900.11  Copies of the transcript.

    (a) During the period in which the proceeding has an active status 
in the Department, a copy of the transcript and exhibits shall be kept 
on file in the office of the hearing clerk, where it shall be available 
for examination during official hours of business. Thereafter said 
transcript and exhibits shall be made available by the hearing clerk for 
examination during official hours of business after prior request and 
reasonable notice to the hearing clerk.
    (b) If a personal copy of the transcript is desired, such copy may 
be obtained upon written application filed with the reporter and upon 
payment of fees at the rate (if any) provided in the contract between 
the reporter and the Secretary.


Sec. 900.12  Administrator's recommended decision.

    (a) Preparation. As soon as practicable following the termination of 
the period allowed for the filing of written arguments or briefs and 
proposed findings and conclusions the Administrator shall file with the 
hearing clerk a recommended decision.
    (b) Contents. The Administrator's recommended decision shall 
include: (1) A preliminary statement containing a description of the 
history of the proceedings, a brief explanation of the material issues 
of fact, law, or discretion presented on the record, and proposed 
findings and conclusions with respect to such issues as well as the 
reasons or basis therefor; (2) A ruling upon each proposed finding or 
conclusion submitted by interested persons; and (3) An appropriate 
proposed marketing agreement or marketing order effectuating his 
recommendations.
    (c) Exceptions to recommended decision. Immediately following the 
filing of his recommended decision, the Administrator shall give notice 
thereof, and opportunity to file exceptions thereto by publication in 
the Federal Register. Within a period of time specified in such notice 
any interested person may file with the hearing clerk exceptions to the 
Administrator's proposed marketing agreement or marketing order, or 
both, as the case may be, and a brief in support of such exceptions. 
Such exceptions shall be in writing, shall refer, where practicable, to 
the related pages of the transcript and may suggest appropriate changes 
in the proposed marketing agreement or marketing order.
    (d) Omission of recommended decision. The procedure provided in this 
section may be omitted only if the Secretary finds on the basis of the 
record that due and timely execution of his functions imperatively and 
unavoidably requires such omission.


Sec. 900.13  Submission to Secretary.

    Upon the expiration of the period allowed for filing exceptions or 
upon request of the Secretary, the hearing clerk shall transmit to the 
Secretary the record of the proceeding. Such record shall include: all 
motions and requests filed with the hearing clerk and rulings thereon; 
the certified transcripts; any proposed findings or conclusions or 
written arguments or briefs that may have been filed; the 
Administrator's recommended decision, if any, and such exceptions as may 
have been filed.


Sec. 900.13a  Decision by Secretary.

    After due consideration of the record, the Secretary shall render a 
decision. Such decision shall become a part of the record and shall 
include (a) a statement of his findings and conclusions, as well as the 
reasons or basis therefor, upon all the material issues of fact, law or 
discretion presented on the

[[Page 13]]

record, (b) a ruling upon each proposed finding and proposed conclusion 
not previously ruled upon in the record, (c) a ruling upon each 
exception filed by interested persons and (d) either (1) a denial of the 
proposal to issue a marketing agreement or marketing order or (2) a 
marketing agreement and, if the findings upon the record so warrant, a 
marketing order, the provisions of which shall be set forth directly or 
by reference, regulating the handling of the commodity or product in the 
same manner and to the same extent as such marketing agreement, which 
order shall be complete except for its effective date and any 
determinations to be made under Sec. 900.14(b) or Sec. 900.14(c): 
Provided, That such marketing order shall not be executed, issued, or 
made effective until and unless the Secretary determines that the 
requirements of Sec. 900.14(b) or Sec. 900.14(c) have been met.


Sec. 900.14  Execution and issuance of marketing agreements and 
          marketing orders.

    (a) Execution and issuance of marketing agreement. If the Secretary 
has approved a marketing agreement, as provided in Sec. 900.13a, the 
Administrator shall cause copies thereof to be distributed for execution 
by the handlers eligible to become parties thereto. If and when such 
number of the handlers as the Secretary shall deem sufficient shall have 
executed the agreement, the Secretary shall execute the agreement. After 
execution of a marketing agreement, such agreement shall be filed with 
the hearing clerk, and notice thereof, together with notice of the 
effective date, shall be given by publication in the Federal Register. 
The marketing agreement shall not become effective less than 30 days 
after its publication in the Federal Register, unless the Secretary, 
upon good cause found and published with the agreement, fixes an earlier 
effective date therefor: Provided, That no marketing agreement shall 
become effective as to any person signatory thereto before either (1) it 
has been filed with the Office of the Federal Register, or (2) such 
person has received actual notice that the Secretary has executed the 
agreement and the effective date of the marketing agreement.
    (b) Issuance of marketing order with marketing agreement. Whenever, 
as provided in paragraph (a) of this section, the Secretary executes a 
marketing agreement, and handlers also have executed the same as 
provided in section 8c(8) of the Act, he shall, if he finds that it will 
tend to effectuate the purposes of the Act, issue and make effective the 
marketing order, if any, which was filed as a part of his decision 
pursuant to Sec. 900.13a: Provided, That the issuance of such order 
shall have been approved or favored by producers as required by section 
8c(8) of the act.
    (c) Issuance of marketing order without marketing agreement. If, 
despite the failure or refusal of handlers to sign the marketing 
agreement, as provided in section 8c(8) of the Act, the Secretary makes 
the determinations required under section 8c(9) of the Act, the 
Secretary shall issue and make effective the marketing order, if any, 
which was filed as a part of his decision pursuant to Sec. 900.13a.
    (d) Effective date of marketing order. No marketing order shall 
become effective less than 30 days after its publication in the Federal 
Register, unless the Secretary, upon good cause found and published with 
the order, fixes an earlier effective date therefor: Provided, That no 
marketing order shall become effective as to any person sought to be 
charged thereunder before either (1) it has been filed with the Office 
of the Federal Register, or (2) such person has received actual notice 
of the issuance and terms of the marketing order.
    (e) Notice of issuance. After issuance of a marketing order, such 
order shall be filed with the hearing clerk, and notice thereof, 
together with notice of the effective date, shall be given by 
publication in the Federal Register. (7 U.S.C. 610(c).)
[25 FR 5907, June 28, 1960, as amended at 53 FR 15659, May 3, 1988]


Sec. 900.15  Filing; extensions of time; effective date of filing; and 
          computation of time.

    (a) Filing, number of copies. Except as is provided otherwise in 
this subpart, all documents or papers required or authorized by the 
foregoing provisions of this subpart to be filed with the hearing clerk 
shall be filed in quadruplicate. Any document or paper, so required or 
authorized to be filed with the hearing clerk, shall, during the course 
of an oral hearing, be filed with the judge. The provisions of this 
subpart concerning filing with the hearing clerk of hearing notices, 
recommended and final decisions, marketing agreements and orders, and 
all documents described in Sec. 900.17 shall be met by filing a true 
copy thereof with the hearing clerk.
    (b) Extensions of time. The time for the filing of any document or 
paper required or authorized by the foregoing provisions of this subpart 
to be filed may be extended by the judge (before the record is certified 
by the judge) or by the Administrator (after the record is so certified 
by the judge but before it is transmitted to the Secretary), or by the 
Secretary (after the record is transmitted to the Secretary) upon 
request filed, and if, in the judgment of the judge, Administrator, or 
the Secretary, as the case may be, there is good reason for the 
extension. All rulings made pursuant to this paragraph shall be filed 
with the hearing clerk.
    (c) Effective date of filing. Any document or paper required or 
authorized by the foregoing provisions of this subpart to be filed shall 
be deemed to be filed when it is postmarked or when it is received by 
the hearing clerk.

[[Page 14]]

    (d) Computation of time. Sundays and Federal holidays shall be 
included in computing the time allowed for the filing of any document or 
paper: Provided, That, when such time expires on a Sunday or legal 
holiday, such period shall be extended to include the next following 
business day.
[25 FR 5907, June 28, 1960, as amended at 30 FR 254, Jan. 9, 1965]


Sec. 900.16  Ex parte communications.

    (a) At no stage of the proceeding following the issuance of a notice 
of hearing and prior to the issuance of the Secretary's decision therein 
shall an employee of the Department who is or may reasonably be expected 
to be involved in the decisional process of the proceeding discuss ex 
parte the merits of the proceeding with any person having an interest in 
the proceeding or with any representative of such person: Provided, That 
procedural matters and status reports shall not be included within this 
limitation; and Provided further, That an employee of the Department who 
is or may reasonably be expected to be involved in the decisional 
process of the proceeding may discuss the merits of the proceeding with 
such a person if all parties known to be interested in the proceeding 
have been given notice and an opportunity to participate. A memorandum 
of any such discussion shall be included in the record of the 
proceeding.
    (b) No person interested in the proceeding shall make or knowingly 
cause to be made to an employee of the Department who is or may 
reasonably be expected to be involved in the decisional process of the 
proceeding an ex parte communication relevant to the merits of the 
proceeding except as provided in paragraph (a) of this section.
    (c) If an employee of the Department who is or may reasonably be 
expected to be involved in the decisional process of the proceeding 
receives or makes a communication prohibited by this section, the 
Department shall place on the public record of the proceeding:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral communications; 
and
    (3) All written responses, and memoranda stating the substance of 
all oral responses thereto.
    (d) Upon receipt of a communication knowingly made or knowingly 
caused to be made by a party in violation of this section, the 
Department may, to the extent consistent with the interest of justice 
and the policy of the underlying statute, take whatever steps are deemed 
necessary to nullify the effect of such communication.
    (e) For the purposes of this section, ex parte communication means 
an oral or written communication not on the public record with respect 
to which reasonable prior notice to all interested parties is not given, 
but which shall not include requests for status reports (including 
requests on procedural matters) on any proceeding.
[42 FR 10833, Feb. 24, 1977]


Sec. 900.17  Additional documents to be filed with hearing clerk.

    In addition to the documents or papers required or authorized by the 
foregoing provisions of this subpart to be filed with the hearing clerk, 
the hearing clerk shall receive for filing and shall have custody of all 
papers, reports, records, orders, and other documents which relate to 
the administration of any marketing agreement or marketing order and 
which the Secretary is required to issue or to approve.


Sec. 900.18  Hearing before Secretary.

    The Secretary may act in the place and stead of a judge in any 
proceeding under this subpart. When he so acts the hearing clerk shall 
transmit the record to the Secretary at the expiration of the period 
provided for the filing of proposed findings of fact, conclusions and 
orders, and the Secretary shall thereupon, after due consideration of 
the record, issue his final decision in the proceeding: Provided, That 
he may issue a tentative decision in which event the parties shall be 
afforded an opportunity to file exceptions before the issuance of the 
final decision.

Subpart--Rules of Practice Governing Proceedings on Petitions To Modify 
                 or To Be Exempted From Marketing Orders

    Authority:  Sec. 5, 49 Stat. 753, as amended; 7 U.S.C. 608c.


Sec. 900.50  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.


Sec. 900.51  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73d Congress, as amended 
and as reenacted and amended by the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. and Sup. 601);
    (b) The term Department means the United States Department of 
Agriculture;
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead;

[[Page 15]]

    (d) The terms administrative law judge or judge means any 
Administrative Law Judge, appointed pursuant to 5 U.S.C. 3105, and 
assigned to the proceeding involved;
    (e) The term administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) [Reserved]
    (g) The term ``Federal Register'' means the publication provided for 
by the Act of July 26, 1935 (49 Stat. 500), and acts supplementary 
thereto and amendatory thereof;
    (h) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the Act;
    (i) The term handler means any person who, by the terms of a 
marketing order, is subject thereto, or to whom a marketing order is 
sought to be made applicable;
    (j) The term proceeding means a proceeding before the Secretary 
arising under subsection (15)(A) of section 8c of the Act;
    (k) The term hearing means that part of the proceeding which 
involves the submission of evidence;
    (l) The term party includes the Department;
    (m) The term hearing clerk means the hearing clerk, United States 
Department of Agriculture, Washington, DC;
    (n) [Reserved]
    (o) The term decision means the judge's initial decision in 
proceedings subject to 5 U.S.C. 556 and 557, and includes the judge's 
(1) findings of fact and conclusions with respect to all material issues 
of fact, law or discretion as well as the reasons or basis thereof, (2) 
order, and (3) rules on findings, conclusions and orders submitted by 
the parties;
    (p) The term petition includes an amended petition.
[25 FR 5907, June 28, 1960, as amended at 26 FR 7796, Aug. 22, 1961, 28 
FR 579, Jan. 23, 1963; 37 FR 8059, Apr. 25, 1972; 38 FR 29798, Oct. 29, 
1973]


Sec. 900.52  Institution of proceeding.

    (a) Filing and service of petition. Any handler desiring to complain 
that any marketing order or any provision of any such order or any 
obligation imposed in connection therewith is not in accordance with 
law, shall file with the hearing clerk, in quadruplicate, a petition in 
writing addressed to the Secretary. Promptly upon receipt of the 
petition, the hearing clerk shall transmit a true copy thereof to the 
Administrator and the General Counsel, respectively.
    (b) Contents of petition. A petition shall contain:
    (1) The correct name, address, and principal place of business of 
the petitioner. If petitioner is a corporation, such fact shall be 
stated, together with the name of the State of incorporation, the date 
of incorporation, and the names, addresses, and respective positions 
held by its officers; if an unincorporated association, the names and 
addresses of its officers, and the respective positions held by them; if 
a partnership, the name and address of each partner;
    (2) Reference to the specific terms or provisions of the order, or 
the interpretation or application thereof, which are complained of;
    (3) A full statement of the facts (avoiding a mere repetition of 
detailed evidence) upon which the petition is based, and which it is 
desired that the Secretary consider, setting forth clearly and concisely 
the nature of the petitioner's business and the manner in which 
petitioner claims to be affected by the terms or provisions of the order 
or the interpretation or application thereof, which are complained of;
    (4) A statement of the grounds on which the terms or provisions of 
the order, or the interpretation or application thereof, which are 
complained of, are challenged as not in accordance with law;
    (5) Prayers for the specific relief which the petitioner desires the 
Secretary to grant;
    (6) An affidavit by the petitioner, or if the petitioner is not an 
individual, by an officer of the petitioner having knowledge of the 
facts stated in the petition, verifying the petition and stating that it 
is filed in good faith and not for purposes of delay.
    (c) Motion to dismiss petition--(1) Filing, contents, and responses 
thereto. If the Administrator is of the opinion that the petition, or 
any portion thereof, does not substantially comply, in form or content, 
with the act or with the requirements of paragraph (b) of this section, 
or is not filed in good faith, or is filed for purposes of delay, he 
may, within thirty days after the filing of the petition, file with the 
Hearing Clerk a motion to dismiss the petition, or any portion thereof, 
on one or more of the grounds stated in this paragraph. Such motion 
shall specify the grounds of objection to the petition and if based, in 
whole or in part, on an allegations of fact not appearing on the face of 
the petition, shall be accompanied by appropriate affidavits or 
documentary evidence substantiating such allegations of fact. The motion 
may be accompanied by a memorandum of law. Upon receipt of such motion, 
the Hearing Clerk shall cause a copy thereof to be served upon the 
petitioner, together with a notice stating that all papers to be 
submitted in opposition to such motion including any memorandum of law, 
must be filed by the petitioner with the Hearing Clerk not later than 20 
days after the service of such notice upon the petitioner. Upon the 
expiration of the time specified in such notice, or upon receipt of such 
papers from the petitioner, the Hearing Clerk shall transmit all

[[Page 16]]

papers which have been filed in connection with the motion to the Judge 
for his consideration.
    (2) Decision by Administrative Law Judge. The Judge, after due 
consideration, shall render a decision upon the motion stating the 
reasons for his action. Such decision shall be in the form of an order 
and shall be filed with the Hearing Clerk who shall cause a copy thereof 
to be served upon the petitioner and a copy thereof to be transmitted to 
the Administrator. Any such order shall be final unless appealed 
pursuant to Sec. 900.65: Provided, That within 20 days following the 
service upon the petitioner of a copy of the order of the Judge 
dismissing the petition, or any portion thereof, on the ground that it 
does not substantially comply in form and content with the act or with 
paragraph (b) of this section, the petitioner shall be permitted to file 
an amended petition.
    (3) Oral argument. Unless a written application for oral argument is 
filed by a party with the hearing clerk not later than the time fixed 
for filing papers in opposition to the motion, it shall be considered 
that the party does not desire oral argument. The granting of a request 
to make oral argument shall rest in the discretion of the Judge.
[25 FR 5907, June 28, 1960, as amended at 38 FR 29798, Oct. 29, 1973]


Sec. 900.52a  Answer to petition.

    (a) Time of filing. Within 30 days after the filing of the petition, 
the Administrator shall file an answer thereto: Provided, That if a 
motion to dismiss the petition, in whole or in part, is made pursuant to 
Sec. 900.52(c), the answer shall be filed within 15 days after the 
filing of an order of the administrative law judge denying the motion or 
granting the motion with respect to only a portion of the petition. The 
answer shall be filed with the hearing clerk who shall cause a copy 
thereof to be served promptly upon the petitioner.
    (b) Contents. The answer shall specify which of the material 
allegations of fact or of law in the petition are controverted and which 
are not controverted. The answer also may contain affirmative 
allegations of fact constituting separate defenses and statements of 
objections to the sufficiency of the whole or any part of the petition.
[25 FR 5907, June 28, 1960]


Sec. 900.52b  Amended pleadings.

    At any time before the close of the hearing the petition or answer 
may be amended, but the hearing shall, at the request of the adverse 
party, be adjourned or recessed for such reasonable time as the judge 
may determine to be necessary to protect the interests of the parties. 
Amendments subsequent to the first amendment or subsequent to the filing 
of an answer may be made only with leave of the judge or with the 
written consent of the adverse party.


Sec. 900.53  Withdrawal of petition.

    If, at any time after the petition is filed, the petitioner desires 
to withdraw the same, he shall file with the hearing clerk (or, if filed 
during the course of a hearing, with the judge) a written request for 
permission to withdraw. The judge may, in his discretion, thereupon 
dismiss the petition without further procedure: Provided, That, if the 
request to withdraw is filed after a hearing has been opened, permission 
to withdraw shall be granted only in exceptional circumstances.


Sec. 900.54  Docket number.

    Each proceeding, immediately following its institution, shall be 
assigned a docket number by the hearing clerk and thereafter the 
proceeding may be referred to by such number.


Sec. 900.55  Judges.

    (a) Assignment. No judge who has any pecuniary interest in the 
outcome of the proceeding, or who has participated in any investigation 
preceding the institution of the proceeding, shall serve as judge in 
such proceeding.
    (b) Conduct. The judge shall conduct the proceeding in a fair and 
impartial manner and shall not discuss ex parte the merits of the 
proceeding with any person who is or who has been connected in any 
manner with the proceeding in an advocative or investigative capacity.
    (c) Powers of judges. Subject to review by the Secretary, as 
provided elsewhere in this subpart, the judge shall have power to:
    (1) Rule upon motions and requests;
    (2) Adjourn the hearing from time to time, and change the time and 
place of hearing;
    (3) Administer oaths and affirmations and take affidavits;
    (4) Issue subpenas, under the facsimile signature of the Secretary, 
requiring the attendance and testimony of witnesses and the production 
of books, records, contracts, papers, and other documentary evidence;
    (5) Examine witnesses and receive evidence;
    (6) Take or order, under the facsimile signature of the Secretary, 
the taking of depositions;
    (7) Admit or exclude evidence;
    (8) Hear oral argument on facts or law;
    (9) Consolidate hearings upon two or more petitions pertaining to 
the same order;
    (10) Do all acts and take all measures necessary for the maintenance 
of order at the hearing and the efficient conduct of the proceeding.
    (d) Who may act in absence of judge. In case of the absence of the 
judge or his inability to act, the powers and duties to be performed by 
him under these rules of practice in con

[[Page 17]]

nection with a proceeding may, without abatement of the proceeding 
unless otherwise ordered by the Secretary, be assigned to any other 
judge.
    (e) Disqualification of judge. The judge may at any time withdraw as 
judge in a proceeding if he deems himself to be disqualified. Upon the 
filing by an interested person in good faith of a timely and sufficient 
affidavit of personal bias or disqualification of a judge, the Secretary 
shall determine the matter as a part of the record and decision in the 
proceeding, after making such investigation or holding such hearings, or 
both, as he may deem appropriate in the circumstances.


Sec. 900.56  Consolidated hearings.

    At the discretion of the judge, hearings upon two or more petitions 
pertaining to the same order may be consolidated, and the evidence taken 
at such consolidated hearing may be embodied in a single record.


Sec. 900.57  Intervention.

    Intervention in proceedings subject to this subpart shall not be 
allowed, except that, in the discretion of the Secretary or the judge, 
any person (other than the petitioner) showing a substantial interest in 
the outcome of a proceeding shall be permitted to participate in the 
oral argument and to file a brief.


Sec. 900.58  Prehearing conferences.

    In any proceeding in which it appears that such procedure will 
expedite the proceeding, the judge, at any time prior to the 
commencement of or during the course of the hearing, may request the 
parties or their counsel to appear at a conference before him to 
consider (a) the simplification of issues; (b) the possibility of 
obtaining stipulations of fact and of documents which will avoid 
unnecessary proof; (c) the limitation of the number of expert or other 
witnesses; and (d) such other matters as may expedite and aid in the 
disposition of the proceeding. No transcript of such conference shall be 
made, but the judge shall prepare and file for the record a written 
summary of the action taken at the conference, which shall incorporate 
any written stipulations or agreements made by the parties at the 
conference or as a result of the conference. If the circumstances are 
such that a conference is impracticable, the judge may request the 
parties to correspond with him for the purpose of accomplishing any of 
the objects set forth in this section. The judge shall forward copies of 
letters and documents to the parties as the circumstances require. 
Correspondence in such negotiations shall not be a part of the record, 
but the judge shall submit a written summary for the record if any 
action is taken.


Sec. 900.59  Motions and requests.

    (a) General. All motions and requests shall be filed with the 
hearing clerk, except that those made during the course of an oral 
hearing may be filed with the judge or may be stated orally and made a 
part of the transcript.
    The judge is authorized to rule upon all motions and requests filed 
or made prior to the transmittal by the hearing clerk to the Secretary 
of the record as provided in this subpart. The Secretary shall rule upon 
all motions and requests filed after that time.
    (b) Certification of motions. The submission or certification of any 
motion, request, objection, or other question to the Secretary shall be 
in the discretion of the judge.
[25 FR 5907, June 28, 1960, as amended at 38 FR 29798, Oct. 29, 1973]


Sec. 900.60  Oral hearings before judge.

    (a) Time and place. The judge shall set a time and place for hearing 
and shall file with the hearing clerk a notice stating the time and 
place of hearing. If any change in the time or place of hearing becomes 
necessary, it shall be made by the judge, who, in such event, shall file 
with the hearing clerk a notice of the change. Such notice shall be 
served upon the parties, unless it is made during the course of an oral 
hearing and made a part of the transcript.
    (b) Appearances--(1) Representation. In any proceeding under the 
act, the parties may appear in person or by counsel or other 
representative. The Department, if represented by counsel, shall be 
represented by an attorney assigned by the General Counsel of the 
Department, and such attorney shall present or supervise the 
presentation of the position of the Department.
    (2) Debarment of counsel or representative. Whenever, while a 
proceeding is pending before him, the judge finds that a person acting 
as counsel or representative for any party to the proceeding is guilty 
of unethical or unprofessional conduct, the judge may order that such 
person be precluded from further acting as counsel or representative in 
such proceeding. An appeal to the Secretary may be taken from any such 
order, but the proceeding shall not be delayed or suspended pending 
disposition of the appeal: Provided, That the judge may suspend the 
proceeding for a reasonable time for the purpose of enabling the client 
to obtain other counsel or representative.
    In case the judge has issued an order precluding a person from 
further acting as counsel or representative in the proceeding, the 
judge, within a reasonable time thereafter, shall submit to the 
Secretary a report of the facts and circumstances surrounding the 
issuance of the order and shall recommend what action the Secretary 
should take respecting the appearance of such person as counsel or 
representative in other proceedings before the Secretary. Thereafter, 
the Secretary may, after notice and an oppor

[[Page 18]]

tunity for hearing, issue such order respecting the appearance of such 
person as counsel or representative in proceedings before the Secretary 
as the Secretary finds to be appropriate.
    (3) Failure to appear. If the petitioner, after being duly notified, 
fails to appear at the hearing, he shall be deemed to have authorized 
the dismissal of the proceeding, without further procedure, and with or 
without prejudice as the judge may determine. In the event that the 
petitioner appears at the hearing and no representative of the 
Department appears, the judge shall proceed ex parte to hear the 
evidence of the petitioner. Provided, That failure on the part of such 
representative of the Department to appear at a hearing shall not be 
deemed to be waiver of the Department's right to file suggested findings 
of fact, conclusions and order; to be served with a copy of the judge's 
initial decision and to appeal to the Secretary with respect thereto.
    (c) Order of proceeding. Except as may be determined otherwise by 
the judge, the petitioner shall proceed first at the hearing.
    (d) Evidence--(1) In general. The hearing shall be publicly 
conducted, and the testimony given at the hearing shall be reported 
verbatim.
    The testimony of witnesses at a hearing shall be upon oath or 
affirmation and subject to cross-examination.
    Any witness may, in the discretion of the judge, be examined 
separately and apart from all other witnesses except those who may be 
parties to the proceeding.
    The judge shall exclude, insofar as practicable, evidence which is 
immaterial, irrelevant, or unduly repetitious, or which is not of the 
sort upon which responsible persons are accustomed to rely.
    (2) Objections. If a party objects to the admission or rejection of 
any evidence or to the limitation of the scope of any examination or 
cross-examination, or any other ruling of the judge, he shall state 
briefly the grounds of such objection, whereupon an automatic exception 
will follow which may be pursued in an appeal pursuant to Sec. 900.65 by 
the party adversely affected by the judge's ruling.
    (3) Depositions. The deposition of any witness shall be admitted, in 
the manner hereinafter provided in and subject to the provisions of 
Sec. 900.61.
    (4) Affidavits. Except as is otherwise provided in this subpart, 
affidavits may be admitted only if the evidence is otherwise admissible 
and the parties agree (which may be determined by their failure to make 
timely objections) that affidavits may be used.
    (5) Proof and authentication of official records or documents. An 
official record or document, when admissible for any purpose, shall be 
admissible in evidence without the production of the person who made or 
prepared the same. Such record or document shall, in the discretion of 
the judge, be evidenced by an official publication thereof or by a copy 
attested by the person having legal custody thereof and accompanied by a 
certificate that such person has the custody.
    (6) Exhibits. All written statements, charts, tabulations, or 
similar data offered in evidence at the hearing shall, after 
identification by the proponent and upon a satisfactory showing of the 
admissibility of the contents thereof, be numbered as exhibits and 
received in evidence and made a part of the record. Except where the 
judge finds that the furnishing of copies is impracticable, a copy of 
each exhibit, in addition to the original, shall be filed with the judge 
for the use of each other party to the proceeding. The judge shall 
advise the parties as to the exact number of copies which will be 
required to be filed and shall make and have noted on the record the 
proper distribution of the copies.
    If the testimony of a witness refers to a statute, or to a report, 
document, or transcript, the judge, after inquiry relating to the 
identification of such statute, report, document, or transcript, shall 
determine whether the same shall be produced at the hearing and 
physically be made a part of the evidence as an exhibit, or whether it 
shall be incorporated into the evidence by reference. If relevant and 
material matter offered in evidence is embraced in a report, document, 
or transcript containing immaterial or irrelevant matter, such 
immaterial or irrelevant matter shall be excluded and shall be 
segregated insofar as practicable, subject to the direction of the 
judge.
    (7) Official notice. Official notice will be taken of such matters 
as are judicially noticed by the courts of the United States and of any 
other matter of technical, scientific, or commercial fact of established 
character: Provided, That the parties shall be given adequate notice, at 
the hearing or by reference in the judge's report or the tentative order 
or otherwise, of matters so noticed, and (except where official notice 
is taken, for the first time in the proceeding, in the final order) 
shall be given adequate opportunity to show that such facts are 
erroneously noticed.
    (8) Offer of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the transcript. The offer of proof shall consist of a 
brief statement describing the evidence to be offered. If the evidence 
consists of a brief oral statement or of an exhibit, it shall be 
inserted into the transcript in toto. In such event, it shall be 
considered a part of the transcript if the Secretary decides that the 
judge's ruling in excluding the evidence was erroneous. The judge shall 
not allow the insertion of such evidence in toto if the taking of such 
evidence will consume a considerable

[[Page 19]]

length of time at the hearing. In the latter event, if on appeal the 
Secretary decides that the judge erred in excluding the evidence, and 
that such error was substantial, the hearing shall be reopened to permit 
the taking of such evidence.
    (e) [Reserved]
    (f) Transcript. (1) During the period in which the proceeding has an 
active status the transcript and exhibits shall be kept on file in the 
office of the hearing clerk, where it shall be available for examination 
during official hours of business. Thereafter said transcript and 
exhibits shall be made available by the hearing clerk for examination 
during official hours of business after prior request and reasonable 
notice to the hearing clerk.
    (2) If a personal copy of the transcript is desired, such copy may 
be obtained upon written application filed with the reporter, and upon 
payment of fees at the rate (if any) provided in the contract between 
the reporter and the Secretary.
[25 FR 5907, June 28, 1960, as amended at 38 FR 29798, Oct. 29, 1973]


Sec. 900.61  Depositions.

    (a) Procedure in lieu of deposition. Before any party may have 
testimony taken by deposition, said party shall, if practicable, submit 
to the other party an affidavit which shall set forth the facts to which 
the witness would testify, if the deposition should be taken. If, after 
examination of such affidavit, the other party agrees, or (within 10 
days after submission of the affidavit) fails to object, that the 
affidavit may be used in lieu of the deposition, the judge shall admit 
the affidavit in evidence and shall not order the deposition to be 
taken.
    (b) Application for taking deposition. Upon the application of a 
party to the proceeding, the judge may, at any time after the filing of 
the moving paper, order, under the facsimile signature of the Secretary, 
the taking of testimony by deposition. The application shall be in 
writing and shall be filed with the hearing clerk and shall set forth: 
(1) The name and address of the proposed deponent; (2) the name and 
address of the person (referred to hereinafter in this section as the 
``officer''), qualified under the rules in this part to take 
depositions, before whom the proposed examination is to be made; (3) the 
proposed time and place of the examination, which shall be at least 15 
days after the date of the mailing of the application; and (4) the 
reasons why such deposition should be taken.
    (c) Judge's order for taking deposition. If, after the examination 
of the application, the judge is of the opinion that the deposition 
should be taken, he shall order its taking. The order shall be filed 
with the hearing clerk and shall be served upon the parties and shall 
state: (1) The time and place of the examination (which shall not be 
less than 10 days after the filing of the order); (2) the name of the 
officer before whom the examination is to be made; (3) the name of the 
deponent. The officer and the time and place need not be the same as 
those suggested in the application.
    (d) Qualifications of officer. The deposition shall be taken before 
the judge or before an officer authorized by the law of the United 
States or by the law of the place of the examination to administer 
oaths, or before an officer authorized by the Secretary to administer 
oaths.
    (e) Procedure on examination. The deponent shall be examined under 
oath or affirmation and shall be subject to cross-examination. The 
testimony of the deponent shall be recorded by the officer or by some 
person under his direction and in his presence. In lieu of oral 
examination, parties may transmit written interrogatories to the officer 
prior to the examination and the officer shall propound such 
interrogatories to the deponent.
    The applicant must arrange for the examination of the witness either 
by oral examination or by written interrogatories. If it is found by the 
judge, upon the protest of a party to the proceeding, that such party 
has his residence and his place of business more than 100 miles from the 
place of the examination and that it would constitute an undue hardship 
upon such party to be represented at the examination, the applicant will 
be required to conduct the examination by means of interrogatories. When 
the examination is conducted by means of interrogatories, copies of the 
interrogatories shall be served upon the other parties to the proceeding 
at least five days prior to the date set for the examination, and the 
other parties shall be afforded an opportunity to file with the officer 
cross-interrogatories at any time prior to the time of the examination.
    (f) Certification by officer. The officer shall certify on the 
deposition that the deponent was duly sworn by him and that the 
deposition is a true record of the deponent's testimony. He shall then 
securely seal the deposition, together with two copies thereof, in an 
envelope and mail the same by registered mail to the hearing clerk.
    (g) Use of depositions. A deposition ordered and taken in accord 
with the provisions of this section may be used in a proceeding under 
the act if the judge finds that the evidence is otherwise admissible and 
(1) that the witness is dead; or (2) that the witness is at a distance 
greater than 100 miles from the place of hearing, unless it appears that 
the absence of the witness was procured by the party offering the 
deposition; or (3) that the witness is unable to attend or testify 
because of age, sickness, infirmity or imprisonment; or (4) that the 
party offering the deposition has endeavored to procure the attendance 
of

[[Page 20]]

the witness by subpena but has been unable to do so; or (5) that such 
exceptional circumstances exist as to make it desirable, in the 
interests of justice, to allow the deposition to be used. If a 
deposition has been taken, and the party upon whose application it was 
taken refuses to offer it in evidence, the other party may offer the 
deposition, or any part thereof, in evidence.


Sec. 900.62  Subpenas.

    (a) Issuance of subpenas. The attendance of witnesses and the 
production of documentary evidence from any place in the United States 
on behalf of any party to the proceeding may, by subpena, be required at 
any designated place of hearing. Subpenas may be issued by the Secretary 
or by the judge, under the facsimile signature of the Secretary, upon a 
reasonable showing by the applicant of the grounds, necessity, and 
reasonable scope thereof.
    (b) Application for subpena duces tecum. Subpenas for the production 
of documentary evidence, unless issued by the judge upon his own motion, 
shall be issued only upon a verified written application. Such 
application shall specify, as exactly as possible, the documents desired 
and shall show their competency, relevancy, and materiality and the 
necessity for their production.
    (c) Service of subpenas. Subpenas may be served (1) by a United 
States Marshal or his deputy, or (2) by any other person who is not less 
than 18 years of age, or (3) by registering and mailing a copy of the 
subpena addressed to the person to be served at his or its last known 
residence or principal place of business or residence. Proof of service 
may be made by the return of service on the subpena by the United States 
Marshal or his deputy; or, if served by an individual other than a 
United States Marshal or his deputy, by an affidavit of such person 
stating that he personally served a copy of the subpena upon the person 
named therein; or, if service was by registered mail, by an affidavit 
made by the person mailing the subpena that it was mailed as provided in 
this paragraph and by the signed return post-office receipt: Provided, 
That, if the subpena is issued on behalf of the Department, the return 
receipt without an affidavit of mailing shall be sufficient proof of 
service. In making personal service, the person making service shall 
leave a copy of the subpena with the person subpenaed; the original, 
bearing or accompanied by the required proof of service shall be 
returned to the official who issued the same.


Sec. 900.63  Fees and mileage.

    Witnesses who are subpenaed and who appear in such proceeding, 
including witnesses whose depositions are taken, shall be paid the same 
fees and mileage that are paid witnesses in the courts of the United 
States, and persons taking depositions shall be entitled to the same 
fees as are paid for like services in the courts of the United States, 
to be paid by the party at whose request the deposition is taken. 
Witness fees and mileage shall be paid by the party at whose instance 
the witnesses appear, and claims therefor, as to witnesses subpenaed on 
behalf of the Department, shall be proved before the person issuing the 
subpena, and, as to witnesses subpenaed on behalf of any other party, 
shall be presented to such party.


Sec. 900.64  The Administrative Law Judge's Decision.

    (a) Corrections to and certification of transcript. (1) At such time 
as the judge may specify, but not later than the time fixed for filing 
proposed findings of fact, conclusions and order, or briefs, as the case 
may be, the parties may file with the judge proposed corrections to the 
transcript. (2) As soon as practicable after the filing of proposed 
findings of fact, conclusions and order, or briefs, as the case may be, 
the judge shall file with the hearing clerk his certificate indicating 
any corrections to be made in the transcript, and stating that, to the 
best of his knowledge and belief, the transcript, as corrected, is a 
true, correct, and complete transcript of the testimony given at the 
hearing, and that the exhibits are all the exhibits properly a part of 
the hearing record. The original of such certificate shall be attached 
to the original transcript and a copy of such certificate shall be 
served upon each of the parties by the hearing clerk who shall also 
enter onto the transcript (without obscuring the text) any correction 
noted in the certification.
    (b) Proposed findings of fact, conclusions, and orders. Within 10 
days (unless the judge shall have announced at the hearing a shorter or 
longer period of time) after the transcript has been filed with the 
hearing clerk, as provided in paragraph (a) of this section, each party 
may file with the hearing clerk proposed findings of fact, conclusions, 
and order, based solely upon the evidence of record, and briefs in 
support thereof.
    (c) Administrative Law Judge's Decision. The judge, within a 
reasonable time after the termination of the period allowed for the 
filing of proposed findings of fact, conclusions, and orders, and briefs 
in support thereof, shall prepare upon the basis of the record, and 
shall file with the hearing clerk, his initial decision, a copy of which 
shall be served by the hearing clerk, upon each of the parties. Such 
decision shall become final without further proceedings 35 days after 
the date of service thereof, unless there is an appeal to the Secretary 
by a party to the proceeding: Provided, however, That no decision shall 
be final for the purpose of judicial review except a final decision 
issued by the Secretary pursuant to an appeal by a party to the 
proceeding.

[[Page 21]]

[25 FR 5907, June 28, 1960, as amended at 38 FR 29799, Oct. 29, 1973]


Sec. 900.65  Appeals to Secretary: transmittal of record.

    (a) Filing of appeal. Any party who disagrees with a judge's 
decision or any part thereof, may appeal the decision to the Secretary 
by transmitting an appeal petition to the hearing clerk within 30 days 
after service of said decision upon said party. Each issue set forth in 
the appeal, and the arguments thereon, shall be separately numbered; 
shall be plainly and concisely stated; and shall contain detailed 
citations of the record, statutes, regulations and authorities being 
relied upon in support thereof. The appeal petition shall be served upon 
the other party to the proceeding by the hearing clerk.
    (b) Argument before Secretary--(1) Oral argument. A party bringing 
an appeal may request within the prescribed time period for filing such 
appeal, an opportunity for oral argument before the Secretary. Failure 
to make such request in writing, within the prescribed time period, 
shall be deemed a waiver of oral argument. The Secretary, in his 
discretion, may grant, refuse or limit any request for oral argument on 
appeal.
    (2) Scope of argument. Argument to be heard on appeal, whether oral 
or in a written brief, shall be limited to the issues raised by the 
appeal, except that if the Secretary determines that additional issues 
should be argued, the parties shall be given reasonable notice of such 
determination, so as to permit preparation of adequate arguments on all 
the issues to be argued.
    (c) Response. Within 20 days after service of an appeal brought by a 
party to the proceeding, any other party may file a response in support 
of or in opposition to such appeal.
    (d) Transmittal of record. Whenever an appeal is filed by a party to 
the proceeding, the hearing clerk shall transmit to the Secretary the 
record of the proceeding. Such record shall include: the pleadings; any 
motions and requests filed, and the rulings thereon; the transcript of 
the testimony taken at the hearing, as well as the exhibits filed in 
connection therewith; any statements filed under the shortened 
procedure; any documents or papers filed in connection with prehearing 
conferences; such proposed findings of fact, conclusions, and orders, 
and briefs in support thereof, as may have been filed in connection with 
the hearing; the judge's initial decision; and the appeal petition; 
briefs in support thereof, and responses thereto as may have been filed 
in the proceeding.
[38 FR 29799, Oct. 29, 1973]


Sec. 900.66  Consideration of appeal by the Secretary and issuance of 
          final order.

    (a) Consideration of appeal. As soon as practicable after the 
receipt of the record from the hearing clerk, or, in case oral argument 
was had, as soon as practicable thereafter, the Secretary, upon the 
basis of and after due consideration of the record, shall rule on the 
appeal. If the Secretary decides that no change or modification of the 
judge's decision is warranted, he may adopt the Judge's decision as the 
final order of the Secretary, preserving any right of the party bringing 
the appeal to seek judicial review of such decision in the proper forum. 
At no stage of the proceeding between its institution and the issuance 
of the order shall the Secretary discuss ex parte the merits of the 
proceeding with any person who is connected with the proceeding in an 
advocative or an investigative capacity, or with any representative of 
such person: Provided, however, That the Secretary may discuss the 
merits of the proceeding with such a person if all parties to the 
proceeding, or their representatives, have been given an opportunity to 
be present. If, notwithstanding the foregoing provisions of this 
section, a memorandum or other communication from any party, or from any 
person acting on behalf of any party, which relates to the merits of the 
proceeding, receives the personal attention of the Secretary (or, if an 
official other than the Secretary is to issue the order, then of such 
other official) during the pendency of the proceeding, such memorandum 
or communication shall be regarded as argument made in the proceeding 
and shall be filed with the hearing clerk, who shall serve a copy 
thereof upon the opposite party to file a reply thereto.
    (b) Issuance of final order. A final order issued by the Secretary 
shall be filed with the hearing clerk, who shall serve it upon the 
parties: Provided, That, if the terms of the order differ substantially 
from those proposed in the decision of the judge, the Secretary shall, 
if he deems it advisable to do so, direct that a copy of the order be 
served upon the parties as a tentative order; and, in such event, 
opportunity shall be given the parties to file exceptions thereto and 
written arguments or briefs in support of such exceptions. In such case, 
if exceptions are filed within a period of time (to be fixed by the 
Secretary but not to exceed 20 days) following the service of the 
tentative order, the Secretary shall give consideration, to and shall 
make such changes in the tentative order as he deems to be appropriate; 
otherwise, the tentative order shall become final, as of the day 
following the date of expiration of the period fixed for the filing of 
exceptions.
[38 FR 29799, Oct. 29, 1973]

[[Page 22]]


Sec. 900.67  [Reserved]


Sec. 900.68  Applications for reopening hearings; for rehearings or 
          rearguments of proceedings; or for reconsideration of orders.

    (a) Petition requisite--(1) Filing; service. An application for 
reopening the hearing to take further evidence, or for rehearing or 
reargument of the proceeding, or for reconsideration of the order shall 
be made by petition addressed to the Secretary and filed with the 
hearing clerk, who immediately shall notify and serve a copy thereof 
upon the other party to the proceeding. Every such petition shall state 
specifically the grounds relied upon.
    (2) Petitions to reopen hearings. A petition to reopen the hearing 
for the purpose of taking additional evidence may be filed at any time 
prior to the issuance of the final order. Every such petition shall 
state briefly the nature and purpose of the evidence to be adduced, 
shall show that such evidence is not merely cumulative, and shall set 
forth a good reason why such evidence was not adduced at the hearing.
    (3) Petitions to rehear or reargue proceedings, or to reconsider 
orders. A petition to rehear or reargue the proceeding or to reconsider 
the final order shall be filed within 15 days after the date of the 
service of such order. Every such petition shall state specifically the 
matters claimed to have been erroneously decided, and alleged errors 
must be briefly stated.
    (b) Procedure for disposition of petitions. Within 10 days following 
the service of any petition provided for in this section, the other 
party to the proceeding shall file with the hearing clerk an answer 
thereto. As soon as practicable thereafter, the Secretary shall announce 
the decision granting or denying the petition. Unless the Secretary 
shall determine otherwise, the issuance or operation of the order shall 
not be stayed pending the decision of the Secretary upon the petition. 
In the event that any such petition is granted by the Secretary, the 
applicable rules of practice, as set out elsewhere in this subpart, 
shall be followed.


Sec. 900.69  Filing; service; extensions of time; effective date of 
          filing; and computation of time.

    (a) Filing; number of copies. Except as provided otherwise herein, 
all documents or papers required or authorized in this subpart to be 
filed with the hearing clerk shall be filed in quadruplicate: Provided, 
That, if there are more than two parties to the proceeding, a sufficient 
number of additional copies shall be filed so as to provide for service 
upon all the parties to the proceeding. Any document or paper, required 
or authorized in this subpart to be filed with the hearing clerk, shall, 
during the course of an oral hearing, be filed with the judge.
    (b) Service; proof of service. Copies of all such papers shall be 
served upon the parties by the hearing clerk, by the judge, or by some 
other employee of the Department or by a United States Marshal or his 
deputy. Service shall be made either (1) by delivering a copy of the 
document or paper to the individual to be served or to a member of the 
partnership to be served or to the president, secretary, or other 
executive officer or any director of the corporation, organization, or 
association to be served, or to the attorney or agent of record of such 
individual, partnership, corporation, organization, or association; or 
(2) by leaving a copy of the document or paper at the principal office 
or place of business of such individual, partnership, corporation, 
organization, or association, or of his or its attorney or agent of 
record; or (3) by registering and mailing a copy of the document or 
paper, addressed to such individual, partnership, corporation, 
organization, or association, or to his or its attorney or agent of 
record, at his or its last known principal office, place of business, or 
residence. Proof of service hereunder shall be made by the affidavit of 
the person who actually made the service. The affidavit contemplated 
herein shall be filed with the hearing clerk, and the fact of filing 
thereof shall be noted on the docket of the proceeding.
    (c) Extensions of time. The time for the filing of any documents or 
papers required or authorized in this subpart to be filed may be 
extended upon (1) a written stipulation between the parties, or (2) upon 
the request of a party, by the judge before the transmittal of the 
record to the Secretary, or by the Secretary at any other time if, in 
the judgment of the Secretary or the judge, as the case may be, there is 
good reason for the extension.
    (d) Effective date of filing. Any document or paper, except a 
petition filed pursuant to Sec. 900.52, required or authorized under 
these rules to be filed shall be deemed to have been filed when it is 
postmarked, or when it is received by the hearing clerk. Any petition 
filed under Sec. 900.52 shall be deemed to be filed when it is received 
by the hearing clerk.
    (e) Computation of time. Sundays and Federal holidays shall be 
included in computing the time allowed for the filing of any document or 
paper: Provided, That, when such time expires on a Sunday or legal 
holiday, such time shall be extended to include the next following 
business day.


Sec. 900.70  Applications for interim relief.

    (a) Filing the application. A person who has filed a petition 
pursuant to Sec. 900.52 may by separate application filed with the 
hearing clerk apply to the Secretary for an order postponing the 
effective date of, or suspend

[[Page 23]]

ing the application of, the marketing order or any provision thereof, or 
any obligation imposed in connection therewith, pending final 
determination of the proceeding.
    (b) Contents of the application. The application shall contain a 
statement of the facts upon which the relief is requested, including any 
facts showing irreparable injury. The application must be signed and 
sworn to by the petitioner and any facts alleged therein which are not 
within his personal knowledge shall be supported by affidavits of a 
person or persons having personal knowledge of such facts or by proper 
documentary evidence thereof.
    (c) Answer to application. Immediately upon receipt of the 
application, the hearing clerk shall transmit a copy thereof, together 
with all supporting papers, to the Administrator, who shall, within 20 
days, or such other time fixed by the Secretary, after the filing of the 
application file an answer thereto with the hearing clerk.
    (d) Contents of answer. The answer shall contain a statement of the 
objections, if any, of the Administrator to the application for interim 
relief, and may be supported by affidavits and documentary evidence.
    (e) Transmittal to Secretary. Upon receiving the answer of the 
Administrator or upon the expiration of the time for filing the answer, 
the hearing clerk shall transmit to the Secretary for his decision all 
papers filed in connection with the application.
    (f) Hearing and oral argument. The Secretary may, in his discretion, 
permit oral argument or the taking of testimony in connection with such 
application. However, unless written request therefor is filed with the 
hearing clerk prior to the transmittal of the papers to the Secretary, 
the parties shall be deemed to have waived oral argument and the taking 
of testimony.
    (g) Decision by Secretary. The Secretary may grant or deny the 
application. Any action taken by the Secretary shall be in the form of 
an order filed with the hearing clerk and shall contain a brief 
statement of the reasons for the action taken. The hearing clerk shall 
cause copies of the order to be served upon the parties.


Sec. 900.71  Hearing before Secretary.

    The Secretary may act in the place and stead of a judge in any 
proceeding hereunder. When he so acts the hearing clerk shall transmit 
the record to the Secretary at the expiration of the period provided for 
the filing of proposed findings of fact, conclusions and orders, and the 
Secretary shall thereupon, after due consideration of the record, issue 
his final order in the proceeding; Provided, That he may issue a 
tentative order in which event the parties shall be afforded an 
opportunity to file appeals before the issuance of the final order.

Subpart--Supplemental Rules of Practice for Marketing Orders, Marketing 
 Agreements, and Requirements Issued Pursuant to 7 U.S.C. 608b(b) and 7 
            U.S.C. 608e Covering Fruits, Vegetables, and Nuts

    Authority:  7 U.S.C. 601-74.

[[Page 24]]


    Source:  61 FR 20717, May 8, 1996, unless otherwise noted.


 Sec. 900.80  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.


Sec. 900.81  Definitions.

    As used in this subpart, the terms as defined in the act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73 Congress (48 Stat. 31) 
as amended and as reenacted and amended by the Agricultural Marketing 
Agreement Act of 1937 (50 Stat. 246), as amended.
    (b) The term Department means the United States Department of 
Agriculture.
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.
    (d) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (e) The term proceeding means a proceeding before the Secretary 
arising under sections 8a, 8b(b), 8c(14), 8e, 10(c) and 10(h).
    (f) The term hearing means that part of the proceeding which 
involves the submission of evidence.
    (g) The term marketing agreement means any marketing agreement or 
any amendment thereto which may be entered into pursuant to section 8b 
of the act.
    (h) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the act, and after 
notice and hearing as required by said section.
    (i) The term handler means any person who, by the terms of a 
marketing order or marketing agreement, is subject thereto, or to whom a 
marketing order or marketing agreement is sought to be made applicable.
    (j) The term importer means any person who, by the terms of section 
8e of the act, is subject thereto.
    (k) The term person means any individual, corporation, partnership, 
association, or any other business unit.


Sec. 900.82  Stipulation procedures.

    The Administrator, or the Administrator's representative, may, at 
any time before the issuance of a complaint seeking a civil penalty 
under the Act, enter into a stipulation with any handler or importer in 
accordance with the following procedures:
    (a) The Administrator, or the Administrator's representative, shall 
give the handler or importer notice of the alleged violation of the 
applicable marketing order or marketing agreement, or the requirements 
issued pursuant to 7 U.S.C. 608b(b) and 7 U.S.C. 608e, and an 
opportunity for a hearing thereon as provided by the Act;
    (b) In agreeing to the proposed stipulation, the handler or importer 
expressly waives the opportunity for a hearing and agrees to pay a 
specified civil penalty within a designated time;
    (c) The Administrator, or the Administrator's representative, agrees 
to accept the specified civil penalty in settlement of the particular 
matter involved if it is paid within the designated time;
    (d) In cases where the handler or importer does not pay the 
specified civil penalty within the designated time, or the handler or 
importer does not agree to the stipulation, the Administrator may issue 
an administrative complaint; and
    (e) The civil penalty that the Administrator may have proposed in a 
stipulation agreement shall have no bearing on the civil penalty amount 
that the Department may seek in a formal administrative proceeding 
against the same handler or importer for the same alleged violation.

Subpart--Procedure Governing Meetings To Arbitrate and Mediate Disputes 
                Relating to Sales of Milk or Its Products

    Authority:  Sec. 3, 50 Stat. 248; 7 U.S.C. 671.


Sec. 900.100  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.


Sec. 900.101  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means section 3 of the Agricultural Marketing 
Agreement Act of 1937, as amended (50 Stat. 248, as amended; 7 U.S.C. 
671);
    (b) The term Department means the United States Department of 
Agriculture;
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead;
    (d) The term General Counsel means the General Counsel of the 
Department;
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any of

[[Page 25]]

ficer or employee of the Department to whom authority has been delegated 
or may hereafter be delegated to act in his stead.
    (f) The term Service means the Agricultural Marketing Service.
    (g) The term Division means the Dairy Division of the Service.
    (h) The term cooperative means any association, incorporated or 
otherwise, which is in good faith owned or controlled by producers, or 
organizations thereof, of milk or its products, and which is bona fide 
engaged in the collective processing or preparing for market or handling 
or marketing, in the current of interstate or foreign commerce, of milk 
or its products;
    (i) The term arbitrator means any officer or employee of the Service 
designated by the Administrator, pursuant to the Act, to arbitrate a 
bona fide dispute with reference to the terms and conditions of the sale 
of milk or its products between a producer cooperative and purchasers, 
handlers, processors, or distributors of milk or its products;
    (j) The term mediator means any officer or employee of the Service 
designated by the Administrator, pursuant to the act, to mediate a bona 
fide dispute with reference to terms and conditions of the sale of milk 
or its products between a producer cooperative and purchasers, handlers, 
processors, or distributors of milk or its products;
    (k) The term hearing clerk means the hearing clerk, United States 
Department of Agriculture, Washington, DC.
[25 FR 5907, June 28, 1960, as amended at 26 FR 7797, Aug. 22, 1961, 28 
FR 579, Jan. 23, 1963; 37 FR 8059, Apr. 25, 1972]


Sec. 900.102  Filing of applications for mediation or arbitration.

    All applications for mediation or arbitration, all submissions, and 
all correspondence regarding mediation or arbitration shall be addressed 
to the Secretary, attention of the Division.


Sec. 900.103  Application for mediation.

    An application for mediation by cooperative shall be in writing and 
shall include the following information:
    (a) Names in full of the parties to the dispute and their addresses;
    (b) Description of the cooperative organization and business, 
including copies of the articles of incorporation or association, 
bylaws, and membership contract; information regarding the number of 
shares of outstanding stock and the approximate portion owned by active 
producers; a statement of the function performed in connection with the 
collective processing, preparing, handling, or marketing of milk or its 
products; and data relative to the distribution of membership by States, 
the distribution by States of plant facilities for collecting, 
processing, or disposing of milk or its products, and the business 
operations for the year last past, including the total quantity of milk 
and its products handled by the applicant and the proportion of that 
quantity that was sold in States other than the States of production;
    (c) Suggested time and place for meeting between parties and 
mediator.


Sec. 900.104  Inquiry by the Administrator.

    Upon receipt of an application for mediation, the Administrator, 
through such officers or employees of the Service as he may designate, 
may make any inquiry which is deemed to be necessary or proper in order 
to determine whether a bona fide dispute exists.


Sec. 900.105  Notification.

    The Administrator, acting on behalf of the Secretary will notify the 
applicant as to whether he considers that mediation will effectuate the 
purpose of the act and as to whether he will mediate.


Sec. 900.106  Assignment of mediator.

    The Director of the Division shall assign a mediator, from the group 
designated by the Administrator, to act in such capacity.


Sec. 900.107  Meetings.

    All meetings held pursuant to Secs. 900.103 to 900.109 shall be held 
with and under the direction of the mediator.


Sec. 900.108  Mediator's report.

    The mediator, upon the completion of mediation proceedings, shall 
submit to the Administrator a complete report on such proceedings.


Sec. 900.109  Mediation agreement.

    An agreement arrived at by mediation shall not become effective 
until approved by the Secretary, and the Secretary will not approve an 
agreement if there is evidence of fraud, if there is a lack of evidence 
to support the agreement, or if the agreement provides for any unfair 
trade practice.


Sec. 900.110  Application for arbitration.

    An application for arbitration by a cooperative shall be in writing 
and shall contain the following information:
    (a) Names in full of the parties to the dispute and their addresses;
    (b) The same information required under Sec. 900.103(b);
    (c) Concise statement of dispute to be submitted;
    (d) Originals or certified copies of all contracts, if any, involved 
in the dispute, and of correspondence which has passed between the 
parties and of any other documents or information relied upon;
    (e) Dates before which it is desired that the hearing shall be had 
and the award shall become effective;

[[Page 26]]

    (f) Suggested time and place for arbitration hearing.
    The applicant shall send a copy of the application to each other 
party to the dispute.


Sec. 900.111  Inquiry by the Administrator.

    Upon receipt of an application for arbitration, the Administrator, 
through such officers or employees of the Service as he may designate, 
may make any inquiry deemed to be necessary or proper in order to 
determine whether a bona fide dispute exists, to assist the parties in 
reducing the dispute to well-defined issues, and to select an arbitrator 
who would be satisfactory to all parties.


Sec. 900.112  Notification.

    The Administrator, acting on behalf of the Secretary, within a 
reasonable time after the receipt of an application, will notify the 
applicant as to whether he will grant the application.


Sec. 900.113  Submission.

    Within a reasonable time after the receipt of the Administrator's 
consent to arbitrate, the parties to the dispute shall file with the 
Administrator a formal submission, which shall contain the following 
information:
    (a) Names in full of the parties;
    (b) Addresses of the parties to whom all notifications and 
communications concerning the arbitration shall be sent;
    (c) Description of the organization and businesses of all parties to 
the dispute, including sufficient information to show that the 
cooperative is a bona fide one, and that the parties are engaged in 
activities in the current of interstate or foreign commerce;
    (d) Concise statement of the specific questions submitted and a 
brief outline of the contentions of each party to the dispute, and a 
statement as to the period of time during which the award shall be in 
effect, said period to be not less than thirty days from the effective 
date of the award;
    (e) Name of arbitrator;
    (f) Time and place of arbitration, including street address;
    (g) Stipulation by the parties that they will produce any books, 
records, and correspondence required by the arbitrator as being 
necessary to a fair determination of the dispute;
    (h) Agreement by the parties that they will consider the award as 
final and will comply therewith;
    (i) Stipulation by the parties that arbitration is to take place 
under rules and regulations issued by the Secretary, and that any such 
rules and regulations pertaining to mediation and arbitration shall be 
considered a part of the submission;
    (j) Stipulation that a stenographic report of the proceedings must 
be made.
    The submission shall be signed by each party before a notary public, 
and when the signature is that of an agent of a corporation or 
cooperative association, the same shall be accompanied by evidence of 
the authority to sign.
    A submission may be withdrawn at any time before the award, and any 
question held by the arbitrator to be a separable question may be 
withdrawn before award by agreement of all parties. When any question is 
so withdrawn, the parties shall file with the arbitrator the agreement 
on that question reached by the parties, showing all the details 
thereof, and the arbitrator shall include it in the record of the 
arbitration.


Sec. 900.114  Designation of arbitrator.

    The Administrator, after receiving the submission, will designate 
one or more persons to act as arbitrator.


Sec. 900.115  Hearing.

    The arbitrator shall have full discretion to conduct the hearing in 
such manner as will, in his opinion, enable him to ascertain all the 
facts in the case.
    Parties to the dispute may appear in person or by duly accredited 
agents and may be represented by counsel.
    All relevant and material evidence may be presented. The arbitrator 
shall not be bound by the legal rules of evidence.
    The arbitrator, in the presence of the parties, may require the 
production of books and records for examination by himself, but not for 
examination of confidential information by other parties to the dispute 
unless the party producing the same consents to its examination by the 
other parties to the dispute.
    No evidence offered by one party shall be received except in the 
presence of all parties unless the parties so agree in a submission 
specifying the nature of the evidence to be received.
    Final determination as to what will be considered confidential 
information shall be made by the arbitrator.
    The arbitrator may request the opinions of economists, marketing 
specialists, statisticians, lawyers, accountants, and other experts.
    When more than two arbitrators are designated to hear a dispute, and 
they disagree, the award of the majority shall be the final award. If 
the arbitrators are evenly divided, there shall be no award.
    A stenographic record of all the proceedings during an arbitration 
must be made.


Sec. 900.116  Award.

    An award shall be made within ten days after the close of the 
hearing.
    The award shall be in writing and shall cover only points of dispute 
raised in the submission.

[[Page 27]]

    The arbitrator, in making the award, may use his own technical 
knowledge in addition to the evidence submitted by the parties.
    The award shall state the period during which it shall be in effect, 
said period to be not less than thirty days from the effective date 
thereof; and said period may be extended by agreement among the parties 
upon notification thereof to the Administrator, unless or until the 
Administrator withdraws his approval.
    The arbitrator shall sign the award in the presence of a notary 
public, or, when more than one arbitrator is designated the arbitrator 
shall sign in the presence of each other.
    Copies of the award shall be delivered to the parties by the 
Division.


Sec. 900.117  Approval of award.

    The award shall not become effective until approved by the 
Secretary, and the Secretary will not approve an award if there is 
evidence of fraud, or evidence of misconduct upon the part of the 
arbitrator, or lack of evidence to support the award, or if the award 
provides for any unfair trade practice.


Sec. 900.118  Costs.

    The parties jointly shall pay for the stenographic record. A copy of 
the record shall be furnished by the parties to the arbitrator and shall 
be forwarded by him to the Administrator, ultimately to be filed in the 
office of the hearing clerk.
    The arbitrator shall not receive compensation for parties to the 
dispute.

                   Subpart--Miscellaneous Regulations

    Authority:  Sec. 10, 48 Stat. 37, as amended; 7 U.S.C. 610.


Sec. 900.200  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73d Congress (48 Stat. 
31), as amended and as reenacted and amended by the Agricultural 
Marketing Agreement Act of 1937 (50 Stat. 246, 7 U.S.C. 601), as 
amended;
    (b) The term Department means the United States Department of 
Agriculture;
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead;
    (d) The term General Counsel means the General Counsel of the 
Department;
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) [Reserved]
    (g) The term Federal Register means the publication provided for by 
the Act of July 26, 1935 (49 Stat. 500), and acts supplementary thereto 
and amendatory thereof;
    (h) The term marketing agreement means any marketing agreement or 
any amendment thereto which may be entered into pursuant to section 8b 
of the Act;
    (i) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the Act;
    (j) The term person means any individual, corporation, partnership, 
association, or any other business unit;
    (k) The term official means the Secretary, any officer, employee, or 
other person employed or appointed by the Department, and any agency or 
agent appointed by the Secretary to administer a marketing agreement or 
a marketing order, and any agent or employee of any such agency or 
agent;
    (l) The term information means and includes reports, books, 
accounts, records, and the facts and information contained therein and 
required to be furnished to or acquired by any official pursuant to the 
provisions of any marketing agreement or marketing order.
[25 FR 5907, June 28, 1960, as amended at 26 FR 7796, Aug. 22, 1961; 28 
FR 579, Jan. 23, 1963]


Sec. 900.201  Investigation and disposition of alleged violations.

    Whenever the Administrator has reason to believe that any handler 
has violated, or is violating, the provisions of any marketing order, he 
may institute such investigation and, after due notice to such handler, 
conduct such hearing in order to determine the facts as, in his opinion, 
are warranted. If, in the opinion of the Administrator and the General 
Counsel, the facts developed as a result of such investigation or 
hearing warrant such action, the General Counsel shall refer the matter 
to the Attorney General for appropriate action.


Sec. 900.210  Disclosures of information.

    All information in the possession of any official which relates to 
the business or property of any person, and which was furnished by, or 
obtained from, such person pursuant to the provisions of any marketing 
agreement or marketing order, shall be kept confidential and shall not 
be disclosed, divulged, or made public, unless otherwise expressly 
provided in said marketing agreement or marketing order, or unless said 
person authorizes said official, in writing, to disclose such 
information, except that:
    (a) Such information may be disclosed, divulged, or made public if 
it has been obtained from or furnished by a person who is

[[Page 28]]

not the person to whose business or property such information relates or 
an employee of such latter person, or if such information is otherwise 
required by law to be furnished to an official;
    (b) Such information may be furnished to other officials for use in 
the regular course of their official duties;
    (c) Such information may be combined and published in the form of 
general statistical studies or data in which the identity of the person 
furnishing such information or from whom it was obtained shall not be 
disclosed;
    (d) Such information may be disclosed upon lawful demand made by the 
President or by either House of Congress or any committee thereof, or, 
if the Secretary determines that such disclosure is not contrary to the 
public interest, such information may be disclosed in response to a 
subpena by any court of competent jurisdiction.
    (e) Such information may be offered in evidence (whether or not it 
has been obtained from or furnished by the person against whom it is 
offered) by or on behalf of the Secretary, the United States, or the 
official who obtained it or to whom it was furnished, in any 
administrative hearing held pursuant to section 8c (15)(A) of the Act or 
in any action, suit, or proceeding, civil or criminal, in which the 
Secretary or the United States or any such official is a party, and (1) 
which is instituted (i) for the purpose of enforcing or restraining the 
violation of any marketing agreement or marketing order, or (ii) for the 
purpose of collecting any penalty or forfeiture provided for in the act, 
or (iii) for the purpose of collecting any monies due under a marketing 
agreement or marketing order, or (2) in which the validity of any 
marketing agreement or marketing order, or any provision of either, is 
challenged or involved.
    (f) Such information may be furnished to the duly constituted 
authorities of any State, pursuant to a written agreement made under 
authority of section 10(i) of the Act, to the extent that such 
information is relevant to transactions within the regulatory 
jurisdiction of such authorities.


Sec. 900.211  Penalties.

    Any official who shall have violated the provisions of Sec. 900.210 
by wilfully divulging, disclosing, or making public any information 
acquired by or furnished to or in the possession or custody of such 
official pursuant to the provisions of a marketing agreement or 
marketing order shall be subject to a penalty of $100 for each offense. 
(The civil penalty provided in this section is prescribed under the 
authority contained in sec. 10(c) of the Act (7 U.S.C. 610(c)); this 
provision is not intended to supersede the provision in sec. 8d(2) of 
the Act (7 U.S.C. 608d(2)) for criminal liability and removal from 
office.

   Subpart--Procedure for Conduct of Referenda To Determine Producer 
   Approval of Milk Marketing Orders To Be Made Effective Pursuant to 
        Agricultural Marketing Agreement Act of 1937, as Amended

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  30 FR 15412, Dec. 15, 1965, unless otherwise noted.


Sec. 900.300  General.

    Unless otherwise prescribed, the procedure contained in this subpart 
shall be applicable to each producer referendum conducted for the 
purpose of ascertaining whether the issuance by the Secretary of a milk 
marketing order is approved or favored, as required under the applicable 
provisions of the Agricultural Marketing Agreement Act of 1937, as 
amended (48 Stat. 31, as amended, 7 U.S.C. 601-674). The procedure in 
this subpart replaces the procedure for conducting similar referenda (15 
FR 5177) issued August 7, 1950.


Sec. 900.301  Definitions.

    As used in this subpart and in all supplementary instructions, 
forms, and documents, unless the context or subject matter otherwise 
requires, the following terms shall have the following meanings:
    (a) Act. ``Act'' means Public Act. No. 10, 73d Congress (48 Stat. 
31), as amended and as re-enacted and amended by the Agricultural 
Marketing Agreement Act of 1937 (50 Stat. 246), as amended.
    (b) Department. ``Department'' means the United States Department of 
Agriculture.
    (c) Secretary. ``Secretary'' means the Secretary of Agriculture of 
the United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.
    (d) Administrator. ``Administrator'' means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (e) Person. ``Person'' includes any individual, partnership, 
corporation, association, and any other business unit.
    (f) Order. ``Order'' means the marketing order (including an 
amendatory order) with respect to which the Secretary has directed that 
a referendum be conducted.
    (g) Producer. ``Producer'' means any person who is a dairy farmer 
and who, during the representative period, met the requirements of the 
term ``producer'' as defined in the order had such order been in effect 
during the representative period.

[[Page 29]]

    (h) Handler. ``Handler'' means any person who, during the 
representative period, met the requirements of the term ``handler'' as 
defined in the order had such order been in effect during the 
representative period.
    (i) Referendum agent. ``Referendum agent'' means the person 
designated by the Secretary to conduct the referendum.
    (j) Representative period. ``Representative period'' means the 
period designated by the Secretary pursuant to section 8c of the act (7 
U.S.C. 608c).
    (k) Cooperative association. ``Cooperative association'' means any 
association of producers that the administrator has found to be 
qualified pursuant to section 608c(12) of the Act.
[30 FR 15412, Dec. 5, 1965, as amended at 37 FR 8059, Apr. 25, 1972]


Sec. 900.302  Associations eligible to vote.

    (a) Any association of producers, not previously determined to be a 
cooperative association may file an application for a determination as 
to whether it is a cooperative association and thus eligible to vote in 
a referendum. Such application shall be filed with the Administrator at 
least 60 days prior to the holding of the referendum: Provided, however, 
That the Administrator may permit the filing of an application in less 
than 60 days when, in the opinion of the Administrator, such filing 
would not delay the conduct of the referendum.
    (b) Within a time fixed by the referendum agent, but not later than 
5 days prior to the final date for balloting, each cooperative 
association electing to vote shall, upon the request of the referendum 
agent, furnish to him a certified list showing the name and address of 
each producer for whom it claims the right to vote and the plant at 
which such person's milk was received during the representative period.


Sec. 900.303  Conduct of referendum.

    The referendum shall be conducted by mail in the manner prescribed 
in this subpart. The referendum agent may utilize such personnel or 
agencies of the Department as are deemed necessary by the Administrator.


Sec. 900.304  Who may vote.

    (a) Each producer shall be entitled to only one vote and to cast one 
ballot in each referendum; and no person who may claim to be a producer 
shall be refused a ballot. Each producer casting more than one ballot 
with conflicting votes shall thereby invalidate all ballots cast by such 
producer in such referendum. Each ballot cast shall contain a 
certification by the person casting the ballot that he is a producer.
    (b) Except as provided in section 8c(5)(B) of the Act, as amended, 
any cooperative association eligible under Sec. 900.302 may, if it 
elects to do so, vote and cast one ballot for producers who are members 
of, stockholders in, or under contract with, such cooperative 
association. A cooperative association shall submit with its ballot, a 
certified copy of the resolution authorizing the casting of the ballot. 
Each such cooperative association entitled to vote in a referendum 
casting more than one ballot with conflicting votes shall thereby 
invalidate all ballots cast by such voter in such referendum.
    (c) Voting by proxy or agent, or in any manner, except by the 
producer or cooperative association will not be permitted; however, a 
producer which is other than an individual may cast its ballot by a 
person who is duly authorized and such ballot shall contain a 
certification by such person that the person on whose behalf the ballot 
is cast is a producer.


Sec. 900.305  Duties of referendum agent.

    The referendum agent shall also:
    (a) For purposes of mailing, prepare a record of producers which 
will disclose the name of each such person, his address, the name of the 
handler who received the producer's milk during the representative 
period, and the name of the cooperative association, if any, which 
claims the right to vote for the producer. Such record may be compiled 
from readily available sources, including the following:
    (1) Records of the Department;
    (2) Producer records supplied by handlers;
    (3) Health authority records;
    (4) Certifications signed by dairy farmers who claim to be 
producers;
    (5) Any other reliable sources of information which may be available 
to the referendum agent.
    (b) Apply, as a guide, the following criteria in preparing a record 
of producers:
    (1) When the order requires approval by an appropriate health 
authority before a person meets the definition of producer, only those 
persons having such approval and who otherwise meet the definition may 
be regarded as producers. When the definition of producer requires the 
shipment of milk to a handler or a plant as well as health authority 
approval, only those persons having such approval and whose milk was 
received by a handler or at a plant may be regarded as producers.
    (2) When the order requires shipment to a handler or to a plant, 
without regard to health authority approval, a person may not be 
regarded as a producer, except as provided in paragraph (b)(6) of this 
section, unless his name appears on the handler's producer records.
    (3) In the case of a producer that is other than an individual, the 
business unit shall be regarded as the producer.
    (4) No person may be included in the record more than once although 
he may operate more than one farm, hold more than one

[[Page 30]]

health authority approval, or appear on more than one handler's producer 
records.
    (5) In the event the health authority records are not available, are 
inaccurate, or are incomplete, the appearance of the producer's name on 
a handler's records as an approved producer shall be prima facie 
evidence of health authority approval.
    (6) In the event any handler refuses or fails to make his records 
available to the referendum agent, a certification signed by the 
producer shall be regarded by the referendum agent as prima facie 
evidence that such person is eligible to vote.
    (c) Verify the information supplied by each cooperative association 
which wishes to vote on behalf of producers, as follows:
    (1) Examine the records of the cooperative association for the 
prupose of ascertaining whether each producer claimed by the cooperative 
association is a member of, stockholder in, or under contract with the 
cooperative association.
    (2) Identify the persons ascertained to be members of, stockholders 
in, or under contract with a cooperative association which wishes to 
vote on behalf of its producers with the names of producers which appear 
on the record compiled pursuant to paragraph (a) of this section.
    (3) In determining whether a cooperative association may vote on 
behalf of a producer the following criteria shall be used:
    (i) The cooperative association may vote for each producer who is a 
member of, stockholder in, or under contract with such cooperative 
association on the date of the order directing that the referendum be 
conducted.
    (ii) The cooperative association may cast only one ballot for all 
such producers.
    (iii) Whenever more than one cooperative association claims the 
right to vote for a producer only the cooperative association which 
furnished evidence satisfactory to the referendum agent that such 
association was in fact marketing the milk of the producer on the date 
of the referendum order may vote for such producer.


Sec. 900.306  Notice of the referendum.

    (a) The referendum agent shall at least 5 days prior to the final 
date for balloting:
    (1) Mail to each cooperative association which has elected to cast a 
ballot on behalf of its producers and to each of all other known 
producers, a notice of the referendum which will include instructions 
for completing the ballot, a statement as to the time within which the 
ballot must be mailed to, and received by, the referendum agent, a copy 
of the final decision, and a ballot containing a description of the 
terms and conditions of the order.
    (2) Give public notice of the referendum:
    (i) By furnishing press releases and other information to available 
media of public information (including but not limited to press, radio, 
and television facilities) serving the area, announcing the time within 
which ballots must be completed and mailed to and received by the 
referendum agent, eligibility requirements, where additional information 
may be procured, and other pertinent information; and
    (ii) By such other means as said agent may deem advisable.


Sec. 900.307  Time for voting.

    There shall be no voting except within the time specified by the 
referendum agent as stated in the notice of the referendum.


Sec. 900.308  Tabulation of ballots.

    (a) General. The referendum agent shall verify the information 
supplied with each ballot. If he ascertains that the person who cast the 
ballot was eligible to do so, that the ballot is complete and was mailed 
and received within the prescribed time, the ballot shall be eligible to 
be counted. If the referendum agent ascertains that the person who cast 
the ballot was not eligible to do so, or if the producer who cast the 
ballot was a member of, stockholder in, or under contract with a 
cooperative association which cast a valid ballot, or if the ballot is 
not completed or cast in accordance with instructions, or if the ballot 
was not mailed to or received by the referendum agent within the 
prescribed time, the ballot shall be marked ``disqualified'' with a 
notation on the ballot as to the reason for the disqualification. The 
total number of ballots cast, including the disqualified ballots, shall 
be ascertained. The number of eligible ballots cast approving and the 
number of eligible ballots cast disapproving the issuance of the order 
shall also be ascertained. The ballots marked ``disqualified'' shall not 
be considered as approving or disapproving the issuance of the order, 
and the persons who cast such ballots shall not be regarded as 
participating in the referendum.
    (b) Individual-handler pool provisions. Whenever separate approval 
of the pooling provisions of the order is required by section 
608c(5)(B)(i) of the Act, any ballot which approves the issuance of the 
order and disapproves the pooling provisions, or approves the pooling 
provisions and disapproves the issuance of the order, shall be 
disqualified; and the referendum agent shall mark the ballot 
accordingly.
    (c) Record of results of the referendum. The referendum agent shall 
notify the Administrator of the number of eligible ballots cast, the 
count of the votes, the number of disqualified ballots and the number of 
producers who were eligible to cast ballots. The referendum agent shall 
seal the ballots, including those marked ``disqualified'', the list of 
eligible voters and tabulation of ballots, and shall transmit to the 
Administrator a complete detailed report of all action taken in

[[Page 31]]

connection with the referendum together with all the ballots cast and 
all other information furnished to or compiled by the referendum agent.
    (d) Announcement of the results of the referendum. Announcement of 
the results of the referendum will be made only at the direction of the 
Secretary. The referendum agent, or others who assist in the referendum, 
shall not disclose the results of the referendum or the total number of 
ballots cast.


Sec. 900.309  Confidential information.

    The ballots cast, the identity of any person who voted, or the 
manner in which any person voted and all information furnished to, 
compiled by, or in the possession of the referendum agent, shall be 
regarded as confidential.


Sec. 900.310  Supplementary instructions.

    The Administrator is authorized to issue instructions and to 
prescribe forms and ballots, not inconsistent with the provisions of 
this subpart, to govern the conduct of referenda by referendum agents.


Sec. 900.311  Submittals or requests.

    Interested persons may secure information or make submittals or 
requests to the Administrator with respect to the provisions contained 
in this subpart.

Subpart--Procedure for Determining the Qualification of Cooperative Milk 
                         Marketing Associations

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  32 FR 9821, July 6, 1967, unless otherwise noted.


Sec. 900.350  General statement.

    Cooperative marketing associations apply for qualification by the 
Secretary under the Federal milk order program for certain privileges 
and exemptions. These privileges and exemptions are expressed in the 
Agricultural Marketing Agreement Act of 1937 (50 Stat. 246) as amended, 
and the milk marketing orders issued pursuant to its provisions.


Sec. 900.351  Applications for qualification.

    Any association of producers may apply for determinations as to 
whether it is a qualified cooperative association with authority to 
represent producers in order referendums; has authorization to collect 
payment from handlers for members' milk; and is rendering specified 
marketing services to producers. Applicant associations should supply 
information for these determinations, using as a guide Application Form 
DA-25. The application form may be obtained from the Dairy Division, 
Agricultural Marketing Service, United States Department of Agriculture, 
Washington, DC 20250. Determinations required of the Secretary of 
Agriculture, or the Administrator of the Agricultural Marketing Service, 
by delegation are made by the Director of the Dairy Division. Once 
issued they are valid until amended, suspended or terminated.


Sec. 900.352  Confidential information.

    The documents and other information submitted by an applicant 
association and otherwise obtained by investigation, examination of 
books, documents, papers, records, files and facilities, and in reports 
filed subsequent to initial determinations of qualification, shall be 
regarded as confidential and shall be governed by Sec. 900.210.


Sec. 900.353  Qualification standards.

    Statutory requirements for qualification of cooperative associations 
are provided in subsections (5) and (12) of section 608c of the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 
et seq.). The association must: (a) Be a cooperative marketing 
association of producers, qualified under the provisions of the Act of 
Congress of February 18, 1922, as amended, known as the ``Capper-
Volstead Act,'' (7 U.S.C. 291, 292); (b) have its entire organization 
and all of its activities under the control of its members; (c) have 
full authority in the sale of its members' milk; and (d) be engaged in 
making collective sales or marketing of milk or milk products for the 
producers thereof. Qualification for exemption from deductions for 
marketing service payments under specific marketing orders and payment 
for milk of members under specific orders shall be determined in 
accordance with the terms of the respective marketing orders.


Sec. 900.354  Inspection and investigation.

    The Secretary of Agriculture, or his duly authorized representative, 
shall have the right, at any time after an application is received, to 
examine all books, documents, papers, records, files and facilities of 
the association, to verify any of the information submitted and to 
procure such other information as may be required to determine whether 
the association is qualified in accordance with its application.


Sec. 900.355  Annual reporting.

    Determinations of qualification for privileges and exemptions are 
subject to amendment, termination or suspension if the association does 
not currently meet the qualification standards. An association found to 
be qualified pursuant to the Act is required to file an annual report 
after its annual meeting has been held following the close of its fiscal 
year. Form DA-24 is used for this purpose. The report form is available 
at the Dairy Division, Agricultural Marketing Service, U.S. Department 
of Agriculture,

[[Page 32]]

Washington, DC 20250. The association is required to file a copy of its 
report with the Dairy Division at Washington and with the market 
administrator of each order under which it operates.


Sec. 900.356  Listing of qualified associations.

    A copy of each determination of qualification is furnished to the 
respective association. Copies are also filed in the Dairy Division, 
Agricultural Marketing Service, and with the Hearing Clerk, Office of 
the Secretary, U.S. Department of Agriculture, Washington, DC 20250, 
where they are available for public inspection. A list of qualified 
associations engaged in marketing milk under a particular milk marketing 
order is maintained at the office of the market administrator of the 
order.


Sec. 900.357  Denial of application; suspension or revocation of 
          determination of qualification.

    Any cooperative association whose application has been wholly or 
partially denied, or whose determination of qualification has been 
wholly or partly revoked or suspended, may petition the Secretary for a 
review of such action. Such petition shall state facts relevant to the 
matter for which review is sought. After due notice to such cooperative 
association, the Director of the Dairy Division, or in his absence the 
Acting Director, shall hold, in the manner hereinafter specified, an 
informal hearing.
    (a) Notice. Notice shall be given in writing and shall be mailed to 
the last known address of the association, or of an officer thereof, at 
least 3 days before the date set for a hearing. Such notice shall 
contain: A statement of the time and place of the hearing, said place to 
be as convenient to the association as can reasonably be arranged, and 
may contain a statement of the reason for calling the hearing and the 
nature of the questions upon which evidence is desired or upon which 
argument may be presented.
    (b) Parties. Hearings are not to be public and are to be attended 
only by representatives of the association and of the Government, and 
such other persons as either the association or the Government desires 
to have appear for purposes of submitting information or as counsel.
    (c) Conduct of hearing. The Director or Acting Director of the Dairy 
Division, or a person designated by him, shall preside at the hearing. 
The hearing shall be conducted in such manner as will be most conducive 
to the proper disposition of the matter. Written statements or briefs 
may be filed by the association within the time specified by the 
presiding officer.
    (d) Preliminary report. The presiding officer shall prepare a 
preliminary report setting forth a recommendation as to what action 
shall be taken and the basis for such action. A copy of said report 
shall be served upon the association by mail or in person. The 
association may file exceptions to said report within 10 days after 
service thereof.
    (e) Final report. After due consideration of all the facts and the 
exceptions, if any, the Director of the Dairy Division shall issue a 
final report setting forth the action to be taken and the basis for such 
action.

   Subpart--Procedure for the Conduct of Referenda in Connection With 
   Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the 
        Agricultural Marketing Agreement Act of 1937, as Amended

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  30 FR 15414, Dec. 15, 1965, unless otherwise noted.


Sec. 900.400  General.

    Referenda for the purpose of ascertaining whether the issuance by 
the Secretary of Agriculture of a marketing order to regulate the 
handling of any fruit, vegetable, or nut, or product thereof, or the 
continuance or termination of such an order, is approved or favored by 
producers or processors shall, unless supplemented or modified by the 
Secretary, be conducted in accordance with this subpart.


Sec. 900.401  Definitions.

    (a) Act means Public Act No. 10, 73d Congress (48 Stat. 31), as 
amended, and as reenacted and amended by the Agricultural Marketing 
Agreement Act of 1937 (50 Stat. 246), as amended (7 U.S.C. 601-674).
    (b) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in his stead; and Department means the United States 
Department of Agriculture.
    (c) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in his stead.
    (d) Order means the marketing order (including an amendatory order) 
with respect to which the Secretary has directed that a referendum be 
conducted.
    (e) Referendum agent means the individual or individuals designated 
by the Secretary to conduct the referendum.
    (f) Representative period means the period designated by the 
Secretary pursuant to section 8c of the Act (7 U.S.C. 608c).
    (g) Person means any individual, partnership, corporation, 
association, or other busi

[[Page 33]]

ness unit. For the purpose of this definition, the term ``partnership'' 
includes (1) a husband and wife who have title to, or leasehold interest 
in, land as tenants in common, joint tenants, tenants by the entirety, 
or, under community property laws, as community property, and (2) so-
called ``joint ventures,'' wherein one or more parties to the agreement, 
informal or otherwise, contributed capital and others contribute labor, 
management, equipment, or other services, or any variation of such 
contributions by two or more parties, so that it results in the growing 
of the commodity for market and the authority to transfer title to the 
commodity so produced.
    (h) Producer means any person defined as a producer in the order 
who: (1) Owns and farms land, resulting in his ownership of the 
commodity produced thereon; (2) rents and farms land, resulting in his 
ownership of all or a portion of the commodity produced thereon; or (3) 
owns land which he does not farm and, as rental for such land, obtains 
the ownership of a portion of the commodity produced thereon. Ownership 
of, or leasehold interest in, land and the acquisition, in any manner 
other than as hereinbefore set forth, of legal title to the commodity 
grown thereon shall not be deemed to result in such owners or lessees 
becoming producers.
[30 FR 15414, Dec. 15, 1965, as amended at 37 FR 8059, Apr. 25, 1972]


Sec. 900.402  Voting.

    (a) Each person who is a producer, as defined in this subpart, at 
the time of the referendum and who also was a producer during the 
representative period, shall be entitled to only one vote in the 
referendum, except that: (1) In a landlord-tenant relationship, wherein 
each of the parties is a producer, each such producer shall be entitled 
to one vote in the referendum; and (2) a cooperative association of 
producers, bona fide engaged in marketing the commodity or product 
thereof proposed to be regulated, or in rendering services for or 
advancing the interest of the producers of such commodity or product, 
may, if it elects to do so, vote, both by number and total volume, for 
the producers who are members of, stockholders in, or under contract 
with such association.
    (b) Whenever, as required by the act, processors vote on the 
issuance of an order, each processor who is engaged in canning or 
freezing within the production area of the commodity covered by the 
order shall be entitled to vote in the referendum the quantity of such 
commodity canned or frozen within the production area for market by him 
during the representative period determined by the Secretary.
    (c) Proxy voting is not authorized but an officer or employee of a 
corporate producer, processor or cooperative association, or an 
administrator, executor or trustee of a producing estate may cast a 
ballot on behalf of such producer, processor, estate, or cooperative 
association. Any individual so voting in a referendum shall certify that 
he is an officer or employee of the producer, processor, or cooperative 
association, or an administrator, executor, or trustee of a producing 
estate, and that he has the authority to take such action. Upon request 
of the referendum agent, the individual shall submit adequate evidence 
of such authority.
    (d) Each producer, cooperative association of producers, and 
processor entitled to vote in a referendum shall be entitled to cast one 
ballot in the referendum. Each producer, cooperative association of 
producers, and processor casting more than one ballot with conflicting 
votes shall thereby invalidate all ballots cast by such producer, 
cooperative association of producers, or processor in such referendum.


Sec. 900.403  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
of the referendum, and the time prior to which all ballots must be cast.
    (b) Determine whether ballots may be cast by mail, at polling 
places, at meetings of producers or processors, or by any combination of 
the foregoing.
    (c) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information for ascertaining (1) whether the person voting, or on whose 
behalf the vote is cast, is an eligible voter, and (2) the total volume 
(i) produced for market during the representative period, or (ii) canned 
or frozen for market during the representative period.
    (d) Give reasonable advance notice of the referendum (1) by 
utilizing without advertising expense available media of public 
information (including, but not being limited to, press and radio 
facilities) serving the production area, announcing the dates, places, 
or methods of voting, eligibility requirements, and other pertinent 
information, and (2) by such other means as said agent may deem 
advisable.
    (e) Make available to producers and the aforesaid cooperative 
associations which indicate to the agent their intentions to vote, and 
to processors when required, instructions on voting, appropriate ballot 
and certification forms, and, except in the case of a referendum on the 
termination or continuance of an order, the text of the proposed

[[Page 34]]

order and a summary of its terms and conditions: Provided, That no 
person who claims to be qualified to vote shall be refused a ballot.
    (f) If ballots are to be cast by mail, cause all the material 
specified in paragraph (e) of this section to be mailed to each producer 
(and processor when required) whose name and address is known to the 
referendum agent.
    (g) If ballots are to be cast at polling places or meetings, 
determine the necessary number of polling or meeting places, designate 
them, announce the time of each meeting or the hours during which each 
polling place will be open, provide the material specified in paragraph 
(e) of this section, and provide for appropriate custody of ballot forms 
and delivery to the referendum agent of ballots cast.
    (h) At the conclusion of the referendum, canvass the ballots, 
tabulate the results, and, except as otherwise directed, report the 
outcome to the Administrator and promptly thereafter submit the 
following:
    (1) All ballots received by the agent and appointees, together with 
a certificate to the effect that the ballots forwarded are all of the 
ballots cast and received by such persons during the referendum period;
    (2) A list of all challenged ballots deemed to be invalid; and
    (3) A tabulation of the results of the referendum and a report 
thereon, including a detailed statement explaining the method used in 
giving publicity to the referendum and showing other information 
pertinent to the manner in which the referendum was conducted.


Sec. 900.404  Subagents.

    The referendum agent may appoint any person or persons deemed 
necessary or desirable to assist said agent in performing his functions 
hereunder. Each person so appointed may be authorized by said agent to 
perform, in accordance with the requirements herein set forth, any or 
all of the following functions (which, in the absence of such 
appointment, shall be performed by said agent):
    (a) Give public notice of the referendum in the manner specified 
herein;
    (b) Preside at a meeting where ballots are to be cast or as poll 
officer at a polling place;
    (c) Distribute ballots and the aforesaid texts to producers (and to 
processors when required) and receive any ballots which are cast; and
    (d) Record the name and address of each person receiving a ballot 
from, or casting a ballot with, said subagent and inquire into the 
eligibility of such person to vote in the referendum.


Sec. 900.405  Ballots.

    The referendum agent and his appointees shall accept all ballots 
cast; but, should they, or any of them, deem that a ballot should be 
challenged for any reason, said agent or appointee shall endorse above 
his signature, on said ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefor, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Invalid ballots shall not be counted.


Sec. 900.406  Referendum report.

    Except as otherwise directed, the Administrator shall prepare and 
submit to the Secretary a report on results of the referendum, the 
manner in which it was conducted, the extent and kind of public notice 
given, and other information pertinent to analysis of the referendum and 
its results.


Sec. 900.407  Confidential information.

    All ballots cast and the contents thereof (whether or not relating 
to the identity of any person who voted or the manner in which any 
person voted) and all information furnished to, compiled by, or in 
possession of, the referendum agent shall be treated as confidential.

                       Subpart--Public Information

    Authority:  5 U.S.C. 301, 552.

    Source:  40 FR 20267, May 9, 1975, unless otherwise noted.

Availability of Program Information, Staff Manuals and Instructions, and 
                            Related Material


Sec. 900.500  General.

    This subpart is issued in accordance with the regulations of the 
Secretary of Agriculture in part 1, subpart A, of subtitle A of this 
title (7 CFR 1.1-1.16), and appendix A thereto, implementing the Freedom 
of Information Act (5 U.S.C. 552). The Secretary's regulations, as 
implemented by the regulations of this subpart, govern the availability 
of records of AMS to the public.


Sec. 900.501  Public inspection and copying.

    (a) Facilities for public inspection and copying of the indexes and 
materials required to be made available under Sec. 1.2(a) of this title 
will be provided by AMS during normal hours of operation. Request for 
this information should be made to the Freedom of Information Act 
Officer at the following address:

Freedom of Information Act Officer, Agricultural Marketing Service, 
United States Department of Agriculture, Washington, DC 20250.


[[Page 35]]


    (b) Copies of such material may be obtained in person or by mail. 
Applicable fees for copies will be charged in accordance with the 
regulations prescribed by the Director, Office of Operations and 
Finance, USDA.
[44 FR 39151, July 5, 1979]


Sec. 900.502  Indexes.

    Pursuant to the regulations in Sec. 1.4(b) of this title, AMS will 
maintain and make available for public inspection and copying current 
indexes of all material required to be made available in Sec. 1.2(a) of 
this title. Notice is hereby given that publication of these indexes is 
unnecessary and impractical, since the material is voluminous and does 
not change often enough to justify the expense of publication.
[44 FR 39151, July 5, 1979]


Sec. 900.503  Request for records.

    (a) Requests for records under 5 U.S.C. 552(a)(3) shall be made in 
accordance with Sec. 1.3(a) of this title. Authority to make 
determinations regarding initial requests in accordance with Sec. 1.4(c) 
of this title is delegated to the Freedom of Information Act Officer of 
AMS. Requests should be submitted to the FOIA Officer at the following 
address:

Freedom of Information Act Officer (FOIA Request), Agricultural 
Marketing Service, United States Department of Agriculture, Washington, 
DC 20250.

    (b) The request shall identify each record with reasonable 
specificity as prescribed in Sec. 1.3 of this title.
    (c) The FOIA Officer is authorized to receive requests and to 
exercise the authority to (1) make determinations to grant requests or 
deny initial requests, (2) extend the administrative deadline, (3) make 
discretionary release of exempt records, and (4) make determinations 
regarding charges pursuant to the fee schedule.
[44 FR 39151, July 5, 1979]


Sec. 900.504  Appeals.

    Any person whose request under Sec. 900.503 above is denied shall 
have the right to appeal such denial in accordance with Sec. 1.3(e) of 
this title. Appeals shall be addressed to the Administrator, 
Agricultural Marketing Service, U.S. Department of Agriculture, 
Washington, DC 20250.

                     Subpart--Information Collection

    Authority:  44 U.S.C. Ch. 35.


Sec. 900.600  General.

    This subpart shall contain such requirements as pertain to the 
information collection provisions under the Paperwork Reduction Act of 
1980.
[49 FR 23826, June 8, 1984]


Sec. 900.601  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

    (a) Purpose. This section collects and displays the control numbers 
assigned to information collection requirements by the Office of 
Management and Budget contained in 7 CFR parts 904 through 998 under the 
Paperwork Reduction Act of 1980.
    (b) Display.

                                                                        
------------------------------------------------------------------------
                                                             Current OMB
         7 CFR part where identified and described           control no.
------------------------------------------------------------------------
904, California Desert Grapefruit..........................    0581-0101
905, Florida Oranges, Grapefruit, Tangerines, Tangelos.....    0581-0094
906, Texas Oranges & Grapefruit............................    0581-0068
907, California-Arizona Navel Oranges......................    0581-0116
908, California-Arizona Valencia Oranges...................    0581-0121
910, California-Arizona Lemons.............................    0581-0120
911, Florida Limes.........................................    0581-0091
912, Florida Indian River Grapefruit.......................    0581-0088
913, Florida Interior District Grapefruit..................    0581-0081
915, Florida Avocados......................................    0581-0078
916, California Nectarines.................................    0581-0072
917, California Pears, Plums & Peaches.....................    0581-0080
918, Georgia Fresh Peaches.................................    0581-0135
919, Mesa County, Colorado, Peaches........................    0581-0139
921, Washington Peaches....................................    0581-0097
922, Washington Apricots...................................    0581-0095
923, Washington Sweet Cherries.............................    0581-0133
924, Washington-Oregon Fresh Prunes........................    0581-0134
925, S. E. California Desert Grapes........................    0581-0109
926, California Tokay Grapes...............................    0581-0075
927, Oregon-Washington-California Winter Pears.............    0581-0089
928, Hawaiian Papayas......................................    0581-0102
929, Cranberries Grown in Designated States................    0581-0103
930, Red Tart Cherries.....................................    0581-0104
931, Oregon-Washington Bartlett Pears......................    0581-0092
932, California Olives.....................................    0581-0142
945, Idaho-Eastern Oregon Potatoes.........................    0581-0069
946, Washington Potatoes...................................    0581-0070
947, Oregon-California Potatoes............................    0581-0112
948, Colorado Potatoes.....................................    0581-0111
953, Southeastern Potatoes.................................    0581-0084
958, Idaho-Oregon Onions...................................    0581-0087
959, South Texas Onions....................................    0581-0074
966, Florida Tomatoes......................................    0581-0073
967, Florida Celery........................................    0581-0145
971, South Texas Lettuce...................................    0581-0085
979, South Texas Melons....................................    0581-0079
981, California Almonds....................................    0581-0071
982, Oregon-Washington Filberts/Hazelnuts..................    0581-0144
984, California Walnuts....................................    0581-0090
985, Spearmint Oil.........................................    0581-0065
987, California Dates......................................    0581-0077
989, California Raisins....................................    0581-0083
991, Hops..................................................    0581-0086
993, California Dried Prunes...............................    0581-0099
998, Domestic Peanuts......................................    0581-0067
------------------------------------------------------------------------

[49 FR 23826, June 8, 1984, as amended at 53 FR 15659, May 3, 1988]

[[Page 36]]



PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS--Table of Contents




Sec.
1000.1  Scope and purpose of part 1000.
1000.2  Definitions.
1000.3  Market administrator.
1000.4  Continuity and separability of provisions.
1000.5  Handler responsibility for records and facilities.
1000.6  Termination of obligations.
1000.7  OMB control number assigned pursuant to the Paperwork Reduction 
          Act.

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  36 FR 9845, May 29, 1971, unless otherwise noted.



Sec. 1000.1  Scope and purpose of part 1000.

    This part sets forth certain terms, definitions, and provisions 
which shall be common to and part of each Federal milk marketing order 
except as specifically defined otherwise, or modified, or otherwise 
provided, in an individual order.



Sec. 1000.2  Definitions.

    The following terms shall have the following meanings as used in the 
order:
    (a) Act. ``Act'' means Public Act No. 10, 73d Congress, as amended 
and as reenacted and amended by the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. 601 et seq.).
    (b) Order. ``Order'' means the applicable part of Title 7 of the 
Code of Federal Regulations issued pursuant to section 8c of the Act as 
a Federal milk marketing order (as amended).
    (c) Department. ``Department'' means the U.S. Department of 
Agriculture.
    (d) Secretary. ``Secretary'' means the Secretary of Agriculture of 
the United States or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated to act in his stead.
    (e) Person. ``Person'' means any individual, partnership, 
corporation, association, or other business unit.



Sec. 1000.3  Market administrator.

    (a) Designation. The agency for the administration of the order 
shall be a market administrator selected by the Secretary and subject to 
removal at the Secretary's discretion. The market administrator shall be 
entitled to compensation determined by the Secretary.
    (b) Powers. The market administrator shall have the following powers 
with respect to each order under his administration:
    (1) Administer the order in accordance with its terms and 
provisions;
    (2) Make rules and regulations to effectuate the terms and 
provisions of the order;
    (3) Receive, investigate, and report complaints of violations to the 
Secretary; and
    (4) Recommend amendments to the Secretary.
    (c) Duties. The market administrator shall perform all the duties 
necessary to administer the terms and provisions of each order under his 
administration, including, but not limited to, the following:
    (1) [Reserved]
    (2) Employ and fix the compensation of persons necessary to enable 
him to exercise his powers and perform his duties;
    (3) Pay out of funds provided by the administrative assessment, 
except expenses associated with functions for which the order provides a 
separate charge, all expenses necessarily incurred in the maintenance 
and functioning of his office and in the performance of his duties, 
including his own compensation;
    (4) Keep records which will clearly reflect the transactions 
provided for in the order, and upon request by the Secretary, surrender 
the records to his successor or such other person as the Secretary may 
designate;
    (5) Furnish information and reports requested by the Secretary and 
submit his records to examination by the Secretary;
    (6) Announce publicly at his discretion, unless otherwise directed 
by the Secretary, by such means as he deems appropriate, the name of any 
handler who, after the date upon which he is required to perform such 
act, has not:

[[Page 37]]

    (i) Made reports required by the order;
    (ii) Made payments required by the order; or
    (iii) Made available records and facilities as required pursuant to 
Sec. 1000.5;
    (7) Prescribe reports required of each handler under the order. 
Verify such reports and the payments required by the order by examining 
records (including such papers as copies of income tax reports, fiscal 
and product accounts, correspondence, contracts, documents or memoranda 
of the handler, and the records of any other persons that are relevant 
to the handler's obligation under the order), by examining such 
handler's milk handling facilities; and by such other investigation as 
the market administrator deems necessary for the purpose of ascertaining 
the correctness of any report or any obligation under the order. 
Reclassify skim milk and butterfat received by any handler if such 
examination and investigation discloses that the original classification 
was incorrect.
    (8) Furnish each regulated handler a written statement of such 
handler's accounts with the market administrator promptly each month. 
Furnish a corrected statement to such handler if verification discloses 
that the original statement was incorrect; and
    (9) Prepare and disseminate publicly for the benefit of producers, 
handlers, and consumers such statistics and other information concerning 
operation of the order and facts relevant to the provisions thereof (or 
proposed provisions) as do not reveal confidential information.
[36 FR 9845, May 29, 1971, as amended at 45 FR 7777, Feb. 5, 1980]



Sec. 1000.4  Continuity and separability of provisions.

    (a) Effective time. The provisions of the order or any amendment to 
the order shall become effective at such time as the Secretary may 
declare and shall continue in force until suspended or terminated.
    (b) Suspension or termination. The Secretary shall suspend or 
terminate any or all of the provisions of the order whenever he finds 
that such provision(s) obstructs or does not tend to effectuate the 
declared policy of the Act. The order shall terminate whenever the 
provisions of the Act authorizing it cease to be in effect.
    (c) Continuing obligations. If upon the suspension or termination of 
any or all of the provisions of the order, there are any obligations 
arising under the order, the final accrual or ascertainment of which 
requires acts by any handler, by the market administrator, or by any 
other person, the power and duty to perform such further acts shall 
continue notwithstanding such suspension or termination.
    (d) Liquidation. (1) Upon the suspension or termination of any or 
all provisions of the order, the market administrator, or such other 
liquidating agent designated by the Secretary, shall if so directed by 
the Secretary liquidate the business of the market administrator's 
office, dispose of all property in his possession or control, including 
accounts receivable and execute and deliver all assignments or other 
instruments necessary or appropriate to effectuate any such disposition; 
and
    (2) If a liquidating agent is so designated, all assets and records 
of the market administrator shall be transferred promptly to such 
liquidating agent. If, upon such liquidation, the funds on hand exceed 
the amounts required to pay outstanding obligations of the office of the 
market administrator and to pay necessary expenses of liquidation and 
distribution, such excess shall be distributed to contributing handlers 
and producers in an equitable manner.
    (e) Separability of provisions. If any provision of the order or its 
application to any person or circumstances is held invalid, the 
application of such provision and of the remaining provisions of the 
order to other persons or circumstances shall not be affected thereby.



Sec. 1000.5  Handler responsibility for records and facilities.

    Each handler shall maintain and retain records of his operations and 
make such records and his facilities available to the market 
administrator. If adequate records of a handler, or of any other 
persons, that are relevant to the obligation of such handler are not 
maintained and made available, any

[[Page 38]]

skim milk and butterfat required to be reported by such handler for 
which adequate records are not available shall not be considered 
accounted for or established as used in a class other than the highest 
priced class.
    (a) Records to be maintained. (1) Each handler shall maintain 
records of his operations (including, but not limited to, records of 
purchases, sales, processing, packaging, and disposition) as are 
necessary to verify whether such handler has any obligation under the 
order, and if so, the amount of such obligation. Such records shall be 
such as to establish for each plant or other receiving point for each 
month:
    (i) The quantities of skim milk and butterfat contained in, or 
represented by, products received in any form, including inventories on 
hand at the beginning of the month, according to form, time, and source 
of each receipt;
    (ii) The utilization of all skim milk and butterfat showing the 
respective quantities of such skim milk and butterfat in each form 
disposed of or on hand at the end of the month; and
    (iii) Payments to producers, dairy farmers and cooperative 
associations, including the amount and nature of any deductions and the 
disbursement of money so deducted.
    (2) Each handler shall keep such other specific records as the 
market administrator deems necessary to verify or establish such 
handler's obligation under the order.
    (b) Availability of records and facilities. Each handler shall make 
available all records pertaining to such handler's operations and all 
facilities the market administrator finds are necessary for such market 
administrator to verify the information required to be reported by the 
order and/or to ascertain such handler's reporting, monetary or other 
obligation under the order. Each handler shall permit the market 
administrator to weigh, sample, and test milk and milk products and 
observe plant operations and equipment and make available to the market 
administrator such facilities as are necessary to carry out his duties.
    (c) Retention of records. All records required under the order to be 
made available to the market administrator shall be retained by the 
handler for a period of 3 years to begin at the end of the month to 
which such records pertain. If, within such 3-year period, the market 
administrator notifies the handler in writing that the retention of such 
records, or of specified records, is necessary in connection with a 
proceeding under section 8c(15)(A) of the Act or a court action 
specified in such notice, the handler shall retain such records, or 
specified records, until further written notification from the market 
administrator. The market administrator shall give further written 
notification to the handler promptly upon the termination of the 
litigation or when the records are no longer necessary in connection 
therewith.



Sec. 1000.6  Termination of obligations.

    The provisions of this section shall apply to any obligation under 
the order for the payment of money:
    (a) Except as provided in paragraphs (b) and (c) of this section, 
the obligation of any handler to pay money required to be paid under the 
terms of the order shall terminate 2 years after the last day of the 
month during which the market administrator receives the handler's 
report of receipts and utilization on which such obligation is based, 
unless within such 2-year period, the market administrator notifies the 
handler in writing that such money is due and payable. Service of such 
written notice shall be complete upon mailing to the handler's last 
known address and it shall contain but need not be limited to the 
following information:
    (1) The amount of the obligation;
    (2) The month(s) on which such obligation is based; and
    (3) If the obligation is payable to one or more producers or to a 
cooperative association (except an obligation to be prorated to 
producers under an individual handler pool), the name of such 
producer(s) or such cooperative association, or if the obligation is 
payable to the market administrator, the account for which it is to be 
paid;
    (b) If a handler fails or refuses, with respect to any obligation 
under the order, to make available to the market administrator all 
records required by the order to be made available, the market 
administrator may notify the handler in writing, within the 2-year

[[Page 39]]

period provided for in paragraph (a) of this section, of such failure or 
refusal. If the market administrator so notifies a handler, the said 2-
year period with respect to such obligation shall not begin to run until 
the first day of the month following the month during which all such 
records pertaining to such obligation are made available to the market 
administrator;
    (c) Notwithstanding the provisions of paragraphs (a) and (b) of this 
section, a handler's obligation under the order to pay money shall not 
be terminated with respect to any transaction involving fraud or willful 
concealment of a fact, material to the obligation, on the part of the 
handler against whom the obligation is sought to be imposed; and
    (d) Unless the handler files a petition pursuant to section 
8c(15)(A) of the Act and the applicable rules and regulations (7 CFR 
900.50 et seq.) within the applicable 2-year period indicated below, the 
obligation of the market administrator:
    (1) To pay a handler any money which such handler claims to be due 
him under the terms of the order shall terminate 2 years after the end 
of the month during which the skim milk and butterfat involved in the 
claim were received; or
    (2) To refund any payment made by a handler (including a deduction 
or offset by the market administrator) shall terminate 2 years after the 
end of the month during which payment was made by the handler.



Sec. 1000.7  OMB control number assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
have been approved by the Office of Management and Budget (OMB) under 
the provisions of Title 44 U.S.C. chapter 35 and have been assigned OMB 
control number 0581-0032.
[49 FR 7102, Feb. 27, 1984]



PART 1001--MILK IN THE NEW ENGLAND MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1001.1  General provisions.

                               Definitions

1001.2  New England marketing area.
1001.3  Route disposition.
1001.4  Plant.
1001.5  Distributing plant.
1001.6  Supply plant.
1001.7  Pool plant.
1001.8  Nonpool plant.
1001.9  Handler.
1001.10  Producer-handler.
1001.11  Dairy farmer for other markets.
1001.12  Producer.
1001.13  Producer milk.
1001.14  Other source milk.
1001.15  Diverted milk.
1001.16  Exempt milk.
1001.17  Fluid milk product.
1001.18  Fluid cream product.
1001.19  Filled milk.
1001.20  Cooperative association.
1001.21  [Reserved]
1001.22  Commercial food processing establishment.

                                 Reports

1001.30  Reports of receipts and utilization.
1001.31  Other reports of receipts and utilization.
1001.32  Reports regarding individual producers and dairy farmers.
1001.33  Notices to producers.

                         Classification of Milk

1001.40  Classes of utilization.
1001.41  Shrinkage.
1001.42  Classification of transfers and diversions.
1001.43  General classification rules.
1001.44  Classification of producer milk.
1001.45  Market administrator's reports and announcements concerning 
          classification.
1001.46--1001.48  [Reserved]

                              Class Prices

1001.50  Class prices.
1001.51  Basic formula price.
1001.52  Plant location adjustments.
1001.53  Determination of applicable zone locations for pricing 
          purposes.
1001.54  Announcement of class prices.
1001.55  Equivalent price.

                              Blended Price

1001.60  Handler's value of milk for computing basic blended price.
1001.61  Partially regulated distributing plant operator's value of milk 
          for computing basic blended price.
1001.62  Computation of basic blended price.
1001.63  Announcement of blended prices and butterfat differential.

[[Page 40]]

                            Payments for Milk

1001.70  Producer-settlement fund.
1001.71  Handlers' producer-settlement fund debits and credits.
1001.72  Payments to and from the producer-settlement fund.
1001.73  Payments to producers.
1001.74  Payments to cooperative associations.
1001.75  Statements to producers.
1001.76  Butterfat differential.
1001.77  Adjustment of accounts.
1001.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1001.85  Assessment for order administration.
1001.86  Deduction for marketing services.

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  41 FR 8357, Feb. 26, 1976, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1001.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1001.2  New England marketing area.

    New England marketing area, hereinafter called the ``marketing 
area,'' means all territory within the boundaries of the places set 
forth below, all waterfront facilities connected therewith and craft 
moored thereat, and all territory therein occupied by any governmental 
installation, institution, or other similar establishment:

                               Connecticut

    All of the State of Connecticut.

                              Massachusetts

Counties:
    Barnstable.
    Bristol.
    Essex.
    Franklin (except the towns of New Salem, Orange, and Warwick).
    Hampden (except the towns of Brimfield, Monson, Palmer, and Wales).
    Hampshire (except the town of Ware).
    Middlesex.
    Norfolk.
    Plymouth.
    Suffolk.
    Worcester (except the towns of Athol, Barre, Douglas, East 
Brookfield, Hardwick, New Braintree, North Brookfield, Northbridge, 
Petersham, Philipston, Royalston, Templeton, Uxbridge, Warren, West 
Brookfield, and Winchendon).

                              New Hampshire

Counties:
    Belknap.
    Cheshire.
    Grafton (the towns of Ashland, Bridgewater, Bristol, Holderness, and 
Plymouth only).
    Hillsborough.
    Merrimack.
    Rockingham.
    Stafford.
    Sullivan (except the town of Plainfield).

                              Rhode Island

    All cities and towns except New Shoreham (Block Island).

                                 Vermont

Counties:
    Bennington (the towns of Landgrove, Peru, and Winhall only).
    Windham (except Somerset).
    Windsor (the towns of Andover, Baltimore, Cavendish, Chester, 
Ludlow, Plymouth, Reading, Springfield, Weathersfield, Weston, West 
Windsor, and Windsor only).
[41 FR 8357, Feb. 26, 1976, as amended at 48 FR 32160, July 14, 1983]



Sec. 1001.3  Route disposition.

    Route disposition means distribution of Class I milk by a handler to 
retail or wholesale outlets, which include vending machines but do not 
include plants or distribution points. The route disposition of a 
handler shall be attributed to the processing and packaging plant from 
which the Class I milk is moved to retail or wholesale outlets without 
intermediate movement to another processing and packaging plant.



Sec. 1001.4  Plant.

    Plant means the land and buildings, together with their 
surroundings, facilities, and equipment, whether owned or operated by 
one or more persons, constituting a single operating unit or 
establishment for the receiving, processing, or packaging of milk or 
milk

[[Page 41]]

products. The term ``plant'' shall not include:
    (a) Distribution points (separate premises used primarily for the 
transfer to vehicles of packaged fluid milk products moved there from 
processing and packaging plants); or
    (b) Bulk reload points (separate premises used for the purpose of 
transferring bulk milk from one tank truck to another tank truck while 
en route from dairy farmers' farms to a plant). If stationary storage 
tanks are used for transferring milk at the premises, the operator of 
the facility shall make an advance written request to the market 
administrator that the facility be treated as a reload point; otherwise 
it shall be a plant. The cooling of milk, collection or testing of 
samples, and washing and sanitizing of tank trucks at the premises shall 
not disqualify it as a bulk reload point.
[43 FR 17459, Apr. 25, 1978, as amended at 46 FR 58642, Dec. 3, 1981]



Sec. 1001.5  Distributing plant.

    Distributing plant means a processing and packaging plant.
[56 FR 5309, Feb. 11, 1991]



Sec. 1001.6  Supply plant.

    Supply plant means a plant at which facilities are maintained and 
used for washing and sanitizing cans and to which milk is moved from 
dairy farmers' farms in cans and is there accepted, weighed or measured, 
sampled, and cooled, or it is a plant to which milk is moved from dairy 
farmers' farms in tank trucks.
[56 FR 5309, Feb. 11, 1991]



Sec. 1001.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which:
    (1) Not less than 40 percent of its total receipts of fluid milk 
products (except filled milk) in any month, or in either of the 2 
preceding months, are disposed of as Class I (except filled milk); and
    (2) Route disposition (except filled milk) in the marketing area in 
the month:
    (i) Is not less than 10 percent of its total receipts of fluid milk 
products (except filled milk);
    (ii) Exceeds its route disposition in any other Federal marketing 
area; and
    (iii) Exceeds 700 quarts on any day or a daily average of 300 
quarts.
    (b) A supply plant which meets the conditions specified in 
paragraphs (a)(1), (2), or (3) of this section. Receipts and disposition 
of filled milk shall be excluded in determining whether a plant has met 
these conditions. For the purposes of this paragraph, milk received at a 
plant from a cooperative association in its capacity as a handler under 
Sec. 1001.9(d) shall be considered as having been received at that plant 
from dairy farmers' farms.
    (1) It is a plant from which in any month of August and December at 
least 15 percent, and in any month of September through November at 
least 25 percent, of its total receipts of milk from dairy farmers' 
farms is shipped as fluid milk products, other than as diverted milk, to 
pool distributing plants.
    (2) For any month of August through December, it is one of a group 
of plants that meets the conditions specified in this paragraph.
    (i) The handler's written request for continuation of pool supply 
plant status, which the plant held under the handler's operation in the 
preceding month, is received by the market administrator on or before 
the 16th day of the month.
    (ii) The group of plants, considered as a unit, meets the shipping 
requirements specified in paragraph (b)(1) of this section.
    (iii) To qualify as a pool supply plant under this paragraph in 
December of any year, the plant, considered individually, shall have 
shipped at least 5 percent of its total receipts of milk from dairy 
farmers' farms as fluid milk products, other than as diverted milk, to 
pool distributing plants in one of the months of August through December 
of that year.
    (iv) In the event of the failure of a group of plants to meet fully 
the requirements of paragraph (b)(2)(ii) of this section, termination of 
pool supply plant status shall be limited to the

[[Page 42]]

least number of plants which will result in the remaining supply plants 
meeting the requirements of paragraph (b)(2)(ii) of this section. If 
such termination becomes necessary, the handler shall be permitted to 
designate which plants shall continue to have pool plant status for the 
month.
    (v) For the purposes of this paragraph, any supply plant operated by 
a cooperative association that is also a handler under Sec. 1001.9(d) 
may be considered as one of a group of plants. In that event, the 
group's total receipts of milk from dairy farmers' farms shall be the 
total of such receipts by the association other than at any of its 
plants that is not one of the group, and the group's qualifying 
shipments shall consist of the qualifying shipments from the plants in 
the group plus the quantity of milk moved by the association in its 
capacity as a handler under Sec. 1001.9(d) from farms of its members to 
pool distributing plants.
    (3) For any month of January through July, it is a plant from which 
at least 15 percent of its total receipts of milk from dairy farmers' 
farms is shipped as fluid milk products, other than as diverted milk, to 
pool distributing plants or it is a plant that meets the requirements 
for automatic pool plant status specified in this paragraph. The 
automatic pool plant status of a plant shall be revoked for any month 
for which the market administrator has received the handler's written 
request for revocation on or before the 16th day of that month. In that 
event, the plant shall not have automatic pool plant status in any 
subsequent month of the current January through July period.
    (i) The plant was a pool supply plant under this order in each of 
the preceding months of August through December; or
    (ii) The plant was a pool supply plant under this order in at least 
two of the preceding months of August through December and would have 
been such a plant in all other months in that period had it not been a 
pool plant under the New York-New Jersey Federal order.
    (4) No plant shall be a pool supply plant in any month in which it 
is operated as:
    (i) A pool distributing plant; or
    (ii) A regulated plant under another Federal order if its Class I 
disposition of fluid milk products, except filled milk, in the marketing 
area regulated by that order exceeds its shipments of fluid milk 
products, except filled milk, to pool distributing plants under this 
order.
    (c) Each plant, other than a plant operated as a pool distributing 
plant or a pool supply plant, that is located in the marketing area and 
operated by a cooperative association shall be a pool plant in any month 
in which its route disposition does not exceed 2 percent of its total 
receipts of fluid milk products. Receipts and disposition of filled milk 
shall be excluded in determining whether a plant has met these 
conditions.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) An exempt distributing plant under Sec. 1001.8(e);
    (2) The plant of a producer-handler under any Federal order;
    (3) A plant designated as a regular pool plant under the New York-
New Jersey Federal order; or
    (4) Any plant for which the market administrator determines that a 
specified proportion or quantity of the receipts from dairy farmers and 
of milk from other sources handled at a plant is not available for Class 
I use because there is in force an unconditional contract for the plant 
to supply fluid milk products for Class II or Class III use, the plant 
shall not be a pool plant for the month in which the market 
administrator notifies the handler of the determination and for any 
subsequent month in which the contract is in force for any part of the 
month.
[56 FR 5310, Feb. 11, 1991]



Sec. 1001.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of nonpool plants 
are further defined as follows:
    (a) Other order plant means a pool plant under another Federal order 
or any other plant at which all fluid milk products handled become 
subject to the

[[Page 43]]

classification and pricing provisions of another Federal order.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not a regulated plant under another Federal order, a producer-
handler plant, or an exempt distributing plant, and from which there is 
route disposition in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is not an 
other order plant, a producer-handler plant, or an exempt distributing 
plant from which fluid milk products are shipped during the month to a 
pool plant.
    (e) Exempt distributing plant means:
    (1) A plant, other than a pool supply plant or a regulated plant 
under another Federal order, that meets all the requirements for status 
as a pool distributing plant, except that its route disposition 
(exclusive of filled milk) in the marketing area in the month does not 
exceed 700 quarts on any day or a daily average of 300 quarts.
    (2) A plant that is operated by a governmental agency and from which 
there is route disposition in the marketing area.
[56 FR 5310, Feb. 11, 1991]



Sec. 1001.9  Handler.

    Handler means:
    (a) Any person who operates a pool plant;
    (b) Any person who operates any other plant, or a pool bulk tank 
unit as defined under another Federal order, from which fluid milk 
products are disposed of, directly or indirectly, in the marketing area;
    (c) Any person who does not operate a plant but who engages in the 
business of receiving fluid milk products for resale and distributes to 
retail or wholesale outlets packaged fluid milk products received from 
any plant described in paragraph (a) or (b) of this section; or
    (d) Any cooperative association with respect to the milk that is 
moved from farms in tank trucks operated by, or under contract to, the 
association to pool plants or as diverted milk to nonpool plants for the 
account of, and at the direction of, the association. The association 
shall be considered as the handler who received the milk from the dairy 
farmers. However, the cooperative association shall not be the handler 
with respect to the milk moved from any farm if the association and the 
operator of the pool plant to which milk from such farm is moved both 
submit a request in writing, on or before the due date for filing the 
monthly reports of receipts and utilization, that the operator of the 
pool plant be considered as the handler who received the milk from the 
dairy farmer, and the pool plant operator's request states that the pool 
plant operator is purchasing the milk from such farm on the basis of the 
farm bulk tank measurement readings and the butterfat tests of samples 
of the milk taken from the farm bulk tank.
[41 FR 8357, Feb. 26, 1976, as amended at 56 FR 5311, Feb. 11, 1991]



Sec. 1001.10  Producer-handler.

    Producer-handler means any person who, during the month, is both a 
dairy farmer and a handler and who meets all of the following 
conditions:
    (a) Provides as the person's own enterprise and at the person's own 
risk the maintenance, care, and management of the dairy herd and other 
resources and facilities that are used to produce milk, to process and 
package such milk at the producer-handler's own plant, and to distribute 
it as route disposition.
    (b) The person's own route disposition constitutes the majority of 
the route disposition from the plant.
    (c) The quantity of route disposition in the marketing area from the 
person's plant is greater than in any other Federal marketing area.
    (d) The producer-handler receives no fluid milk products except from 
such handler's own production and from pool handlers, either by transfer 
or diversion pursuant to Sec. 1001.15. If the producer-handler's 
receipts from own production and the total route disposition from the 
producer-handler's plant each exceed 4,300 pounds per day for the month, 
the producer-handler's receipts from pool plants are not in excess of 2

[[Page 44]]

percent of receipts from own production. For the purposes of this 
paragraph, the producer-handler's receipts of fluid milk products shall 
include receipts from plants of other persons at all retail and 
wholesale outlets that are located in a Federal marketing area and 
operated by the producer-handler, an affiliate, or any person who 
controls or is controlled by the producer-handler.
[56 FR 5311, Feb. 11, 1991]



Sec. 1001.11  Dairy farmer for other markets.

    Dairy farmer for other markets means any dairy farmer described in 
this section. For the purposes of this section, the acts of any person 
who is an affiliate of, or who controls or is controlled by, a handler 
or dealer shall be considered as having been performed by the handler or 
dealer. Receipts from a ``dairy farmer for other markets'' under 
paragraphs (a), (b), and (c) of this section shall be considered as 
receipts from the unregulated plant at which the greatest quantity of 
his milk was received in the most recent month.
    (a) The term includes a dairy farmer with respect to milk that is 
purchased from him during the month by a dealer who operates a plant but 
does not operate a pool plant, if the milk is moved to a pool plant 
directly from the dairy farmer's farm. The term shall not apply to the 
dairy farmer, however, if all the nonpool milk purchased from him during 
the month by the same dealer is a receipt of producer milk under the 
provisions of another Federal order or will be such if the dairy farmer 
is a producer under this order.
    (b) The term includes a dairy farmer with respect to milk that is 
purchased from him by a handler and moved to a pool plant or that is 
purchased from him by a cooperative association in its capacity as a 
handler under Sec. 1001.9(d), if that handler caused milk from the same 
farm to be moved as nonpool milk to any plant during the same month. The 
term shall not apply to the dairy farmer, however, if all the nonpool 
milk is a receipt of producer milk under the provisions of another 
Federal order or will be such if the dairy farmer is a producer under 
this order or if all the nonpool milk is excluded from producer milk 
under Sec. 1001.15.
    (c) The term includes a dairy farmer with respect to milk that is 
received from him by a handler at a pool plant or that is purchased from 
him by a cooperative association in its capacity as a handler under 
Sec. 1001.9(d) during any of the months of January through July, if the 
handler caused nonpool milk from the same farm to be received during any 
of the preceding months of August through December at a plant that is 
not a pool plant under any Federal order in the current month. The term 
shall not apply to the dairy farmer, however, if all the nonpool milk 
was a receipt of producer milk under the provisions of another Federal 
order or represented receipts from own production by a producer-handler 
under any Federal order, or was excluded from producer milk under 
Sec. 1001.15.
    (d) Notwithstanding the provisions of paragraphs (a), (b), and (c) 
of this section, the term shall apply to any dairy farmer with respect 
to milk moved from his farm to a handler's pool plant or purchased from 
him by a cooperative association in its capacity as a handler under 
Sec. 1001.9(d) during any month in which milk from that farm was 
received as base milk under another Federal order.
[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17460, Apr. 25, 1978]



Sec. 1001.12  Producer.

    Producer means a dairy farmer who produces milk that is moved, other 
than in packaged form, from his farm to a pool plant, or to any other 
plant as diverted milk. However, the term shall not include:
    (a) A producer-handler under any Federal order;
    (b) A dairy farmer with respect to milk caused to be moved from his 
farm to a pool plant under this order by a handler under another Federal 
order if all of the dairy farmer's milk so received is considered as a 
receipt from a producer under the provisions of the other Federal order;
    (c) A dairy farmer for other markets;
    (d) A dairy farmer who is a local or state government that has 
nonproducer status for the month under Sec. 1001.16(c);

[[Page 45]]

    (e) A dairy farmer who is a governmental agency that is operating an 
exempt distributing plant under Sec. 1001.8(e)(2);
    (f) A dairy farmer with respect to salvage product assigned under 
Sec. 1001.44(a)(7)(ii);
    (g) A dairy farmer with respect to milk that is excluded from 
producer milk under Sec. 1001.15; or
    (h) A dairy farmer with respect to milk that a handler causes to be 
moved from the dairy farmer's farm to a regulated plant under another 
Federal order if any portion of such dairy farmer's milk so moved is 
assigned to Class I milk under the provisions of such other order and 
all of the dairy farmer's milk so moved is considered as producer milk 
under the other order.
[41 FR 8357, Feb. 26, 1976, as amended at 56 FR 5311, Feb. 11, 1991]



Sec. 1001.13  Producer milk.

    Producer milk means milk that the handler has received from 
producers. The quantity of milk received by a handler from producers 
shall include any milk of a producer that was not received at any plant 
but which the handler or an agent of the handler has accepted, measured, 
sampled, and transferred from the producer's farm tank into a tank truck 
during the month. Such milk shall be considered as having been received 
at the pool plant at which other milk from the same farm of that 
producer is received by the handler during the month, except that in the 
case of a cooperative association in its capacity as a handler under 
Sec. 1001.9(d), the milk shall be considered as having been received at 
a plant in the zone location of the pool plant, or pool plants within 
the same zone, to which the greatest aggregate quantity of the milk of 
the cooperative association in such capacity was moved during the 
current month or the most recent month.



Sec. 1001.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1001.40(b)(1) from any source other than producers, handlers 
described in Sec. 1001.9(d), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1001.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1001.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1001.40(b)(1)) for which the handler fails 
to establish a disposition.
[56 FR 5311, Feb. 11, 1991]



Sec. 1001.15  Diverted milk.

    Diverted milk means milk, other than that excluded under 
Sec. 1001.12 from being considered as received from a producer, that 
meets the conditions set forth in paragraph (a) or (b) of this section 
and is not excluded from diverted milk under paragraph (c) of this 
section.
    (a) Milk that a handler in its capacity as the operator of a pool 
plant reports as having been moved from a dairy farmer's farm to the 
pool plant, but which the handler caused to be moved from the farm to 
another plant, if the handler specifically reports such movement to the 
other plant as a movement of diverted milk, and the conditions of 
paragraph (a) (1) or (2) of this section have been met. Milk that is 
diverted milk under this paragraph shall be considered to have been 
received at the pool plant from which it was diverted, but for pricing 
purposes the location adjustments for the zone location specified in 
Sec. 1001.53 shall be used.
    (1) During any 2 months subsequent to July of the preceding calendar 
year, or during the current month, on more than half of the days on 
which the handler caused milk to be moved from the dairy farmer's farm 
during the month, all of the milk that the handler caused to be moved 
from that farm was physically received as producer milk at the handler's 
pool plant or at another of the handler's pool plants that is no longer 
operated as a plant.

[[Page 46]]

    (2) During the current month and not more than 5 other months 
subsequent to July of the preceding calendar year, milk from the dairy 
farmer's farm was received at or diverted from the handler's pool plant 
as producer milk, and during the current month all of the milk from that 
farm that the handler reported as diverted milk was moved from the farm 
in a tank truck in which it was intermingled with milk from other farms, 
the milk from a majority of which farms was diverted from the same pool 
plant in accordance with the preceding provisions of this paragraph.
    (b) Milk that a cooperative association in its capacity as a handler 
under Sec. 1001.9(d) caused to be moved from a dairy farmer's farm to a 
nonpool plant if the association specifically reports the movement to 
such plant as a movement of diverted milk, and the conditions of 
paragraph (b) (1) or (2) of this section have been met. Milk that is 
diverted under this paragraph shall be considered to have been received 
by the cooperative association in its capacity as a handler under 
Sec. 1001.9(d), but for pricing purposes the location adjustments for 
the zone location specified in Sec. 1001.53 shall be used.
    (1) During any 2 months subsequent to July of the preceding calendar 
year, or during the current month, on more than half of the days on 
which the cooperative association in its capacity as a handler under 
Sec. 1001.9(d) caused milk to be moved from the farm as producer milk 
during the month, all of the milk that the association caused to be 
moved from the farm was physically received at a pool plant.
    (2) During the current month and not more than 5 other months 
subsequent to July of the preceding calendar year, the cooperative 
association in its capacity as a handler under Sec. 1001.9(d) caused 
milk to be moved from the dairy farmer's farm as producer milk, and 
during the current month all of the milk from that farm that the 
cooperative association in its capacity as a handler under 
Sec. 1001.9(d) reported as diverted milk was moved from the farm in a 
tank truck in which it was intermingled with milk from other farms, the 
milk from a majority of which farms was diverted by the association in 
accordance with the preceding provisions of this paragraph.
    (c) Milk moved, as described in paragraphs (a) and (b) of this 
section, from dairy farmers' farms to nonpool plants in excess of 35 
percent in the months of September through November and 45 percent in 
other months, of the total quantity of producer milk received (including 
diversions) by the handler during the month shall not be diverted milk. 
Such milk, and any other milk reported as diverted milk that fails to 
meet the requirements set forth in this section, shall be considered as 
having been moved directly from the dairy farmers' farms to the plant of 
physical receipt, and if that plant is a nonpool plant the milk shall be 
excluded from producer milk. If the handler fails to designate the dairy 
farmers whose milk is to be so excluded, the entire quantity of milk 
that the handler caused to be moved from dairy farmers' farms directly 
to nonpool plants during the month shall be excluded from producer milk.
[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17460, Apr. 25, 1978; 46 
FR 58642, Dec. 3, 1981; 56 FR 5311, Feb. 11, 1991]



Sec. 1001.16  Exempt milk.

    Exempt milk means:
    (a) Fluid milk products received at a pool plant in bulk from a 
nonpool plant to be processed and packaged, for which an equivalent 
quantity of packaged fluid milk products is returned to the operator of 
the nonpool plant during the same month, if the receipt of bulk fluid 
milk products and return of packaged fluid milk products occur during an 
interval in which the facilities of the nonpool plant at which the fluid 
milk products are usually processed and packaged are temporarily 
unusable because of fire, flood, storm, or similar extraordinary 
circumstances completely beyond the nonpool plant operator's control;
    (b) Packaged fluid milk products received at a pool plant from a 
nonpool plant in return for an equivalent quantity of bulk fluid milk 
products moved from a pool plant for processing and packaging during the 
same month, if the movement of bulk fluid milk products and receipt of 
packaged fluid milk products occur during an interval in

[[Page 47]]

which the facilities of the pool plant at which the fluid milk products 
are usually processed and packaged are temporarily unusable because of 
fire, flood, storm, or similar extraordinary circumstances completely 
beyond the pool plant operator's control;
    (c) Milk received at a pool plant in bulk from the dairy farmer who 
produced it, to the extent of the quantity of any packaged fluid milk 
products returned to the dairy farmer, if:
    (1) The dairy farmer is a State or local government that is not 
engaged in the route disposition of any of the returned products; and
    (2) The dairy farmer has, by written notice to the market 
administrator and the receiving handler, elected nonproducer status for 
a period of not less than 12 months beginning with the month in which 
the election was made and continuing for each subsequent month until 
canceled in writing, and the election is in effect for the current 
month.
[41 FR 8357, Feb. 26, 1976, as amended at 56 FR 5311, Feb. 11, 1991]



Sec. 1001.17  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27775, May 11, 1993]



Sec. 1001.18  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27775, May 11, 1993]



Sec. 1001.19  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with 
skimmed milk (whether fresh, cultured, reconstituted or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers or flavoring) resembles milk 
or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1001.20  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members; and
    (c) To be engaged in making collective sales of, or marketing, milk 
or its products for its members.



Sec. 1001.21  [Reserved]



Sec. 1001.22  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to

[[Page 48]]

commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1001.15, 1001.41 and 1001.52.
[58 FR 27775, May 11, 1993]

                                 Reports



Sec. 1001.30  Reports of receipts and utilization.

    On or before the 8th day after the end of each month, or not later 
than the 10th day if the report is delivered in person to the office of 
the market administrator, each handler shall report for such month to 
the market administrator, in the detail and on the forms prescribed by 
the market administrator, as follows:
    (a) Each handler, with respect to each of the handler's pool plants, 
shall report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk (including the specific quantities of 
diverted milk and receipts from the handler's own production);
    (2) Receipts of milk from cooperative associations in their capacity 
as handlers under Sec. 1001.9(d);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1001.40(b)(1);
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1001.9(d) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler shall report bulk milk received at a handler's pool 
plant from a cooperative association in its capacity as the operator of 
a pool plant or as a handler under Sec. 1001.9(d), if such milk was 
rejected by the handler subsequent to such handler's receipt of the milk 
on the basis that it was not of marketable quality at the time the milk 
was delivered to the handler's plant, and such milk was removed from the 
plant in bulk form by the cooperative association and was replaced with 
other milk from the association. Except for purposes of this paragraph 
and Sec. 1001.31(b), such milk that was so removed from the handler's 
plant shall be treated for all other purposes of the order as though it 
had not been delivered to and received at the handler's plant.
    (e) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to the handler's receipts and 
utilization of milk, filled milk, and milk products in such manner as 
the market administrator may prescribe.
[56 FR 5312, Feb. 11, 1991]



Sec. 1001.31  Other reports of receipts and utilization.

    (a) Each handler who dumps fluid milk products at a pool plant 
shall:
    (1) Give the market administrator, at the request and in accordance 
with instructions of the market administrator, advance notice of the 
handler's intention to dump such products and the quantities involved; 
and
    (2) Submit to the market administrator at the time and in the manner 
prescribed by the market administrator such detailed reports of dumpage 
as the market administrator requests.
    (b) Each handler who intends to have a receipt of unmarketable milk 
replaced with other milk in the manner described under Sec. 1001.30(d) 
shall give

[[Page 49]]

the market administrator, at the request and in accordance with 
instructions of the market administrator, advance notice of the 
handler's intention to have such milk replaced.
    (c) In addition to the reports required pursuant to paragraphs (a) 
and (b) of this section and Secs. 1001.30 and 1001.32, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.
[56 FR 5312, Feb. 11, 1991]



Sec. 1001.32  Reports regarding individual producers and dairy farmers.

    (a) Each handler shall report on or before the 15th day after the 
end of each month the information required by the market administrator 
with respect to producer additions, producer withdrawals, changes in 
farm locations, and changes in the name of farm operators.
    (b) Each handler that is not a cooperative association, upon request 
from any such association, shall furnish it with information with 
respect to each of its producer members from whose farm the handler 
begins, resumes, or stops receiving milk at his pool plant. Such 
information shall include the applicable date, the producer-member's 
post office address and farm location, and, if known, the plant at which 
his milk was previously received, or the reason for the handler's 
failure to continue receiving milk from his farm. In lieu of providing 
the information directly to the association, the handler may authorize 
the market administrator to furnish the association with such 
information, derived from the handler's reports and records.
    (c) Each handler shall submit to the market administrator, within 10 
days after his request made not earlier than 20 days after the end of 
the month, his producer payroll for the month, which shall show for each 
producer:
    (1) The daily and total pounds of milk delivered and its average 
butterfat test; and
    (2) The net amount of the handler's payments to the producer, with 
the prices, deductions, and charges involved.



Sec. 1001.33  Notices to producers.

    Each handler shall furnish each producer from whom he receives milk 
the following information regarding the weight and butterfat test of the 
milk:
    (a) Whenever he receives milk from the producer on the basis of farm 
bulk tank measurements, the handler shall give the producer at the time 
the milk is picked up at the farm a receipt indicating the measurement 
and the equivalent pounds of milk received;
    (b) Whenever he receives milk from the producer on a basis other 
than farm bulk tank measurements, the handler shall give the producer 
within 3 days after receipt of the milk a written notice of the quantity 
so received;
    (c) If butterfat tests of the producer's milk are determined from 
fresh milk samples, the handler shall give the producer within 10 days 
after the end of each month a written notice of the producer's average 
butterfat test for the month. Such notice shall not be required if the 
handler has given the producer a written notice of the butterfat test 
for each of the sampling periods within the month; and
    (d) If butterfat tests of the producer's milk are determined from 
composite milk samples, the handler shall give the producer within 7 
days after the end of each sampling period a written notice of the 
producer's average butterfat test for the period.

                         Classification of Milk



Sec. 1001.40  Classes of utilization.

    Except as provided in Sec. 1001.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1001.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged inventory of fluid milk products at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:

[[Page 50]]

    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1001.17 and the

[[Page 51]]

fluid cream product definition pursuant to Sec. 1001.18; and
    (7) In shrinkage assigned pursuant to Sec. 1001.41(a) to the 
receipts specified in Sec. 1001.41(a)(2) and in shrinkage specified in 
Sec. 1001.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[56 FR 5313, Feb. 11, 1991, as amended at 57 FR 174, Jan. 3, 1992; 58 FR 
27776, May 11, 1993]



Sec. 1001.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1001.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1001.9(d));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1001.9(d) and in milk 
diverted to such plant from another pool plant, except that if the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph shall be 2 percent:
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts from dairy farmers for other markets and in bulk fluid milk 
products received from unregulated supply plants, excluding the quantity 
for which Class II or Class III classification is requested by the 
handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1001.9(d), but not in excess of 0.5 percent 
of the skim milk and butterfat, respectively, in such milk. If the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph for the cooperative association shall be 
zero.
[56 FR 5313, Feb. 11, 1991]



Sec. 1001.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream

[[Page 52]]

product from a pool plant to another pool plant shall be classified as 
Class I milk unless the operators of both plants request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1001.44(a)(12) and the corresponding 
step of Sec. 1001.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1001.44(a)(7) 
or the corresponding step of Sec. 1001.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1001.44(a) 
(11) or (12) or the corresponding steps of Sec. 1001.44(b), the skim 
milk or butterfat so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1001.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
distributing plants. Skim milk or butterfat in the following forms that 
is transferred or diverted from a pool plant to a producer-handler under 
this or any other Federal order or to an exempt distributing plant shall 
be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and

[[Page 53]]

    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt distributing plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1001.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of milk for 
such nonpool plant; and
    (B) To such nonpool plant's receipts of milk from plants not fully 
regulated under any Federal milk order which the market administrator 
determines constitute regular sources of milk for such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining

[[Page 54]]

Class I utilization, then to Class II utilization, and then to Class III 
utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.
[56 FR 5314, Feb. 11, 1991, as amended at 58 FR 27776, May 11, 1993]



Sec. 1001.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1001.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1001.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1001.9(d) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1001.40, 
1001.41, and 1001.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1001.9(d) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative; and
    (d) If receipts from more than one pool plant are to be assigned, 
the receipts shall be assigned in sequence according to the zone 
locations of the plants, beginning with the plant in the lowest-numbered 
zone for assignments to Class I milk and beginning with the plant in the 
highest numbered zone for assignments to Class III milk; and
    (e) Receipts of other source milk from more than one plant shall be 
assigned in sequence according to the zone locations of the plants, 
beginning with the plant in the lowest-numbered zone for assignments to 
Class I milk and beginning with the plant in the highest-numbered zone 
for assignments to Class III milk.
    (f) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
    (g) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1001.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1001.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[56 FR 5315, Feb. 11, 1991, as amended at 57 FR 174, Jan. 3, 1992; 58 FR 
27776, May 11, 1993]



Sec. 1001.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1001.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1001.9(d) by allocating the handler's 
receipts of skim milk and butterfat to the handler's utilization 
pursuant to paragraphs (a) through (c) of this section.

[[Page 55]]

    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1001.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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; and
    (ii) Receipts of exempt milk;
    (iii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1001.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1001.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1001.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1001.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1001.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts from dairy farmers of fluid milk products which are 
rejected and segregated in the handler's normal operation for receiving 
milk, and which receipts are accepted and disposed of by the handler as 
salvage product rather than as milk;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;

[[Page 56]]

    (vii) Receipts of fluid milk products (other than exempt milk) from 
a local or State government which has elected nonproducer status for the 
month pursuant to Sec. 1001.16(c); and
    (viii) Receipts of fluid milk products from dairy farmers for other 
markets;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step (exclusive of transfers between pool plants of the 
same handler) at all pool plants of the handler;
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1001.40(b)(1), in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(iii), (a)(5) and (7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, prorata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v) and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk

[[Page 57]]

products to the same unregulated supply plant from which fluid milk 
products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from another order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii) and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II with respect to whichever of 
the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class, as announced for the month pursuant to Sec. 1001.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the

[[Page 58]]

computations pursuant to paragraph (a)(12)(i) or (ii) of this section 
result in a quantity of skim milk to be subtracted from Class I that 
exceeds the pounds of skim milk remaining in such class, the pounds of 
skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from other pool plants according to the 
classification of such products pursuant to Sec. 1001.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and in receipts from 
handlers under Sec. 1001.9(d), subtract such excess from the pounds of 
skim milk remaining in each class in series beginning with Class III. 
Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[56 FR 5315, Feb. 11, 1991, as amended at 58 FR 27776, May 11, 1993]



Sec. 1001.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from a 
regulated plant or handler under another Federal order pursuant to 
Sec. 1001.44(a)(12) and the corresponding step of Sec. 1001.44(b), 
estimate and publicly announce the utilization (to the nearest whole 
percentage) in each class during the month of skim milk and butterfat, 
respectively, in producer milk of all handlers. Such estimate shall be 
based upon the most current available data and shall be final for such 
purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1001.43(g) and Sec. 1001.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
[56 FR 5317, Feb. 11, 1991, as amended at 58 FR 27777, May 11, 1993]



Secs. 1001.46--1001.48  [Reserved]

                              Class Prices



Sec. 1001.50  Class prices.

    Subject to the provisions of Sec. 1001.52, the class prices per 
hundredweight of milk for the month shall be as follows:
    (a) Class I price. The Class I price in Zone 21 shall be the basic 
formula price for the second preceding month plus $2.52. The 
differential value for Zone 1 shall be $3.24.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. Subject to the adjustment set forth below for 
the applicable month, the Class III price shall

[[Page 59]]

be the basic formula price for the month.

                                                                        
------------------------------------------------------------------------
                             Month                                Amount
------------------------------------------------------------------------
January........................................................   +$0.03
February.......................................................     +.02
March..........................................................     -.05
April..........................................................     -.09
May............................................................     -.12
June...........................................................     -.11
July...........................................................     +.03
August.........................................................     +.10
September......................................................     +.06
October........................................................     +.06
November.......................................................     +.06
December.......................................................     +.06
------------------------------------------------------------------------

    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent, and subject to the adjustments set forth in paragraph 
(c) of this section for the applicable month.
[56 FR 5317, Feb. 11, 1991, as amended at 58 FR 63285, Dec. 1, 1993; 60 
FR 6607, Feb. 2, 1995]



Sec. 1001.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1001.76 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is

[[Page 60]]

of the total of the data represented in paragraphs (d)(1) and (d)(2) of 
this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent reporting period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent reporting period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18953, Apr. 14, 1995]



Sec. 1001.52  Plant location adjustments.

    The Class I and blended prices computed under Secs. 1001.50 and 
1001.61 shall be subject to plant location adjustments based upon the 
zone locations of plants. The zone location of any plant and the 
location adjustments applicable to each zone location shall be 
determined as specified in this section.
    (a) The following zones are defined for the purpose of determining 
location adjustments:
    (1) Zone 1 shall include the State of Rhode Island and the 
Massachusetts counties of Barnstable, Bristol, Dukes, Norfolk, Plymouth 
and Suffolk, and between Boston and Massachusetts highway route number 
128.
    (2) Zone 2 shall include the Massachusetts counties of Middlesex 
(only that portion south of Massachusetts highway route number 2 not 
included in Zone 1) and Worcester (only the townships of Berlin, 
Blackstone, Bolton, Douglas, Hopedale, Mendon, Milford, Millville, 
Northborough, Northbridge, Southborough, Sutton, Upton, Uxbridge, 
Westborough and that portion of Harvard township south of Massachusetts 
highway route number 2).
    (3) Zone 3 shall include: (i) The Connecticut counties of Middlesex 
(except the townships of Cromwell, Durham, Haddam, Middlefield, 
Middletown, and Portland), New London, Tolland (except the townships of 
Ellington and Somers), and Windham.
    (ii) The Massachusetts county of Worcester (only the townships of 
Auburn, Boylston, Charlton, Clinton, Dudley, Grafton, Holden, Lancaster, 
Leicester, Millbury, Oxford, Paxton, Shrewsbury, Southbridge, Sterling, 
Webster, West Boylston, and Worcester City).
    (4) Zone 5 shall include: (i) The Connecticut counties of Fairfield, 
Hartford, Litchfield, Middlesex (only the townships of Cromwell, Durham, 
Haddam, Middlefield, Middletown and Portland), New Haven, and Tolland 
(only the townships of Ellington and Somers).
    (ii) The Massachusetts counties of Hampden (only the townships of 
Brimfield, Holland, Monson, Palmer and Wales), Hampshire (only the 
township of Ware) and Worcester (only the townships of Brookfield, East 
Brookfield, Hardwick, New Braintree, North Brookfield, Oakham, Spencer, 
Sturbridge, Warren and West Brookfield).
    (5) Zone 6 shall include the Massachusetts counties of Hampden 
(except the townships of Brimfield, Holland, Monson, Palmer and Wales), 
and Hampshire (except the township of Ware).
    (b)-(c)  [Reserved]
    (d) The zone location of each plant in the State of Massachusetts 
(except Berkshire County) that is outside the areas specified in 
paragraph (a) of this section shall be based upon its highway mileage 
distance to Boston, Massachusetts. The distance for each plant shall be 
the mileage between Boston, Massachusetts, and the named point nearest 
to the plant, measured to the greatest extent possible over roads 
designated as principal roads, on the road maps specified in paragraph 
(e) of this section.
    (e) The zone location of each plant that is outside the areas 
specified in

[[Page 61]]

paragraphs (a) through (d) of this section shall be based upon its 
highway mileage distance to Boston, Mass., as determined by use of 
Mileage Guide No. 11, and supplements to and revisions thereof, issued 
by Household Goods Carriers' Bureau, Agent, Arlington, Va. The mileages 
used shall be those shown between designated key points in the mileage 
charts, and between named points on the appropriate State road maps, as 
published in the mileage guide. In any instance in which the map does 
not clearly show the mileage between points on a road, the mileage used 
shall be the mileage as determined by the highway authority for the 
State in which the road is located. The distance for each plant shall be 
the mileage between Boston and the named point nearest to the plant, as 
shown in the mileage charts. If that named point is not listed in the 
mileage charts, the distance for the plant shall be the lowest mileage 
distance between Boston and that named point, computed as follows:
    (1) Determine from the charts the mileage between Boston and each of 
the three key points nearest to the named point which are nearer to 
Boston than the named point; and
    (2) For each of these key points, add to the result in paragraph 
(e)(1) of this section the mileage between the key point and the named 
point, measured to the greatest extent possible over roads designated as 
principal roads.
    (f) Notwithstanding the provisions of paragraph (e) of this section, 
for any named point located in Maine, New Hampshire, Vermont, New York, 
or Berkshire County, Mass., determine the highway mileage distance 
between Boston and the named point by use of the appropriate State maps 
contained in Mileage Guide No. 7, issued by Household Goods Carriers' 
Bureau, Agent, Arlington, Va. Such distance shall be the lowest highway 
mileage between Boston and the named point on the map, over roads 
designated thereon as paved, all-weather roads. In the event that the 
named point is not located on a through, paved, all-weather road, such 
other roads shall be used to reach a through, paved, all-weather road as 
will result in the lowest highway mileage to Boston, except that such 
other roads shall not be used for a distance of more than 15 miles if it 
is otherwise possible to connect with a through, paved, all-weather 
road. In any instance in which the map does not clearly show the mileage 
between points on a road, the mileage used shall be the mileage as 
determined by the highway authority for the State in which the road is 
located. The mileage so determined, or the mileage determined under 
paragraph (e) of this section, whichever is less, shall be considered to 
be the lowest highway mileage distance between Boston and the named 
point.
    (g) The location adjustments for each plant shall be the amounts 
shown in the following table for the zone in which the plant is located:

          Location Adjustments for Determination of Zone Price          
------------------------------------------------------------------------
                                                            Class I and 
                                                  Plant    blended price
          Distance to Boston (miles)            location    adjustments 
                                                  zone      (cents per  
                                                          hundredweight)
------------------------------------------------------------------------
1 to 10.......................................        1           +72.0 
11 to 20......................................        2           +69.5 
21 to 30......................................        3           +67.0 
31 to 40......................................        4           +64.5 
41 to 50......................................        5           +62.0 
51 to 60......................................        6           +59.5 
61 to 70......................................        7           +57.0 
71 to 80......................................        8           +54.5 
81 to 90......................................        9           +52.0 
91 to 100.....................................       10           +49.5 
101 to 110....................................       11           +47.0 
111 to 120....................................       12           +44.5 
121 to 130....................................       13           +42.0 
131 to 140....................................       14           +39.5 
141 to 150....................................       15           +15.0 
151 to 160....................................       16           +12.5 
161 to 170....................................       17           +10.0 
171 to 180....................................       18            +7.5 
181 to 190....................................       19            +5.0 
191 to 200....................................       20            +2.5 
201 to 210....................................       21            +0.0 
211 to 220....................................       22            -2.5 
221 to 230....................................       23            -5.0 
231 to 240....................................       24            -7.5 
241 to 250....................................       25           -10.0 
251 and over..................................   \2\ 26           (\1\) 
------------------------------------------------------------------------
\1\ Class I and blended price location adjustments applicable to plants 
  located in subsequent zones shall be obtained by extending the table  
  at the rate of 2.5 cents for each additional 10 miles except that in  
  no event shall the Class I or blended price at any zone be less than  
  the Class II price for the month.                                     
\2\ Includes 26 and over.                                               

[43 FR 49972, Oct. 26, 1978, as amended at 46 FR 58642, Dec. 3, 1981; 56 
FR 5318, Feb. 11, 1991]

[[Page 62]]



Sec. 1001.53  Determination of applicable zone locations for pricing purposes.

    In computing the value of fluid milk products at claas prices under 
Secs. 1001.60 and 1001.61, the handlers' producer-settlement fund debits 
and credits under Sec. 1001.71, the minimum amounts payable to producers 
under Sec. 1001.73, and the minimum amounts payable to cooperative 
associations under Sec. 1001.74, the location adjustments specified in 
Sec. 1001.52 for the zone location of the plant for which the 
computation is being made shall be used except that for the following 
items the adjustments for the zone locations specified shall be used:
    (a) For producer milk diverted by any handler, including a 
cooperative association in its capacity as a handler under 
Sec. 1001.9(d), the zone location of the plant to which the milk was 
diverted;
    (b) For producer milk of a cooperative association in its capacity 
as a handler under Sec. 1001.9(d) moved to a pool plant, the zone 
location of the plant to which the milk was moved;
    (c) For milk of a cooperative association in its capacity as a 
handler under Sec. 1001.9(d) in shrinkage, overage, extraordinary loss, 
and ending inventory, the zone location of the pool plant, or pool 
plants within the same zone, to which the greatest aggregate quantity of 
such milk of the cooperative association was moved during the current 
month or the most recent month;
    (d) For beginning inventory of a cooperative association in its 
capacity as a handler under Sec. 1001.9(d), the zone location at which 
the milk was priced as ending inventory during the previous month;
    (e) [Reserved]
    (f) For receipts from unregulated supply plants assigned to Class I 
milk, the zone location of the plant from which the product was 
received;
    (g) For any excess of beginning inventory assigned to Class I milk 
under Sec. 1001.44(a)(2)(iii), (a)(5), (a)(7)(i), or (a)(9) over the 
quantities of producer milk and of milk from cooperative associations in 
their capacity as handlers under Sec. 1001.9(d) assigned to Class II and 
Class III milk in the preceding month, the zone location of the pool 
plants from which an equivalent quantity of receipts of fluid milk 
products were assigned to Class II or Class III milk in the preceding 
month in sequence beginning with the plant in the lowest-numbered zone; 
and
    (h) For purposes of computing the value of fluid milk products at 
class prices, any fluid milk products moved in bulk from a pool plant to 
another pool plant at which a higher Class I price applies and which is 
classified as Class I milk shall be priced at the Class I price 
applicable at the location of the plant to which the milk was moved 
subject to a location adjustment credit for the transferee-plant 
determined by the market administrator as follows:
    (1) After the allocation step of Sec. 1001.44(a)(12) for the 
transferee-plant, multiply the remaining pounds of Class I skim milk and 
Class I butterfat, plus the pounds of skim milk and butterfat in 
receipts of concentrated fluid milk products from other pool plants that 
are assigned to Class I use, by 110 percent and 150 percent, 
respectively;
    (2) Subtract the respective pounds of skim milk and butterfat in 
bulk fluid milk products physically received at the plant from the 
following sources:
    (i) Producers;
    (ii) Cooperative associations in their capacity as handlers under 
Sec. 1001.9(d);
    (iii) Receipts of diverted milk from pool plants; and
    (iv) Receipts (other than diverted milk) from pool plants at which 
the same or a higher Class I price applies;
    (3) Assign any pounds remaining (which are not in excess of Class I 
transfers) to skim milk and butterfat in bulk receipts of fluid milk 
products (except diverted milk) from other pool plants at which a lower 
Class I price applies in sequence according to the zone location of the 
plants, beginning with the plant in the lowest numbered zone; and
    (4) Multiply the hundredweight computed for each transferor-plant in 
paragraph (h)(3) of this section by the difference in the Class I prices 
applicable at the transferee-plant and transferor-plant and total such 
amounts.
[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 49972, Oct. 26, 1978; 46 
FR 58643, Dec. 3, 1981; 56 FR 5318, Feb. 11, 1991; 58 FR 27777, May 11, 
1993]

[[Page 63]]



Sec. 1001.54  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I and Class II prices for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6607, Feb. 2, 1995]



Sec. 1001.55  Equivalent price.

    If, for any reason, a price specified in this part for use in 
computing class prices or for other purposes is not reported or 
published in the manner described in this part, the market administrator 
shall use one determined by the Secretary to be equivalent to the price 
that is specified.

                              Blended Price



Sec. 1001.60  Handler's value of milk for computing basic blended price.

    For the purpose of computing the basic blended price, 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. 1001.9(d) with respect to milk that was not 
received at a pool plant, as directed in this section. The prices used 
shall be those for the applicable zone locations as determined under 
Sec. 1001.53.
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1001.9(d) that were classified in each class 
as determined pursuant to Sec. 1001.44 by the applicable class prices 
and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1001.44(a)(14) and the 
corresponding step of Sec. 1001.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1001.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1001.44(a)(9) and the corresponding step of Sec. 1001.44(b).
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1001.43(g) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1001.44(a)(7) (i) through (iv), (vii), and (viii) and the 
corresponding step of Sec. 1001.44(b), excluding receipts of bulk fluid 
cream products from an other order plant and bulk concentrated fluid 
milk products from pool plants, other order plants and unregulated 
supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1001.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1001.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1001.43(g) and Sec. 1001.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1001.44(a)(11) and the corresponding steps of Sec. 1001.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the

[[Page 64]]

hundredweight of skim milk and butterfat contained in receipts of 
nonfluid milk products that are allocated to Class I use pursuant to 
Sec. 1001.43(g);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1001.61(e); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[56 FR 5319, Feb. 11, 1991, as amended at 58 FR 27777, May 11, 1993]



Sec. 1001.61  Partially regulated distributing plant operator's value of milk for computing basic blended price.

    For the purpose of computing the basic blended price, the market 
administrator shall determine for each month the value of milk 
distributed as route disposition in the marketing area by the operator 
of a partially regulated distributing plant, as follows:
    (a) Subtract from the quantity of route disposition, except 
reconstituted milk products, distributed in the marketing area by the 
partially regulated distributing plant operator the quantity of fluid 
milk products (except reconstituted milk products and those described in 
paragraph (b) of this section) received at the plant during the month 
that is classified and priced as Class I milk or the equivalent thereof 
under any marketwide pool Federal order and that is not used to offset 
route disposition in any other marketing area, and multiply the result 
by the applicable Class I price;
    (b) Multiply by the difference between the applicable Class I price 
and the Class III price for the month the quantity of filled milk 
distributed as route disposition in the marketing area from the 
partially regulated distributing plant which is not proved to have been 
made from other fresh fluid milk products; and
    (c) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant. Add the amount obtained from multiplying the pounds 
of labeled reconstituted milk included previously in this paragraph by 
the difference between the Class I price applicable at the location of 
the partially regulated distributing plant less $1.00 (but not to be 
less than the Class III price) and the Class III price. For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (d) Add the values pursuant to paragraphs (a) through (c) of this 
section.
    (e) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1001.43(g). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the

[[Page 65]]

nonfluid milk ingredients at the difference between the Class I price 
applicable under the other order at the location of the plant where the 
nonfluid milk ingredients were processed (but not to be less than the 
Class III price) and the Class III price. This payment option shall 
apply only if a majority of the total milk received at the plant that 
processed the nonfluid milk ingredients is regulated under one or more 
Federal orders and payment may only be made to the producer-settlement 
fund of the order pricing a plurality of the milk used to produce the 
nonfluid milk ingredients. This payment option shall not apply if the 
source of the nonfluid ingredients used in reconstituted fluid milk 
products cannot be determined by the market administrator.
[56 FR 5319, Feb. 11, 1991, as amended at 58 FR 27777, May 11, 1993]



Sec. 1001.62  Computation of basic blended price.

    The market administrator shall compute the basic blended price per 
hundredweight applicable to milk received at plants located in zone 21 
and containing 3.5 percent butterfat as follows:
    (a) Combine into one total the values computed pursuant to 
Secs. 1001.60 and 1001.61 for all handlers from whom the market 
administrator has received at the market administrator's office prior to 
the 11th day after the end of the month the reports for the month 
prescribed in Sec. 1001.30 and the payments for the preceding month 
required under Sec. 1001.72(a);
    (b) Deduct the amount of the plus adjustments, and add the amount of 
the minus adjustments, that are applicable under Secs. 1001.52 and 
1001.53;
    (c)-(d) [Reserved]
    (e) Add an amount equal to not less than one-half of the unobligated 
balance of the producer-settlement fund at the close of business on the 
10th day after the end of the month;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk;
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1001.60(f); and
    (3) The total hundredweight for which a value is computed pursuant 
to Sec. 1001.61(a); and
    (g) Subtract not less than 4 cents nor more than 5 cents for the 
purpose of retaining a cash balance in the producer-settlement fund. The 
result shall be the basic blended price for the month.
[56 FR 5319, Feb. 11, 1991, as amended at 59 FR 16512, Apr. 7, 1994]



Sec. 1001.63  Announcement of blended prices and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 13th day after the end of each month the zone blended prices 
resulting from the adjustment of the basic blended price for such month, 
as computed under Sec. 1001.62, by the location adjustments set forth in 
Sec. 1001.52.
[56 FR 5320, Feb. 11, 1991]

                            Payments for Milk



Sec. 1001.70  Producer-settlement fund.

    (a) The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund.'' He shall deposit into 
the fund all amounts received from handlers under Secs. 1001.72, 
1001.77, and 1001.78 and the amount subtracted under Sec. 1001.62(c). He 
shall pay from the fund all amounts due handlers under Secs. 1001.72, 
1001.77, and 1001.78 and the amount added under Sec. 1001.62(d), subject 
to his right to offset any amounts due from the handler under these 
sections and under Secs. 1001.85 and 1001.86.
    (b) All amounts subtracted under Sec. 1001.62(c), including interest 
earned thereon, shall remain in the producer-settlement fund as an 
obligated balance until it is withdrawn for the purpose of effectuating 
Sec. 1001.62(d).
    (c) The market administrator shall place all monies subtracted under 
Sec. 1001.62(c) in an interest-bearing bank account or accounts in a 
bank or banks duly approved as a Federal depository for such monies, or 
invest them in short-term U.S. Government securities.
[41 FR 8357, Feb. 26, 1976, as amended by 56 FR 5320, Feb. 11, 1991]

[[Page 66]]



Sec. 1001.71  Handlers' producer-settlement fund debits and credits.

    On or before the 15th day after the end of the month, the market 
administrator shall render a statement to each handler showing the 
amount of the handler's producer-settlement fund debit or credit, as 
calculated in this section.
    (a) The producer-settlement fund debit or credit for each plant and 
each cooperative association in its capacity as a handler under 
Sec. 1001.9(d) shall be computed as specified in this paragraph.
    (1) Multiply the quantities of producer milk, the quantities of 
fluid milk products received at the pool plant from cooperative 
associations in their capacity as handlers under Sec. 1001.9(d), the 
quantities of other source fluid milk receipts at pool plants that were 
allocated to Class I pursuant to Sec. 1001.44; and the quantities of 
route disposition in the marketing area by partially regulated 
distributing plants for which a value was determined pursuant to 
Sec. 1001.61(a) by the basic blended price computed under Sec. 1001.62 
adjusted by any location adjustments applicable under Secs. 1001.52 and 
1001.53.
    (2) For any cooperative association in its capacity as a handler 
under Sec. 1001.9(d), multiply the quantities of milk moved to each pool 
plant by the basic blended price computed under Sec. 1001.62 adjusted by 
any location adjustments applicable under Secs. 1001.52 and 1001.53; and 
to the result add the value determined under Sec. 1001.60.
    (3) If the value of fluid milk products, as determined under 
Sec. 1001.60 for any pool plant, under Sec. 1001.61 for any partially 
regulated distributing plant, or under paragraph (a)(2) of this section 
for any cooperative association in its capacity as a handler under 
Sec. 1001.9(d), is greater than the credit as determined under paragraph 
(a)(1) of this section, the difference shall be the producer-settlement 
fund debit for the plant or the cooperative association in its capacity 
as a handler under Sec. 1001.9(d).
    (4) If the value of fluid milk products, as determined under 
Sec. 1001.60 or 1001.61 for any plant, or as determined under paragraph 
(a)(2) of this section for any cooperative association in its capacity 
as a handler under Sec. 1001.9(d), is less than the credit as determined 
under paragraph (a)(1) of this section, the difference shall be the 
producer-settlement fund credit for the plant or the cooperative 
association in its capacity as a handler under Sec. 1001.9(d).
    (b) The producer-settlement fund debit or credit of any handler 
shall be the net of the producer-settlement fund debits and credits as 
computed for all of its operations under paragraph (a) of this section.
[41 FR 8357, Feb. 26, 1976, as amended by 56 FR 5320, Feb. 11, 1991]



Sec. 1001.72  Payments to and from the producer-settlement fund.

    (a) On or before the 18th day after the end of the month, each 
handler shall pay to the market administrator the handler's producer-
settlement fund debit for the month as determined under Sec. 1001.71.
    (b) On or before the 20th day after the end of the month, the market 
administrator shall pay to each handler the handler's producer-
settlement fund credit for the month as determined under Sec. 1001.71. 
If the unobligated balance in the producer-settlement fund is 
insufficient to make such payments, the market administrator shall 
reduce uniformly such payments and shall complete them as soon as the 
funds are available.



Sec. 1001.73  Payments to producers.

    (a) On or before the 5th day after the end of the month, each 
handler shall pay each producer for milk received from him during the 
first 15 days of the month at a rate that is not less than the Class III 
price for the preceding month.
    (b) On or before the 20th day after the end of the month, each 
handler shall make final payment to each producer for the total value of 
milk received from him during the month at not less than the basic 
blended price per hundredweight computed under Sec. 1001.62, adjusted by 
the location adjustment applicable under Secs. 1001.52 and 1001.53 and 
the butterfat differential applicable under Sec. 1001.76, minus the 
amount of the payment made to the producer under paragraph (a) of this 
section. If

[[Page 67]]

the handler has not received full payment from the market administrator 
under Sec. 1001.72(b) by the date payments are due under this paragraph, 
he may reduce pro rata his payments to producers by an amount not to 
exceed such underpayment. Such payments shall be completed after receipt 
of the balance due from the market administrator by the next following 
date for making payments under this paragraph.
    (c) If the handler's net payment to a producer is for an amount less 
than the total amount due the producer under this section, the burden 
shall rest upon the handler to prove to the market administrator that 
each deduction from the total amount due is properly authorized and 
properly chargeable to the producer.
    (d) In making payment to producers under paragraph (b) of this 
section for milk diverted from a pool plant the handler may elect to pay 
such producers at the price applicable at the zone location of the plant 
from which the milk was diverted, if the resulting net payment to each 
producer is not less than that otherwise required under this section and 
the rate of payment and the deductions shown on the statement required 
to be furnished under Sec. 1001.75 are those used in computing the 
payment.
[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17461, Apr. 25, 1978; 43 
FR 49972, Oct. 26, 1978; 56 FR 5320, Feb. 11, 1991]



Sec. 1001.74  Payments to cooperative associations.

    (a) Each cooperative association may file with a handler who is not 
a cooperative association a claim either for the payments that the 
handler is required to make to the association's producer members under 
Sec. 1001.73 or for authorized deductions from such payments. The claim 
shall contain a list of the producers to whom the payments are due or to 
whom the deductions apply, an agreement to indemnify the handler in the 
making of such payments or deductions, and a certification that the 
association has for each producer listed an unterminated membership 
contract authorizing the payment or deduction.
    (b) The handler shall withhold from the association's producer 
members the payments or the deductions specified in paragraph (a) of 
this section in accordance with the association's claim. He shall pay 
the amounts withheld to the association on or before the dates on which 
such amounts otherwise would have been due to the producer members under 
Sec. 1001.73.
    (c) For each producer member from whom payment was withheld, the 
handler shall furnish the association a supporting statement showing the 
information required to be furnished to the producer under Sec. 1001.75. 
Such information with respect to milk received during the first 15 days 
of the month shall be furnished not later than the 27th day of the month 
and with respect to milk received during the remainder of the month not 
later than the 12th day of the following month. For each producer member 
from whom a deduction is made under this section, the handler shall 
furnish the association a statement showing the pounds of milk received.
    (d) Each handler who receives fluid milk products at his plant from 
a cooperative association in its capacity as the operator of a pool 
plant or in its capacity as a handler under Sec. 1001.9(d) shall make 
payment to the association for such receipts as follows:
    (1) On or before the 5th day after the end of the month, for the 
fluid milk products received from the association during the first 15 
days of the month at a rate that is not less than the Class III price 
for the preceding month. The payment made to the association under this 
subparagraph shall constitute partial payment of the total amount 
required to be paid under this paragraph.
    (2) On or before the 20th day after the end of the month, for not 
less than the total value of fluid milk products received from the 
association's pool plants, as determined by multiplying the respective 
quantities assigned to each class under Sec. 1001.44 by the class price 
for the month, adjusted by the location adjustments applicable under 
Secs. 1001.52 and 1001.53 and the butterfat differential applicable 
under Sec. 1001.76, minus the amount of the payment made to the 
association under paragraph (d)(1) of this section.
    (3) On or before the 20th day after the end of the month, for not 
less than the

[[Page 68]]

total value of milk received from the cooperative association in its 
capacity as a handler under Sec. 1001.9(d), at the basic blended price 
per hundredweight for the month computed under Sec. 1001.62, adjusted by 
the location adjustment applicable under Secs. 1001.52 and 1001.53 and 
the butterfat differential applicable under Sec. 1001.76, minus the 
amount of the payment made to the association under paragraph (d)(1) of 
this section. If the handler has not received full payment from the 
market administrator under Sec. 1001.72(b) by the date payment is due 
under this paragraph, he may reduce his payment to the association by an 
amount not to exceed such underpayment. Such payment shall be completed 
after receipt of the balance due from the market administrator by the 
next following date for making payment under this paragraph.
[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17461, Apr. 25, 1978; 56 
FR 5320, Feb. 11, 1991]



Sec. 1001.75  Statements to producers.

    In making the payments to producers required under Sec. 1001.73, 
each handler shall furnish each producer with a supporting statement, in 
such form that it may be retained by the producer, which shall show:
    (a) The month and the identity of the handler and of the producer;
    (b) The pounds and butterfat test of milk that is received from the 
producer, or if more than one minimum rate of payment is applicable to 
the producer's milk under Sec. 1001.73, the respective pounds and test 
to which each minimum rate of payment applies;
    (c) The minimum rate or rates, including the butterfat differential, 
at which payment to the producer is required under Sec. 1001.73;
    (d) The rate that is used in making the payment, if such rate is 
other than the applicable minimum rate;
    (e) The amount or the rate per hundredweight of each deduction 
claimed by the handler, including any deductions claimed under 
Secs. 1001.74 and 1001.86, together with a description of the respective 
deductions; and
    (f) The net amount of payment to the producer.



Sec. 1001.76  Butterfat differential.

    (a) In making the payments to producers required under Sec. 1001.73 
and the payments to cooperative associations required under 
Sec. 1001.74(d), each handler shall add for each one-tenth of one 
percent of average butterfat content above 3.5 percent, or may deduct 
for each one-tenth of one percent of average butterfat content below 3.5 
percent, as a butterfat differential, an amount per hundredweight that 
shall be computed by the market administrator under paragraph (b) of 
this section.
    (b) Round to the nearest one-tenth cent, which 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. 1001.51 (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.
[41 FR 8357, Feb. 26, 1976, as amended at 60 FR 18954, Apr. 14, 1995]



Sec. 1001.77  Adjustment of accounts.

    (a) Whenever the market administrator's verification of a handler's 
reports or payments discloses an error in payments to or from the market 
administrator under Sec. 1001.72, Sec. 1001.85, or Sec. 1001.86, the 
market administrator shall promptly issue to the handler a charge bill 
or a credit, as the case may be, for the amount of the error. Adjustment 
charge bills issued during the period beginning with the 11th day of the 
prior month and ending with the 10th day of the current month shall be 
payable by the handler to the market administrator on or before the 18th 
day of the current month. Adjustment credits issued during that period 
shall be payable by the market administrator to the handler on or before 
the 20th day of the current month.
    (b) Whenever the market administrator's verification of a handler's 
payments discloses payment to a producer or a cooperative association of 
an amount less than is required by Secs. 1001.73 and 1001.74, the 
handler shall

[[Page 69]]

make payment of the balance due the producer or the cooperative 
association not later than the 20th day after the end of the month in 
which the handler is notified of the deficiency.



Sec. 1001.78  Charges on overdue accounts.

    Any producer-settlement fund account balance due from or to a 
handler under Sec. 1001.72, Sec. 1001.77, or Sec. 1001.78, for which 
remittance has not been received in or paid from the market 
administrator's office by the close of business on the 20th day of any 
month, shall be increased one percent effective the following day.
[56 FR 5320, Feb. 11, 1991]

        Administrative Assessment and Marketing Service Deduction



Sec. 1001.85  Assessment for order administration.

    On or before the 18th day after the end of the month, each handler 
shall pay to the market administrator his pro rata share of the expense 
of administration of this order. The payment shall be at the rate of 4 
cents per hundredweight, or such lesser rate as the Secretary may 
prescribe. The payment shall apply to:
    (a) All of a handler's receipts at pool plants during the month of 
fluid milk products from all sources, except receipts from pool plants, 
receipts from regulated plants or pool bulk tank units under other 
Federal orders if such receipts were subject to an administrative 
expense assessment under the other order, and receipts of exempt milk 
processed at plants other than pool plants;
    (b) All receipts and beginning inventory of a cooperative 
association in its capacity as a handler under Sec. 1001.9(d) for the 
month less its disposition to pool plants and ending inventory for the 
month; and
    (c) The quantity distributed as route disposition in the marketing 
area from a partially regulated distributing plant for which a value is 
determined under Sec. 1001.61.
[41 FR 8357, Feb. 26, 1976, as amended by 56 FR 5320, Feb. 11, 1991]



Sec. 1001.86  Deduction for marketing services.

    (a) In making the payments required by Sec. 1001.73 to producers, 
other than himself and any producer who is a member of a cooperative 
association that the Secretary determines is performing the services 
specified in this section, each handler shall deduct 5 cents per 
hundredweight, or such lesser rate as the Secretary shall determine to 
be sufficient, for marketing services. The handler shall pay the amount 
deducted to the market administrator on or before the 18th day after the 
end of the month.
    (b) The market administrator shall expend amounts received under 
paragraph (a) of this section only in providing for market information 
to such producers and for verification of weights, samples, and tests of 
milk received from them. The market administrator may contract with a 
cooperative association for the furnishing of the whole or any part of 
these services.
[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17461, Apr. 25, 1978]



PART 1002--MILK IN NEW YORK-NEW JERSEY MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                   General Provisions and Definitions

Sec.
1002.1  General provisions.
1002.3  Marketing area.
1002.5  Dairy farmer.
1002.6  Producer.
1002.7  Handler.
1002.8  Plant.
1002.9  Unit.
1002.10  Farm.
1002.11  Own farm milk.
1002.12  Producer-handler.
1002.13  Other order.
1002.14  Pool milk.
1002.15  Fluid milk product.
1002.16  Other source milk.
1002.17  Filled milk.
1002.18  Fluid cream product.
1002.19  [Reserved]
1002.20  Commercial food processing establishment.

                          Market Administrator

1002.22  Additional duties of the market administrator.

[[Page 70]]

                     Pool Plants and Bulk Tank Units

1002.24  Regular pool plants.
1002.25  Bulk tank units.
1002.26  Operating requirements.
1002.27  Suspension and cancellation of designation.
1002.28  Temporary pool plants.
1002.29  Partial pool plants.

                                 Reports

1002.30  Reports of receipts and utilization.
1002.31  Producer payroll reports.
1002.32  Other reports.

                             Classification

1002.40  General classification rules.
1002.41  Classes of utilization.
1002.42  Shrinkage.
1002.44  Transfers.
1002.45  Allocation of skim milk and butterfat classified.
1002.46  Rules and regulations.

                             Minimum Prices

1002.50  Class prices.
1002.51  Basic formula price.
1002.52  Transportation differentials.
1002.53  Producer-handler price differential.
1002.54  Use of equivalent price or index.
1002.55  Transportation credit on bulk unit pool milk.
1002.56  Announcement of class prices and butterfat differential.

                     Determination of Uniform Price

1002.60  Net pool obligation of handlers.
1002.61  Computation of the uniform price.
1002.62  Announcement of uniform price.

               Producer Settlement Fund and Its Operation

1002.70  Producer settlement fund.
1002.71  Handler's accounts.
1002.72  Payments to the producer-settlement fund.
1002.73  Payments out of the producer-settlement fund.
1002.74  Handler's pool debit or credit.
1002.75  Adjustments of errors in payments.
1002.76   Charges on overdue accounts.
1002.77  Cooperative payments for marketwide services.

                Payment by Handlers Directly to Producers

1002.80  Time and rate of payments.
1002.81  Butterfat differential.
1002.82  Transportation differentials.

                        Expense of Administration

1002.85  Payment by handlers.

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.



                   Subpart--Order Regulating Handling

    Source:  33 FR 8201, June 1, 1968, unless otherwise noted.

                   General Provisions and Definitions



Sec. 1002.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.
[36 FR 9847, May 29, 1971]



Sec. 1002.3  Marketing area.

    New York-New Jersey milk marketing area (hereinafter called the 
``marketing area'') means all of the territory within the boundaries of 
the city of New York, and the counties and parts of counties set forth 
below together with all piers, docks, and wharves connected therewith, 
and all craft moored thereat, and including territory within such 
boundaries which is occupied by Government (municipal, State, Federal, 
or international) reservations, installations, institutions, or other 
establishments.

                            New York Counties

Albany.
Broome.
Cayuga (except the townships of Sterling, Victory, Conquest, and 
Montezuma).
Chemung.
Chenango.
Columbia.
Cortland.
Delaware.
Dutchess.
Essex (Schroon, Ticonderoga, Crown Point, and Moriah townships only).
Fulton (except the township of Stratford).
Greene.
Herkimer (except the townships of Webb, Ohio, and Salisbury).
Madison.
Montgomery.
Nassau.
Oneida (except the townships of Ava, Boonville, Forestport, and 
Florence).
Onondaga.
Orange.
Oswego (except the townships of Redfield and Boylston).
Otsego
Putnam.
Rensselaer.
Rockland.

[[Page 71]]

Saratoga (except the townships of Day, Edinburg, and Providence).
Schenectady.
Schoharie.
Schuyler.
Steuben (Addison, Corning, and Erwin townships only).
Suffolk (except Fisher's Island).
Sullivan.
Tioga.
Tompkins.
Ulster.
Warren (except the townships of Johnsburg, Thurman, and Stony Creek).
Washington.
Westchester.
Yates (except the townships of Italy, Middlesex, and Potter).

                           New Jersey Counties

Bergen.
Essex.
Hudson.
Hunterdon.
Middlesex.
Monmouth.
Morris.
Ocean (except the boroughs of Barnegat Light, Beach Haven, Harvey, 
Cedars, Ship Bottom, Surf City, Tuckerton, and the townships of 
Eagleswood, Lacery, Little Egg Harbor, Long Beach, Ocean, Stafford, and 
Union).
Passaic.
Somerset.
Sussex.
Union.
Warren.



Sec. 1002.5  Dairy farmer.

    Dairy farmer means any person who produces milk.



Sec. 1002.6  Producer.

    Producer means any dairy farmer who produces milk approved by a duly 
constituted regulatory agency for fluid consumption and who delivers 
pool milk as specified in Sec. 1002.14 to a pool plant, a pool unit, a 
plant specified in Sec. 1002.28 (f)(2) which is a partial pool plant, or 
a partial pool unit whose pool designation was canceled for failure to 
meet the requirements specified in Sec. 1002.26(a), except that it shall 
not include any such dairy farmer delivering to such partial pool plant 
or partial pool unit unless at least 50 percent of such dairy farmer's 
milk delivered to such plant or unit is pool milk pursuant to 
Sec. 1002.14. Each dairy farmer delivering milk to a partial pool plant 
or a partial pool unit shall be considered to have delivered pool milk 
for such dairy farmer's proportionate share of total milk delivered by 
dairy farmers to such plant or unit.
[56 FR 5320, Feb. 11, 1991]



Sec. 1002.7  Handler.

    Handler means:
    (a) Any person who engages in the handling of skim milk or butterfat 
which was received at a pool plant, a partial pool plant, a pool unit or 
a partial pool unit or at a plant approved by any health authority as a 
source of skim milk or butterfat for disposition as fluid milk products 
in the marketing area;
    (b) Any person who engages in the handling of fluid milk products, 
all or a portion of which is shipped to, or received in, the marketing 
area; or
    (c) Any cooperative association with respect to milk which it causes 
to be delivered from producers to any other handler for the account of 
such association and for which such association receives payment.



Sec. 1002.8  Plant.

    (a) Plant means the land, buildings, surroundings, facilities, and 
equipment, whether owned or operated by one or more persons, 
constituting a single operating unit or establishment for the receiving, 
handling, or processing of milk or milk products as determined by the 
market administrator.
    (b) Pool plant means any plant which is designated as a pool plant 
pursuant to Secs. 1002.24 to 1002.28 and any plant, except an other 
order plant, which receives no milk from dairy farmers or units and from 
which 50 percent or more of the gross receipts of skim milk and 
butterfat in the form of fluid milk products is disposed of in consumer 
packages or dispenser inserts in the marketing area by direct 
distribution or is moved either in packaged form or bulk to other plants 
in the marketing area.
    (c) Partial pool plant means a plant which is so designated pursuant 
to Sec. 1002.29.
    (d) Other order plant means a plant which is fully subject to the 
pricing and payment provisions of an other order.

[[Page 72]]



Sec. 1002.9  Unit.

    (a) Pool unit means a bulk tank unit established pursuant to 
Sec. 1002.25 and which meets the requirements of a pool unit pursuant to 
such section.
    (b) Partial pool unit means a bulk tank unit so designated pursuant 
to Sec. 1002.25(k).



Sec. 1002.10  Farm.

    Farm means the production facilities and resources supplying milk to 
a milk house of a dairy farmer. The location of the farm shall be deemed 
to be the same as the location of the milk house, and in the event of a 
change in the location of the dairy farmer's milk house, any question as 
to whether milk received from the new milk house is from the same or a 
different farm shall be determined by the market administrator.



Sec. 1002.11  Own farm milk.

    (a) Own farm milk means milk received at a plant from a farm 
operated by the person who is the operator of such plant.
    (b) The market administrator shall publicly announce the name of any 
handler operating a pool plant receiving own farm milk and the location 
of the plant operated by such handler. This public announcement shall 
not include the name of:
    (1) Any person meeting the definition of producer-handler as set 
forth in Sec. 1002.12;
    (2) Any person receiving no milk from other dairy farmers and 
selling no more than 100 quarts per day of Class I-A milk to persons in 
the marketing area other than to other plants; or
    (3) A charitable, religious, educational, or governmental 
institution which is not engaged in the practice of receiving bulk milk 
from other sources for processing or packaging and is not engaged in the 
practice of selling packaged milk to persons not associated with such 
institution.



Sec. 1002.12  Producer-handler.

    Producer-handler means a handler who, following the filing of an 
application pursuant to paragraph (a) of this section, has been so 
designated by the market administrator upon determination that the 
requirements of paragraph (b) of this section have been met. Such 
designation shall be effective on the first of the month after receipt 
by the market administrator of an application containing complete 
information on the basis of which the market administrator determines 
that the requirements of paragraph (b) of this section are being met. 
The effective date of designation shall be governed by the date of 
filing new applications in instances where applications previously filed 
have been denied. All designations shall remain in effect until 
cancelled pursuant to paragraph (c) of this section.
    (a) Application. Any handler claiming to meet the requirements of 
paragraph (b) of this section may file with the market administrator, on 
forms prescribed by the market administrator, an application for 
designation as a producer-handler. The application shall contain the 
following information:
    (1) A listing and description of all resources and facilities used 
for the production of milk which are owned or directly or indirectly 
operated or controlled by the applicant.
    (2) A listing and description of all resources and facilities used 
for the processing or distribution of milk or milk products which are 
owned, or directly or indirectly operated or controlled by the 
applicant.
    (3) A description of any other resources and facilities used in the 
production, handling, or processing of milk or milk products in which 
the applicant in any way has an interest, including any contractual 
arrangement, and the names of any other persons having or exercising any 
degree of ownership, management, or control in, or with whom there 
exists any contractual arrangement with respect to, the applicant's 
operation either in his capacity as a handler or in his capacity as a 
dairy farmer.
    (4) A listing and description of the resources and facilities used 
in the production, processing, and distribution of milk or milk products 
which the applicant desires to be determined as his milk production, 
processing, and distribution unit in connection with his

[[Page 73]]

designation as a producer-handler: Provided, That all milk production 
resources and facilities owned, operated, or controlled by the applicant 
either directly or indirectly shall be considered as constituting a part 
of the applicant's milk production unit in the absence of proof 
satisfactory to the market administrator that some portion of such 
facilities or resources do not constitute an actual or potential source 
of milk supply for the applicant's operation as a producer-handler.
    (5) Such other information as may be required by the market 
administrator.
    (b) Requirements. (1) The handler has and exercises (in his capacity 
as a handler) complete and exclusive control over the operation and 
management of a plant at which he handles milk received from production 
facilities and resources (milking herd, buildings housing such herd, and 
the land on which such buildings are located) the operation and 
management of which also are under the complete and exclusive control of 
the handler (in his capacity as a dairy farmer), all of which facilities 
and resources for the production, processing, and distribution of milk 
and milk products constitute an integrated operation over which the 
handler (in his capacity as a producer-handler) has and exercises 
complete and exclusive control.
    (2) The handler, in his capacity as a handler, handles no fluid milk 
products other than those derived from the milk production facilities 
and resources designated as constituting the applicant's operation as a 
producer-handler.
    (3) The handler is not, either directly or indirectly, associated 
with control or management of the operation of another plant or another 
handler, nor is another handler so associated with his operation.
    (4) The handler sells more than an average of 100 quarts per day of 
Class I-A milk to persons in the marketing area other than to other 
plants.
    (5) In case the plant of the applicant was operated by a handler 
whose designation as a producer-handler previously had been cancelled 
pursuant to paragraph (c) of this section, the quantity of fluid milk 
products handled during the 12 months preceding the application which 
was derived from sources other than the designated milk production 
facilities and resources constituting the applicant's operation as a 
producer-handler is less than the volume set forth for cancellation 
pursuant to paragraph (c)(3) or (4) of this section.
    (c) Cancellation. The designation as a producer-handler shall be 
cancelled under conditions set forth in paragraphs (c)(1) and (2) of 
this section or, except as specified in paragraphs (c)(3) and (4) of 
this section, upon determination by the market administrator that any of 
the requirements of paragraph (b) of this section are not continuing to 
be met, such cancellation to be effective on the first day of the month 
following the month in which the requirements were not met.
    (1) Milk from the designated production facilities and resources of 
the producer-handler is delivered in the name of another person as pool 
milk to another handler or except in the months of June through November 
with prior notice to the market administrator, a dairy herd, cattle 
barn, or milking parlor is transferred to another person who uses such 
facilities or resources for producing milk which is delivered as pool 
milk to another handler. This provision, however, shall not be deemed to 
preclude the occasional sale of individual cows from the herd.
    (2) A dairy herd, cattle barn, or milking parlor, previously used 
for the production of milk delivered as pool milk to another handler, is 
added to the designated milk production facilities and resources of the 
producer-handler, except in the months of December through May, with 
prior notice to the market administrator, or if such facilities and 
resources were a part of the designated production facilities and 
resources during any of the preceding 12 months. This provision, 
however, shall not be deemed to preclude the occasional purchase of 
individual cows for the herd.
    (3) If the producer-handler handles an average of more than 150 
product pounds per day of fluid milk products which are derived from 
sources other than the designated milk production facilities and 
resources, the cancellation of designation shall be effective the first 
of the month in which he handled such fluid milk products.

[[Page 74]]

    (4) If the producer-handler handles fluid milk products derived from 
sources other than the designated milk production facilities and 
resources in a volume less than specified in paragraph (c)(3) of this 
section, the designation shall be cancelled effective on the first of 
the month following the third month in any six-month period in which the 
producer-handler handled such fluid milk products: Provided, That the 
receipt of up to an average of ten pounds per day of packaged fluid milk 
products in the form of fluid skim milk, or of any volume of other 
packaged fluid milk products (except milk) from pool plants, shall not 
be counted for purposes of this paragraph (c)(4).
    (d) Public announcement. The market administrator shall publicly 
announce the name, plant, and farm location of persons designated as 
producer-handlers, and those whose designations have been canceled. Such 
announcements shall be controlling with respect to the accounting at 
plants of other handlers for fluid milk products received from such 
producer-handler on and after the first of the month following the date 
of such announcement.
    (e) Burden of establishing and maintaining producer-handler status. 
The burden rests upon the handler who is designated as a producer-
handler (and upon the applicant for such designation) to establish 
through records required pursuant to Sec. 1000.5 that the requirements 
set forth in paragraph (b) of this section have been and are continuing 
to be met and that the conditions set forth in paragraph (c) of this 
section for cancellation of designation do not exist.
[33 FR 8201, June 1, 1968, as amended at 35 FR 16789, Oct. 30, 1970; 36 
FR 9847, May 29, 1971]



Sec. 1002.13  Other order.

    Other order means an order issued by the Secretary pursuant to the 
Act, which order regulates the handling of milk in a marketing area 
other than that defined in this part.



Sec. 1002.14  Pool milk.

    Pool milk means all skim milk and butterfat contained in milk except 
as set forth in paragraphs (a) through (k) of this section which is 
pumped at the farm into a tank mounted on a truck or trailer for a 
handler who has included such milk in a pool unit, or a partial pool 
unit or which is delivered direct from a farm to a pool plant or a 
partial pool plant but is not put into a tank truck prior to such 
delivery. This definition shall include any milk so delivered by a 
person defined in Sec. 1002.11(b)(2), by an institution defined in 
Sec. 1002.11(b)(3), or by a producer-handler designated pursuant to 
Sec. 1002.12 which milk is produced in accordance with methods and 
standards of the American Association of Medical Milk Commissions for 
the production of certified milk and which is delivered in bulk to 
another handler but for marketing as other than certified milk.
    (a) Milk first received at a pool plant which otherwise would be 
considered producer milk under an other order if all of such milk is 
assigned to Class II or Class III pursuant to Sec. 1002.45(a)(9) and the 
corresponding step of Sec. 1002.45(b).
    (b) Milk not approved by a duly constituted regulatory agency for 
fluid consumption.
    (c) Milk delivered by a pool unit direct to a plant other than a 
pool plant or a partial pool plant if such milk is pooled as producer 
milk under an other order.
    (d) Milk which is pumped into a tank truck at the farm for delivery 
to a handler during any of the months of December through June if any 
milk from such farm was delivered to such handler as producer milk under 
an other order during any of the preceding months of July through 
November unless such farm becomes part of a partial pool unit.
    (e) Milk delivered to a partial pool plant set forth in 
Sec. 1002.29(a) and milk of a partial pool unit pursuant to 
Sec. 1002.25(k)(1) in excess of the quantity of such milk classified as 
Class I-A and Class I-B.
    (f) Milk delivered to a partial pool plant set forth in 
Sec. 1002.29(b) and milk of a partial pool unit pursuant to 
Sec. 1002.25(k)(2) in excess of the quantity of such milk classified as 
Class I-A in the marketing area or at a pool plant, except that if milk 
is shipped from a partial pool plant in the 401 miles and over freight 
zone to a plant from which 50 percent or more of the gross receipts

[[Page 75]]

of skim milk and butterfat in the form of fluid milk products is 
disposed of in consumer packages and dispenser inserts in the marketing 
area either by direct distribution or to other plants, all of the milk 
so shipped shall be considered to be pool milk except as set forth in 
paragraph (g) of this section.
    (g) Milk delivered to a partial pool plant or a partial pool unit if 
in either case there is a monetary obligation on such milk under an 
other order.
    (h) Milk received from farms in Nassau and Suffolk Counties in New 
York, which farms are not approved for sale of milk in New York City, 
and milk received from farms in New York City.
    (i) Own farm milk of a handler listed pursuant to Sec. 1002.11(b) 
not in excess of an average of 800 pounds per day if the handler is not 
a producer-handler designated pursuant to Sec. 1002.12, and if the 
volume of skim milk and butterfat in milk handled, other than that 
derived from own farm milk, does not exceed an average of 1,600 pounds 
per day.
    (j) Own farm milk of an institution as defined pursuant to 
Sec. 1002.11(b)(3) if such milk is not delivered to a pool plant, a 
partial pool plant, a pool unit or a partial pool unit.
    (k) All skim milk and butterfat handled by:
    (1) A producer-handler designated pursuant to Sec. 1002.12 which is 
derived from such producer-handler's production resources and facilities 
except as provided in the preamble of this section; or
    (2) A producer-handler pursuant to an other order.
[33 FR 8201, June 1, 1968, as amended at 41 FR 8367, Feb. 26, 1976; 56 
FR 5320, Feb. 11, 1991]



Sec. 1002.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27778, May 11, 1993]



Sec. 1002.16  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts in the form of fluid milk products from any source 
other than receipts of pool milk from dairy farmers, receipts from other 
pool plants and pool units, and receipts of pool milk from partial pool 
plants and partial pool units;
    (b) Receipts in a form other than as a fluid milk product (including 
those produced at the plant during a prior month) which are reprocessed, 
converted or combined with another product during the month; and
    (c) Receipts in a form other than a fluid milk product for which the 
handler fails to establish a disposition.



Sec. 1002.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers or flavoring) resembles milk or any 
other fluid milk product; and contains less than 6 percent nonmilk fat 
(or oil).
[34 FR 18604, Nov. 22, 1969]

[[Page 76]]



Sec. 1002.18  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27778, May 11, 1993]



Sec. 1002.19  [Reserved]



Sec. 1002.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of that uses such receipts as 
ingredients in food products and has no disposition of fluid milk 
products or fluid cream products other than those received in consumer-
type packages.
[58 FR 27778, May 11, 1993]

                          Market Administrator



Sec. 1002.22  Additional duties of the market administrator.

    In addition to the duties specified in Sec. 1000.3(c) of this 
chapter, the market administrator shall perform the following duties:
    (a) Maintain a main office and such branch offices as may be 
necessary;
    (b) Promptly notify a handler, upon receipt of the handler's written 
request therefor, of the market administrator's determination: as to 
whether one or more plants exist at a specified location, as to whether 
any specified item constitutes a part of the handler's plant, or as to 
which plant a specified item is a part in the event that the particular 
premises in question constitutes more than one plant: Provided, That if 
the request of the handler is for revision or affirmation of a previous 
determination, there is set forth in the request a statement of what the 
handler believes to be the changed conditions which make a new 
determination necessary. If a handler has been notified in writing of a 
determination with respect to an establishment operated by him, any 
revision of such determination shall not be effective prior to the date 
on which such handler is notified of the revised determination;
    (c) Place the sums deducted under Sec. 1002.61(d) and retained 
pursuant to Sec. 1002.70 in an interest-bearing account or accounts in a 
bank or banks duly approved as a Federal depository for such sums or 
invest them in short-term United States Government securities;
    (d) For the purpose of allocating receipts from other Federal order 
plants under Sec. 1002.45(a)(15) and the corresponding step of 
Sec. 1002.45(b), publicly announce the market administrator's estimate 
of the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in pool milk 
of all handlers. Such estimate shall be final for such purpose.
    (e) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from another order plant, the class to which such 
receipts are allocated pursuant to Secs. 1002.40(c) and 1002.45 on the 
basis of such report, (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
[56 FR 5321, Feb. 11, 1991, as amended at 58 FR 27778, May 11, 1993]

                     Pool Plants and Bulk Tank Units



Sec. 1002.24  Regular pool plants.

    A plant may be designated a regular pool plant pursuant to either 
paragraph (a) or paragraph (b) of this section. Designation shall be 
applicable to the plant as such and subject to cancellation only 
pursuant to Sec. 1002.27, regardless of change in the person owning or 
operating the plant. The market administrator shall be notified by the 
handlers involved of any transfer from one person to another of 
ownership or operation of a pool plant.
    (a) Any plant shall be designated a pool plant upon determination by 
the Secretary that the provisions of paragraphs (a)(1) through (4) of 
this section have been met. Not later than the end

[[Page 77]]

of the month following the month in which an application is received by 
the Secretary pursuant to paragraph (a)(1) of this section, the 
Secretary shall either determine that the provisions of paragraphs 
(a)(1) through (4) of this section either have been met or have not been 
met, or notify the applicant that additional information is needed prior 
to making a determination. Such designation shall be effective the first 
of the month following the date of designation and shall continue until 
such designation is canceled pursuant to Sec. 1002.27: Provided, That 
notwithstanding the provisions of paragraphs (a)(1) through (4) of this 
section, any plant which for the month immediately preceding the 
effective date of this section, had a designation pursuant to 
Sec. 1002.24 as then in effect, is hereby designated a regular pool 
plant from the effective date of this section until such designation is 
canceled pursuant to Sec. 1002.27.
    (1) An application by the operator of the plant for such 
determination has been addressed to the Secretary and filed at the 
office of the market administrator: Provided, That if 50 percent or more 
of the dairy farmers delivering milk at such plant deliver such milk for 
the account of a cooperative association which does not operate the 
plant but for which milk such association receives payment, an 
application must be filed by such cooperative association as well as the 
person operating the plant.
    (2) The plant is located in New York, New Jersey, or Pennsylvania.
    (3) The plant was a pool plant pursuant to paragraph (a) or (b) of 
Sec. 1002.28 for each of the 12 months immediately preceding the month 
during which an application is filed.
    (4) The operating requirements of Sec. 1002.26 are being met.
    (b) A plant may be designated at any time as a regular pool plant 
upon application made by the person operating the plant to the Secretary 
showing that the plant is a replacement for one or more pool plants, 
designated pursuant to this section, which are operated by him and that 
substantially all of the dairy farmers delivering milk at the plant 
previously delivered milk to the pool plant or plants replaced.



Sec. 1002.25  Bulk tank units.

    Any handler receiving milk from farms in a tank truck shall 
establish such farms in one or more bulk tank units (hereinafter called 
``units'') each consisting of one or more farms, in accordance with 
provisions of this section. The milk of any farm included in a unit 
shall be considered for pricing purposes as having been received by the 
handler in the unit at the nearest point of the township (as determined 
pursuant to Sec. 1002.52(b)) in which such farm is located. Any handler 
who receives milk at a pool plant or a plant distributing Class I-A milk 
in the marketing area which is delivered from a farm to such plant in a 
tank truck shall be deemed to have received such milk from a unit, pool, 
partial pool, or nonpool, and any handler who receives bulk milk from a 
farm in a tank truck containing pool milk shall be deemed to have 
received such milk from a farm of a unit either pool, partial pool, or 
nonpool.
    (a) Handlers who may establish, maintain, and be responsible for 
pool units are as follows:
    (1) A handler who operates a pool plant or a handler who operates a 
plant from which Class I-A milk is distributed in the marketing area 
other than to another plant: Provided, That a handler who is affiliated 
with or is a subsidiary of a handler operating a pool plant may also 
operate pool units if both handlers notify the market administrator in 
writing of such relationship: Provided further, That such handler who 
operates a distributing plant but not a pool plant, to be eligible to 
maintain a pool unit for any month, must have combined receipts of skim 
milk and butterfat from such unit for such month classified as Classes 
I-A and I-B in a percentage at least as great as the market percentage 
of pool milk in Classes I-A and I-B for the same month of the preceding 
year.
    (2) A cooperative handler who does not operate a plant but who 
receives milk from farms in a tank truck and delivers such milk to 
plants of other handlers if such cooperative for 12 months has been 
qualified as a basis for payments pursuant to Sec. 1002.77 or if such 
cooperative has operated a pool

[[Page 78]]

unit for 12 consecutive months: Provided, That such cooperative must 
meet the definition of a cooperative set forth in Sec. 1002.77(a)(1).
    (3) Any other cooperative handler who does not operate a plant if 
such cooperative meets the definition of a cooperative set forth in 
Sec. 1002.77(a)(1) subject to the conditions of this section.
    (4) For the months specified in paragraph (a)(4)(i) or (ii) of this 
section, any other handler operating a unit in any of the months of 
April, May, or June which unit had for such month any skim milk or 
butterfat classified as Class I-A milk in the marketing area (on some 
basis other than failure to account for such milk) and had a total Class 
I-A and Class I-B classification in a percentage at least as great as 
the market percentage of pool milk in Classes I-A and I-B for the same 
month in the preceding year.
    (i) Such month.
    (ii) Each of the months through March following such month except 
for any month when the Class I-B or combined Class I-A and Class I-B of 
such unit is less than 60 percent.
    (b) The handler may establish the units in any manner chosen by him, 
subject to the following limitations:
    (1) Each unit shall have a headquarters where the basic record of 
receipts and butterfat tests of milk from each farm are maintained and 
where there is maintained the basic record of each receipt and each 
delivery of milk by each tank truck receiving milk from farms of the 
unit and related details with respect to the movement of such milk.
    (2) Each unit shall be given a name indicating the general 
geographic area in which farms comprising such unit are located.
    (3) The handler shall declare whether each unit is to be operated as 
a pool unit. Farms from which the milk is to be pooled shall be 
established in a separate unit from those which are not to be pooled.
    (4) Farms in the area specified in paragraph (e) of this section 
shall be in units separate from farms in the area specified in paragraph 
(f) of this section.
    (c) Except as set forth in paragraphs (c)(1) through (5) of this 
section, a handler may declare that a unit is to be operated as a pool 
unit and at any time may add a farm to a pool unit: Provided, That a 
handler pursuant to paragraph (a)(4) of this section may not add farms 
to a pool unit during the months of July through March unless such 
handler's Class I-A skim milk or butterfat utilization exceeds the total 
receipts of skim milk or butterfat, respectively, in milk from the pool 
unit, and in the latter case he may add only the smallest number of 
farms necessary to provide sufficient milk to cover such Class I-A 
utilization.
    (1) If the unit is a declared nonpool unit or if the farm is a part 
of a declared nonpool unit of such handler, the unit or farm may be 
changed to a pool status, except as excluded from the pool milk 
definition pursuant to Sec. 1002.14(d), only beginning the first day of 
a month upon notice to the market administrator by not later than the 
10th day of such month. If the notice is filed after the 10th day of the 
month, the effective date shall be the first day of the following month 
except as specified in paragraph (c)(5) of this section.
    (2) In the period of December through June, no new pool unit may be 
established, no nonpool or partial pool unit may be declared to be a 
pool unit, and no farm may be added to a pool unit if the handler 
caused, as specified in paragraph (d) of this section, any pool unit or 
any farm of a pool unit to become nonpool in the period of July through 
November immediately preceding: Provided, That this limitation shall not 
prevent the handler from including in a pool unit a farm which for the 
first time has converted from can delivery to bulk tank delivery and 
from which the handler received as pool milk all milk delivered by such 
farm in cans for a period of 30 days immediately preceding: Provided 
further, That, except in the case set forth in paragraph (d)(3) of this 
section, this paragraph (c)(2) shall not be applicable if the farm which 
is caused to become nonpool thereby becomes a producer farm under 
another order with a provision for marketwide equalization.
    (3) No farm which was caused to become nonpool may be made a part of 
a pool unit by a handler set forth in paragraphs (c)(3)(i) through (iv) 
of this

[[Page 79]]

section until after the passage of a complete April-May-June period 
following the time such farm was caused to become nonpool:
    (i) The handler who caused the farm to become nonpool.
    (ii) The handler or other person who received the milk as nonpool 
milk.
    (iii) A handler who is substantially under the same management 
control, or ownership as the handler or other person set forth in 
paragraph (c)(3)(i) or (ii) of this section.
    (iv) A handler who receives the milk through arrangement with the 
handler or other person set forth in paragraph (c)(3)(i), (ii), or 
(c)(3)(iii) of this section.
    (4) A handler may transfer a farm from one pool unit to another of 
his pool units on the first day of any month upon notice to the market 
administrator by not later than the 10th day of such month.
    (5) A farm shall automatically be added to a pool unit or a nonpool 
unit shall automatically become a pool unit effective the first day of 
any month in which any of the skim milk or butterfat in milk of such 
farm or unit is assigned pursuant to Sec. 1002.45 to Class I-A milk 
unless the handler is precluded from doing so pursuant to paragraph 
(c)(2) or (c)(3) of this section or unless such milk is considered 
producer milk under an other order with a provision for marketwide 
equalization. If some but not all skim milk or butterfat in milk 
received from such farms previously a part of a nonpool unit is assigned 
to Class I-A milk the handler operating such unit has until the time of 
filing the report required pursuant to Sec. 1002.30 to specify which 
farms are to be added to a pool unit and if upon verification by audit 
the market admininstrator finds that other skim milk or butterfat in 
milk of a declared nonpool unit is assigned to Class I-A milk, the 
handler operating such unit has until ten days after notification by the 
market administrator to specify which farms are to be added to a pool 
unit. In absence of such specification, all eligible farms shall be 
added to the pool unit.
    (d) A handler may cause a pool unit or a farm which is a part of a 
pool unit to become nonpool by the methods set forth in paragraphs 
(d)(1) through (4) of this section: Provided, That the failure of a unit 
to meet the pool requirements set forth in paragraph (f) of this section 
shall not be considered for purposes of this paragraph to be a change of 
pool status caused by the handler: Provided further, That a handler 
pursuant to paragraph (a)(4) of this section must continue in a pool 
unit any farm which was a part of such handler's pool unit in any of the 
months of April, May, or June preceding from which he receives milk or 
from which any other handler receives milk through arrangement with him: 
Provided further, That if a unit operated by a handler is reported by 
another handler which is a cooperative, the actions specified in 
paragraphs (d)(1), (2), and (4) of this section must be concurred in by 
such cooperative handler.
    (1) The handler may change the status of a declared pool unit to a 
declared nonpool unit effective the first day of any month upon notice 
to the market administrator by not later than the 10th day of such 
month. If the notice is filed after the 10th day of the month, the 
effective date shall be the first day of the following month.
    (2) The handler may transfer a farm from a pool unit to a nonpool 
unit effective the first day of any month upon notice to the market 
administrator by not later than the 10th day of such month. If the 
notice is filed after the 10th day of the month, the effective date 
shall be the first day of the following month.
    (3) The handler may so operate a unit located in the area specified 
in paragraph (e) of this section that its pool status is cancelled 
pursuant to Sec. 1002.27.
    (4) The handler may arrange for the milk of a farm in his pool unit 
to be delivered to another person as nonpool milk. Any delivery of milk 
by a farm in a handler's pool unit to another person as nonpool milk 
shall be considered to have been arranged by such handler unless such 
handler can establish that such other person is not substantially under 
the same management, control or ownership as such handler and that such 
handler was in no way a party to such nonpool delivery.
    (e) A declared pool unit must be operated to meet the requirements 
set

[[Page 80]]

forth in Sec. 1002.26 if the farms of such unit are located in the 
following area: New York, New Jersey, the counties of Addison, Rutland, 
and Bennington in Vermont, the county of Berkshire in Massachusetts, or 
in Pennsylvania. Failure to meet such requirements shall make such 
declared pool unit subject to suspension and cancellation pursuant to 
the procedure set forth in Sec. 1002.27. This paragraph shall not be 
applicable to a cooperative handler specified in paragraph (a)(3) of 
this section.
    (f) A declared pool unit made up of farms located outside the area 
specified in paragraph (e) of this section or a declared pool unit made 
up of farms specified in paragraph (e) of this section and operated by a 
cooperative handler specified in paragraph (a)(3) of this section shall 
be a pool unit in the months of July through March if at least 25 
percent of the milk in such unit is delivered in such month to pool 
plants, and shall be a pool unit in the months of April through June 
only if 60 percent of the milk of such unit was received at pool plants 
during the period of October through December immediately preceding or 
if such handler received no milk of such unit or from farms of such unit 
in the preceding October through December.
    (g) Any unit declared to be a pool unit shall be designated a pool 
unit in any month (1) if the handler is qualified in such month pursuant 
to paragraph (a) of this section, (2) if such unit meets all the 
requirements of this section applicable to it to be a pool unit, or (3) 
if the designation of such unit has not been cancelled pursuant to 
Sec. 1002.27.
    (h) Each handler shall report by not later than the 10th day of the 
month any changes in units during the preceding month and as of the 
first day of such month.
    (i) Whenever the market administrator finds that a handler has 
received bulk tank milk from a farm required to be included in an 
established unit but which has not been so included, he shall 
tentatively assign such farm to a unit and promptly notify the handler 
of such action. Unless otherwise requested by the handler within 10 days 
of such notice, the tentative assignment by the market administrator 
will become final.
    (j) Whenever the market administrator finds that a handler has 
caused milk to become nonpool pursuant to paragraph (d)(4) of this 
section he shall promptly notify the handler of such finding. Within 10 
days of such notice the handler may, except as to any such milk pooled 
under another order, (1) make a written claim that the failure to 
include the milk involved as pool milk was an error and, in such event, 
the market administrator shall pool such milk and rescind his finding, 
or (2) make a written offer to submit proof that he had not caused such 
milk to become nonpool. In the latter event, the market administrator 
shall examine such proof and shall either rescind his original finding 
or confirm it. Failure to respond to the market administrator's notice 
shall be deemed to confirm the finding.
    (k) Units other than those which are pool units pursuant to 
paragraph (g) of this section shall be designated partial pool units if 
they meet the provisions set forth in paragraphs (k)(1) and (2) of this 
section.
    (1) Any nonpool unit which would have been automatically made a pool 
unit pursuant to paragraph (c)(5) of this section except that the 
handler is precluded from adding farms thereof to a pool unit pursuant 
to paragraph (c)(2) or (c)(3) of this section. If a unit of a handler 
becomes a partial pool unit pursuant to this paragraph, all of the 
handler's pool units and partial pool units shall be combined and the 
skim milk and butterfat in milk of the partial pool units assigned to 
Class II and Class III of such combined total prior to any skim milk and 
butterfat in the partial pool unit milk being assigned to Class I-A.
    (2) Any unit the milk of which fails to meet the pooling 
requirements of paragraph (f) of this section, or any unit operated by a 
handler not specified in paragraph (a) of this section, as being 
eligible to establish and maintain pool units, or any unit made up of 
farms located in the 401 miles and over freight zone unless the handlers 
operating such unit is eligible to establish a pool unit and has 
specifically requested such unit to be so designated.

[[Page 81]]

    (l) The market administrator shall publicly announce the names of 
handlers establishing pool units and the names and headquarters of such 
units. He shall also publicly announce any change in the pool status of 
such units, and the names of handlers who are ineligible to add farms to 
a pool unit under the terms set forth in paragraph (c)(2) of this 
section.
[33 FR 8201, June 1, 1968, as amended at 56 FR 5321, Feb. 11, 1991]



Sec. 1002.26  Operating requirements.

    The person operating a pool plant designated pursuant to 
Sec. 1002.24 or a declared pool unit consisting of farms in the area 
specified in Sec. 1002.25(e) shall stipulate to each of the following 
requirements:
    (a) Be willing to dispose of as Class I-A milk in the marketing area 
milk received at the plant or on the unit from dairy farmers and agree 
that if a plant designation is canceled for failure to meet this 
requirement, the Class I-A and Class I-B milk of such plant through the 
partial pool plant and partial pool unit provisions shall be priced and 
equalized from the effective date of cancellation through the following 
June 30;
    (b) Keep such control over the sanitary conditions under which milk 
received at the plant or on the unit is produced and handled that the 
milk can meet the requirements of a source of milk for the marketing 
area: Provided, That approval by a health authority of the plant as a 
source of milk for the marketing area shall constitute sufficient 
evidence that this requirement is being met even though such approval is 
restricted to prohibit shipment to the marketing area of milk for 
specified periods during which permission is given by such health 
authority for receiving unapproved milk or skim milk at the plant or for 
shipment of approved skim milk from such plant; and
    (c) Have no commitments for disposition of milk that prevent him 
from utilizing milk as set forth in Sec. 1002.27(g).
[33 FR 8201, June 1, 1968, as amended at 56 FR 5322, Feb. 11, 1991]



Sec. 1002.27  Suspension and cancellation of designation.

    The designation of a pool plant pursuant to Sec. 1002.24 or of a 
declared pool unit consisting of farms in the area specified in 
Sec. 1002.25(e) may be suspended or canceled under any of the following 
provisions:
    (a) The designation shall be canceled effective on the first of the 
month following the filing with the market administrator, and on a form 
prescribed by him, of an application by the handler operating the plant: 
Provided, That a plant whose designation is so canceled on the first of 
any of the months of August through November shall be a pool plant if it 
meets the provisions of paragraph (e) of Sec. 1002.28, and shall not be 
a pool plant pursuant to any other provision of this order prior to 
December 1 following such cancellation: Provided further, That such 
application for cancellation shall be accompanied by proof that the 
handler, if not a cooperative association qualified pursuant to 
Sec. 1002.77 has notified any qualified cooperative association which 
has any members who deliver milk to such plant, and has notified 
individually all producers delivering to such plant who are not members 
of such qualified cooperative association, of his intention to make such 
application: Provided further, That if 50 percent or more of the 
producers delivering milk at such plant deliver such milk for the 
account of a cooperative association which does not operate the plant 
but for which milk such association receives payment, an application 
must be made by such cooperative association as well as by the handler 
operating the plant: Provided further, That if a handler applies for a 
replacement designation pursuant to Sec. 1002.24(b), the designation of 
the plant or plants replaced shall be canceled automatically at the time 
the replacement designation becomes effective.
    (b) The designation of any plant which in any month is not approved 
by a health authority as a source of milk for the marketing area shall 
be automatically suspended at the beginning of the second month 
following the month that the handler receives notice that the plant does 
not have health approval as a source of milk for the marketing area 
unless the absence of

[[Page 82]]

health approval is a temporary condition covering a period of not more 
than 15 days: Provided, That the designation of a plant approved by a 
health authority as a source of milk for the marketing area, even though 
such approval is restricted to prohibit shipment to the marketing area 
of milk for specified periods during which permission is given by such 
health authority for receiving unapproved milk or skim milk at the plant 
or for shipment of approved skim milk from such plant, shall not be 
suspended pursuant to this provision.
    (c) The designation of a plant pursuant to Sec. 1002.24 shall be 
suspended at the beginning of the second month following any consecutive 
12-month period in which the plant failed to receive any pool milk or at 
the beginning of the second month following a month in which there is a 
failure to maintain the facilities and equipment that constitute a plant 
pursuant to Sec. 1002.8(a).
    (d) The designation of any plant or unit shall be suspended, 
effective no sooner than 10 days nor later than 20 days after the date 
of mailing of notice, by registered letter, to the handler, whenever the 
market administrator, subject to the limitations set forth in paragraphs 
(h) and (j) of this section, finds on the basis of available information 
that the handler operating the plant or unit is not meeting the 
requirements set forth in Sec. 1002.26: Provided, That, if the handler 
operating the plant or unit is not a cooperative association qualified 
pursuant to Sec. 1002.77, the market administrator shall notify any 
qualified cooperative association which has any members who deliver milk 
to such plant or unit, and shall also notify individually all producers 
delivering to such plant or unit who are not members of such qualified 
cooperative association, of such suspension of designation.
    (e) In the case of suspension pursuant to this section of the 
designation of one or more plants or units for failure to meet the 
requirements of Sec. 1002.26(a) or (c) the handler operating such plant 
or unit may select, prior to the effective date of such suspension, one 
or more other pool plants or pool units consisting of farms in the area 
specified in Sec. 1002.25(e) for suspension in lieu thereof if, during 
the preceding month, the quantity of pool milk received from producers 
at such substituted plants or units was not less than the quantity of 
pool milk received from producers at the plants or units named for 
suspension. The handler may also select the order in which plant or unit 
designations are to be canceled in the event of a later determination by 
the Secretary canceling the designation of some but not all of the 
plants or units suspended.
    (f) Not later than 10 days after the effective date of suspension of 
designation pursuant to this section, the handler operating the plant or 
unit may apply to the Secretary for a review. If the handler fails to so 
apply for such review, the designation shall be canceled as of the 
effective date of the suspension. If the handler does so apply, the 
Secretary shall, after review, either determine that the requirements 
set forth in Sec. 1002.26 have been met and order the suspension 
revoked, or determine that such requirements have not been met and order 
the designation canceled as of the effective date of the suspension: 
Provided, That, if the Secretary has made no determination within two 
months after the end of the month in which the suspension was made 
effective, but later orders the designation canceled, such cancellation 
shall be effective as of the first of the month following the date of 
such determination.
    (g) Beginning with the effective date of a suspension pursuant to 
this section, and until the Secretary has either ordered the designation 
canceled or ordered the suspension revoked, the plant or unit shall be 
treated as a pool plant or pool unit: Provided, That all payments into 
or out of the producer settlement fund (except such payments on the 
basis of operations during a month in which the plant meets the 
requirements of Sec. 1002.28 or the unit meets the requirements of 
Sec. 1002.25(g)) shall be held in reserve by the market administrator 
until an order is issued by the Secretary, but not longer than 2 months 
after the end of the month in which the suspension was made effective.
    (h) No pool plant or pool unit designation shall be suspended for 
failure

[[Page 83]]

to meet the requirements of Sec. 1002.26(a) except under the following 
conditions or pursuant to paragraph (l) of this section:
    (1) A meeting has been held no sooner than three days after notice 
by the market administrator to all handlers operating pool plants 
designated pursuant to Sec. 1002.24 or pool units consisting of farms in 
the area specified in Sec. 1002.25(e) for consideration of the desirable 
utilization of milk received from producers during a period ending not 
later than the end of the second month after the month during which such 
meeting is held.
    (2) There has been issued by the market administrator, following 
such meeting, and mailed to all handlers operating pool plants 
designated pursuant to Sec. 1002.24 or pool units consisting of farms in 
the area specified in Sec. 1002.25(e) the market administrator's 
determination of the desirable utilization of milk received from 
producers each month during all or a part of the period set forth in 
paragraph (h)(1) of this section. Such determination shall include a 
schedule setting forth, by months, the desired minimum percentage of 
pool milk received from producers to be utilized in specified classes. 
Such specified classes shall include Class I-A in the marketing area, 
and may include all or a part of other Class I-A and Class I-B.
    (3) The market administrator finds on the basis of available 
information that the handler operating a plant or unit or the 
cooperative reporting a plant or unit is not utilizing milk received 
from producers in accordance with the minimum percentage set forth in 
the determination of the market administrator previously announced 
pursuant to paragraph (h)(2) of this section: Provided, That the 
suspension of the designation of a plant or unit may be made effective 
during the months of November and December if the market administrator 
finds that the handler is utilizing any milk received from producers in 
classes other than those set forth in the determination of the market 
administrator announced pursuant to paragraph (h)(2) of this section.
    (i) The cancellation of pool plant or pool unit designation for 
failure to meet the requirements of Sec. 1002.26(a) shall be subject to 
the following conditions:
    (1) No pool plant or pool unit designation shall be canceled if the 
handler operating the plant or unit utilized the milk received by the 
handler from producers during the month in which the suspension is made 
effective in accordance with the minimum percentage set forth in the 
determination of the market administrator announced pursuant to 
paragraph (h)(2) or paragraph (l) of this section.
    (2) No pool plant or pool unit designation shall be canceled if the 
handler operating the plant or unit utilized in the specified classes 
set forth in the determination of the market administrator announced 
pursuant to paragraph (h)(2) of this section a percentage of the total 
milk received by such handler from producers during the month in which 
the suspension is made effective which is not less than the percentage 
of the total pool milk reported by all handlers for such month to have 
been used in the specified classes.
    (3) In the event that all milk received from producers at a plant or 
unit is reported to the market administrator by a cooperative 
association qualified pursuant to Sec. 1002.77 and such association pays 
the producer for such milk, the pool plant or pool unit designation 
shall not be canceled if a percentage of all milk reported by such 
cooperative association is utilized in accordance with the minimum 
percentage set forth in the determination of the market administrator 
announced pursuant to paragraph (h)(2) of this section, or in accordance 
with the percentage set forth in paragraph (i)(2) of this section.
    (4) Cancellation of designations shall be limited to those plants or 
units necessary to result in a utilization of milk received at the 
remaining pool plants and pool units operated by the handler, or 
reported by the cooperative, as the case may be, in accordance with the 
minimum percentage set forth in paragraph (l) of this section, or in the 
determination of the market administrator announced pursuant to 
paragraph (h)(2) of this section.
    (j) Loss of approval by health authorities of a plant as a source of 
milk for the marketing area may in itself constitute adequate reason for 
the

[[Page 84]]

market administrator to suspend the designation of the plant for failure 
to meet the requirements of Sec. 1002.26(b) only if the absence of such 
approval continues for more than 15 days.
    (k) The designation shall be canceled effective on the first of the 
month following three consecutive months if in the absence of this 
designation milk received from dairy farmers and units at the plant 
would have been classified and priced under another order with a 
provision for marketwide equalization and if in each of such months the 
percentage of milk received from dairy farmers and units at the plant 
which is classified as Class I-A and disposed of in the marketing area 
defined in such other order is greater than the percentage of such milk 
so classified and disposed of in this marketing area.
    (l) The designation of any pool plant pursuant to Sec. 1002.24 or 
any pool unit pursuant to Sec. 1002.25(e) shall be canceled unless 5 
percent or more of the pool milk received from producers at such plant 
or by such unit during each of the months of December and January, and 
10 percent during each of the months of September through November, is 
utilized as Class I-A milk unless the percentage has been revised 
pursuant to paragraph (h) of this section.
[33 FR 8201, June 1, 1968, as amended at 56 FR 5322, Feb. 11, 1991]



Sec. 1002.28  Temporary pool plants.

    Except for plants which, pursuant to paragraph (f) of this section, 
are not eligible for designation, any plant not designated pursuant to 
Sec. 1002.24 shall automatically be designated a pool plant in 
accordance with provisions of paragraphs (a) through (e) of this 
section: Provided, That no plant shall be a pool plant pursuant to this 
section if, in the absence of this provision, milk received from dairy 
farmers and units at the plant would be classified and priced under 
another order with a provision for marketwide equalization, and if the 
percentage of the milk received from dairy farmers and units at the 
plant which is classified in Class I-A and disposed of in the marketing 
area defined in such other order is greater than the percentage of such 
milk so classified and disposed of in this marketing area: Provided, 
further, That for purposes of the computations of percentages set forth 
in this section, skim milk and butterfat in filled milk shall be 
excluded from skim milk and butterfat classified in Class I-A and Class 
I-B.
    (a) For any of the months of January through March and July through 
December, any plant at which 25 percent or more of the combined receipts 
of skim milk and butterfat in milk from dairy farmers and units is 
classified as Class I-A in the marketing area or as Class I-A on the 
basis of a transfer to a pool plant on some basis other than the failure 
to account for such milk shall automatically be designated a pool plant 
for such month: Provided, That at the option of the handler the plant 
shall not be a pool plant if less than 25 percent of such combined 
receipts of skim milk and butterfat in milk from other than pool units 
is classified in such Class I-A.
    (b) For any of the months of April, May, or June, any plant at which 
during the preceding period of October, November, and December either 
(1) no milk was received from dairy farmers or units, or (2) 60 percent 
or more of the combined receipts of skim milk and butterfat in milk 
received from dairy farmers and units was classified in Class I-A in the 
marketing area or as Class I-A on the basis of a transfer to a pool 
plant, on some basis other than the failure to account for such milk, 
shall automatically be designated a pool plant for any of such months of 
April, May, or June in which 10 percent or more of the combined receipts 
of skim milk and butterfat in milk received from dairy farmers and units 
is classified in Class I-A in the marketing area or as Class I-A on the 
basis of a transfer to a pool plant, on some basis other than the 
failure to account for such milk: Provided, That at the option of the 
handler the plant shall not be a pool plant if less than 10 percent of 
combined receipts of skim milk and butterfat in such milk from other 
than pool units as classified in such Class I-A.
    (c) Any plant which is a pool plant in any of the months of April, 
May, or June on the basis of paragraph (b) of

[[Page 85]]

this section or on the basis of paragraph (d) of this section and in the 
latter case, the percentage of combined receipts of skim milk and 
butterfat in milk from dairy farmers and units classified in Class I-A 
in the marketing area or as Class I-A on the basis of a transfer to a 
pool plant, is at least as great as the market percentage of pool milk 
in Classes I-A and I-B for the same month of the previous year, shall be 
a pool plant in any of the months of July through March following in 
which 60 percent or more of the combined receipts of skim milk and 
butterfat in milk received at the plant from dairy farmers and units is 
classified in Class I-A, Class I-B, or Classes I-A and I-B combined.
    (d) Any plant which for any month is not a pool plant because of 
failure to meet the requirements of paragraph (a), (b), or (c) of this 
section shall be a pool plant in any month in which a daily average of 
at least 800 pounds of combined receipts of skim milk and butterfat in 
milk received from dairy farmers and units is classified as Class I-A in 
the marketing area or as Class I-A on the basis of a transfer to a pool 
plant, on some basis other than failure to account for such milk and if 
the percentage of combined receipts of skim milk and butterfat in milk 
classified as Class I-A and Class I-B is at least as great as the market 
percentage of pool milk in Classes I-A and I-B for the same month in the 
preceding year: Provided, That at the option of the handler, the plant 
shall not be a pool plant if none of the skim milk or butterfat in such 
milk from other than pool units is classified in such Class I-A: 
Provided further, That such plant shall not be a pool plant on the basis 
of this paragraph if it is located in the 401 miles and over freight 
zone.
    (e) A plant whose regular pool plant designation has been canceled 
at the request of the handler on the first of any of the months of 
August through November shall be a pool plant in any month through 
November 30 following such cancellation if the percentage of the 
combined receipts of skim milk and butterfat in milk received from dairy 
farmers and units classified in Class I-A, Class I-B or Classes I-A and 
I-B combined is at least as great as the market percentage of pool milk 
in Classes I-A and I-B for the same month in the preceding year unless 
such plant qualifies as a pool plant under an other order with a 
provision for marketwide equalization.
    (f) A plant shall not be a pool plant on the basis of this section 
for the periods and under the conditions set forth in paragraphs (f)(1) 
and (2) of this section:
    (1) If the pool plant designation was canceled on the first of 
August, September, October, or November pursuant to Sec. 1002.27(a), for 
the period through November 30 except as specified in paragraph (e) of 
this section.
    (2) If the pool plant designation was canceled pursuant Sec. 1002.27 
for failure to meet the requirements of Sec. 1002.26(a), for the period 
from the date the cancellation was effective through the following June 
30.
    (g) At the time of announcing the uniform price for each month, the 
market administrator shall make public the location and name of the 
operator of any plant for which a report of receipts from dairy farmers 
was used in the computation of that uniform price.
[33 FR 8201, June 1, 1968, as amended at 34 FR 18604, Nov. 22, 1969; 41 
FR 8367, Feb. 26, 1976]



Sec. 1002.29  Partial pool plants.

    The following plants not designated pool plants pursuant to 
Secs. 1002.24 and 1002.28, which plants distribute fluid milk products 
in the marketing area or transfer fluid milk products to a pool plant 
shall be designated partial pool plants:
    (a) Plants set forth in Sec. 1002.28(f).
    (b) Plants other than those set forth in paragraph (a) of this 
section which have some skim milk or butterfat in milk received from 
dairy farmers or nonpool units classified in Class I-A on some basis 
other than failure to account for such milk, except a plant which would 
otherwise qualify as a pool plant pursuant to Sec. 1002.28(d) but which 
has less than a daily average of 800 pounds of skim milk or butterfat in 
milk received from dairy farmers or

[[Page 86]]

units classified in Class I-A in the marketing area on some basis other 
than failure to account for such milk.
[33 FR 8201, June 1, 1968, as amended at 41 FR 8367, Feb. 26, 1976]

                                 Reports



Sec. 1002.30  Reports of receipts and utilization.

    Each handler, except a handler receiving own farm milk and not 
required to be listed pursuant either to Sec. 1002.11 or Sec. 1002.12, 
shall report each month to the market administrator for the preceding 
month in the manner and on the forms prescribed by the market 
administrator with respect to each pool plant, partial pool plant, pool 
unit or partial pool unit operated by such person, the information set 
forth in paragraphs (a) through (d) of this section. Such report shall 
be physically received at the office of the market administrator no 
later than the close of business on the 10th day of the month. Other 
information required to be reported no later than the 10th day of the 
month pursuant to Secs. 1002.25 and 1002.31 must also be physically 
received by the market administrator no later than the 10th day of the 
month.
    (a) The quantity of skim milk and butterfat contained in:
    (1) Receipts of milk from producers;
    (2) Receipts of fluid milk products from other pool plants or 
partial pool plants and from pool units or partial pool units; and
    (3) Receipts of other source milk.
    (b) Inventories at the beginning and the end of the month of fluid 
milk products and products specified in Sec. 1002.41(c)(1);
    (c) The utilization of all skim milk and butterfat required to be 
reported pursuant to this section, including the destination of any 
fluid milk product, the classification of which wholly or partially 
depends upon its destination; and
    (d) The computation pursuant to Sec. 1002.60 of such handler's net 
pool obligation.
[33 FR 8201, June 1, 1968, as amended at 55 FR 3199, Jan. 31, 1990; 56 
FR 5323, Feb. 11, 1991]



Sec. 1002.31  Producer payroll reports.

    Each handler shall report with respect to producers as set forth in 
paragraphs (a) and (b) of this section:
    (a) On or before the 10th day after the end of each month, the 
information required by the market administrator with respect to 
producer additions, producer withdrawals, and changes in names of farm 
operators; and
    (b) On or before the last day of each month such handler's producer 
payroll for the preceding month, which shall show for each producer:
    (1) The total pounds of milk from such producer;
    (2) The average butterfat content of such milk: Provided, That if no 
butterfat tests are made on any of the milk received from producers, and 
if such milk is received by the handler from no more than 10 producers, 
3.5 percent shall be reported as the average butterfat test of milk 
received from producers;
    (3) The amount of payment due each producer;
    (4) The nature and amount of any deductions and charges made by the 
handler;
    (5) The net amount of payment to such producer; and
    (6) Such other information with respect thereto as the market 
administrator shall require.



Sec. 1002.32  Other reports.

    At such time as the market administrator may request, each handler 
shall report to the market administrator in the manner and on forms 
prescribed by the market administrator:
    (a) The quantities of skim milk and butterfat in milk and each milk 
product received at his nonpool plants, from dairy farmers, from other 
plants or nonpool units, from such handler's own farm, from other 
handlers, and from other sources;
    (b) The quantities of skim milk and butterfat in milk and each milk 
product moved out of, or on hand at, his nonpool plants and the 
destination of such skim milk and butterfat;
    (c) Information concerning land, buildings, surroundings, facilities 
and equipment at any of his plants;

[[Page 87]]

    (d) The current receipts and utilization of skim milk and butterfat 
at each of his pool plants and pool units; and
    (e) Such other information as may be necessary for the 
administration of the provisions of this part.

                             Classification



Sec. 1002.40  General classification rules.

    All skim milk and butterfat required to be reported by each handler 
pursuant to Secs. 1002.30 and 1002.32 shall be classified each month 
pursuant to the provisions of Secs. 1002.41 through 1002.46, subject to 
the following conditions:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1002.30, including the pounds of skim milk and butterfat, 
respectively, in each class in accordance with Secs. 1002.40 through 
1002.44;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk used or disposed of in such product 
shall be considered to be an amount equivalent to the nonfat milk solids 
contained in such products plus all the water originally associated with 
such solids; and
    (c) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1002.45. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1002.45 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (d) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant or 
unit.
[58 FR 27778, May 11, 1993, as amended at 58 FR 63285, Dec. 1, 1993]



Sec. 1002.41  Classes of utilization.

    Subject to the conditions set forth in Secs. 1002.42 through 
1002.46, the classes of utilization shall be as follows:
    (a) Class I-A milk. Class I-A milk shall be all skim milk and 
butterfat:
    (1) Disposed of as a fluid milk product, except as otherwise 
provided in paragraphs (c) and (d) of this section:
    (i) Inside the marketing area;
    (ii) As route disposition in an other order marketing area;
    (iii) To an other order plant and assigned under such other order to 
Class I;
    (iv) In packaged form to an other order plant if such product is not 
defined as a fluid milk product under such other order; and
    (v) To a partially regulated plant under an other order and there 
applied as an offset to Class I sales in any other order market;
    (2) In packaged inventory of fluid milk products at the end of the 
month;
    (3) In shrinkage assigned to Class I-A pursuant to Sec. 1002.42(c); 
and
    (4) Not specifically accounted for as Class I-B, Class II or Class 
III milk.
    (b) Class I-B milk. Class I-B milk shall be all skim milk and 
butterfat:
    (1) Disposed of as a fluid milk product outside this or any other 
Federal order marketing area, except for:
    (i) Milk moved to a partially regulated plant under an other order 
and there applied as an offset to Class I sales in any other order 
market; and
    (ii) Inventory of packaged fluid milk products at nonpool plants 
that are not other order plants.
    (2) In shrinkage assigned to Class I-B pursuant to Sec. 1002.42(c).
    (c) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (d) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified

[[Page 88]]

in paragraph (c)(1) of this section and in bulk concentrated fluid milk 
products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of to a commercial food processor if the market administrator 
is permitted to audit the records of the commercial food processing 
establishment for the purpose of verification. Otherwise, such uses 
shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (d) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (c)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (c)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (c)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (c)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (c)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (c)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(c)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (c)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1002.15 and the fluid 
cream product definition pursuant to Sec. 1002.18; and
    (7) In shrinkage assigned pursuant to Sec. 1002.42(a) to the 
receipts specified in Sec. 1002.42(a)(2) and in shrinkage specified in 
Sec. 1002.42(b) and (c).

[[Page 89]]

    (e) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[56 FR 5323, Feb. 11, 1991, as amended at 58 FR 27778, May 11, 1993; 58 
FR 63285, Dec. 1, 1993]



Sec. 1002.42  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1002.30, the following shall be 
determined:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (5) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraph (b)(1) through 
(5) of this section, which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
pool milk received from producers, in milk received from pool units, and 
in milk received from units other than pool units, exclusive of the 
quantity for which Class II or Class III utilization was requested by 
the handler;
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts of fluid milk products in bulk from other pool plants;
    (3) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts of fluid milk products in bulk from plants other than those 
defined in Sec. 1002.8(b) or (d), excluding the quantity for which Class 
II or Class III classification is requested by the handler; and
    (5) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraph (b)(1) through (4) of this section; 
and
    (c) Shrinkage in excess of the amounts assigned to Class III 
pursuant to paragraphs (a) and (b) of this section shall be assigned pro 
rata to Class I-A and Class I-B in accordance with the respective 
volumes of skim milk and butterfat actually accounted for in each such 
class.
[56 FR 5323, Feb. 11, 1991]



Sec. 1002.44  Transfers.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant or a pool unit to another pool plant shall be classified as 
Class I-A milk unless the operators of both plants request the same 
classification in another class. In either case, the classification of 
such transfers shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1002.45(a)(17) and the corresponding step of 
Sec. 1002.45(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1002.45(a)(8) or the corresponding 
step of Sec. 1002.45(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1002.45(a) (13) or (15) or the 
corresponding steps of Sec. 1002.45(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk,

[[Page 90]]

shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the 
transferee-plant.
    (b) Transfers to other order plants. Skim milk or butterfat 
transferred in the form of a fluid milk product or a bulk fluid cream 
product from a pool plant to an other order plant shall be classified in 
the following manner:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes (either Class I-A, II or III) to which allocated 
as a fluid milk product under the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both the transferor and the transferee 
plants so request in the reports of receipts and utilization filed with 
their respective market administrators, transfers in bulk form shall be 
classified as Class II or Class III milk to the extent of such 
utilization available for such classification pursuant to the allocation 
provisions of the other order;
    (4) If information concerning the classes to which such transfers 
were allocated under the other order is not available to the market 
administrator for the purpose of establishing classification under this 
paragraph, classification shall be as Class I-A, subject to adjustment 
at a later date;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class 1-A milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1002.41.
    (c) Transfers to producer-handlers. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I-A milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers to other nonpool plants. Skim milk or butterfat 
transferred in the following forms from a pool plant or a pool unit to a 
nonpool plant that is not an other order plant or a producer-handler 
plant shall be classified:
    (1) As Class I-A milk, if transferred in the form of a packaged 
fluid milk product; and
    (2) As Class I-A milk, if transferred in the form of a bulk fluid 
milk product or a bulk fluid cream product, unless the following 
conditions apply:
    (i) The transferring handler claims classification pursuant to the 
assignment set forth in paragraph (d)(3) of this section in the 
handler's report submitted to the market administrator pursuant to 
Sec. 1002.30 for the month within which such transaction occurred;
    (ii) The operator of such transferee plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for the purpose of verification;
    (iii) In determining the nonpool plant's utilization for purposes of 
this section, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a second nonpool plant shall be 
classified pursuant to the same assignment procedure with respect to 
receipts and utilization at such second nonpool plant, except that 
classification of such transfers in Class I-A and I-B shall not be less 
than the quantities which would be assigned to those classes if the 
transfer of such products had been directly from a pool plant or pool 
unit.

[[Page 91]]

    (3) Skim milk and butterfat so transferred shall be classified on 
the basis of the following assignment of utilization at the transferee 
plant pursuant to paragraph (d)(2)(ii) of this section:
    (i) Packaged receipts of fluid milk products from Federal order 
sources shall first be assigned to route disposition in Federal order 
marketing areas (assigning receipts to sales in the same market to the 
extent possible) and any residual shall be assigned to Class 1-B route 
sales.
    (ii) Such bulk transfers and other bulk receipts of fluid milk 
products at such transferee plant from pool plants and units and from 
other order plants shall next be assigned to any remaining route 
disposition in any Federal order marketing area. For this purpose 
receipts from each Federal order market shall first be assigned to 
remaining route sales in such marketing area and any remainder of such 
receipts shall be prorated with all Federal order receipts to remaining 
route disposition in all Federal order marketing areas.
    (iii) Receipts from dairy farmers shall then be assigned to any 
remaining route sales in the marketing area.
    (iv) Remaining receipts from dairy farmers and other unregulated 
other source receipts (excluding opening inventory) in the form of fluid 
milk products shall be assigned pro rata to Class I-B, Class II and 
Class III utilization at such plant to the extent of such utilization 
available at such plant and any remainder of such receipts shall be 
assigned pro rata to Class I-A bulk sales to plants regulated under this 
order and Class I bulk sales to plants regulated under other orders.
    (v) Receipts of bulk fluid cream products from plants defined 
pursuant to Sec. 1002.8 (b) and (d) shall be assigned pro rata among 
such plants to any remaining Class II and Class III utilization on a pro 
rata basis, then to any remaining Class I-A disposition and finally any 
Class I-B disposition.
    (vi) Any remaining receipts of fluid milk products or bulk fluid 
cream products being assigned pursuant to this paragraph shall be 
assigned pro rata with remaining receipts from other order plants, first 
to remaining Class I-A utilization, then to Class I-B utilization, then 
to Class II utilization, and finally to Class III utilization at such 
plant: Provided, That if on inspection of the books and records of such 
plant the market administrator finds that there is insufficient 
utilization to cover such receipts, the remainder shall be classified as 
Class I-A.
    (vii) Any remaining Class I-A route disposition in any Federal 
marketing area shall be subject to the pricing specified in 
Sec. 1002.60(d)(2).
[56 FR 5324, Feb. 11, 1991, as amended at 58 FR 27779, May 11, 1993]



Sec. 1002.45  Allocation of skim milk and butterfat classified.

    The classification of milk received from producers at each pool 
plant or pool unit for each handler shall be determined each month 
pursuant to paragraphs (a), (b), and (c) of this section: Provided, That 
for the purpose of establishing the pool status of any plant with Class 
I-A route disposition in the marketing area which is not a pool plant 
pursuant to Sec. 1002.24, skim milk and butterfat in milk received at 
such plant directly from dairy farmers or units up to an amount 
sufficient to qualify such plant as a pool plant pursuant to 
Sec. 1002.28 (a) or (b) shall be considered the source of such Class I-A 
route disposition of such plant and be subtracted from Class I-A prior 
to the application of the allocation sequence set forth in paragraphs 
(a) and (b) of this section, unless at the time of filing the handler's 
report pursuant to Sec. 1002.30 the handler elects not to have it so 
allocated.
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk classified as Class III pursuant to Sec. 1002.42(b);
    (2) Subtract the pounds of skim milk received in packaged form from 
a producer-handler for marketing as certified fluid milk products from 
the total pounds of skim milk in Class I-A and Class 1-B milk, 
respectively, in accordance with its proportionate disposition in such 
classes;
    (3) Subtract from the remaining pounds of skim milk in Class III, 2 
percent of the pounds of skim milk in packaged fluid milk products 
received

[[Page 92]]

from other order plants, and subtract the balance from Class I-A;
    (4) Subtract from the remaining pounds of skim milk in Class 1-A the 
pounds of skim milk in packaged fluid milk products in inventory at the 
beginning of the month. This paragraph shall apply only if the pool 
plant was subject to the provisions of this paragraph (a)(4) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (5) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1002.41(c)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1002.41(c)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(6) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (7) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1002.41(c) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1002.41(d)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class I-A, Class II and Class III milk, in series 
beginning with Class III, the pounds of skim milk in:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(6) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1002.41(c)(1) that was not subtracted pursuant to paragraphs 
(a)(5), (a)(6) and (a)(7) of this section;
    (ii) Receipts of fluid milk products not approved by a duly 
constituted health authority which are excepted from the pool milk 
definition pursuant to Sec. 1002.14(b);
    (iii) Receipts of fluid milk products from a producer-handler 
pursuant to an other order or a producer-handler defined pursuant to 
Sec. 1002.12 (except pool milk designated in the preamble of 
Sec. 1002.14).
    (iv) Receipts of fluid milk products from a handler's plant at which 
milk is excepted from the pool milk definition pursuant to 
Sec. 1002.14(h).
    (v) Receipts of fluid milk products from a handler with own farm 
milk, which milk is excepted from the pool milk definition pursuant to 
Sec. 1002.14(i).
    (9) Subtract in series beginning with Class III from the pounds of 
skim milk remaining in Class II and Class III milk the pounds of skim 
milk in receipts of other source milk in the form of fluid milk products 
from plants other than those defined in Sec. 1002.8 (b) or (d) and units 
other than pool units for which the handler requests a Class II or Class 
III classification, but not in any case to exceed the pounds of skim 
milk remaining in such class;
    (10) Subtract from the remaining pounds of skim milk in Class II or 
Class III milk the pounds of skim milk in bulk receipts of fluid milk 
products from other order plants not previously assigned and for which a 
Class II or Class III classification is requested by both the transferor 
and transferee handler in filing reports of receipts and utilization for 
the month with their respective market administrators, but not in any 
case to exceed the pounds of skim milk remaining in such class;
    (11) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1002.41(c)(1), in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(4), (6) and (8)(i) of this section;

[[Page 93]]

    (12) Add to the remaining pounds of skim milk in Class III the 
pounds subtracted pursuant to paragraph (a)(1) of this section;
    (13)(i) Subtract pro rata from the pounds of skim milk remaining in 
Class I-B, Class II and Class III milk the remaining pounds of skim milk 
in receipts of other source milk in the form of fluid milk products from 
plants not defined pursuant to Sec. 1002.8 (b) or (d) and from units 
other than pool units: Provided, That if the pounds of skim milk to be 
assigned pursuant to this paragraph (a)(13)(i) exceed the available 
pounds of skim milk in Class I-B, Class II, and Class III the handler 
shall designate the priority of sources to be assigned to such classes;
    (ii) No assignment shall be made pursuant to this paragraph with 
respect to milk received from a plant not defined pursuant to 
Sec. 1002.8 (b) or (d) in the 401 miles and over freight zone at a plant 
from which 50 percent or more of the gross receipts of skim milk and 
butterfat leaves the plant in the form of fluid milk products in 
consumer packages or dispenser inserts and is classified as Class I-A;
    (14) Subtract pro rata from the remaining pounds of skim milk in 
each class the pounds of skim milk in receipts from dairy farmers and 
from the handler's own farm which are excepted from the pool milk 
definition pursuant to Sec. 1002.14 (h) and (i);
    (15) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of 
fluid milk products from other order plants not previously assigned 
pursuant to paragraph (a) (3) and (10) of this section:
    (i) Subject to the provisions of this paragraph, such subtraction 
shall be pro rata to the pounds of skim milk in each class with respect 
to whichever of the following quantities represents the higher 
proportion of Class II and Class III milk combined:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1002.22(d); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(15)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I-A 
milk and Class I-B milk after such proration at the pool plants at which 
such other source milk was received;
    (iii) Except as provided in paragraph (a)(15)(ii) of this section, 
should the computations pursuant to paragraph (a)(15) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I-A milk and Class I-B milk combined shall be decreased by a like 
amount, pro rata to remaining utilization in each such class. In such 
case, the pounds of skim milk remaining in each class at this allocation 
step at the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (iv) Except as provided in paragraph (a)(15)(ii) of this section, 
should the computations pursuant to paragraph (a)(15) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I-A milk or Class I-B milk that exceeds the pounds of skim milk 
remaining in that class, the pounds of skim milk in such class shall be 
increased by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class II and Class III combined shall be 
decreased by a like amount (decreasing

[[Page 94]]

as necessary Class III and then Class II). In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount in sequence beginning with the nearest other pool plant 
of such handler at which Class I-A or Class I-B utilization is 
available;
    (16) If the plant at which assignment is being made is a plant from 
which 50 percent or more of the gross receipts of skim milk and 
butterfat in the form of fluid milk products left the plant in the form 
of fluid milk products in consumer packages or dispenser inserts and was 
classified as Class I-A, subtract pro rata from the remaining pounds of 
skim milk in each class the pounds of skim milk in receipts of fluid 
milk products from plants in the 401 miles and over freight zone, not 
defined pursuant to Sec. 1002.8 (b) or (d);
    (17) Subtract from the remaining pounds of skim milk in Class I-A 
milk the pounds of skim milk in remaining receipts from plants (except 
other order plants) or units the pool status of which has not yet been 
established and which receipts have not previously been assigned 
pursuant to paragraph (a) (13) and (16) of this section;
    (18) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk received in the form of fluid milk products and 
bulk fluid cream products from other pool plants and from pool units 
(not previously assigned pursuant to the preamble of this section), in 
accordance with the classification assigned by the transferee handler 
subject to the conditions of paragraph (a)(18) (i) through (iii) of this 
section:
    (i) The skim milk so assigned to any class of utilization shall be 
limited to the amount thereof remaining in such class in the transferee 
plant;
    (ii) If the transferor plant received during the month other source 
milk to be allocated pursuant to paragraph (a)(7) of this section the 
skim milk so transferred shall be classified so as to allocate the least 
possible Class I-A or I-B utilization to such other source milk; and
    (iii) If the transferor handler received during the month other 
source milk to be allocated pursuant to paragraph (a)(13) of this 
section, the skim milk so transferred shall not be classified as Class 
I-A or I-B to a greater extent than would be applicable to a like 
quantity of such other source milk received at the transferee plant;
    (19) Add to the remaining pounds of skim milk in Class I-A the 
pounds of skim milk received directly from dairy farmers or units which 
was deducted pursuant to the proviso in the preamble of this section;
    (20) If the pounds of skim milk remaining in all classes exceeds the 
pounds of skim milk in receipts from producers subtract such excess from 
the pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) Combine the amounts of skim milk and butterfat determined 
pursuant to paragraphs (a) and (b) of this section into one total for 
each class.
[56 FR 5325, Feb. 11, 1991, as amended at 58 FR 27779, May 11, 1993]



Sec. 1002.46  Rules and regulations.

    Accounting rules and regulations to effectuate the provisions of 
Secs. 1002.40 through 1002.45 shall be issued by the market 
administrator and shall include (but not be limited to) conversion 
factors to be used in the absence of specific weights and tests, 
specific definitions of products, specific shrinkage allowances and 
procedures for determining the quantities of skim milk and butterfat 
disposed of in specified products. Such rules and regulations shall be 
made, and may from time to time be amended, by the market administrator 
in accordance with the procedure set forth in this section: Provided, 
That at any time upon a determination by the Secretary that an emergency 
exists which requires the immediate adoption of rules and regulations, 
the market administrator may issue, with the approval of the Secretary, 
temporary rules and regulations without regard to the following 
procedure: Provided further, That, if any interested person makes 
written request for the issuance,

[[Page 95]]

amendment, or repeal of any rule, the market administrator shall within 
30 days either issue notice of meeting pursuant to paragraph (a) of this 
section or deny such request and except in affirming a prior denial, or 
where the denial is self-explanatory, shall state the grounds for such 
denial: Provided further, That if the market administrator finds it 
necessary to promulgate formal rules with respect to units, he shall 
follow the procedure set forth in this section.
    (a) All proposed rules and regulations and amendments thereto shall 
be the subject of a meeting called by the market administrator at which 
time all interested persons shall have opportunity to be heard. Notice 
of such meeting shall be given by the market administrator, and a copy 
of the proposed rules and regulations shall be sent at least 5 days 
prior to the date of the meeting to all handlers operating pool plants. 
A stenographic record shall be made at all such meetings and such record 
shall be public information available for inspection at the office of 
the market administrator.
    (b) A period of at least 5 days after the meeting held pursuant to 
paragraph (a) of this section shall be allowed for the filing of briefs. 
Such briefs shall be public information available for inspection at the 
office of the market administrator.
    (c) Not later than 30 days after a meeting held pursuant to 
paragraph (a) of this section, the market administrator shall issue and 
send to all handlers, operating pool plants and pool units the tentative 
rules and regulations or amendments thereto relating to the issues 
considered at such meeting, or a tentative notice that no rules or 
regulations or amendments thereto are to be issued prior to further 
consideration at another meeting. The tentative rules and regulations, 
or tentative notice, together with copies of the stenographic record and 
briefs, shall also at the same time be forwarded by the market 
administrator to the Secretary.
    (d) Not later than 30 days after issuance by the market 
administrator, the Secretary shall either approve the tentative rules 
and regulations or tentative notice as issued, or direct the market 
administrator to reconsider. In which latter event, the market 
administrator shall within 30 days either issue revised tentative rules 
and regulations or tentative notice, or call another meeting pursuant to 
paragraph (a) of this section.
    (e) The tentative rules and regulations and amendments thereto or 
tentative notice issued pursuant to paragraph (c) of this section shall 
be effective as of the first of the month following approval by the 
Secretary, but not sooner than 10 days after issuance by the market 
administrator.

                             Minimum Prices



Sec. 1002.50  Class prices.

    For pool milk received during each month from dairy farmers or 
cooperative associations of producers, each handler shall pay per 
hundredweight not less than the prices set forth in this section, 
subject to the differentials and adjustments in Secs. 1002.52 and 
1002.81. Any handler who purchases or receives milk during any month 
from a cooperative association of producers but does not operate the 
plant or unit receiving this milk from producers shall pay the 
cooperative association on or before 2 days before the last day of the 
month if paid by check, or the last day of the month if paid in cash or 
cash equivalent, at not less than the lowest class price pursuant to 
this section for the preceding month for milk received from such 
cooperative during the first 15 days of the month, and shall pay the 
cooperative association on or before the 15th day of the following month 
the balance due for milk received during the month from such cooperative 
at not less than the class prices pursuant to this section subject to 
the differentials and adjustments set forth in Secs. 1002.52 and 1002.81 
applicable at the plant at which the milk is first received from the 
cooperative association. Such payments to a cooperative association 
shall be deemed not to have been made until the payments have been 
received by the cooperative association.
    (a) Class I-A price. For Class I-A milk the Class I price in the 
201-210 mile freight zone shall be the basic formula price for the 
second preceding month

[[Page 96]]

plus Sec. 2.42. The differential value in the 1-10 mile freight zone 
shall be $3.14.
    (b) Class I-B price. For Class I-B milk the price shall be the price 
for Class I-A milk.
    (c) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (d) Class III price. Subject to the adjustment set forth below for 
the applicable month, the Class III price shall be the basic formula 
price for the month.

                                                                        
------------------------------------------------------------------------
              Month                 Amount         Month          Amount
------------------------------------------------------------------------
January..........................     +.03  July...............     +.03
February.........................     +.02  August.............     +.10
March............................     -.05  September..........     +.06
April............................     -.09  October............     +.06
May..............................     -.12  November...........     +.06
June.............................     -.11  December...........     +.06
------------------------------------------------------------------------

    (e) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent, and subject to the adjustments set forth in paragraph 
(d) of this section for the applicable month.
[56 FR 5327, Feb. 11, 1991, as amended at 58 FR 63285, Dec. 1, 1993; 60 
FR 6607, Feb. 2, 1995]



Sec. 1002.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1002.81 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.

[[Page 97]]

    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent reporting period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18954, Apr. 14, 1995]



Sec. 1002.52  Transportation differentials.

    The class prices set forth in Sec. 1002.50 shall be subject to a 
transportation differential determined in accordance with paragraphs (a) 
through (e) of this section.
    (a) The market administrator shall determine a freight zone for each 
pool plant and each partial pool plant. Such freight zone shall be the 
shortest highway mileage from the plant to the nearest of the following 
points as computed by the market administrator from data contained in 
Mileage Guide No. 5, without supplements, issued on July 20, 1949, 
effective August 21, 1949, by the Household Goods Carriers' Bureau, 
Agent, Washington, DC: Mount Vernon or Yonkers in the State of New York; 
Tenafly, Glen Ridge, East Orange, Elizabeth, Hackensack, Hillside, 
Irvington, or Passaic in the State of New Jersey. The freight zone for 
plants located in New York City, Nassau, and Suffolk Counties in the 
State of New York, or in Essex, Hudson, and Union Counties in the State 
of New Jersey shall be in the 1- to 10-mile zone. The market 
administrator shall publicly announce the freight zones for pool plants.
    (b) The market administrator shall determine and publicly announce a 
freight zone for each minor civil division (township, borough, 
incorporated village, or city) within which farms included in a pool or 
partial pool unit are located by computing the shortest highway mileage 
distance from the nearest point in the minor civil division to the 
nearest point specified in paragraph (a) of this section, using the 
mileage guide specified in such paragraph supplemented by U.S. 
Geological Survey maps. In States where the smallest governmental unit 
except for incorporated cities or villages is the county, a zone for the 
county shall be determined in the same manner as for minor civil 
divisions. The zone for each farm shall be the zone of the minor civil 
division or county in which the farm is located.
    (c) The differential rates applicable at plants shall be as set 
forth in the following schedule:

                                                                        
------------------------------------------------------------------------
                       A                             B            C     
------------------------------------------------------------------------
                                                              Classes II
              Freight zone miles                Classes I-A  and III and
                                                  and I-B       III-A   
------------------------------------------------------------------------
 1-10.........................................        +72.0           +8
11-20.........................................        +69.5           +8
21-25.........................................        +67.0           +8
26-30.........................................        +67.0           +7
31-40.........................................        +64.5           +7
41-50.........................................        +62.0           +7
51-60.........................................        +59.5           +6
61-70.........................................        +57.0           +6
71-75.........................................        +32.5           +6
76-80.........................................        +32.5           +5
81-90.........................................        +30.0           +5
91-100........................................        +27.5           +5
101-110.......................................        +25.0           +4
111-120.......................................        +22.5           +4
121-125.......................................        +20.0           +4
126-130.......................................        +20.0           +3
131-140.......................................        +17.5           +3
141-150.......................................        +15.0           +3
151-160.......................................        +12.5           +2
161-170.......................................        +10.0           +2
171-175.......................................         +7.5           +2
176-180.......................................         +7.5           +l
181-190.......................................         +5.0           +1
191-200.......................................         +2.5           +1
201-210.......................................          0.0            0
211-220.......................................         -2.5            0

[[Page 98]]

                                                                        
221-225.......................................         -5.0            0
226-230.......................................         -5.0            0
231-240.......................................         -7.5            0
241-250.......................................        -10.0            0
251-260.......................................        -12.5            0
261-270.......................................        -15.0            0
271-275.......................................        -17.5            0
276-280.......................................        -17.5            0
281-290.......................................        -20.0            0
291-300.......................................        -22.5            0
301-310.......................................        -25.0            0
311-320.......................................        -27.5            0
321-325.......................................        -30.0            0
326-330.......................................        -30.0            0
331-340.......................................        -32.5            0
341-350.......................................        -35.0            0
351-360.......................................        -37.5            0
361-370.......................................        -40.0            0
371-375.......................................        -42.5            0
376-380.......................................        -42.5            0
381-390.......................................        -45.0            0
391-400.......................................        -47.5            0
401 and over..................................        -50.0            0
------------------------------------------------------------------------

    (d) The differential rate applicable to each pool unit or partial 
pool unit shall be computed each month as follows: Multiply the volume 
of pool milk received from farms in each zone by the rate for that zone 
as set forth in the schedule in paragraph (c) of this section, add the 
resulting values for all zones of the unit, divide such sum by the total 
volume of milk received by the unit and round to the nearest 0.1 cent. 
Rates shall be computed separately for Columns B and C of such schedule.
    (e) In the event that a plant in the 401 miles and over freight zone 
becomes a pool plant, a 10-mile zone shall be determined for such plant 
and for each farm in any pool unit delivering to such plant. The Column 
B differentials in paragraph (c) of this section shall be extended at 
the same rate as provided in such column for such plant or unit: 
Provided, That in no case shall such differential cause the class price 
or the uniform price for such plant or unit to be less than the Class 
III price for such plant or unit: Provided further, That farms or units 
delivering to such plant shall be deemed to be in the same zone as the 
plant.
[33 FR 8201, June 1, 1968, as amended at 37 FR 2929, Feb. 10, 1972; 46 
FR 41756, Aug. 18, 1981; Redesignated and amended at 56 FR 5327 and 
5328, Feb. 11, 1991; 58 FR 63285, Dec. 1, 1993]



Sec. 1002.53  Producer-handler price differential.

    For skim milk and butterfat received from a handler who is a 
producer-handler under this or any other order and is assigned to Class 
I-A pursuant to Sec. 1002.45(a)(8)(iii), the transferee handler shall 
pay a differential equal to the difference between the Class I-A price 
and the Class III price both appropriately adjusted for differentials 
pursuant to Sec. 1002.52.
[56 FR 5328, Feb. 11, 1991]



Sec. 1002.54  Use of equivalent price or index.

    If for any reason a price or index specified by this part for use in 
computing class prices or other purposes is not reported or published in 
the manner therein described, the market administrator shall use a price 
or index determined by the Secretary to be equivalent to or comparable 
with the price or index specified.



Sec. 1002.55  Transportation credit on bulk unit pool milk.

    For pool milk received by a handler in a pool or partial pool unit, 
a transportation credit at the rate of 15 cents per hundredweight shall 
be computed.
[56 FR 5328, Feb. 11, 1991]



Sec. 1002.56  Announcement of class prices and butterfat differential.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month applicable at the 201-
210 mile zone and at the 1-10 mile zone.
    (b) The Class II price for the following month applicable at the 
201-210 mile zone and at the 1-10 mile zone.
    (c) The Class III and Class III-A prices for the preceding month 
applicable at the 201-210 mile zone and at the 1-10 mile zone;
    (d) The butterfat differential for the preceding month;
    (e) The basic formula price for the preceding month, pursuant to 
Sec. 1002.51, as reported by the United States Department of 
Agriculture.
    (f) The average price per hundredweight for manufacturing grade 
milk,

[[Page 99]]

f.o.b. plants in Wisconsin and Minnesota, using the base month series, 
for the second preceding month, as reported by the United States 
Department of Agriculture.
    (g) The average price per pound of Grade A (92-score) butter, at the 
Chicago Mercantile Exchange, for the preceding month, as reported by the 
United States Department of Agriculture.
    (h) The average price per pound, of nonfat dry milk f.o.b. Western 
Area, for the preceding month, as reported by the United States 
Department of Agriculture.
[56 FR 5328, Feb. 11, 1991, as amended at 58 FR 63285, Dec. 1, 1993; 60 
FR 6607, Feb. 2, 1995; 60 FR 18955, Apr. 14, 1995]

                     Determination of Uniform Price



Sec. 1002.60  Net pool obligation of handlers.

    Each handler's net pool obligation for milk received at each plant 
and unit shall be computed separately pursuant to paragraphs (a) through 
(d) of this section and then combined into one total to be adjusted by 
any credit applicable pursuant to paragraph (e) of this section to 
determine the handler's total net pool obligation.
    (a) Multiply the quantity of milk in each class remaining after the 
computation pursuant to Sec. 1002.45(a)(20) and the corresponding step 
of Sec. 1002.45(b) by the applicable class price adjusted by the 
applicable differential pursuant to Sec. 1002.52:
    (b) For each partial pool plant or partial pool unit multiply the 
quantity of pool milk in each class by the applicable class price 
adjusted by the applicable differential pursuant to Sec. 1002.52;
    (c) Deduct, in the case of each plant or unit nearer than the 201-
to-210-mile zone and add, in the case of each plant or unit farther than 
the 201-to-210-mile zone, the sum obtained by multiplying the quantity 
of pool milk received from dairy farmers by the differential in Column B 
of Sec. 1002.52(c) applicable at the plant and weighted average Column B 
differential computed pursuant to Sec. 1002.52(d) applicable to the 
unit.
    (d) Add the amounts computed in paragraph (d) (1) through (4) of 
this section:
    (1) Multiply the pounds of overage deducted from each class pursuant 
to Sec. 1002.45(a)(20) and the corresponding step of Sec. 1002.45(b) by 
the applicable class price adjusted by the differentials pursuant to 
Secs. 1002.52 and 1002.81;
    (2) Multiply the pounds of skim milk and butterfat in receipts of 
nonfluid milk products subtracted from Class I-A pursuant to 
Sec. 1002.45(a)(8)(i) and the corresponding step of Sec. 1002.45(b) and 
the pounds of skim milk and butterfat specified in 
Sec. 1002.44(d)(3)(vii) by the difference between the Class I-A and 
Class III prices, each adjusted by the applicable differential pursuant 
to Sec. 1002.52;
    (3) Multiply the pounds of skim milk and butterfat in receipts of 
nonfluid milk products assigned to Class I pursuant to Sec. 1002.40(c) 
by the difference between the Class I price less $1.00 (but not to be 
less than the Class III price) and the Class III price, both adjusted by 
the applicable differential pursuant to Sec. 1002.52. Alternatively, the 
handler may, with respect to such receipts of nonfluid milk products 
processed from producer milk regulated under another Federal order, 
elect to make payment to the producer-settlement fund of the other order 
at the difference between the Class I price applicable under the other 
order at the location of the plant where the nonfluid milk products were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
products is regulated under one or more Federal orders and payment may 
only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk products. This 
payment option shall not apply if the source of the nonfluid milk 
products used in reconstituted fluid milk products cannot be determined 
by the market administrator;
    (4) Multiply the quantity of skim milk and butterfat in receipts of 
concentrated fluid milk products from plants other than those defined in 
Sec. 1002.8(b) or (d) or as a producer-handler and which are assigned to 
Class I pursuant to Sec. 1002.40(c) or which are subtracted from Class 
I-A pursuant to Sec. 1002.45(a)(8)(i) and the corresponding

[[Page 100]]

step of Sec. 1002.45(b) by the Class I price, adjusted by the applicable 
differential pursuant to Sec. 1002.52.
    (5) Multiply the producer-handler price differential by the pounds 
of skim milk and butterfat subtracted from Class I-A pursuant to 
Sec. 1002.45(a)(8)(iii) and the corresponding step of Sec. 1002.45(b);
    (6) Multiply the difference between the Class III price for the 
preceding month and the Class I-A price or the Class II price, as the 
case may be, for the current month, both applicable at the location of 
the nearest plant or unit from which an equivalent quantity of Class III 
milk was received in the preceding month, by the pounds of skim milk and 
butterfat subtracted from Class I-A and Class II pursuant to 
Sec. 1002.45(a)(11) and the corresponding step of Sec. 1002.45(b).
    (e) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
    (f) Deduct any credit applicable pursuant to Sec. 1002.55.
[33 FR 8201, June 1, 1968, as amended at 34 FR 18605, Nov. 22, 1969; 35 
FR 16790, Oct. 30, 1970; 39 FR 11981, Apr. 2, 1974; 39 FR 30925, Aug. 
27, 1974; 41 FR 8367, Feb. 26, 1976. Redesignated and amended at 56 FR 
5328, Feb. 11, 1991; 58 FR 27779, May 11, 1993]



Sec. 1002.61  Computation of the uniform price.

    The market administrator shall, on or before the 14th day of each 
month, audit for mathematical correctness and obvious errors the report 
submitted for the preceding month by each handler. If the unreserved 
cash balance in the producer settlement fund to be included in the 
computation is less than 2 cents per hundredweight of pool milk on all 
reports, the report of any handler who has not made payment of the last 
monthly pool debit account rendered pursuant to Sec. 1002.71 shall not 
be included in the computation of the uniform price. The report of such 
handler shall not be included in the computation for succeeding months 
until he has made full payment of outstanding monthly pool debits. 
Subject to the aforementioned conditions, the market administrator shall 
compute the uniform price in the following manner:
    (a) Combine into one total the net pool obligations of all handlers 
computed pursuant to Sec. 1002.60;
    (b) Subtract the total of payments required to be made pursuant to 
Sec. 1002.77;
    (c) Subtract an amount computed by multiplying the quantity of pool 
milk delivered directly from farms to pool plants and partial pool 
plants that was not put into a tank truck prior to such delivery, by a 
rate per hundredweight that is equal to the rate specified in 
Sec. 1002.55;
    (d)-(e) [Reserved]
    (f) Add the amount of unreserved cash in the producer settlement 
fund;
    (g) Subtract an amount equal to not less than 8 cents nor more than 
9 cents per hundredweight of pool milk and receipts of concentrated 
fluid milk products for which a payment obligation is computed pursuant 
to Sec. 1002.60(d)(4) to provide against the contingency of errors in 
reports and payments or of delinquencies in payments by handlers; and
    (h) Divide the result obtained in paragraph (g) of this section by 
the total pounds of pool milk delivered by dairy farmers and the total 
pounds of concentrated fluid milk products for which a payment 
obligation is computed pursuant to Sec. 1002.60(d)(4). The result shall 
be known as the uniform price.
[33 FR 8201, June 1, 1968, as amended at 37 FR 4175, Feb. 29, 1972; 42 
FR 52380, Sept. 30, 1977. Redesignated and amended at 56 FR 5329, Feb. 
11, 1991; 58 FR 27780, May 11, 1993; 59 FR 16512, Apr. 7, 1994]



Sec. 1002.62  Announcement of uniform price.

    The market administrator shall publicly announce, on or before the 
14th

[[Page 101]]

day of each month, the uniform price for the preceding month pursuant to 
Sec. 1002.61 applicable at the 201-210 mile zone and at the 1-10 mile 
zone pursuant to Sec. 1002.82.
[56 FR 5329, Feb. 11, 1991]

               Producer Settlement Fund and Its Operation



Sec. 1002.70  Producer settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer settlement fund'' into which he shall 
deposit all payments and out of which he shall make all payments 
pursuant to Secs. 1002.72 through 1002.77. All amounts subtracted under 
Sec. 1002.61(d), inclusive of interest earned thereon, shall remain 
therein as an obligated balance until it is withdrawn for the purpose of 
effectuating Sec. 1002.61(e).
[56 FR 5329, Feb. 11, 1991]



Sec. 1002.71  Handler's accounts.

    The market administrator shall establish an account for each handler 
who is required to make payments to the producer settlement fund or who 
received payments from the producer settlement fund. After computing the 
uniform price and each handler's pool debit or credit each month, and at 
such times as he deems appropriate, the market administrator shall 
render each handler a statement of his account showing the debit or 
credit balance, together with all debits or credits entered on such 
handler's account since the previous statement was rendered: Provided, 
That the handler operating a pool plant receiving milk from a partial 
pool plant or partial pool unit without producers as defined in 
Sec. 1002.6, or from a partial pool plant in the 401 miles or over 
freight zone, shall be responsible for the debit or credit arising on 
milk so received and for the payment of the administration assessment 
pursuant to Sec. 1002.85 on such milk.
[33 FR 8201, June 1, 1968. Redesignated and amended at 56 FR 5329, Feb. 
11, 1991]



Sec. 1002.72  Payments to the producer-settlement fund.

    On or before the 16th day of each month each handler shall make full 
payment to the market administrator of the debit balance, if any, of 
such handler shown on the last statement of account rendered pursuant to 
Sec. 1002.71. Payments to the market administrator shall be deemed not 
to have been made until such payments have been received by the market 
administrator. If the date by which such payments must be received by 
the market administrator falls on a Saturday or Sunday or a national 
holiday, such payments shall not be due until the next day that the 
market administrator's office is open for public business.
[42 FR 11823, Mar. 1, 1977, as amended at 55 FR 3200, Jan. 31, 1990. 
Redesignated and amended at 56 FR 5329, Feb. 11, 1991]



Sec. 1002.73  Payments out of producer-settlement fund.

    (a) On or before the 17th day of each month the market administrator 
shall make payment to each handler of the credit balance, if any, of 
such handler shown on the last statement of account rendered pursuant to 
Sec. 1002.71. If the date by which such payments are to be made falls on 
Saturday or Sunday or a national holiday, such payments need not be made 
until the next day that the market administrator's office is open for 
public business. If payments to the producer-settlement fund under 
Sec. 1002.72 were delayed because the due date fell on a Saturday or 
Sunday or a national holiday, payments under this paragraph may be 
delayed by the same number of days.
    (b) If the balance in the producer-settlement fund is insufficient 
to make full payment required under paragraph (a) of this section, the 
market administrator shall reduce uniformly the payments to each handler 
and shall complete such payments as soon as the necessary funds are 
available. No handler who, on the 20th day of the month, has not 
received such payments in full from the market administrator shall be 
deemed to be in violation of Secs. 1002.80 through 1002.82 if he reduces 
his total

[[Page 102]]

payments to producers for milk delivered by such producers during the 
preceding month by not more than the amount of the reduction in payment 
from the producer-settlement fund.
[42 FR 11823, Mar. 1, 1977, as amended at 55 FR 3200, Jan. 31, 1990; 56 
FR 5329, Feb. 11, 1991]



Sec. 1002.74  Handler's pool debit or credit.

    After computing the uniform price for each month, the market 
administrator shall compute each handler's pool debit or credit as 
follows:
    (a) Add the contents computed as follows:
    (1) Multiply the quantity of pool milk received by each handler from 
dairy farmers by the uniform price;
    (2) Multiply the quantity of pool milk received by the handler at a 
pool plant or partial pool plant directly from farms that was not put 
into a tank truck prior to delivery by a rate per hundredweight that is 
equal to the rate specified in Sec. 1002.55;
    (3) Multiply the quantity of concentrated fluid milk products for 
which a payment obligation is computed pursuant to Sec. 1002.60(d)(4) by 
the uniform price.
    (b) If the result obtained in paragraph (a) of this section is less 
than the handler's net pool obligation, the difference shall be entered 
on the handler's producer settlement fund account as such handler's pool 
debit.
    (c) If the result obtained in paragraph (a) of this section is 
greater than the handler's net pool obligation, the difference shall be 
entered on the handler's producer settlement fund account as such 
handler's pool credit.
[33 FR 8201, June 1, 1968, as amended at 42 FR 52381, Sept. 30, 1977. 
Redesignated at 56 FR 5329, Feb. 11, 1991, and amended at 58 FR 27780, 
May 11, 1993]



Sec. 1002.75  Adjustments of errors in payments.

    Whenever verification by the market administrator of reports or 
payments of any handler discloses errors made in payments to or from the 
producer settlement fund, the market administrator shall debit the 
handler's producer settlement fund account for any unpaid amount. 
Whenever verification discloses that payment is due from the market 
administrator to any handler, the market administrator shall credit the 
handler's producer settlement fund account for any such amount.
[33 FR 8201, June 1, 1968. Redesignated at 56 FR 5329, Feb. 11, 1991]



Sec. 1002.76  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1002.72 and 
1002.85 shall be increased 1 percent on the first day after the due date 
of such obligation and on the same day of each succeeding month until 
such obligation is paid.
[42 FR 52381, Sept. 30, 1977. Redesignated and amended at 56 FR 5329, 
Feb. 11, 1991]



Sec. 1002.77  Cooperative payments for marketwide services.

    Payments shall be made to qualified cooperatives or to federations 
under the conditions, in the manner, and at the rates set forth in this 
section.
    (a) Definitions. As used in this section the following terms shall 
have the following meanings:
    (1) Cooperative means a cooperative association of producers which 
is duly incorporated under the cooperative corporation laws of a state; 
is qualified under the Capper-Volstead Act (7 U.S.C. 291 et seq.); has 
all its activities under the control of its members; and has full 
authority in the sale of its members' milk.
    (2) Federation means a federation of cooperatives which is duly 
incorporated under the laws of a State.
    (3) Federated cooperatives means a cooperative which is a member of 
a federation and on whose membership the federation is an applicant for 
or receives payments under paragraph (f)(2) of this section.
    (4) Affiliated cooperatives means a cooperative upon whose entire 
membership another cooperative, by mutual consent, is an applicant for 
or receives payments under paragraph (f)(2) of this section.
    (5) Member producer means, when used with respect to a cooperative 
or federation which is an applicant for or is receiving payments, is a 
producer as defined in Sec. 1002.6 who has met the following conditions:

[[Page 103]]

    (i) He is a member of the cooperative or one of its affiliated 
cooperatives, or in the case of a federation, he is a member of one of 
its federated cooperatives from whom the cooperative, affiliated 
cooperative, or federated cooperative is receiving at least 1 cent per 
hundredweight of milk delivered by him: Provided, That the cooperative 
of which he is a member is meeting the requirements of this part 
applicable to it;
    (ii) He has been a producer, or his farm, as defined in 
Sec. 1002.10, had been the farm of a producer for at least a prior 12-
month period; and
    (iii) He has not for a prior 12-month period been a member producer 
of another cooperative or federation: Provided, That in the case of 
membership transfers resulting from mergers of designated organizations, 
or from affiliation, federation or merger of cooperatives not previously 
meeting the definition of paragraph (a)(3) or (a)(4) of this section, 
this paragraph shall not apply.
    (6) Marketwide services means services performed by cooperatives or 
federations, as defined herein, which benefit all producers in the 
marketing of their milk under this order; such services are not limited 
to those specified in paragraphs (e)(1) through (6) of this section and 
may include services directly or indirectly related to the order.
    (b) Designated cooperatives and federations. A cooperative or 
federation may submit an application to the market administrator for 
payments under the provisions of this section or for modification of the 
basis of a previous designation. In accordance with the requirements of 
the rules and regulations issued by the market administrator such 
application shall include a written description of the applicant's 
program for the performance of marketwide services, including evidence 
that adequate facilities and personnel will be maintained by it so as to 
enable it to perform the marketwide services; and the application shall 
contain a statement by the applicant that it will perform the required 
marketwide services for which it is applying for payments: Provided, 
That in the case of an application for modification of the basis for a 
previous designation the market administrator may waive the requirement 
for submission of the written description of the programs. The 
application shall set forth all necessary data so as to enable the 
market administrator to determine whether it meets the designation 
requirements with respect to the payments for which the application is 
submitted. An application shall be approved by the market administrator 
only if he determines that:
    (1) In the case of a cooperative;
    (i) It has as member producers not less than 15 percent of all 
producers, as defined in Sec. 1002.6;
    (ii) It has contracts with each of its affiliated cooperatives under 
which the cooperatives agree to continue as affiliated cooperatives for 
at least 1 year, and such contracts cover or will be renewed for a 
yearly period for every subsequent year for which member producers of 
the affiliated cooperative are to be included within its membership for 
cooperative payment purposes;
    (iii) It receives from each of its affiliated cooperatives not less 
than 1 cent per hundredweight of milk delivered by member producers of 
such cooperatives; and
    (iv) If the application is also for an additional payment under 
paragraph (f)(3) of this section, the cooperative or its affiliated 
cooperatives operate marketing facilities, i.e., pool plants and pool 
bulk tank units, at which is received at least 25 percentum, by weight, 
of all milk delivered by its member producers; and, in addition, the 
cooperative or its affiliated cooperatives control processing facilities 
capable of handling at least 10 percentum, by weight, of all milk 
marketed by its member producers: Provided, That such processing 
facilities must be capable of handling not less than 1 million pounds of 
milk daily: Provided further, That the cooperative must be willing to 
accept nonmember milk on a temporary basis under the generally 
prevailing conditions for acceptance of milk from its own members.
    (2) In the case of a federation:
    (i) It has contracts with each of its federated cooperatives under 
which the cooperatives agree to remain in the federation for at least 1 
year, and such

[[Page 104]]

contracts cover or will be renewed for a yearly period for every 
subsequent year for which the federated cooperatives are to be included 
within the membership of the federation for cooperative payment 
purposes;
    (ii) It has as member producers not less than 15 percent of all 
producers, as defined in Sec. 1002.6;
    (iii) It receives from each of its federated cooperatives not less 
than 1 cent per hundredweight of milk delivered by member producers of 
such cooperative;
    (iv) If the application is also for an additional payment under 
paragraph (f)(4) of this section, the federation or its federated 
cooperatives operate marketing facilities, i.e., pool plant(s) and pool 
bulk tank unit(s), at which is received at least 25 percentum, by 
weight, of the milk marketed by its member producers; and, in addition, 
the federation or its federated cooperatives control processing 
facilities capable of handling at least 10 percentum, by weight, of all 
milk marketed by its member producers: Provided, That such processing 
facilities must be capable of handling not less than 1 million pounds of 
milk daily: Provided further, That the federation must be willing to 
accept nonmember milk on a temporary basis under the generally 
prevailing conditions for such acceptance of milk from its own members.
    (3) The applicant cooperative or federation demonstrates that it has 
the ability to perform the marketwide services for which application is 
made, and that such services will be performed.
    (4) The applicant cooperative or the federated cooperatives of an 
applicant federation are in no way precluded from arranging for the 
utilization of milk under their respective control so as to yield the 
highest available net return to all producers without displacing an 
equivalent quantity of other producer milk in the preferred 
classification.
    (c) Notice of designation or denial; effective date. Upon 
determination by the market administrator that a cooperative or a 
federation shall be designated to receive payment for performance of the 
marketwide services, he shall transmit such determination to the 
applicant cooperative or federation and publicly announce the issuance 
of the determination. The determination shall be effective with respect 
to milk delivered on and after the first day of the month following 
issuance of the determination. If, after consideration of an application 
for payments for marketwide services, the market administrator 
determines that the cooperative or federation is not qualified to 
receive such payments he shall promptly notify the applicant and 
specifically set forth in such notice his reasons for denial of the 
application.
    (d) Requirements for continued designation. From time to time and in 
accordance with the rules and regulations which may be issued by the 
market administrator, each designated cooperative or federation must 
demonstrate to the market administrator that it continues to meet the 
designation requirements for the payments and is fully performing the 
marketwide services for which it is being paid.
    (e) Marketwide services. Each cooperative or federation shall 
perform the marketwide services enumerated in this paragraph. Such 
services shall include:
    (1) Analyzing milk marketing problems and their solutions, 
conducting market research and maintaining current information as to all 
market developments, preparing and assembling statistical data relative 
to prices and marketing conditions, and making an economic analysis of 
all such data;
    (2) determining the need for the formulation of amendments to the 
order and proposing such amendments or requesting other appropriate 
action by the Secretary or the market administrator in the light of 
changing conditions;
    (3) participating in proceedings with respect to amendments to the 
order, including the preparation and presentation of evidence at public 
hearings, the submission of appropriate briefs and exceptions, and also 
participating, by voting or otherwise, in the referenda relative to 
amendments;
    (4) participating in the meetings called by the market 
administrator, such as meetings with respect to rules and regulations 
issued under the order, including activities such as the preparation and 
presentation of data at such

[[Page 105]]

meetings and briefs for submission thereafter;
    (5) conducting a comprehensive education program among producers--
i.e., members and nonmembers of cooperatives--and keeping such producers 
well informed for participation in the activities under the regulatory 
order and, as a part of such program, issuing publications that contain 
relevant data and information about the order and its operation, and the 
distribution of such publications to members and, on the same 
subscription basis, to nonmembers who request it, and holding meetings 
at which members and nonmembers may attend;
    (6) in the case of a cooperative or federation which receives an 
additional payment under paragraph (f)(3) or (4) of this section, 
operating marketing facilities, or having affiliated cooperatives or 
federated cooperatives that operate marketing facilities, i.e., pool 
plant(s) and pool bulk tank unit(s), at which is received at least 25 
percentum, by weight, of milk marketed by its member producers; and in 
addition, controls, or having affiliated cooperatives or federated 
cooperatives that control processing facilities capable of handling at 
least 10 percentum, by weight, of the milk marketed by its member 
producers: Provided, That such processing facilities must be capable of 
handling at least one million pounds of milk daily: Provided further, 
That the cooperative or federation must be willing to accept nonmember 
milk on a temporary basis under the generally prevailing conditions for 
such acceptance of milk of its own members; and
    (7) performing such other services as are needed to maintain 
satisfactory marketing conditions and promote market stability.
    (f) Rate, computation, time, and method of payment. (1) Subject to 
the provisions of paragraph (g) of this section, the market 
administrator, on or before the 20th day of each month, shall make 
payment out of the producer-settlement fund, or issue equivalent credit 
therefore, to each cooperative or federation which is designated for 
such payments for marketwide services. The payments to a cooperative or 
federation shall be based upon the milk reported by cooperative or 
proprietary handlers to have been received during the preceding month 
from its member producers, subject to adjustment upon verification by 
the market administrator.
    (2) Such payment or credit shall be at the rate of 3 cents per 
hundredweight of milk in accordance with paragraph (f)(1) of this 
section.
    (3) Any cooperative that operates marketing facilities or whose 
affiliated cooperatives operate marketing facilities, i.e., pool 
plant(s) and pool bulk tank unit(s), at which is received at least 25 
percentum, by weight, of the milk marketed by its member producers, and, 
in addition, controls, or has affiliated cooperatives that control, 
processing facilities capable of handling, at least 10 percentum, by 
weight, of the milk marketed by its member producers but not less than 
one million pounds of milk daily shall receive a payment in addition to 
that provided for in paragraph (f)(2) of this section of one cent per 
hundredweight of all milk marketed by member producers in accordance 
with paragraph (f)(1) of this section.
    (4) Any federation that operates marketing facilities, or whose 
federated cooperatives operate marketing facilities, i.e., pool plant(s) 
and pool bulk tank unit(s), at which is received at least 25 percentum, 
by weight, of the milk marketed by its member producers, and, in 
addition, controls, or whose federated cooperatives control, processing 
facilities capable of handling at least 10 percentum of the milk 
marketed by its member producers but not less than 1 million pounds 
daily, shall receive a payment, in addition to the payment provided for 
in paragraph (f)(2) of this section, of 1 cent per hundredweight of all 
milk marketed by member producers in accordance with paragraph (f)(1) of 
this section.
    (5) If an individually designated cooperative is affiliated with a 
federation, the cooperative payment shall be made to such cooperative 
unless its contract with the federation specified in writing that the 
federation is to receive the payments. Any such contract must authorize 
the federation to receive the payments for at least 1 year, and such 
agreement must cover or be renewed

[[Page 106]]

for a yearly period for every subsequent year for which the federation 
is to receive the payments.
    (g) Cancellation of designation. (1) The market administrator shall 
issue an order wholly or partly canceling the designation of a 
previously designated cooperative or federation for payments authorized 
pursuant to this section and such payments shall not thereafter be made 
to it if he determines that:
    (i) The cooperative or federation no longer complies with the 
requirements of this part: Provided, That if one of its affiliated or 
federated cooperatives has failed to comply with the requirements of 
this part applicable to it or has failed, promptly after demand by the 
market administrator, to arrange for the utilization of milk under its 
control so as to yield the highest available net return to all producers 
without displacing an equivalent quantity of other producer milk in the 
preferred classification, the cooperative or federation shall be 
disqualified only to the extent that its qualification for payments or 
the amount of its payment are based upon the membership, milk, or 
operations of such noncomplying affiliated or federated cooperatives.
    (ii) The cooperative or federation has failed to make reports or 
furnish records pursuant to this section or pursuant to rules and 
regulations issued by the market administrator; or
    (iii) In the case of the cooperative, it has failed, promptly after 
demand by the market administrator, to arrange for the utilization of 
milk under its control so as to yield the highest available net return 
to all producers without displacing an equivalent quantity of other 
producer milk in the preferred classification.
    (2) An order of the market administrator wholly or partly canceling 
the designation of a cooperative or federation shall not be issued until 
after the cooperative or federation has had opportunity for hearing 
thereon following not less than 15 days' notice to it specifying the 
reasons for the proposed cancellation. If the cooperative or federation 
fails to file a written request for hearing with the market 
administrator within such period of 15 days, the market administrator 
may issue an order of cancellation without further notice: But if within 
such period a request for hearing is filed, the market administrator 
shall promptly proceed to hold such hearing pursuant to rules and 
regulations issued by him under paragraph (i) of this section.
    (3) A cancellation order issued by the market administrator shall 
set forth the findings and conclusions on the basis of which it is 
issued.
    (h) Appeals--(1) From denials of application. Any cooperative or 
federation whose application for designation has been denied by the 
market administrator may, within 30 days after notice of such denial, 
file with the Secretary a written petition for review. But the failure 
to file such petition shall not bar the cooperative or federation from 
again applying to the market administrator for designation.
    (2) From cancellation orders. A cancellation order by the market 
administrator shall become final 30 days after its service on the 
cooperative or federation unless within such 30-day period the 
cooperative or federation files a written petition with the Secretary 
for review thereof. If such petition for review is filed, payments for 
which the cooperative or federation has been canceled by the order shall 
be held in reserve by the market administrator pending ruling of the 
Secretary, after which the sums so held in reserve shall either be 
returned to the producer-settlement fund or paid over to the cooperative 
or federation depending on the Secretary's ruling on the petition. If 
such petition for review is not filed, any payments which otherwise 
would be made within the 30-day period following issuance of the 
cancellation order shall be held in reserve until such order becomes 
final and shall then be returned to the producer-settlement fund.
    (3) Record on appeal. If an appeal is taken under paragraph (h) (1) 
or (2) of this section, the market administrator shall promptly certify 
to the Secretary the ruling or order appealed from and the evidence upon 
which it was issued: Provided, That if a hearing was held the complete 
record thereof, including the applications, petitions, and all exhibits 
or other documentary material submitted in evidence shall be the record 
so certified. Such certified material shall

[[Page 107]]

constitute the sole record upon which the appeal shall be decided by the 
Secretary.
    (i) Regulations. The market administrator is authorized to issue 
regulations and amendments thereto to effectuate the provisions of this 
section and to facilitate and implement the administration of its 
provisions. Such regulations shall be issued in accordance with the 
following procedure:
    (1) All proposed rules and regulations and amendments thereto shall 
be the subject of a meeting called by the market administrator, at which 
all interested persons shall have opportunity to be heard. Not less than 
5 days prior to the meeting, notice thereof and of the proposed 
regulations or amendments shall be mailed to qualified cooperatives and 
federations. A stenographic record shall be made at such meetings which 
shall be public information and be available for inspection at the 
office of the market administrator.
    (2) A period of at least 5 days after the meeting shall be allowed 
for the filing of briefs.
    (3) All regulations and amendments thereto issued by the market 
administrator pursuant to this section must be submitted in tentative 
form to the Secretary for approval, shall not be effective without such 
approval. The regulations or amendments in tentative form shall be 
forwarded also to cooperatives and federations designated under this 
section and to other persons upon request in writing. The Secretary 
shall either approve the regulations or amendments thereto submitted by 
the market administrator or direct the market administrator to 
reconsider the tentative rules or amendments. In the event the market 
administrator is directed to give reconsideration to the matter, the 
market administrator shall either issue revised tentative regulations or 
amendments or call another meeting pursuant to this section for 
additional consideration of the rules or amendments.
    (j) Reports and records. Each designated cooperative or federation 
shall, in accordance with rules and regulations issued by the market 
administrator:
    (1) After submission to the market administrator for verification, 
make a public report of its performance of marketwide services pursuant 
to this section, including data on its receipts and expenditure of 
cooperative payments funds and a description of the marketwide services 
performed. The report shall contain a certification by the market 
administrator that the report is, to the best of his knowledge, accurate 
and in accordance with the rules and regulations which he has 
established.
    (2) Submit an annual report to the market administrator which shall 
include:
    (i) A concise report of its performance of marketwide services and 
allocations of expenditures to such performance for the previous year; 
and
    (ii) An outline of its proposed program and budget for performance 
of marketwide services for the coming year.
    (3) Make such additional reports to the market administrator as may 
be requested by him for the administration of the provisions of this 
section.
    (4) Maintain and make available to the market administrator or his 
representative such records as will enable the market administrator to 
verify such reports.
    (k) Notices, demands, orders, etc. All notices, demands, orders, or 
other papers required by this section to be given to or served upon a 
cooperative or federation shall be deemed to have been given or served 
as of the time when mailed to the last known secretary of the 
cooperative or federation at his last known address.
[33 FR 14230, Sept. 20, 1968, as amended at 55 FR 3200, Jan. 31, 1990. 
Redesignated and amended at 56 FR 5329, Feb. 11, 1991; 60 FR 62019, Dec. 
4, 1995]

                Payment by Handlers Directly to Producers



Sec. 1002.80  Time and rate of payments.

    (a) On or before the last day of the month, each handler shall make 
payment to each producer for milk received from such producer during the 
first 15 days of the month at not less than the lowest class price for 
the preceding month.

[[Page 108]]

    (b) On or before the 20th day of the month, each handler shall make 
payment, pursuant to paragraphs (c), (d), (e), (f) and (g) of this 
section, to each producer for the balance due for all milk received from 
such producer during the preceding month at not less than the uniform 
price for such month, subject to the following adjustments:
    (1) Appropriate differentials set forth in Secs. 1002.81 and 
1002.82;
    (2) Proper deductions for the month that were authorized in writing 
by producers from whom the handler received milk (except as specified in 
paragraph (a)(3) of this section);
    (3) For milk received in a bulk tank unit and for which 
transportation was provided by the handler or at his expense, there may 
be deducted, as proper and as authorized in writing by the producer, or 
by a cooperative association authorized to act on behalf of such 
producer, a tank truck service (transportation) charge. This charge may 
include any farm-to-first plant transportation costs for which the 
handler was not reimbursed through the transportation credit pursuant to 
Sec. 1002.55, but such charge shall be reduced by the amount that the 
class use location value of milk at the plant of first receipt exceeds 
its class use location value where the milk was accounted for as a 
receipt in the bulk tank unit from which the milk was transferred. Any 
such deduction, plus the transportation credit, and plus the amount of 
the increase in class use location value of the milk at the plant 
compared to the unit shall not exceed the actual transportation costs 
incurred. Any such deduction also must be made by the handler not later 
than the date on which the producer is required to be paid for such 
milk. If authorization for such deduction is cancelled by the producer 
or by the cooperative by notifying the handler in writing, such 
cancellation shall be effective on the first day of the month following 
its receipt by the handler; and
    (4) For pool milk delivered directly from a farm to a pool plant or 
a partial pool plant that was not put into a tank truck prior to such 
delivery, the handler shall pay to the producer an additional amount 
computed by multiplying the quantity of such milk by a rate per 
hundredweight that is equal to the rate specified in Sec. 1002.55.
    (c) Upon receipt of a written request from a cooperative association 
which the market administrator determines is authorized by its producer-
members to collect payment for their milk, each handler, on or before 2 
days before payments are due to individual producers if paid by check, 
or the same day such payments are due to individual producers if paid in 
cash or cash equivalent, shall pay the cooperative association for milk 
received during the month from the producer-members of such association 
an amount equal to not less than the total amount otherwise due such 
producer-members as determined pursuant to paragraphs (a) and (b) of 
this section.
    (d) Each handler which is also a cooperative marketing association, 
determined by the Secretary to be qualified under the Capper-Volstead 
Act with respect to producers who are members of and under contract with 
such association, may make distribution in accordance with the contract 
between the association and such members of the net proceeds of all its 
sales in all markets in all use classifications.
    (e) Whenever verification by the market administrator of the payment 
to any producer or cooperative association of producers for milk 
delivered to any handler discloses payment of less than is required by 
this part, the handler shall make up such payment to the producer or 
cooperative association of producers not later than the time of making 
payment next following such disclosure.
    (f) If a handler claims that he cannot make the required payment 
because the producer is deceased or cannot be located, or because the 
cooperative association or its lawful successor or assignee is no longer 
in existence, such payment shall be made to the producer settlement 
fund, and in the event that the handler subsequently locates and pays 
the producer or a lawful claimant, or in the event that the handler no 
longer exists and a lawful claim is later established, the market 
administrator shall make such payment from the producer settlement fund 
to the handler or to the lawful claimant as the case may be.

[[Page 109]]

    (g) If not later than the date when such payment is required to be 
made, legal proceedings have been instituted by the handler for the 
purpose of administrative or judicial review of the market 
administrator's findings upon verification as provided above such 
payment shall be made to the producer settlement fund and shall be held 
in reserve until such time as the above-mentioned proceedings have been 
completed or until the handler submits proof to the market administrator 
that the required payment has been made to the producer or association 
of producers in which latter event the payment shall be refunded to the 
handler.
[33 FR 8201, June 1, 1968, as amended at 42 FR 11823, Mar. 1, 1977; 42 
FR 52380, Sept. 30, 1977; 46 FR 41756, Aug. 18, 1981; 55 FR 3200, Jan. 
31, 1990]



Sec. 1002.81  Butterfat differential.

    The butterfat differential for the adjustment of prices as specified 
in this part shall be plus or minus for each one-tenth of one percent of 
butterfat above or below 3.5 percent by an amount computed as follows: 
Round to the nearest one-tenth cent, 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. 1002.51 (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.
[60 FR 18955, Apr. 14, 1995]



Sec. 1002.82  Transportation differentials.

    The transportation differential shall be plus or minus the 
appropriate differential shown in column B of the schedule in 
Sec. 1002.52(c) for the zone of the plant to which the milk is delivered 
or in the case of farms included in units the zone of the township in 
which the milk is received.
[56 FR 5329, Feb. 11, 1991]

                        Expense of Administration



Sec. 1002.85  Payment by handlers.

    To share on a pro rata basis the expense of administration of this 
part, each handler shall, on or before the date specified for making 
payment to the producer-settlement fund pursuant to Sec. 1002.72, pay to 
the market administrator a sum not exceeding five cents per 
hundredweight on the total quantity of pool milk received from dairy 
farmers at plants or from farms in a unit operated by such handler, 
directly or at the instance of a cooperative association of producers 
and on the quantity for which payment is made pursuant to 
Sec. 1002.60(d)(2), the exact amount to be determined by the market 
administrator subject to review by the Secretary. This section shall not 
be deemed to duplicate any similar payment by any handler under an order 
issued by the Commissioner of Agriculture and Markets of the State of 
New York, or the Director of the Division of Dairy Industry of the New 
Jersey Department of Agriculture, with respect to the marketing area. 
Whenever verification by the market administrator discloses an error in 
the payment made by any handler, such error shall be adjusted not later 
than the date next following such disclosure on which payments are due 
pursuant to this section.
[42 FR 11823, Mar. 1, 1977, as amended at 53 FR 48516, Dec. 1, 1988; 53 
FR 49966, Dec. 12, 1988. Redesignated and amended at 56 FR 5329, Feb. 
11, 1991]



PART 1004--MILK IN THE MIDDLE ATLANTIC MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1004.1  General provisions.

                               Definitions

1004.2  Middle Atlantic marketing area.
1004.3  Route disposition.
1004.4  Plant.
1004.5--1004.6  [Reserved]
1004.7  Pool plant.
1004.8  Nonpool plant.
1004.9  Handler.
1004.10  Producer-handler.

[[Page 110]]

1004.11  Dairy farmer.
1004.12  Producer.
1004.13  Producer milk.
1004.14  Other source milk.
1004.15  Fluid milk product.
1004.16  Fluid cream product.
1004.17  Filled milk.
1004.18  Exempt milk.
1004.19  Federation.
1004.20  Cooperative association.
1004.21  [Reserved]
1004.22  Commercial food processing establishment.

                             Handler Reports

1004.30  Reports of receipts and utilization.
1004.31  [Reserved]
1004.32  Other reports.

                         Classification of Milk

1004.40  Classes of utilization.
1004.41  Shrinkage.
1004.42  Classification of transfers and diversions.
1004.43  General classification rules.
1004.44  Classification of producer milk.
1004.45  Market administrator's reports and announcements concerning 
          classification.

                       Class and Component Prices

1004.50  Class and component prices.
1004.51  Basic formula prices.
1004.52  Location differentials to handlers.
1004.53  Announcement of class prices and component prices.
1004.54  Equivalent prices or indexes.

                Differential Pool and Handler Obligations

1004.60  Handler's value of milk for computing uniform prices.
1004.61  Computation of weighted average differential price, and 
          producer nonfat milk solids price.
1004.62  Computation of uniform price.
1004.63  Announcement of weighted average differential price, nonfat 
          milk solids price and producer nonfat milk solids price.

                            Payments for Milk

1004.70  Producer-settlement fund.
1004.71  Payments to the producer-settlement fund.
1004.72  Payments from the producer-settlement fund.
1004.73  Value of producer milk.
1004.74  Payments to producers and to cooperative associations.
1004.75  Location differentials to producers and on nonpool milk.
1004.76  Payments by a handler operating a partially regulated 
          distributing plant.
1004.77  Adjustment of accounts.
1004.78  Charges on overdue accounts.
1004.79  Direct-delivery differential.

        Administrative Assessment and Marketing Service Deduction

1004.85  Assessment for order administration.
1004.86  Deductions for marketing services.

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  40 FR 18753, Apr. 30, 1975, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1004.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1004.2  Middle Atlantic marketing area.

    Middle Atlantic marketing area (hereinafter called the ``marketing 
area'') means all territory within the boundaries of the following 
places, including piers, docks and wharves and territory within such 
boundaries occupied by government (municipal, State, or Federal) 
reservations, installations, institutions or other similar 
establishments:
    (a) The District of Columbia.
    (b) The State of Delaware.
    (c) In the State of Maryland:
    (1) The counties of:

    Anne Arundel, Baltimore, Calvert, Caroline, Carroll, Cecil, Charles, 
Dorchester, Frederick, Harford, Howard, Kent, Montgomery, Prince 
Georges, Queen Annes, Somerset, St. Marys, Talbot, Washington, Wicomico, 
Worcester.

    (2) The city of Baltimore.
    (d) In the State of New Jersey:
    (1) The counties of:

    Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, 
Mercer, Salem.

    (2) In Ocean County:
    (i) The townships of:

    Eagleswood, Lacey, Long Beach, Little Egg Harbor, Ocean, Stafford, 
Union.

    (ii) The boroughs of:


[[Page 111]]


    Barnegat Light, Beach Haven, Harvey Cedars, Ship Bottom, Tuckerton.

    (e) In the State of Pennsylvania, the counties of:

    Adams, Bucks, Chester, Cumberland, Dauphin, Delaware, Franklin, 
Fulton, Juniata, Lancaster, Lebanon, Montgomery, Perry, Philadelphia, 
York.

    (f) In the State of Virginia:
    (1) The counties of:

    Arlington, Fairfax, Loudoun, Prince William.

    (2) The cities of:

    Alexandria, Falls Church, Fairfax.



Sec. 1004.3  Route disposition.

    Route disposition means any delivery of a fluid milk product from a 
plant to a retail or wholesale outlet (including any delivery through a 
distribution depot, by a vendor, from a plant store or through a vending 
machine) except any delivery to a plant.



Sec. 1004.4  Plant.

    Except as specifically provided in Sec. 1004.7(d)(2), plant means 
the land and buildings together with their surroundings, facilities and 
equipment, whether owned or operated by one or more persons, 
constituting a single operating unit or establishment for the receiving, 
processing or packaging of milk or milk products (including filled 
milk). However, a separate facility used only for the purpose of 
transferring bulk milk from one tank truck to another tank truck or only 
as a distribution depot for fluid milk products in transit for route 
distribution shall not be included under this definition.
[50 FR 16453, Apr. 26, 1985]



Secs. 1004.5--1004.6  [Reserved]



Sec. 1004.7  Pool plant.

    Except as provided in paragraph (f) of this section, pool plant 
means a plant (except a producer-handler plant or the plant of a handler 
pursuant to Sec. 1004.9(e)) specified in paragraphs (a) through (e) of 
this section.
    (a) A plant from which during the month a volume not less than 40 
percent in the months of September through February, and 30 percent in 
the months of March through August, of its receipts described in 
paragraph (a)(1) or (2) of this section is disposed of as Class I milk 
(except filled milk) and a volume not less than 15 percent of such 
receipts is disposed of as route disposition (other than as filled milk) 
in the marketing area.
    (1) Milk received at such plant directly from dairy farmers 
(excluding milk diverted as producer milk pursuant to Sec. 1004.12, by 
either the plant operator or by a cooperative association, and also 
excluding the milk of dairy farmers for other markets) and from a 
cooperative in its capacity as a handler pursuant to Sec. 1004.9(c); or
    (2) In the case of a plant with no receipts described in paragraph 
(a)(1) of this section, receipts of fluid milk products (other than 
filled milk) from other plants.
    (3) A plant which meets the ``pool plant'' requirements of this 
paragraph during any month shall retain its pool status during the 
immediately succeeding two months as long as the plant continues to meet 
the 15-percent in-area Class I disposition requirement, unless written 
application is filed by the plant operator with the market administrator 
on or before the first day of any such month requesting that the plant 
be designated a nonpool plant for such month and each subsequent month 
during which it does not otherwise qualify pursuant to this paragraph.
    (4) A plant's status as an other order plant pursuant to paragraph 
(f) of this section will become effective beginning the third 
consecutive month in which a plant is subject to the classification and 
pricing provisions of another order.
    (b) Any plant not meeting the conditions of paragraph (a) of this 
section from which during the month a quantity of fluid milk products 
(other than filled milk) not less than the applicable percentage (as 
specified in paragraph (b)(1) of this section) of such plant's receipts 
of milk from dairy farmers (including milk diverted as producer milk 
pursuant to Sec. 1004.12 by either the plant operator or by a 
cooperative association) and from a cooperative association in its 
capacity as a handler pursuant to Sec. 1004.9(c) is moved to a plant(s) 
meeting the percentage disposition requirements specified in paragraph 
(a)

[[Page 112]]

of this section with respect to its total receipts of fluid milk 
products (other than filled milk) from dairy farmers, cooperative 
associations as handlers pursuant to Sec. 1004.9(c) and from other 
plants. However, a plant shall not qualify pursuant to this paragraph in 
any month in which a greater proportion of its qualifying shipments are 
made to a plant(s) regulated under another Federal order than to plants 
regulated under this order.
    (1) The applicable percentage for the purpose of this paragraph 
shall be:
    (i) 50 percent for any month of September through February; and
    (ii) 40 percent for any month of March through August.
    (c) [Reserved]
    (d) A plant operated in accordance with paragraph (d)(1), (2) or (3) 
of this section, subject to the requirement of paragraph (d)(4) of this 
section.
    (1) A reserve processing plant operated by a cooperative association 
at which milk from dairy farmers is received if the total of fluid milk 
products (except filled milk) transferred from such cooperative 
association plant(s) to, and the milk of member producers physically 
received at, pool plants pursuant to Sec. 1004.7(a) is not less than 25 
percent of the total milk of member producers during the month.
    (2) A reserve processing plant operated by a federation of 
cooperative associations if, during the month, 30 percent or more of the 
producer milk of member producers of such cooperative is caused to be 
delivered to and physically received at pool plants qualified pursuant 
to paragraph (a) of this section either from the farms of such producers 
or by transfer in the form of fluid milk products (except filled milk) 
from the plant(s) of such cooperatives. If a pipeline is maintained 
between a reserve processing plant and a nonpool plant operated by 
another person and located on the same premises, the reserve processing 
plant shall be a pool plant for the month if the operator of such plant 
proves to the satisfaction of the market administrator that such plant 
should be eligible for pool status on the basis of the plant's monthly 
receipts and disposition of milk and that the pipeline was used only to 
move by-products (not milk) between such plants during the month.
    (3) A reserve processing plant owned and operated by a cooperative 
association that also owns and operates a pool plant pursuant to 
Sec. 1004.7(a) so long as the volume of the cooperative's member milk 
pooled at the reserve processing plant does not exceed the volume of 
sales of Class I milk (except filled milk) from the cooperative's pool 
distributing plant, plus the milk of member producers received directly 
at pool plants pursuant to Sec. 1004.7(a) of other handlers during the 
month.
    (4) A cooperative or federation of cooperatives operating a pool 
reserve processing plant qualified pursuant to this paragraph shall 
notify the market administrator each month, at the time of filing 
reports pursuant to Sec. 1004.30 and in the detail prescribed by the 
market administrator, with respect to any receipts from member dairy 
farmers of the cooperative(s) delivering to such plant not meeting the 
health requirements for disposition as fluid milk in the marketing area.
    (e) A plant that qualified as a pool plant pursuant to paragraph (b) 
or (d) of this section during each of the immediately preceding months 
of September through February shall be qualified for automatic pool 
plant status for each of the following months of March through August, 
unless the plant operator files a written request with the market 
administrator prior to the beginning of any such month asking that such 
plant not be a pool plant. Such nonpool status shall be effective on the 
first day of the month following the receipt of such request and shall 
continue until the plant again qualifies as a pool plant pursuant to 
paragraph (b) or (d) of this section, subject to the following 
conditions:
    (1) The automatic pool plant status for any plant identified in 
paragraph (e) of this section shall be cancelled if another plant is 
qualified as a pool plant on the basis of deliveries to the same plants 
through which such automatic pooling status was acquired by the plant. 
Cancellation of the plant's automatic pool plant status shall be 
effective on the first day of the month in which the other plant is 
qualified as a pool plant and shall continue until the

[[Page 113]]

plant again qualifies as a pool plant pursuant to paragraph (b) or (d) 
of this section; and
    (2) The automatic pool plant status of a reserve processing plant 
operated by a federation of cooperative associations qualified pursuant 
to paragraph (d)(2) of this section shall be forfeited for any month 
during the March through August period in which the market administrator 
determines on the basis of the investigation conducted pursuant to 
paragraph (d)(2) of this section that such plant shall not be a pool 
plant for the month.
    (f) A plant specified in paragraph (f)(1) or (2) of this section 
shall, except as provided in Secs. 1004.32(e) and 1004.71(c), be exempt 
from the provisions of this part:
    (1) Any plant qualified pursuant to paragraph (a) of this section 
which would be subject to the classification and pricing provisions of 
another order issued pursuant to the Act unless the Secretary determines 
that a greater volume of Class I milk, except filled milk, is disposed 
of from such plant as route disposition in the Middle Atlantic marketing 
area than is so disposed of in a marketing area regulated pursuant to 
such other order; or
    (2) Any plant subject to the classification and pricing provisions 
of another order issued pursuant to the Act, notwithstanding its status 
under this order pursuant to paragraph (a) or (b) of this section.
    (g) The applicable shipping percentage of paragraphs (a) and (b) or 
(d) 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 percentages 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 effective.
[40 FR 18753, Apr. 30, 1975, as amended at 44 FR 21621, Apr. 11, 1979; 
47 FR 5194, Feb. 4, 1982; 47 FR 51732, Nov. 17, 1982; 48 FR 39034, Aug. 
29, 1983; 49 FR 33432, Aug. 23, 1984; 50 FR 16453, Apr. 26, 1985; 60 FR 
55310, Oct. 31, 1995]



Sec. 1004.8  Nonpool plant.

    Nonpool plant means a plant other than a pool plant. The following 
categories of nonpool plants are further defined:
    (a) Other order plant means a plant that is fully subject to the 
pricing and payment provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a plant which is 
not a pool plant, a producer-handler plant, an other order plant, or the 
plant of a handler pursuant to Sec. 1004.9(e), from which fluid milk 
products in consumer-type packages or dispenser units are disposed of as 
route disposition in the marketing area during the month.
    (d) Unregulated supply plant means a plant which is not a pool 
plant, a producer-handler plant, an other order plant, or the plant of a 
handler pursuant to Sec. 1004.9(e), from which fluid milk products are 
shipped during the month to a plant qualified under Sec. 1004.7.



Sec. 1004.9  Handler.

    Handler means any person described in paragraphs (a) through (f) of 
this section. Any person in his capacity as the operator of a pool plant 
or a cooperative association in its capacity as a handler pursuant to 
paragraph (b) or (c) of this section shall be a ``pool handler''.
    (a) Any person in his capacity as the operator of:
    (1) A pool plant;
    (2) A partially regulated distributing plant;
    (3) An unregulated supply plant; or
    (4) An other order plant.
    (b) Any cooperative association or federation of cooperative 
associations with respect to the milk of any producer which it causes to 
be diverted in

[[Page 114]]

accordance with the provisions of Sec. 1004.12 for the account of such 
cooperative association or federation.
    (c) Any cooperative association with respect to the milk of its 
producer members which is delivered from the farm to the pool plant of 
another person in a tank truck owned and operated by or under contract 
to such cooperative association, unless both the cooperative association 
and the operator of the pool plant notify the market administrator in 
writing prior to the first day of the month that the plant operator will 
be responsible for payment for the milk and is purchasing the milk on 
the basis of farm weights determined by farm bulk tank calibrations and 
butterfat tests based on samples taken at the farm. Milk for which the 
cooperative association is qualified pursuant to this paragraph shall be 
deemed to have been received at the location of the pool plant to which 
such milk is delivered.
    (d) A producer-handler.
    (e) A governmental agency in its capacity as the operator of a plant 
with route disposition in the marketing area.
    (f) Any other person who by purchase or direction causes milk of 
producers to be picked up at the farm and/or moved to a plant.
[40 FR 18753, Apr. 30, 1975, as amended at 49 FR 33432, Aug. 23, 1984]



Sec. 1004.10  Producer-handler.

    Producer-handler means any person who operates a dairy farm and a 
plant with route disposition in the marketing area, and who meets the 
conditions of paragraphs (a), (b), and (c) of this section:
    (a) The sole source of supply of fluid milk products is his own farm 
production and transfers of such products from pool plants;
    (b) The quantity of fluid milk products received from pool plants 
during the month does not exceed 10,000 pounds;
    (c) Such person furnishes proof satisfactory to the market 
administrator that the maintenance and management of all dairy animals 
and other resources necessary to produce the entire amount of fluid milk 
products handled (excluding transfers from pool plants), and the 
operation of the plant are each the personal enterprise of and at the 
personal risk of such person; and
    (d) Sections 1004.40 through 1004.45, 1004.50 through 1004.54, 
1004.60 through 1004.62, 1004.70 through 1004.79, 1004.85 and 1004.86, 
and 1004.90 through 1004.95 shall not apply to a producer-handler.
[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5329, Feb. 11, 1991]



Sec. 1004.11  Dairy farmer.

    Dairy farmer means any person who produces milk which is delivered 
in bulk to a plant. A dairy farmer shall be a ``dairy farmer for other 
markets'' with respect to milk reported pursuant to Sec. 1004.7(d)(4).
[56 FR 5329, Feb. 11, 1991]



Sec. 1004.12  Producer.

    Subject to the conditions of paragraph (e) and the exceptions of 
paragraph (f) of this section, producer means any person described in 
paragraphs (a) through (d) of this section.
    (a) A dairy farmer with respect to milk which is received at a pool 
plant pursuant to Sec. 1004.7 (a), (b), or (e) directly from the farm.
    (b) A dairy farmer with respect to milk which is received at a pool 
plant pursuant to Sec. 1004.7(d): Provided, That such milk is received 
directly from the farm of one who is a member of the cooperative 
operating the plant or is received directly from the farm of one who is 
a member of a cooperative association that is a member of the federation 
operating the plant, or is received as milk diverted from a pool plant 
pursuant to Sec. 1004.7(a), (b) or (e).
    (c) A dairy farmer with respect to milk received by a cooperative 
association in its capacity as a handler pursuant to Sec. 1004.9(c).
    (d) A dairy farmer with respect to milk which is diverted to a 
nonpool plant (other than a producer-handler plant) in accordance with 
the conditions of paragraphs (d)(1) and (d)(2) of this section.
    (1) During any month of March through August.
    (2) Not more than 18 days' production during any month of September 
through February unless all of the diversions of member and nonmember

[[Page 115]]

milk, as the case may be, are pursuant to paragraph (d)(2)(i) or (ii) of 
this section, respectively, and they fall within the limits prescribed 
thereunder. If a handler diverting milk pursuant to this paragraph 
(d)(2) diverts milk of any dairy farmer in excess of the limits 
prescribed such dairy farmer shall be a producer only with respect to 
that milk physically received at a pool plant.
    (i) All of the diversions of milk of members of a cooperative 
association or a federation of cooperative associations to nonpool 
plants are for the account of such cooperative association or 
federation, and the amount of member milk so diverted does not exceed 55 
percent of the volume of milk of all members of such cooperative 
association or federation delivered to or diverted from pool plants 
during the month.
    (ii) All of the diversions of milk of dairy farmers who are not 
members of a cooperative association diverting milk for its own account 
during the month are diversions by a handler in his capacity as the 
operator of a pool plant from which the quantity of such nonmember milk 
so diverted does not exceed 45 percent of the total of such nonmember 
milk for which the pool plant operator is the handler during the month.
    (e) Milk which is diverted in accordance with the provisions of this 
section shall be deemed to have been received by the handler for whose 
account it is diverted at a pool plant at the location of the plant from 
which it is diverted, except that, for the purpose of applying location 
adjustments pursuant to Secs. 1004.52 and 1004.75 and the direct-
delivery differential pursuant to Sec. 1004.79, milk which is diverted 
shall be considered to be received at the location of the plant to which 
the milk is diverted.
    (f) This definition shall not include a:
    (1) Producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Dairy farmer for other markets;
    (3) Government agency which is a handler pursuant to Sec. 1004.9(e);
    (4) Dairy farmer with respect to milk reported as milk diverted to 
an other order plant if any portion of such dairy farmer's milk so moved 
is assigned to Class I under the provisions of such other order; or
    (5) Dairy farmer with respect to milk physically received at a pool 
plant as diverted milk from another order plant if all of the milk so 
received from such dairy farmer is assigned to Class II or Class III and 
the milk is treated as producer milk under the provisions of such other 
order.
    (g) The applicable percentages in paragraphs (d)(2)(i) and 
(d)(2)(ii) 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 diversion limit percentages 
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 the diversion limit 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 effective.
[40 FR 18753, Apr. 30, 1975, as amended at 44 FR 21621, Apr. 11, 1979; 
47 FR 51732, Nov. 17, 1982; 49 FR 33432, Aug. 23, 1984; 56 FR 5329, Feb. 
11, 1991; 60 FR 55310, Oct. 31, 1995]



Sec. 1004.13  Producer milk.

    Producer milk means any skim milk or butterfat contained in milk:
    (a) Received at a pool plant pursuant to Sec. 1004.7(a), (b), or (e) 
directly from the farm.
    (b) Received at a pool plant pursuant to Sec. 1004.7(d): Provided, 
That such milk is received directly from the farm of one who is a member 
of the cooperative operating the plant or is received directly from the 
farm of one who is a member of a cooperative association that is a 
member of the federation operating plant, or is received as milk 
diverted from a pool plant pursuant to Sec. 1004.7(a), (b), or (e).

[[Page 116]]

    (c) Received from producers by a cooperative association in its 
capacity as a handler pursuant to Sec. 1004.9(c); or
    (d) Diverted to a nonpool plant in accordance with the provisions of 
Sec. 1004.12.
[40 FR 18753, Apr. 30, 1975, as amended at 44 FR 21621, Apr. 11, 1979; 
56 FR 5329, Feb. 11, 1991]



Sec. 1004.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts in the form of fluid milk products and bulk products 
specified in Sec. 1004.40(b)(1) from any source other than producers, 
handlers described in Sec. 1004.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1004.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1004.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1004.40(b)(1)) for which the handler fails 
to establish a disposition.
[56 FR 5329, Feb. 11, 1991]



Sec. 1004.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27780, May 11, 1993]



Sec. 1004.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27780, May 11, 1993]



Sec. 1004.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers, or flavoring) resembles milk or any 
other fluid milk product; and contains less than 6 percent nonmilk fat 
(or oil).



Sec. 1004.18  Exempt milk.

    Exempt milk means bulk fluid milk products received at a pool plant 
or a partially regulated distributing plant from the plant of a handler 
pursuant to Sec. 1004.9(e) for processing and packaging and for which an 
equivalent quantity of packaged fluid milk products is returned to such 
handler during the month.



Sec. 1004.19  Federation.

    Federation means an organization that is formed by two or more 
cooperative associations as defined in Sec. 1004.20 and which is 
incorporated under the laws of the state.
[44 FR 21621, Apr. 11, 1979]

[[Page 117]]



Sec. 1004.20  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) Has full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or milk products 
for its members; and
    (c) Has its entire activities under the control of its members.



Sec. 1004.21  [Reserved]



Sec. 1004.22  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1004.12, 1004.13, and 1004.41.
[58 FR 27780, May 11, 1993]

                             Handler Reports



Sec. 1004.30  Reports of receipts and utilization.

    (a) On or before the eighth day after the end of each month each 
handler with respect to each of the handler's pool plants shall report 
for the month to the market administrator in the detail and on forms 
prescribed by the market administrator as follows:
    (1) The quantities of skim milk and butterfat contained in:
    (i) Receipts of producer milk (including such handler's own 
production) and milk received from a cooperative association for which 
it is a handler pursuant to Sec. 1004.9(c), and the pounds of nonfat 
milk solids contained in such receipts;
    (ii) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants; and
    (iii) Receipts of other source milk;
    (2) The quantities of skim milk and butterfat in inventories at the 
beginning and end of the month of fluid milk products and products 
specified in Sec. 1004.40(b)(1); and
    (3) The utilization or disposition of all skim milk and butterfat 
required to be reported pursuant to this paragraph, showing separately 
in-area route disposition, except filled milk, and filled milk route 
disposition in the marketing area;
    (b) Each handler who operates a partially regulated distributing 
plant shall report as required in paragraph (a) of this section, except 
that receipts of milk from dairy farmers shall be reported in lieu of 
producer milk and that the market administrator may waive the reporting 
of nonfat milk solids; such report shall include a separate statement 
showing the quantity of reconstituted skim milk in fluid milk products 
disposed of on routes in the marketing area;
    (c) Each producer-handler and each handler pursuant to 
Sec. 1004.9(e) shall make reports to the market administrator at such 
time and in such manner as the market administrator may prescribe; and
    (d) On or before the eighth day after the end of each month, each 
cooperative association and/or a federation of cooperative associations 
shall report with respect to milk for which it is a handler pursuant to 
Sec. 1004.9 (b) or (c) as follows:
    (1) Receipts of skim milk, butterfat and nonfat milk solids from 
producers;
    (2) Utilization of skim milk, butterfat and nonfat milk solids 
diverted to nonpool plants; and
    (3) The quantities of skim milk, butterfat and nonfat milk solids 
delivered to each pool plant of another handler.
[56 FR 61348, Dec. 3, 1991]



Sec. 1004.31  [Reserved]



Sec. 1004.32  Other reports.

    (a) Each pool handler shall report to the market administrator in 
detail and

[[Page 118]]

on forms prescribed by the market administrator as follows:
    (1) On or before the 25th day after the end of the month for each 
pool plant, his producer payroll for such month which shall show for 
each producer:
    (i) His name and address;
    (ii) The total pounds of milk received from such producer;
    (iii) The average butterfat content and average nonfat milk solids 
content of such milk; and
    (iv) The net amount of the handler's payment, together with the 
price paid and the amount and nature of any deduction;
    (2) Such other information with respect to receipts and utilization 
of butterfat, skim milk and nonfat milk solids as the market 
administrator shall prescribe.
    (b) Promptly after a producer moves from one farm to another, or 
starts or resumes deliveries to a pool handler, the handler shall file 
with the market administrator a report stating the producer's name and 
post office address, the health department permit number, if applicable, 
the date on which the changes took place, and the farm and plant 
location involved.
    (c) Each handler operating a partially regulated distributing plant 
who does not elect to make payments pursuant to Sec. 1004.76(b) shall 
report the same information as required in paragraph (a) of this section 
with respect to dairy farmers from whom he receives milk
    (d) On or before the 20th day after the end of the month, each 
handler pursuant to Sec. 1004.9(f) shall report to the market 
administrator, in the detail and on forms prescribed by the market 
administrator, all transactions wherein milk was bought or dealt in, 
giving the following information:
    (1) The name and address of any cooperative association or producer 
for whom the handler by either purchase or direction caused milk of 
producers to be moved to a plant;
    (2) The total pounds of milk involved in the transaction, and the 
average butterfat and nonfat milk solids content of such milk; and
    (3) Such other information with respect to such transaction as the 
market administrator may prescribe.
    (e) Each handler operating a plant described in Sec. 1004.7(f) 
shall, with respect to total receipts and utilization or disposition of 
skim milk and butterfat at such plant, make reports to the market 
administrator at such time and in such manner as the market 
administrator may require (in lieu of other reports specified in this 
section or in Sec. 1004.30) and allow verification of such reports by 
the market administrator.
[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 61349, Dec. 3, 1991]

                         Classification of Milk



Sec. 1004.40  Classes of utilization.

    Subject to the conditions set forth in Secs. 1004.41 through 
1004.44, all skim milk and butterfat required to be reported by a 
handler pursuant to Secs. 1004.30 and 1004.32 shall be classified as 
follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraph (b) and (c) of this section;
    (2) In packaged inventory of fluid milk products at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta

[[Page 119]]

cheese, pot cheese, Creole cheese, and any similar soft, high-moisture 
cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1004.15 and the fluid 
cream product definition pursuant to Sec. 1004.16; and
    (7) In shrinkage assigned pursuant to Sec. 1004.41(a) to the 
receipts specified in Sec. 1004.41(a)(2) and in shrinkage specified in 
Sec. 1004.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[56 FR 5330, Feb. 11, 1991, as amended at 57 FR 175, Jan. 3, 1992; 58 FR 
27780, May 11, 1993]



Sec. 1004.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1004.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:

[[Page 120]]

    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section, which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1004.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1004.9(c) and in milk 
diverted to such plant from another pool plant, except that if the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph shall be 2 percent:
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk tank lots of fluid milk products received by transfer from other 
order plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts from dairy farmers for other markets pursuant to 
Sec. 1004.11 and receipts of bulk fluid milk products from unregulated 
supply plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk tank lots of fluid milk products transferred to other plants 
that is not in excess of the respective amounts of skim milk and 
butterfat to which percentages are applied in paragraphs (b) (1), (2), 
(4), (5), and (6) of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1004.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.
[56 FR 5331, Feb. 11, 1991]



Sec. 1004.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1004.44(a)(13) and the corresponding 
step of Sec. 1004.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;

[[Page 121]]

    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1004.44(a)(8) 
or the corresponding step of Sec. 1004.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1004.44 (a) 
(12) or (13) or the corresponding steps of Sec. 1004.44(b), the skim 
milk or butterfat so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or the divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1004.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
exempt distributing plants operated by governmental agencies. Skim milk 
or butterfat in the following forms that is transferred from a pool 
plant to a producer-handler under this or any other Federal order or 
transferred or diverted from a pool plant to an exempt distributing 
plant operated by a governmental agency shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt distributing plant operated by a 
governmental agency shall be classified:

[[Page 122]]

    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1004.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of milk for 
such nonpool plant; and
    (B) To such nonpool plant's receipts of milk from plants not fully 
regulated under any Federal milk order which the market administrator 
determines constitute regular sources of milk for such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the

[[Page 123]]

same assignment priorities at the second plant that are set forth in 
paragraph (d)(2) of this section.
[56 FR 5331, Feb. 11, 1991, as amended at 58 FR 27781, May 11, 1993]



Sec. 1004.43  General classification rules.

    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports of receipts and 
utilization submitted pursuant to Sec. 1004.30 (a), (b), and (d) by each 
handler and compute the total pounds of skim milk and butterfat, 
respectively, in each class at each of the plants of such handler, and 
the total pounds of skim milk and butterfat in each class which was 
received from producers by a cooperative association handler pursuant to 
Sec. 1004.9 (b) and (c) and was not received at a pool plant.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
products plus all the water originally associated with such solids.
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1004.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III use at the plant.
    (e) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1004.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1004.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[56 FR 5333, Feb. 11, 1991, as amended at 57 FR 175, Jan. 3, 1992; 58 FR 
27781, May 11, 1993]



Sec. 1004.44  Classification of producer milk.

    After making the computations pursuant to Sec. 1004.43, the market 
administrator each month shall determine the classification of milk 
received from producers by each cooperative association handler pursuant 
to Sec. 1004.9 (b) and (c) which was not received at a pool plant, and 
the classification of milk received from producers and from cooperative 
association handlers pursuant to Sec. 1004.9(c) at each pool plant for 
each handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1004.41(b);
    (2) Subtract from the total pounds of skim milk in Class I, the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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; and
    (ii) Receipts of exempt milk;
    (3) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(8)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining, or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the remaining pounds of skim milk in Class I the 
pounds of skim milk in packaged fluid milk products in inventory at the 
beginning of the month. This paragraph

[[Page 124]]

shall apply only if the pool plant was subject to the provisions of this 
paragraph or comparable provisions of another Federal milk order in the 
immediately preceding month;
    (5) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1004.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1004.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(6) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (7) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1004.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1004.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(6) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1004.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(5), (a)(6) and (a)(7) of this section;
    (ii) Receipts of fluid milk products from dairy farmers for other 
markets pursuant to Sec. 1004.11 and from unidentified sources;
    (iii) Receipts of fluid milk products from a producer-handler, as 
defined under this or any other Federal order;
    (iv) Receipts (other than exempt milk) of fluid milk products from a 
handler pursuant to Sec. 1004.9(e);
    (v) Receipts of reconstituted skim milk in filled milk from 
unregulated supply plants that were not subtracted pursuant to paragraph 
(a)(2) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling to the extent that 
reconstituted skim milk is allocated to Class I at the transferor plant 
and is not assigned under this step at a plant regulated under another 
market pool order;
    (9) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (8)(v) of this section for which the handler 
requests aclassification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (8)(v) and (9)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(9)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the

[[Page 125]]

pounds of skim milk in Class I shall be decreased by a like amount. In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step at all pool plants of the handler (excluding any 
duplication of Class I utilization resulting from reported Class I 
transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, from a 
cooperative association in its capacity as a handler pursuant to 
Sec. 1004.9(c), and in receipts of bulk fluid milk products from other 
order plants that were not subtracted pursuant to paragraph (a)(8)(vi) 
of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(8)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (10) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1004.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(4), (6) and (8)(i) of this section;
    (11) Add to the remaining pounds of skim milk in Class III, the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (12) Subject to the provisions of paragraphs (a)(12) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, prorata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from 
unregulated supply plants and from other order plants if not classified 
or priced pursuant to the order regulating such plants, that were not 
subtracted pursuant to paragraphs (a)(2)(i), (8)(v) and (9) (i) and (ii) 
of this section and that were not offset by transfers or diversions of 
fluid milk products to the same unregulated supply plant from which 
fluid milk products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(12) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(12) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like

[[Page 126]]

amount (decreasing as necessary Class III and then Class II). In such 
case, the pounds of skim milk remaining in each class at this allocation 
step at the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount, beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in remaining 
receipts of bulk fluid milk products from other order plants (except 
receipts from other order plants not classified and priced pursuant to 
the order regulating such plants), that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraphs (a)(8)(vi) and (9)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(13) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II with respect to whichever of 
the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class, as announced for the month pursuant to Sec. 1004.45(b); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(13)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at such plants, the pounds of such excess shall 
be subtracted from the pounds of skim milk remaining in Class I after 
such proration at the pool plants at which such other source milk was 
received;
    (iii) Except as provided in paragraph (a)(13)(ii) of this section, 
should the computations pursuant to paragraph (a)(13) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(13)(ii) of this section, 
should the computations pursuant to paragraph (a)(13) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (14) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant and from a cooperative 
association in its capacity as a handler pursuant to Sec. 1004.9(c) 
according to the classification assigned pursuant to Sec. 1004.42(a); 
and
    (15) If the pounds of skim milk remaining in all classes exceed the 
pounds of skim milk in producer milk,

[[Page 127]]

subtract such excess from the pounds of skim milk remaining in each 
class in series beginning with Class III. Any amount so subtracted shall 
be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(15) of this section and the 
corresponding step of paragraph (b) of this section.
[56 FR 5333, Feb. 11, 1991, as amended at 58 FR 27781, May 11, 1993]



Sec. 1004.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) On or before the 15th day after the end of each month, report to 
each cooperative association which so requests, the class utilization of 
milk purchased from such association or delivered to the pool plant(s) 
of each handler by producers who are members of such cooperative 
association. For the purpose of this report, the milk so purchased or 
received shall be allocated to each class in the same ratio as all 
producer milk received by such handler during such month;
    (b) Whenever required for purpose of allocating receipts from other 
order plants pursuant to Sec. 1004.44(a)(13) and the corresponding step 
of Sec. 1004.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in producer 
milk of all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose;
    (c) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1004.43(e) and Sec. 1004.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (d) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order 
plant, the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler; and, as necessary, any changes in such classification 
arising from the verification of such report.
[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5335, Feb. 11, 1991; 58 
FR 27782, May 11, 1993]

                       Class and Component Prices



Sec. 1004.50  Class and component prices.

    Subject to the provisions of Sec. 1004.52 the class prices per 
hundredweight of milk 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 Sec. 3.03.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. Subject to the adjustment set forth below for 
the applicable month, the Class III price shall be the basic formula 
price for the month.

                                                                        
------------------------------------------------------------------------
                             Month                               Amount 
------------------------------------------------------------------------
January.......................................................    +$0.05
February......................................................      +.04
March.........................................................      -.03
April.........................................................      -.07
May...........................................................      -.10
June..........................................................      -.09
July..........................................................      +.05
August........................................................      +.12
September.....................................................      +.08
October.......................................................      +.08
November......................................................      +.08
December......................................................      +.08
------------------------------------------------------------------------

    (d) Butterfat price. The butterfat price per pound shall be a figure 
computed as follows:
    (1) Compute a butterfat differential per one percent butterfat, 
rounded to the nearest one-tenth cent, by multiplying the current 
month's butter

[[Page 128]]

price by 1.38, and subtract from the result an amount determined by 
multiplying 0.028 by 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. 1004.51 (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.
    (2) Multiply the butterfat differential obtained in paragraph (d)(1) 
of this section by 3.5, and subtract the resulting amount from the Class 
III price;
    (3) Divide the value obtained from the calculations of paragraph 
(d)(2) of this section by 100; and
    (4) Add to the resulting amount the butterfat differential computed 
in paragraph (d)(1) of this section. The sum thereof shall be the price 
per pound for producer butterfat for the month.
    (e) Nonfat milk solids price. The price per pound for nonfat milk 
solids shall be computed by subtracting from the Class III price the 
butterfat price multiplied by 3.5, and dividing the result by the 
average percentage of nonfat milk solids in all producer milk for the 
month.
    (f) Skim milk price. The skim milk price per hundredweight shall be 
the Class III price for the month adjusted to remove the value of 3.5 
percent butterfat and rounded to the nearest cent. Such adjustment shall 
be computed by multiplying the butterfat differential pursuant to 
paragraph (d)(1) of this section by 3.5 and subtracting the result from 
the Class III price.
    (g) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential value per hundredweight 
of 3.5 percent milk and rounded to the nearest cent, and subject to the 
adjustments set forth in paragraph (c) of this section for the 
applicable month.
[56 FR 5335, Feb. 11, 1991, as amended at 56 FR 61349, Dec. 3, 1991; 57 
FR 49635, Nov. 3, 1992; 58 FR 63285, Dec. 1, 1993; 60 FR 6607, Feb. 2, 
1995; 60 FR 18955, Apr. 14, 1995]



Sec. 1004.51  Basic formula prices.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1004.50(d)(1) and rounded to 
the nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the non dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average

[[Page 129]]

for the month of the Western Nonfat Dry Milk Low/Medium Heat price, as 
reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18955, Apr. 14, 1995]



Sec. 1004.52  Location differentials to handlers.

    (a) For that milk received from producers and from a cooperative 
association in its capacity as a handler pursuant to Sec. 1004.9(c) at a 
plant located 55 miles or more by shortest highway distance from the 
city hall in Philadelphia, Pa., and also 75 miles or more by the 
shortest highway distance from the nearer of the zero milestone in 
Washington, DC, or the city hall in Baltimore, MD (all such distance to 
be determined by the market administrator), and which is assigned to 
Class I milk, subject to the limitations pursuant to paragraph (b) of 
this section, and for other source milk for which a location adjustment 
is applicable, the Class I price shall be reduced at the rate of 1.5 
cents per 10-mile distance or fraction thereof that such plant location 
is from the nearest of such basing points.
    (b) For purposes of calculating such adjustment, transfers between 
pool plants shall be assigned to Class I disposition at the transferee 
plant in an amount not in excess of that by which such Class I 
disposition exceeds 95 percent of the sum of receipts at such plant from 
producers, cooperative associations pursuant to Sec. 1004.9(c), and the 
pounds assigned as Class I to receipts from other order plants and 
unregulated supply plants, and from dairy farmers for other markets 
pursuant to Sec. 1004.11. Such assignment is to be made first to 
transferor plants at which no location adjustment credit is applicable 
and then in sequence beginning with the plant at which the least 
location adjustment would apply: Provided, That for the purposes of this 
paragraph, transfers from a pool plant to a second pool plant which are 
in turn transferred to a third pool plant shall be treated as though the 
transfer was direct from the originating plant to the plant of final 
receipt.
[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5336, Feb. 11, 1991]

[[Page 130]]



Sec. 1004.53  Announcement of class prices and component prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III and Class III-A prices for the preceding month; 
and
    (d) The prices for butterfat and skim milk computed pursuant to 
Sec. 1004.50(d) and (f).
[56 FR 5336, Feb. 11, 1991, as amended at 56 FR 61349, Dec. 3, 1991; 57 
FR 175, Jan. 3, 1992; 60 FR 6607, Feb. 2, 1995]



Sec. 1004.54  Equivalent prices or indexes.

    If for any reason a price or pricing constituent required by this 
order for computing class prices or for other purposes is not available 
as prescribed in this order, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.
[56 FR 61349, Dec. 3, 1991]

                Differential Pool and Handler Obligations



Sec. 1004.60  Handler's value of milk for computing uniform prices.

    The market administrator shall compute each month for each handler 
defined in Sec. 1004.9(a) with respect to each of such handler's pool 
plants, and for each handler defined in Sec. 1004.9 (b) and (c), an 
obligation to the pool computed by adding the following values:
    (a) The pounds of milk received from a cooperative association as a 
handler pursuant to Sec. 1004.9(c) and allocated to Class I pursuant to 
Sec. 1004.44(a)(14) and the corresponding step of Sec. 1004.44(b), and 
the pounds of producer milk in Class I as determined pursuant to 
Sec. 1004.44, both multiplied by the difference between the Class I 
price (adjusted pursuant to Sec. 1004.52) and the Class III price;
    (b) The pounds of milk received from a cooperative association as a 
handler pursuant to Sec. 1004.9(c) and allocated to Class II pursuant to 
Sec. 1004.44(a)(14) and the corresponding step of Sec. 1004.44(b), and 
the pounds of producer milk in Class II as determined pursuant to 
Sec. 1004.44, both multiplied by the difference between the Class II 
price and Class III price;
    (c) The value of the product pounds, skim milk, and butterfat in 
overage assigned to each class pursuant to Sec. 1004.44(a)(15) and the 
value of the corresponding pounds of nonfat milk solids associated with 
the skim milk subtracted from Class II and Class III pursuant to 
Sec. 1004.44(a)(15), by multiplying the skim milk pounds so assigned by 
the percentage of nonfat milk solids in the handler's receipts of 
producer skim milk during the month, as follows:
    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1004.44(a)(15) and the corresponding step of 
Sec. 1004.44(b), multiplied by the difference between the Class I price 
adjusted for location and the Class III price, plus the hundredweight of 
skim milk subtracted from Class I pursuant to Sec. 1004.44(a)(15) 
multiplied by the skim milk price, plus the butterfat pounds of overage 
subtracted from Class I pursuant to Sec. 1004.44(b) multiplied by the 
butterfat price;
    (2) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1004.44(a)(15) and the corresponding step of 
Sec. 1004.44(b) multiplied by the difference between the Class II price 
and the Class III price, plus the pounds of nonfat milk solids in skim 
milk subtracted from Class II pursuant to Sec. 1004.44(a)(15) multiplied 
by the nonfat milk solids price, plus the butterfat pounds of overage 
subtracted from Class II pursuant to Sec. 1004.44(b) multiplied by the 
butterfat price;
    (3) The pounds of nonfat milk solids in skim milk overage subtracted 
from Class III pursuant to Sec. 1004.44(a)(15) multiplied by the nonfat 
milk solids price, plus the butterfat pounds of overage subtracted from 
Class III pursuant to Sec. 1004.44(b) multiplied by the butterfat price;
    (d) For the first month that this paragraph is effective, the value 
of the hundredweight of skim milk and butterfat subtracted from Class I 
and Class II pursuant to Sec. 1004.44(a)(10) and the corresponding step 
of Sec. 1004.44(b), as follows:

[[Page 131]]

    (1) The value of the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) applicable at the location of the 
pool plant at the difference between the current month's Class I price 
and the previous month's Class III price;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) at the difference between the 
current month's Class II price and the Class III price for the previous 
month;
    (e) For the second and subsequent months that this paragraph is 
effective, the value of the product pounds, skim milk, and butterfat 
subtracted from Class I or Class II pursuant to Sec. 1004.44(a)(10) and 
the corresponding step of Sec. 1004.44(b), and the value of the pounds 
of nonfat milk solids associated with the skim milk subtracted from 
Class II pursuant to Sec. 1004.44(a)(10), computed by multiplying the 
skim milk pounds so subtracted by the percentage of nonfat milk solids 
in the handler's receipts of producer skim milk during the previous 
month, as follows:
    (1) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) applicable at the location of the 
pool plant at the current month's Class I-Class III price difference and 
the current month's skim milk and butterfat prices, less the Class III 
value of the milk at the previous month's nonfat milk solids and 
butterfat prices;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) at the current month's Class II-
Class III price difference and the current month's nonfat milk solids 
and butterfat prices, less the Class III value of the milk at the 
previous month's nonfat milk solids and butterfat prices;
    (f) The value of the product pounds, skim milk and butterfat 
assigned to Class I pursuant to Sec. 1004.43(e) and the hundredweight of 
skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1004.44(a)(8) (i) through (iv), and the corresponding step of 
Sec. 1004.44(b), excluding receipts of bulk fluid cream products from 
another order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants, applicable at 
the location of the pool plant at the current month's Class I-Class III 
price difference;
    (g) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1004.44(a)(8) (v) and (vi) and 
the corresponding step of Sec. 1004.44(b) applicable at the location of 
the transferor-plant at the current month's Class I-Class III price 
difference;
    (h) The value of the product pounds, skim milk and butterfat in 
receipts of concentrated fluid milk products assigned to Class I 
pursuant to Sec. 1004.43(e) and Sec. 1004.44(a)(8)(i) and the pounds of 
skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1004.44(a)(12) and the corresponding steps of Sec. 1004.44(b), 
excluding such hundredweight in receipts of bulk fluid milk products 
from an unregulated supply plant to the extent that an equivalent 
quantity disposed of to such plant by handlers fully regulated by any 
Federal order is classified and priced as Class I milk and is not used 
as an offset for any other payment obligation under any order, 
applicable at the location of the nearest unregulated supply plants from 
which an equivalent volume was received at the current month's Class I-
Class III price difference;
    (i) The pounds of skim milk received from a cooperative association 
as a handler pursuant to Sec. 1004.9(c) and allocated to Class I 
pursuant to Sec. 1004.44(a)(14), and the pounds of producer milk in 
Class I as determined pursuant to Sec. 1004.44, both multiplied by the 
skim milk price for the month computed pursuant to Sec. 1004.50(f);
    (j) The pounds of nonfat milk solids in skim milk in receipts 
allocated to Class II and Class III pursuant to Sec. 1004.44(a)(14) and 
in producer milk classified as Class II and Class III pursuant to 
Sec. 1004.44, computed by multiplying the skim milk pounds so assigned 
by the percentage of nonfat milk solids in the handler's receipts of 
producer skim milk during the month

[[Page 132]]

for each report filed, separately, the result to be multiplied by the 
nonfat milk solids price for the month computed pursuant to 
Sec. 1004.50(e).
    (k) For producer milk in Class III-A, add or subtract as appropriate 
an amount per hundredweight that the Class III-A price is more or less, 
respectively, than the Class III price.
    (l) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1004.43(e);
    (m) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1004.76(b)(5) or (c); and
    (n) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[56 FR 61349, Dec. 3, 1991, as amended at 57 FR 175, Jan. 3, 1992; 58 FR 
27782, May 11, 1993]



Sec. 1004.61  Computation of weighted average differential price and producer nonfat milk solids price.

    For each month the market administrator shall compute a ``weighted 
average differential price'' and a ``producer nonfat milk solids 
price'', as follows:
    (a) The ``weighted average differential price'' shall be the result 
of the following computations:
    (1) Combine into one total:
    (i) The value computed pursuant to Sec. 1004.60 (a) through (h) for 
all handlers who filed the reports prescribed by Sec. 1004.30 for the 
month and who made the payments pursuant to Sec. 1004.71 for the 
preceding month;
    (ii) An amount equal to the total value of the location 
differentials computed pursuant to Sec. 1004.75;
    (iii) An amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund.
    (2) Divide the total value calculated under paragraph (a)(1) of this 
section by the sum of the following for all handlers:
    (i) The total hundredweight of producer milk pursuant to 
Sec. 1004.13 represented by the value established pursuant to (1)(i) of 
this paragraph; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1004.60(h).
    (3) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``Weighted average differential 
price.''
    (b) [Reserved]
    (c) The ``Producer nonfat milk solids price'' to be paid to all 
producers for the pounds of nonfat milk solids contained in their milk 
shall be computed by the market administrator each month as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1004.60 (i) and (j) for all handlers who made reports pursuant to 
Sec. 1004.30 and who made payments pursuant to Sec. 1004.71 for the 
preceding month;
    (2) Divide the resulting amount by the total pounds of nonfat milk 
solids in producer milk; and
    (3) Round by subtracting a positive amount not to exceed one cent. 
The result is the ``Producer nonfat milk solids price.''
[56 FR 61350, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]



Sec. 1004.62  Computation of uniform price.

    A uniform price for producer milk containing 3.5 percent butterfat 
shall be computed by adding the weighted average differential price 
determined pursuant to Sec. 1004.61(a) to the Class III price.
[56 FR 61351, Dec. 3, 1991]

[[Page 133]]



Sec. 1004.63  Announcement of weighted average differential price, nonfat milk solids price and producer nonfat milk solids price.

    On or before the 13th day of each month, the market administrator 
shall publicly announce for the preceding month by posting in a 
conspicuous place in his office and by such other means as he deems 
appropriate, the weighted average differential price, the producer 
nonfat milk solids price computed pursuant to Sec. 1004.61, and the 
price for nonfat milk solids computed pursuant to Sec. 1004.50(e).
[56 FR 61351, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]

                            Payments for Milk



Sec. 1004.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
into such fund pursuant to Secs. 1004.71, 1004.76 and 1004.77 and out of 
which he shall make all payments from such fund pursuant to 
Secs. 1004.72 and 1004.77: Provided, That the market administrator shall 
offset the payment due to a handler against payment due from such 
handler.



Sec. 1004.71  Payments to the producer-settlement fund.

    On or before the 15th day after the end of the month each handler 
shall pay to the market administrator the amount, if any, by which the 
total amount specified in paragraph (a) of this section exceeds the 
amounts specified in paragraph (b) of this section:
    (a) The net pool obligation computed pursuant to Sec. 1004.60 for 
such handler;
    (b) The sum of:
    (1) The value of milk received by such handler from producers and 
from cooperative association handlers pursuant to Sec. 1004.9(c) at the 
applicable price(s) pursuant to Sec. 1004.61 adjusted by applicable 
location differentials, less in the case of a cooperative association on 
milk for which it is a handler pursuant to Sec. 1004.9(c), the amount 
due from other handlers pursuant to Sec. 1004.74(d); and
    (2) The value at the weighted average differential price, computed 
pursuant to Sec. 1004.61, adjusted by the applicable location 
differential on nonpool milk pursuant to Sec. 1004.75(b), with respect 
to other source milk for which a value was computed pursuant to 
Sec. 1004.60(h).
[40 FR 18753, Apr. 30, 1975, as amended at 45 FR 23402, Apr. 7, 1980; 56 
FR 61351, Dec. 3, 1991; 57 FR 175, Jan. 3, 1992]



Sec. 1004.72  Payments from the producer-settlement fund.

    On or before the 16th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1004.71(b) exceeds the amount computed 
pursuant to Sec. 1004.71(a), subject to the following conditions:
    (a) If the balance in the producer-settlement fund is insufficient 
to make all payments pursuant to this section, the market administrator 
shall reduce uniformly such payments and shall complete such payments as 
soon as the necessary funds are available.
    (b) If the 16th day after the end of the month is a Saturday, 
Sunday, or national holiday, the market administrator may delay payments 
pursuant to this section until the next day his office is open for 
public business.
[45 FR 23402, Apr. 7, 1980]



Sec. 1004.73  Value of producer milk.

    The total value of milk received from producers during any month 
shall be the sum of the following calculations:
    (a) The value of a producer's milk shall be the sum of the 
following:
    (1) The weighted average differential price subject to the 
appropriate plant location adjustment times the total hundredweight of 
milk received from the producer;
    (2) The total nonfat milk solids contained in the producer milk 
received from the producer multiplied by the producer nonfat milk solids 
price computed pursuant to Sec. 1004.61; and
    (3) The total butterfat contained in the producer milk received from 
the producer times the butterfat price computed pursuant to 
Sec. 1004.50(d).
    (b) [Reserved]
[56 FR 61351, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]

[[Page 134]]



Sec. 1004.74  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraphs (b) and (d) of this section, 
each pool handler shall make payment as specified in paragraphs (a)(1) 
and (2) of this section to each producer from whom milk is received.
    (1) On or before the last day of each month at not less than the 
Class III price for the preceding month per hundredweight for his 
deliveries of producer milk during the first 15 days of the month; and
    (2) On or before the 20th of the following month at not less than 
the total amount computed in accordance with the provisions set forth in 
Sec. 1004.73 with respect to such milk, subject to the following 
adjustments:
    (i) Proper deductions authorized in writing by such producer;
    (ii) Partial payment made pursuant to paragraph (a)(1) of this 
section;
    (iii) Less the location differential applicable pursuant to 
Sec. 1004.75; and
    (iv) If by such date such handler has not received full payment from 
the market administrator pursuant to Sec. 1004.72 for such month he may 
reduce pro rata his payments to producers by not more than the amount of 
such underpayment. Payment to producers shall be completed thereafter 
not later than the date for making payments pursuant to this paragraph 
next following after receipt of the balance due from the market 
administrator.
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its producer-members to 
collect payment for their milk and which has so requested any handler in 
writing, such handler shall on or before the second day prior to the 
date on which payments are due individual producers, pay the cooperative 
association for milk received during the month from the producer-members 
of such association as determined by the market administrator an amount 
equal to not less than the total due such producer-members as determined 
pursuant to paragraph (a) of this section;
    (c) In the case of milk received by a handler from a cooperative 
association in its capacity as the operator of a pool plant such handler 
shall on or before the second day prior to the date on which payments 
are due individual producers, pay to such cooperative association for 
milk so received during the month, an amount not less than the value of 
such milk computed at the applicable class and/or component prices for 
the location of the plant of the buying handler; and
    (d) Each handler who receives milk from a cooperative association 
handler pursuant to Sec. 1004.9(c), shall on or before the second day 
prior to the date payments are due individual producers, pay such 
cooperative association for such milk as follows:
    (1) A partial payment for milk received during the first 15 days of 
the month at the rate specified in paragraph (a)(1) of this section; and
    (2) A final payment equal to the total value of such milk computed 
pursuant to Sec. 1004.73, adjusted by the applicable differentials 
pursuant to Sec. 1004.75, less the amount of partial payment on such 
milk.
    (e) In making payments to producers pursuant to paragraph (a)(2) of 
this section, or to a cooperative association pursuant to paragraph (b) 
of this section, each pool handler shall furnish such producer or 
cooperative association with respect to each of its producer members 
from whom the handler received milk during the month, a written 
statement showing:
    (1) The month and the identity of the handler and the producer;
    (2) The total pounds, average butterfat test and average test of 
nonfat milk solids of milk delivered by the producer;
    (3) The minimum rate at which payment to such producer is required 
under paragraph (a)(2) of this section;
    (4) The rate which is used in making the payment, if such rate is 
other than the applicable minimum rate;
    (5) The nature and amount of any deductions made in payment due such 
producer; and
    (6) The net amount of the payment to the producer.
[40 FR 18753, Apr. 30, 1975, as amended at 45 FR 23403, Apr. 7, 1980; 56 
FR 5337, Feb. 11, 1991. Redesignated and amended at 56 FR 61351, Dec. 3, 
1991; 58 FR 27782, May 11, 1993]

[[Page 135]]



Sec. 1004.75  Location differentials to producers and on nonpool milk.

    (a) For milk received from producers and from cooperative 
association handlers pursuant to Sec. 1004.9(c) at a plant located 55 
miles or more from the city hall in Philadelphia, PA., and also at least 
75 miles from the nearer of the zero milestone in Washington, DC, or the 
city hall in Baltimore, MD. (all distances to be the shortest highway 
distance as determined by the market administrator), the weighted 
average differential price shall be reduced 1.5 cents for each 10 miles 
distance or fraction thereof that such plant is from the nearest of such 
basing points.
    (b) For purposes of computations pursuant to Secs. 1004.71 and 
1004.74, the weighted average differential price computed pursuant to 
Sec. 1004.61(a) shall be reduced at the rate set forth in paragraph (a) 
of this section applicable at the location of the nonpool plant from 
which the milk was received, except that the adjusted weighted average 
differential price shall not be less than zero.
[56 FR 61351, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]



Sec. 1004.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1004.30(b) and 1004.32(c) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1)(i) The obligation that would have been computed pursuant to 
Sec. 1004.60 at such plant shall be determined as though such plant were 
a pool plant. For purposes of such computation, receipts at such nonpool 
plant from a pool plant, a cooperative association as a handler pursuant 
to Sec. 1004.9(b), or an other order plant shall be assigned to the 
utilization at which classified at the pool plant or other order plant 
and transfers from such nonpool plant to a pool plant or an other order 
plant shall be classified as Class III milk if allocated to such class 
at the pool plant or other order plant and be valued at the weighted 
average price of the respective order if so allocated to Class I milk 
except that reconstituted skim milk in filled milk shall be valued at 
the Class III price. There shall be included in the obligation so 
computed a charge in the amount specified in Sec. 1004.60(h) and a 
credit in the amount specified in Sec. 1004.71(b)(2) with respect to 
receipts from an unregulated supply plant, except that the credit for 
receipts of reconstituted skim milk in filled milk shall be at the Class 
III price, unless an obligation with respect to such plant is computed 
as specified below in paragraph (a)(1)(ii) of this section; and
    (ii) If the operator of the partially regulated distributing plant 
so requests, and provides with his reports pursuant to Secs. 1004.30(b) 
and 1004.32(c) similar reports with respect to the operations of any 
other nonpool plant which serves as a supply plant for such partially 
regulated distributing plant by shipments to such plant during the month 
equivalent to the requirements of Sec. 1004.7(b) with agreement of the 
operator of such plant that the market administrator may examine the 
books and records of such plant for purposes of verification of such 
reports, there will be added the amount of the obligation computed at 
such nonpool supply plant in the same manner and subject to the same 
conditions as for the partially regulated distributing plant.
    (2) From this obligation there will be deducted the sum of: (i) The 
gross payments made by such handler for milk (approved by a duly 
constituted health authority for fluid disposition) received during the 
month from dairy farmers at such plant and like payments made by the 
operator of a supply plant(s) included in the computations pursuant to 
paragraph (a)(1) of this section, and (ii) any payments to the producer-
settlement fund of another order under which such plant is also a 
partially regulated distributing plant.
    (b) An amount computed as follows:

[[Page 136]]

    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as Class I milk on routes in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received as Class I milk at the partially regulated distributing plant 
from pool plants; cooperative associations in their capacity as handlers 
pursuant to Sec. 1004.9(b), and other order plants, except that deducted 
under a similar provision of another order issued pursuant to the Act;
    (3) Deduct the quantity of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of on routes in the 
marketing area from the partially regulated distributing plant;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total and determine the weighted average butterfat content; and
    (5) From the value of such milk at the Class I price, subtract its 
value at the uniform price computed pursuant to Sec. 1004.62, and add 
for the quantity of labeled reconstituted skim milk specified in 
paragraph (b)(3) of this section its value computed at the Class I price 
less $1.00 (but not to be less than the Class III price) and the value 
of such milk at the Class III price (except that the Class I price and 
the uniform price shall be adjusted for the location of the nonpool 
plant and shall not be less than the Class III price). For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1004.43(e). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[40 FR 18753, Apr. 30, 1975, as amended at 45 FR 23403, Apr. 7, 1980; 56 
FR 5336, Feb. 11, 1991; 56 FR 61352, Dec. 3, 1991; 58 FR 27782, May 11, 
1993]



Sec. 1004.77  Adjustment of accounts.

    Whenever verification by the market administrator of reports or 
payments of any handler discloses errors resulting in money due: (a) The 
market administrator from such handler, (b) such handler from the market 
administrator, or (c) any producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made on or before the 
next date for making payments set forth in the provisions under which 
such error occurred.



Sec. 1004.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1004.71, 
1004.73, 1004.76, 1004.77, 1004.79, 1004.85, or 1004.86 shall

[[Page 137]]

be increased 1 percent beginning on the day after the due date, and on 
the same day of each succeeding month until such obligation is paid, 
subject to the following conditions:
    (a) The amount payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section and all such 
amounts shall be paid to the administrative assessment fund maintained 
by the market administrator;
    (b) Any obligation that was determined at a date later than that 
prescribed by the order because of a handler's failure to submit a 
report to the market administrator when due, shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due; and
    (c) Payments shall be deemed not to have been made until such 
payments have been received, except:
    (1) Any payment received after the due date in an envelope that is 
postmarked not later than the second day prior to the due date shall be 
considered to have been received by the due date; and
    (2) If the date by which payments must be received falls on a 
Saturday or Sunday or on a national holiday, payments shall be 
considered to have been received by the due date if received not later 
than the next day on which the market administrator's office is open for 
public business.
[45 FR 23403, Apr. 7, 1980]



Sec. 1004.79  Direct-delivery differential.

    For producer milk received at a plant located within 55 miles of the 
city hall in Philadelphia, Pa., the handler in making payments to 
producers and cooperative association handlers pursuant to 
Sec. 1004.9(c), in addition to any amounts required by other provisions 
of this part, shall pay 6 cents per hundredweight of milk so received.

        Administrative Assessment and Marketing Service Deduction



Sec. 1004.85  Assessment for order administration.

    As his pro rata share of the expense of administration, each handler 
shall pay to the market administrator on or before the 20th day after 
the end of the month, 4 cents per hundredweight, or such lesser amount 
as the Secretary may prescribe with respect to milk handled during the 
month as follows:
    (a) Each handler (excluding a cooperative association in its 
capacity as a handler pursuant to Sec. 1004.9(c), and a cooperative 
association as the operator of a pool plant with respect to milk 
transferred in bulk to a pool plant) with respect to the handler's 
receipts of producer milk (including such handler's own-farm production, 
milk received from a cooperative association pursuant to Sec. 1004.9(c), 
and milk transferred in bulk from a pool plant owned and operated by a 
cooperative association) and receipts of concentrated fluid milk 
products from unregulated supply plants and receipts of nonfluid milk 
products assigned to Class I use pursuant to Sec. 1004.43(e) and other 
source milk allocated to Class I pursuant to Sec. 1004.44(a)(8) and 
(a)(12) and the corresponding step of Sec. 1004.44(b), except such other 
source milk that is excluded from the computations pursuant to 
Sec. 1004.60(f) and (h);
    (b) Each handler in his capacity as the operator of a partially 
regulated distributing plant with respect to his route disposition in 
the marketing area in excess of his receipts of Class I milk from pool 
plants, cooperative associations as handlers pursuant to Sec. 1004.9(b), 
and other order plants assigned to such disposition.
[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5337, Feb. 11, 1991; 56 
FR 61352, Dec. 3, 1991; 58 FR 27783, May 11, 1993]



Sec. 1004.86  Deductions for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, making payments directly to producers for milk (other than milk 
of his own production) pursuant to Sec. 1004.74(a) shall deduct 5 cents 
per hundredweight or such lesser amount as the Secretary may prescribe 
and shall pay such deductions to the market administrator on or before 
the 20th day after the end of the month. Such money shall be expended by 
the market administrator to provide market information and to verify or 
establish the weights, samples and tests of milk of producers who are

[[Page 138]]

not receiving such service from a cooperative association; and
    (b) In the case of producers for whom the Secretary determines a 
cooperative association is actually performing the services set forth in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deduction specified in paragraph (a) of this section, such deductions 
from the payments to be made directly to such producer pursuant to 
Sec. 1004.74(a) as are authorized by such producers on or before the 
18th day after the end of each month and pay such deductions to the 
cooperative rendering such services.
[56 FR 61352, Dec. 3, 1991]



PART 1005--MILK IN THE CAROLINA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1005.1  General provisions.

                               Definitions

1005.2  Carolina marketing area.
1005.3  Route disposition.
1005.4  Plant.
1005.5  Distributing plant.
1005.6  Supply plant.
1005.7  Pool plant.
1005.8  Nonpool plant.
1005.9  Handler.
1005.10  Producer-handler.
1005.11  [Reserved]
1005.12  Producer.
1005.13  Producer milk.
1005.14  Other source milk.
1005.15  Fluid milk product.
1005.16  Fluid cream product.
1005.17  Filled milk.
1005.18  Cooperative association.
1005.19  Commercial food processing establishment.

                             Handler Reports

1005.30  Reports of receipts and utilization.
1005.31  Payroll reports.
1005.32  Other reports.

                         Classification of Milk

1005.40  Classes of utilization.
1005.41  Shrinkage.
1005.42  Classification of transfers and diversions.
1005.43  General classification rules.
1005.44  Classification of producer milk.
1005.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1005.50  Class prices.
1005.51  Basic formula price.
1005.52  [Reserved]
1005.53  Plant location adjustments for handlers.
1005.54  Announcement of class prices.
1005.55  Equivalent price.

                              Uniform Price

1005.60  Handler's value of milk for computing uniform price.
1005.61  Computation of uniform price (including weighted average 
          price).
1005.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1005.70  Producer-settlement fund.
1005.71  Payments to the producer-settlement fund.
1005.72  Payments from the producer-settlement fund.
1005.73  Payments to producers and to cooperative associations.
1005.74  Butterfat differential.
1005.75  Plant location adjustments for producers and on nonpool milk.
1005.76  Payments by handler operating a partially regulated 
          distributing plant.
1005.77  Adjustment of accounts.
1005.78  Charges on overdue accounts.

                       Marketwide Service Payments

1005.80  Transportation credit balancing fund.
1005.81  Payments to the transportation credit balancing fund.
1005.82  Payments from the transportation credit balancing fund.

        Administrative Assessment and Marketing Service Deduction

1005.85  Assessment for order administration.
1005.86  Deduction for marketing services.

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

    Source:  55 FR 31352, Aug. 2, 1990, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1005.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby referenced and made a part of this order.

[[Page 139]]

                               Definitions



Sec. 1005.2  Carolina marketing area.

    The Carolina marketing area, hereinafter called the marketing area, 
means all the territory within the boundaries of the following counties, 
including all piers, docks and wharves connected therewith and all craft 
moored thereat, and all territory occupied by government (municipal, 
State or Federal) reservations, installations, institutions, or other 
similar establishments if any part thereof is within any of the listed 
counties (in the event such provision conflicts with a similar provision 
of an adjacent Federal milk order, the provisions of the adjacent 
Federal order shall have precedence.):
    (a) Northwestern Zone:

    North Carolina counties of Alexander, Alleghany, Ashe, Avery, 
Buncombe, Burke, Caldwell, Cherokee, Clay, Graham, Haywood, Henderson, 
Jackson, McDowell, Macon, Madison, Mitchell, Rockingham, Stokes, Surry, 
Swain, Transylvania, Watauga, Wilkes, Yadkin, and Yancey.

    (b) Base Zone:

    North Carolina counties of Alamance, Anson, Cabarrus, Caswell, 
Catawba, Chatham, Cleveland, Davidson, Davie, Durham, Forsyth, Franklin, 
Gaston, Granville, Guilford, Halifax, Iredell, Lee, Lincoln, 
Mecklenberg, Montgomery, Moore, Nash, Northampton, Orange, Person, Polk, 
Randolph, Richmond, Rowan, Rutherford, Stanly, Union, Vance, Wake, and 
Warren.
    South Carolina counties of Abbeville, Anderson, Cherokee, Chester, 
Greenville, Greenwood, Lancaster, Laurens, McCormick, Oconee, Pickens, 
Spartanburg, Union, and York.

    (c) Southeastern Zone:

    North Carolina counties of Beaufort, Bertie, Bladen, Brunswick, 
Camden, Carteret, Chowan, Columbus, Craven, Cumberland, Currituck, Dare, 
Duplin, Edgecombe, Gates, Greene, Harnett, Hertford, Hoke, Hyde, 
Johnston, Jones, Lenoir, Martin, New Hanover, Onslow, Pamlico, 
Pasquotank, Pender, Perquimans, Pitt, Robeson, Sampson, Scotland, 
Tyrrell, Washington, Wayne, and Wilson.
    South Carolina counties of Aiken, Allendale, Bamberg, Barnwell, 
Beaufort, Berkeley, Calhoun, Charleston, Chesterfield, Clarendon, 
Colleton, Darlington, Dillon, Dorchester, Edgefield, Fairfield, 
Florence, Georgetown, Hampton, Horry, Jasper, Kershaw, Lee, Lexington, 
Marion, Marlboro, Newberry, Orangeburg, Richland, Saluda, Sumter, and 
Williamsburg.



Sec. 1005.3  Route disposition.

    Route disposition means a delivery to a retail or wholesale outlet 
(except to a plant) either directly or through any distribution facility 
(including disposition from a plant store, vendor or vending machine) of 
a fluid milk product classified as Class I milk.



Sec. 1005.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products, including filled milk, are received, processed, or 
packaged. Separate facilities without stationary storage tanks that are 
used only as a reload point for transferring bulk milk from one tank 
truck to another or separate facilities used only as a distribution 
point for storing packaged fluid milk products in transit for route 
disposition shall not be a plant under this definition.



Sec. 1005.5  Distributing plant.

    Distributing plant means a plant that is approved by a duly 
constituted regulatory agency for the handling of Grade A milk and at 
which fluid milk products are processed or packaged and from which there 
is route disposition in the marketing area during the month.



Sec. 1005.6  Supply plant.

    Supply plant means a plant that is approved by a duly constituted 
regulatory agency for the handling of Grade A milk and from which fluid 
milk products are transferred during the month to a pool distributing 
plant.



Sec. 1005.7  Pool plant.

    Except as provided in paragraph (e) of this section, pool plant 
means:
    (a) A plant that is approved by a duly constituted regulatory agency 
for the processing or packaging of Grade A milk and from which during 
the month is:
    (1) Route disposition, except filled milk, in the marketing area not 
less than 15 percent of its total route disposition, except filled milk, 
during the month; and

[[Page 140]]

    (2) The total quantity of fluid milk products, except filled milk, 
disposed of in class I is not less than 60 percent in each of the months 
of August through November and January and February, and 40 percent in 
each of the other months, of the total quantity of fluid milk products, 
except filled milk, physically received at such plant or diverted 
therefrom pursuant to Sec. 1005.13, subject to the following conditions:
    (i) Two or more plants operated by the same handler may be 
considered as a unit for the purpose of meeting the total Class I 
requirement percentages specified in paragraph (a)(2) of this section if 
each plant in the unit meets the in-area route disposition requirement 
specified in paragraph (a)(1) of this section, and if such handler 
requests that the plants be so considered as a unit. If such a handler 
wishes to add or remove plants from consideration as a unit, such a 
request must be made before the first day of the month for which it is 
to be effective.
    (ii) The applicable percentages in paragraph (a)(2) of this section 
may be increased or decreased up to 10 percentage points by the Director 
of the Dairy Division if the Director finds such revision is necessary 
to assure orderly marketing and efficient handling of milk in the 
marketing area. Before making such a finding, the Director shall 
investigate the need for revision either at the Director's own 
initiative or at the request of interested persons. If the investigation 
shows that a revision might be appropriate, the Director shall issue a 
notice stating that the revision is being considered and invite written 
data, views, and arguments.
    (b) A plant, other than a plant described in paragraph (a) of this 
section, from which fluid milk products, except filled milk, are shipped 
to pool plants pursuant to paragraph (a) of this section. Such shipments 
must equal not less than 60 percent in each of the months of August 
through November and January and February, and 40 percent in each of the 
other months, of the total quantity of milk approved by a duly 
constituted regulatory agency for fluid consumption that is received 
during the month from dairy farmers (including producer milk diverted 
from the plant pursuant to Sec. 1005.13 but excluding milk diverted to 
such plant) and handlers described in Sec. 1005.9(c). The operator of 
such plant may include milk diverted from such plant to plants described 
in paragraph (a) of this section as qualifying shipments in meeting up 
to one-half of the required shipments. The applicable shipping 
percentage of this paragraph may be increased or decreased up to 10 
percentage points by the market administrator if the market 
administrator finds such revision is necessary to obtain needed 
shipments or to prevent uneconomic shipments. Before making such a 
finding, the market administrator shall investigate the need for 
revision either at the market administrator's own initiative or at the 
request of interested persons. If the investigation shows that a 
revision might be appropriate, the market administrator shall issue a 
notice stating that the revision is being considered and invite data, 
views, and arguments.
    (c) A plant located in the State of North Carolina, South Carolina 
or Virginia that is operated by a cooperative association if pool plant 
status under this paragraph is requested for such plant by the 
cooperative association and during the month 60 percent or more of the 
producer milk of members of such cooperative association, excluding such 
milk that is received at or diverted from pool plants described in 
paragraph (b) of this section but including milk delivered by such 
cooperative as a handler described in Sec. 1005.9(c), is delivered 
directly from their farms to pool plants described in paragraph (a) of 
this section or is transferred to such plants as a bulk fluid milk 
product from the plant of the cooperative association, subject to the 
following conditions:
    (1) The plant does not qualify as a pool plant under paragraph (a) 
or (b) of this section or under the provisions of another Federal order 
applicable to a distributing plant or a supply plant; and
    (2) The plant is approved by a duly constituted regulatory agency to 
handle milk for fluid consumption.
    (d) A plant located within the marketing area (other than a 
producer-handler plant or a governmental agency plant) that meets the 
qualifications

[[Page 141]]

described in paragraph (a) of this section regardless of its quantity of 
route disposition in any other Federal order marketing area.
    (e) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A governmental agency plant;
    (3) A plant with route disposition in this marketing area that is 
located within the marketing area of another Federal order and that is 
fully regulated under such order;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which is not located within any Federal order marketing area but which 
also meets the pooling requirements of another Federal order and from 
which there is a greater quantity of route disposition, except filled 
milk, during the month in such other Federal order marketing area than 
in this marketing area; and
    (5) A plant qualified pursuant to paragraph (b) of this section if 
the plant has automatic pooling status under another Federal order or if 
the plant meets the pooling requirements of another Federal order during 
the month and makes greater qualifying shipments to plants regulated 
under such other order than to plants regulated under this order.
[55 FR 31352, Aug. 2, 1990, as amended at 56 FR 31858, July 12, 1991; 61 
FR 1148, Jan. 17, 1996]



Sec. 1005.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not a producer-handler plant, a governmental agency plant or an 
other order plant and from which there is route disposition in consumer-
type packages or dispenser units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is not a 
producer-handler plant, a governmental agency plant or an other order 
plant and from which fluid milk products are shipped to a pool plant.
    (e) Governmental agency plant means a plant operated by a 
governmental agency from which fluid milk products are distributed in 
the marketing area. Such plant shall be exempt from all provisions of 
this part.



Sec. 1005.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to milk of such 
producers diverted to nonpool plants for the account of such association 
pursuant to Sec. 1005.13, excluding the milk of producers diverted by 
the association as a handler pursuant to paragraph (a) of this section;
    (c) Any cooperative association with respect to milk excluding the 
milk of producers diverted to pool plants by the association as a 
handler pursuant to paragraph (a) of this section, that it receives for 
its account from the farm of a producer for delivery to a pool plant or 
another handler, in a tank truck owned and operated by, or under the 
control of, such cooperative association, unless both the cooperative 
association and the operator of the pool plant notify the market 
administrator prior to the time that such milk is delivered to the pool 
plant that the plant operator will be the handler of such milk and will 
purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler;

[[Page 142]]

    (f) Any person who operates an other order plant described in 
Sec. 1005.7 (d)(3) or (d)(4); and
    (g) Any person who operates an unregulated supply plant.



Sec. 1005.10  Producer-handler.

    Producer-handler means any person:
    (a) Who operates a dairy farm and a processing plant from which 
there is route disposition in the marketing area;
    (b) Who receives no fluid milk products from sources other than his 
own farm production, pool plants and other order plants;
    (c) Whose receipts of fluid milk products from pool plants and other 
order plants do not exceed the lesser of 5 percent of Class I 
disposition or 5,000 pounds during the month;
    (d) Who disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from his own farm production or pool plants; and
    (e) Who provides proof satisfactory to the market administrator that 
the care and management of the dairy farm and other resources necessary 
for his own farm production of milk and the management and operation of 
the processing plant are the personal enterprise and risk of such 
person.



Sec. 1005.11  [Reserved]



Sec. 1005.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for fluid consumption, which milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1005.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1005.13.
    (b) Producer shall not include:
    (1) A producer-handler as described in any order (including this 
part) issued pursuant to the Act;
    (2) A governmental agency operating a plant exempt pursuant to 
Sec. 1005.8(e);
    (3) Any person with respect to milk produced by such person which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1005.44(a)(8)(iii) and the corresponding step of Sec. 1005.44(b); 
and
    (4) Any person with respect to milk produced by such person which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.



Sec. 1005.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant, excluding such milk that is diverted from another 
pool plant;
    (b) Received by a handler described in Sec. 1005.9(c);
    (c) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant;
    (d) Diverted from a pool plant to a nonpool plant (other than a 
producer-handler plant) for the account of the handler described in 
Sec. 1005.9 (a) or (b) subject to the following conditions:
    (1) A producer's milk shall be eligible for diversion to a nonpool 
plant during any month in which such producer's milk is physically 
received at a pool plant as follows:
    (i) In any month of July through February, six days' production;
    (ii) In any month of March through June, two days' production.
    (2) During each of the months of July through November and January 
and February, the total quantity of milk diverted by a cooperative 
association shall not exceed one-fourth of the producer milk that such 
cooperative caused that month to be delivered to or diverted from such 
pool plants;
    (3) A handler described in Sec. 1005.9(a) that is not a cooperative 
association may divert for its account any milk that is not under the 
control of a cooperative association that diverts milk during the month 
pursuant to paragraph (d)(2) of this section. The total quantity of milk 
so diverted shall not exceed one-fourth of the milk that is physically 
received at or diverted from

[[Page 143]]

pool plants as producer milk of such handler in each month of July 
through November and January and February;
    (4) Any milk diverted in excess of the limits prescribed in 
paragraphs (d)(2) and (d)(3) of this section shall not be producer milk. 
The diverting handler shall designate the dairy farmer deliveries that 
shall not be producer milk. If the handler fails to make such 
designation, no milk diverted by such handler pursuant to this paragraph 
shall be producer milk;
    (5) To the extent that it would result in nonpool status for the 
pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (6) The cooperative association shall designate the dairy farmer 
deliveries that are not producer milk pursuant to paragraph (d)(5) of 
this section. If the diverting handler fails to make such designation, 
no milk diverted by such handler shall be producer milk; and
    (e) Milk diverted pursuant to paragraph (c) or (d) of this section 
shall be priced at the location of the plant to which diverted.



Sec. 1005.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1005.40(b)(1) from any source other than producers, handlers 
described in Sec. 1005.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1005.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1005.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1005.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1005.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27783, May 11, 1993]



Sec. 1005.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27783, May 11, 1993]



Sec. 1005.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).

[[Page 144]]



Sec. 1005.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have and be exercising full authority in the sale of milk of 
its members.



Sec. 1005.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1005.13, 1005.41 and 1005.53.
[58 FR 27783, May 11, 1993]

                             Handler Reports



Sec. 1005.30  Reports of receipts and utilization.

    On or before the seventh day after the end of each month, each 
handler shall report for such month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler, with respect to each of its pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted from 
the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1005.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order, except Federal Orders 1007, 1011, and 1046, for which a 
transportation credit is requested pursuant to Sec. 1005.82, including 
the date that such milk was received;
    (6) Receipts of producer milk described in Sec. 1005.82(c)(2), 
including the identity of the individual producers whose milk is 
eligible for the transportation credit pursuant to that paragraph and 
the date that such milk was received;
    (7) For handlers submitting transportation credit requests, 
transfers of bulk milk to nonpool plants, including the dates that such 
milk was transferred;
    (8) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1005.40(b)(1); and
    (9) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1005.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers;
    (2) The utilization or disposition of all such receipts; and
    (3) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec. 1005.82, all of the 
information required in paragraphs (a)(5),(a)(6), and (a)(7) of this 
section.
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 41490, Aug. 9, 1996; 62 
FR 39739, July 23, 1997]



Sec. 1005.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1005.9 (a), (b), and (c) shall report to the 
market administrator its producer payroll for such month, in the

[[Page 145]]

detail prescribed by the market administrator, showing for each 
producer:
    (1) Such producer's name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1005.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1005.32  Other reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1005.9 (a), (b), and (c) shall report to the 
market administrator any adjustments to transportation credit requests 
as reported pursuant to Sec. 1005.30(a) (5), (6), and (7).
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Secs. 1005.30 and 1005.31, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish each handler's obligation under the order.
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69017, Dec. 31, 1996; 62 
FR 39740, July 23, 1997]

                         Classification of Milk



Sec. 1005.40  Classes of utilization.

    Except as provided in Sec. 1005.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1005.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:

[[Page 146]]

    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1005.15 and the fluid 
cream product definition pursuant to Sec. 1005.16; and
    (7) In shrinkage assigned pursuant to Sec. 1005.41(a) to the 
receipts specified in Sec. 1005.41(a)(2) and in shrinkage specified in 
Sec. 1005.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27783, May 11, 1993, as amended at 58 FR 63285, Dec. 1, 1993]



Sec. 1005.41  Shrinkage.

    For the purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1005.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1005.9(c), and in milk 
diverted to such plant from another pool plant, except that in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this subparagraph shall be 
2 percent;

[[Page 147]]

    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (b)(2), (b)(4), (b)(5), 
and (b)(6) of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1005.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1005.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1005.44(a)(12) and the corresponding step of 
Sec. 1005.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1005.44(a)(7) 
or the corresponding step of Sec. 1005.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1005.44(a)(11) or (a)(12) or the corresponding steps of 
Sec. 1005.44(b), the skim milk or butterfat so transferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to another order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as

[[Page 148]]

described in paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to the class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order classification under this paragraph shall be in 
accordance with the provisions of Sec. 1005.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
governmental agency plants. Skim milk or butterfat in the following 
forms that is transferred from a pool plant to a producer-handler under 
this or any other Federal order or transferred or diverted from a pool 
plant to a governmental agency plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or a governmental agency plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i)(A) and 
(d)(2)(i)(B) of this section are met, transfers or diversions in bulk 
form shall be classified on the basis of the assignment of the nonpool 
plant's utilization to its receipts as set forth in paragraph (d)(2)(ii) 
through (d)(2)(viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in such handler's report of receipts and utilization 
filed pursuant to Sec. 1005.30 for the month within which such 
transaction occurred; and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;

[[Page 149]]

    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
    (e) Transfers by a handler described in Sec. 1005.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1005.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1005.44 pro rata with producer milk 
received at the transferee-handler's plant.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993]



Sec. 1005.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1005.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1005.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1005.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1005.40, 1005.41, and 1005.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1005.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the

[[Page 150]]

pounds of skim milk in such product that are to be considered under this 
part as used or disposed of by the handler shall be an amount equivalent 
to the nonfat milk solids contained in such product plus all of the 
water originally associated with such solids; and
    (c) The classification of producer milk of a handler pursuant to 
Sec. 1005.9 (b) or (c) shall be determined separately from the 
operations of any pool plant operated by such handler.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1005.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1005.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993; 58 
FR 63286, Dec. 1, 1993]



Sec. 1005.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1005.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1005.9(c), by allocating the handler's 
receipts of skim milk and butterfat to the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1005.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1005.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1005.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this subparagraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in

[[Page 151]]

other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1005.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1005.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1005.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (a)(8)(ii)(C) of this section. Should the pounds 
of skim milk to be subtracted from Class II and Class III combined 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1005.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and

[[Page 152]]

    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1005.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (a)(8)(ii) of this section and 
that were not offset by transfers or diversions of fluid milk products 
to the same unregulated supply plant from which fluid milk products to 
be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), 
(a)(12)(iii), and (a)(12)(iv) of this section, such subtraction shall be 
pro rata to the pounds of skim milk in Class I and in Class II and Class 
III combined, with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
with respect to whichever of the following quantities represents the 
lower proportion of Class I milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1005.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler

[[Page 153]]

(excluding any duplication of utilization in each class resulting from 
transfers between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (a)(12)(ii) 
of this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (a)(12)(ii) 
of this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1005.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1005.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1005.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993]



Sec. 1005.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1005.44(a)(12) and the corresponding 
step of Sec. 1005.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received

[[Page 154]]

from a handler who has received fluid milk products or bulk fluid cream 
products from an other order plant, the class to which such receipts are 
allocated pursuant to Sec. 1005.43(d) and Sec. 1005.44 on the basis of 
such report, (including any reclassification of inventories of bulk 
concentrated fluid milk products), and thereafter, any change in such 
allocation required to correct errors disclosed in the verification of 
such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests, the percentage of 
producer milk delivered by members of such association that was used in 
each class by each handler receiving such milk. For the purpose of this 
report the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993]

                              Class Prices



Sec. 1005.50  Class prices.

    Subject to the provisions of Sec. 1005.53, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus $3.08.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 63286, Dec. 1, 1993; 60 
FR 6608, Feb. 2, 1995]



Sec. 1005.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1005.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat

[[Page 155]]

Dry Milk Low/Medium Heat price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfatS dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18956, Apr. 14, 1995]



Sec. 1005.52  [Reserved]



Sec. 1005.53  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or a handler 
described in Sec. 1005.9(c) which is classified as Class I milk subject 
to the limitations pursuant to paragraph (b) of this section, the Class 
I price specified in Sec. 1005.50(a) shall be adjusted by the amount 
stated in paragraphs (a)(1) through (a)(6) of this section for the 
location of such plant:
    (1) For a plant located within one of the zones set forth in 
Sec. 1005.2, the adjustment shall be as follows:

                                                                        
------------------------------------------------------------------------
                                            Adjustment per hundredweight
------------------------------------------------------------------------
Northwestern..............................  Minus 15 cents.             
Base......................................  No adjustment.              
Southeastern..............................  Plus 15 cents.              
------------------------------------------------------------------------

    (2) For a plant located within the Tennessee Valley Federal order 
marketing area (part 1011), except Kentucky and West Virginia counties, 
the adjustment shall be a minus 31 cents;
    (3) For a plant located within the State of Florida, the adjustment 
shall be a plus 50 cents;
    (4) For a plant located outside the areas specified in paragraphs 
(a)(1), (a)(2), and (a)(3) of this section and south of a line extending 
through the southern boundary of the State of Tennessee and east of the 
Mississippi River, the adjustment shall be the adjustment applicable at 
Anderson, North Augusta, or Hardeeville, South Carolina, whichever city 
is nearest;
    (5) For a plant located outside the area specified in paragraph 
(a)(2) of this section and in the State of Virginia, the adjustment 
shall be the adjustment applicable at Reidsville, Roanoke Rapids, or 
Elizabeth City, North Carolina, whichever city is nearest;
    (6) For a plant located within the Middle Atlantic Federal Order 
Marketing Area (Part 1004), the adjustment shall be computed by 
subtracting the base zone Class I price specified in

[[Page 156]]

Sec. 1005.50(a) from the Class I price applicable at such plant under 
the Middle Atlantic Federal Order; and
    (7) For a plant located outside the areas specified in paragraphs 
(a)(1) through (a)(6) of this section, the adjustment shall be a minus 
2.5 cents for each 10 miles or fraction thereof (by the shortest hard-
surfaced highway distance as determined by the market administrator) 
that such plant is from the nearer of the city halls in Greenville, 
South Carolina, or Charlotte or Greensboro, North Carolina.
    (b) For fluid milk products transferred in bulk from a pool plant to 
a pool distributing plant at which a higher Class I price applies and 
which are classified as Class I milk, the Class I price shall be the 
Class I price applicable at the location of the transferor-plant subject 
to a location adjustment credit for the transferor-plant which shall be 
determined by the market administrator for skim milk and butterfat, 
respectively, as follows:
    (1) Subtract from the pounds of skim milk remaining in Class I at 
the transferee-plant after the computations pursuant to 
Sec. 1005.44(a)(12) and the pounds of skim milk in receipts of 
concentrated fluid milk products from other pool plants that are 
assigned to Class I use, an amount equal to:
    (i) The pounds of skim milk in receipts of milk at the transferee-
plant from producers and handlers described in Sec. 1005.9(c); and
    (ii) The pounds of skim milk in receipts of packaged fluid milk 
products from other pool plants.
    (2) Assign any remaining pounds of skim milk in Class I at the 
transferee-plant to the skim milk in receipts of bulk fluid milk 
products from other pool plants, first to the transferor-plant at which 
the highest Class I price applies and then to other plants in sequence 
beginning with the plant at which the next highest Class I price 
applies;
    (3) Compute the total amount of location adjustment credits to be 
assigned to transferor-plants by multiplying the hundredweight of skim 
milk assigned pursuant to paragraph (b)(2) of this section to each 
transferor-plant at which the Class I price is lower than the Class I 
price at the transferee-plant by the difference in the Class I prices 
applicable at the transferor-plant and transferee-plant, and add the 
resulting amounts;
    (4) Assign the total amount of location adjustment credits computed 
pursuant to paragraph (b)(3) of this section to those transferor-plants 
that transferred fluid milk products containing skim milk classified as 
Class I milk pursuant to Sec. 1005.42(a) and at which the applicable 
Class I price is less than the Class I price at the transferee-plant, in 
sequence beginning with the plant at which the highest Class I price 
applies. Subject to the availability of such credits, the credit 
assigned to each plant shall be equal to the hundredweight of such Class 
I skim milk multiplied by the applicable location adjustment rate for 
such plant. If the aggregate of this computation for all plants having 
the same location adjustment rate exceeds the credits that are available 
to those plants, such credits shall be prorated to the volume of skim 
milk in Class I transfers from such plants; and
    (5) Location adjustment credit for butterfat shall be determined in 
accordance with the procedure outlined for skim milk in paragraphs 
(b)(1) through (b)(4) of this section.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993; 61 
FR 1148, Jan. 17, 1996]



Sec. 1005.54  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6608, Feb. 2, 1995]



Sec. 1005.55  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in

[[Page 157]]

this part, the market administrator shall use a price or pricing 
constituent determined by the Secretary to be equivalent to the price or 
pricing constituent that is required.

                              Uniform Price



Sec. 1005.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk for each 
handler described in Sec. 1005.9(a) with respect to each of its pool 
plants and for each handler described in Sec. 1005.9 (b) and (c) with 
respect to milk that was not received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1005.9(c) that were classified in each class 
pursuant to Secs. 1005.43(a) and 1005.44(c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1005.44(a)(14) and the 
corresponding step of Sec. 1005.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1005.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1005.44(a)(9) and the corresponding step of Sec. 1005.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1005.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1005.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1005.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1005.44 (a)(7)(v) and 
(a)(7)(vi) and the corresponding step of Sec. 1005.44(b); and
    (f) Add the amount obtained from multiplying the Class I 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. 1005.43(d) and Sec. 1005.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1005.44(a)(11) and the corresponding steps of Sec. 1005.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1005.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1005.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that

[[Page 158]]

results from any inventory reclassification of bulk concentrated fluid 
milk products that occurs at the transferee plant. Any such applicable 
class price change shall be applied to the plant that used the 
concentrated milk in the event that the concentrated fluid milk products 
were made from bulk unconcentrated fluid milk products received at the 
plant during the prior month.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993]



Sec. 1005.61  Computation of uniform price (including weighted average price).

    (a) The market administrator shall compute the weighted average 
price for each month and the uniform price for each month per 
hundredweight for milk of 3.5 percent butterfat content as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1005.60 for all handlers who filed the reports prescribed in 
Sec. 1005.30 for the month and who made the payments pursuant to 
Sec. 1005.71 for the preceding month;
    (2) Add one-half the unobligated balance in the producer-settlement 
fund;
    (3) Add an amount equal to the total value of the minus adjustments 
and subtract an amount equal to the total value of the plus adjustments 
computed pursuant to Sec. 1005.75;
    (4) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (i) The total hundredweight of producer milk; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1005.60(f); and
    (5) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The resulting figure, rounded to the nearest cent, shall 
be the weighted average price for each month and the uniform price.
    (b) [Reserved]
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 1148, Jan. 17, 1996; 61 
FR 41490, Aug. 9, 1996; as amended at 61 FR 69017, Dec. 31, 1996; 62 FR 
39740, July 23, 1997]



Sec. 1005.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end after the end of each month the 
uniform price pursuant to Sec. 1005.61 for such month.
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]

                            Payments for Milk



Sec. 1005.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1005.71, 
1005.76, and 1005.77, and out of which he shall make all payments 
pursuant to Secs. 1005.72 and 1005.77: Provided, That any payments due 
any handler shall be offset by any payments due from such handler.



Sec. 1005.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1005.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1005.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1005.9(c); and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1005.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler

[[Page 159]]

pooling shall pay to the market administrator an amount computed as 
follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1005.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1005.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
appropriate funds are available.



Sec. 1005.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk for which 
payment is not made to a cooperative association pursuant to paragraph 
(b) of this section, as follows:
    (1) On or before the last day of each month, for milk received 
during the first 15 days of the month from such producer who has not 
discontinued delivery of milk to such handler before the 25th day of the 
month at not less than the Class III price for the preceding month or 90 
percent of the weighted average price for the preceding month, whichever 
is higher, less proper deductions authorized in writing by the producer; 
and
    (2) On or before the 15th day of the following month, an amount 
equal to not less than the uniform price, as adjusted pursuant to 
Secs. 1005.74 and 1005.75, multiplied by the hundredweight of milk 
received from such producer during the month, subject to the following 
adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1005.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producers; and
    (iv) Less proper deductions authorized in writing by such producer: 
Provided, That if by such date such handler has not received full 
payment from the market administrator pursuant to Sec. 1005.72 for such 
month, he may reduce pro rata his payments to producers by not more than 
the amount of such underpayment. Payments to producers shall be 
completed thereafter not later than the date for making payments 
pursuant to the paragraph next following after the receipt of the 
balance due from the market administrator;
    (b) Each handler shall make payment to the cooperative association 
for producer milk which it caused to be delivered to such handler, if 
such cooperative association is authorized to collect such payments for 
its members and exercises such authority, an amount equal to the sum of 
the individual payments otherwise payable for such producer milk as 
follows:
    (1) On or before two days prior to the last day of each month for 
producer milk received during the first 15 days of the month; and
    (2) On or before the 13th day after the end of each month for milk 
received during such month.
    (c) Each handler pursuant to Sec. 1005.9(a) who receives milk from a 
cooperative association as a handler pursuant to Sec. 1005.9(c), 
including the milk of producers who are not members of such association, 
and who the market

[[Page 160]]

administrator determines have authorized such cooperative association to 
collect payment for their milk, shall pay such cooperative for such milk 
as follows:
    (1) On or before two days prior to the last day of the month for 
milk received during the first 15 days of the month, not less than the 
Class III price for the preceding month or 90 percent of the weighted 
average price for the preceding month, whichever is higher; and
    (2) On or before the 13th day of the following month for milk 
received during the month, not less than the uniform price as adjusted 
pursuant to Secs. 1005.74 and 1005.75, and less any payments made 
pursuant to paragraph (c)(1) of this section.
    (d) In making payments for producer milk pursuant to this section, 
each handler shall furnish each producer or cooperative association from 
whom he has received milk a supporting statement in such form that it 
may be retained by the recipient which shall show:
    (1) The month and identity of the producer;
    (2) The daily and total pounds and the average butterfat content of 
producer milk;
    (3) [Reserved]
    (4) The minimum rate at which payment to the producer is required 
pursuant to this order;
    (5) The rate(s) used in making the payment if such rate is other 
than the applicable minimum rate;
    (6) The amount, or the rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to such producer or cooperative 
association.
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1005.51 (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.
[60 FR 18956, Apr. 14, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.75  Plant location adjustments for producers and on nonpool milk.

    (a) In making the payments required pursuant to Sec. 1005.73, the 
uniform price pursuant to Sec. 1005.61 for the month shall be adjusted 
by the amounts set forth in Sec. 1005.53 according to the location of 
the plant where the milk being priced was received.
    (b) For purposes of computing the value of other source milk 
pursuant to Sec. 1005.71, the weighted average price shall be adjusted 
by the amount set forth in Sec. 1005.53 that is applicable at the 
location of the nonpool plant from which the milk was received, except 
that the adjusted weighted average price shall not be less than the 
Class III price.
[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1005.30(b) and 1005.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;

[[Page 161]]

    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants, handlers pursuant to 
Sec. 1005.9(b), and other order plants, except that subtracted under a 
similar provision of another Federal milk order; and
    (ii) From another nonpool plant that is not another order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and weighted average price shall not be 
less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1005.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant, a handler 
described in Sec. 1005.9(b), or another order plant shall be allocated 
at the partially regulated distributing plant to the same class in which 
such products were classified at the fully regulated plant or as 
classified pursuant to Sec. 1005.42 with respect to receipts from a 
handler described in Sec. 1005.9(b);
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or 
another order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1005.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced

[[Page 162]]

at the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1005.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1005.60(f) less the value of such other source milk 
specified in Sec. 1005.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1005.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1005.7(b) 
subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1005.30(b) and 
1005.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1005.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1005.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1005.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1005.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993]



Sec. 1005.77  Adjustment of accounts.

    (a) Whenever verification by the market administrator of payments by 
any handler discloses errors made in payments to the producer-settlement 
fund pursuant to Sec. 1005.71 or to the transportation credit balancing 
fund pursuant to Sec. 1005.81, the market administrator shall promptly 
bill such handler for any unpaid amount and such handler shall, within 
15 days, make payment to the market administrator of the amount so 
billed. Whenever verification discloses that payment is due from the 
market administrator to any handler pursuant to Sec. 1005.72 or 
Sec. 1005.82, the market administrator shall make payment to such 
handler within 15 days or, in the case of the transportation credit

[[Page 163]]

balancing fund, as soon as funds become available. If a handler is due 
additional payment for a month in which payments to handlers were 
prorated pursuant to Sec. 1005.82(a), the additional payment pursuant to 
this section shall be multiplied by the final proration percentage 
computed in Sec. 1005.82(a)(2).
    (b) Whenever verification by the market administrator of the payment 
by a handler to any producer or cooperative association for milk 
received by such handler discloses payment of less than is required by 
Sec. 1005.73, the handler shall pay such balance due such producer or 
cooperative association not later than the time of making payment to 
producers or cooperative associations next following such disclosure.
[62 FR 39740, July 23, 1997]



Sec. 1005.78  Charges on overdue accounts.

    Any unpaid obligations of a handler pursuant to Secs. 1005.71, 
1005.73, 1005.76, 1005.77, 1005.81, 1005.85 or 1005.86 shall be 
increased one and one-fourth percent per month beginning on the first 
day after the due date, and on each date of subsequent months following 
the day on which such type of obligation is normally due, subject to the 
following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
interest charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than that prescribed by the order because of 
a handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.
[55 FR 31352, Aug. 2, 1990, as amended at 62 FR 39740, July 23, 1997]

                       Marketwide Service Payments



Sec. 1005.80  Transportation credit balancing fund.

    The market administrator shall maintain a separate fund known as the 
Transportation Credit Balancing Fund into which shall be deposited the 
payments made by handlers pursuant to Sec. 1005.81 and out of which 
shall be made the payments due handlers pursuant to Sec. 1005.82. 
Payments due a handler shall be offset against payments due from the 
handler.
[61 FR 41490, Aug. 9, 1996]



Sec. 1005.81  Payments to the transportation credit balancing fund.

    (a) On or before the 12th day after the end of the month, each 
handler operating a pool plant and each handler specified in Sec. 1005.9 
(b) and (c) shall pay to the market administrator a transportation 
credit balancing fund assessment determined by multiplying the pounds of 
Class I producer milk assigned pursuant to Sec. 1005.44 by $0.065 per 
hundredweight or such lesser amount as the market administrator deems 
necessary to maintain a balance in the fund equal to the total 
transportation credits disbursed during the prior June-January period. 
In the event that during any month of the June-January period the fund 
balance is insufficient to cover the amount of credits that are due, the 
assessment should be based upon the amount of credits that would have 
been disbursed had the fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 5th day of the month the assessment pursuant to paragraph (a) of 
this section for the following month.
[61 FR 41490, Aug. 9, 1996, as amended at 62 FR 39740, July 23, 1997]



Sec. 1005.82  Payments from the transportation credit balancing fund.

    (a) Payments from the transportation credit balancing fund to 
handlers and cooperative associations requesting transportation credits 
shall be made as follows:
    (1) On or before the 13th day after the end of each of the months of 
July

[[Page 164]]

through December and any other month in which transportation credits are 
in effect pursuant to paragraph (b) of this section, the market 
administrator shall pay to each handler that received, and reported 
pursuant to Sec. 1005.30(a)(5), bulk milk transferred from another order 
plant as described in paragraph (c)(1) of this section or that received, 
and reported pursuant to Sec. 1005.30(a)(6), milk directly from 
producers' farms as specified in paragraph (c)(2) of this section, a 
preliminary amount determined pursuant to paragraph (d) of this section 
to the extent that funds are available in the transportation credit 
balancing fund. If an insufficient balance exists to pay all of the 
credits computed pursuant to this section, the market administrator 
shall distribute the balance available in the transportation credit 
balancing fund by reducing payments prorata using the percentage derived 
by dividing the balance in the fund by the total credits that are due 
for the month. The amount of credits resulting from this initial 
proration shall be subject to audit adjustment pursuant to paragraph 
(a)(2) of this section;
    (2) The market administrator shall accept adjusted requests for 
transportation credits on or before the 20th day of the month following 
the month for which such credits were requested pursuant to 
Sec. 1005.32(a). After such date, a preliminary audit will be conducted 
by the market administrator, who will recalculate any necessary 
proration of transportation credit payments for the preceding month 
pursuant to paragraph (a) of this section. Handlers will be promptly 
notified of an overpayment of credits based upon this final computation 
and remedial payments to or from the transportation credit balancing 
fund will be made on or before the next payment date for the following 
month;
    (3) Transportation credits paid pursuant to paragraph (a) (1) and 
(2) of this section shall be subject to final verification by the market 
administrator pursuant to Sec. 1005.77. Adjusted payments to or from the 
transportation credit balancing fund will remain subject to the final 
proration established pursuant to paragraph (a)(2) of this section; and
    (4) In the event that a qualified cooperative association is the 
responsible party for whose account such milk is received and written 
documentation of this fact is provided to the market administrator 
pursuant to Sec. 1005.30(c)(3) prior to the date payment is due, the 
transportation credits for such milk computed pursuant to this section 
shall be made to such cooperative association rather than to the 
operator of the pool plant at which the milk was received.
    (b) The market administrator may extend the period during which 
transportation credits are in effect (i.e., the transportation credit 
period) to the months of January and June if a written request to do so 
is received 15 days prior to the beginning of the month for which the 
request is made and, after conducting an independent investigation, 
finds that such extension is necessary to assure the market of an 
adequate supply of milk for fluid use. Before making such a finding, the 
market administrator shall notify the Director of the Dairy Division and 
all handlers in the market that an extension is being considered and 
invite written data, views, and arguments. Any decision to extend the 
transportation credit period must be issued in writing prior to the 
first day of the month for which the extension is to be effective.
    (c) Transportation credits shall apply to the following milk:
    (1) Bulk milk received from a plant regulated under another Federal 
order, except Federal Orders 1007, 1011, and 1046, and allocated to 
Class I milk pursuant to Sec. 1005.44(a)(12); and
    (2) Bulk milk received directly from the farms of dairy farmers at 
pool distributing plants subject to the following conditions:
    (i) The quantity of such milk that shall be eligible for the 
transportation credit shall be determined by multiplying the total 
pounds of milk received from producers meeting the conditions of this 
paragraph by the lower of:
    (A) The marketwide estimated Class I utilization of all handlers for 
the month pursuant to Sec. 1005.45(a); or
    (B) The Class I utilization of all producer milk of the pool plant 
operator receiving the milk after the computations described in 
Sec. 1005.44;

[[Page 165]]

    (ii) The dairy farmer was not a ``producer'' under this order during 
more than 2 of the immediately preceding months of January through June 
and not more than 50 percent of the production of the dairy farmer 
during those 2 months, in aggregate, was received as producer milk under 
this order during those 2 months. However, if January and/or June are 
months in which transportation credits are disbursed pursuant to 
paragraph (a) of this section, these months shall not be included in the 
2-month limit provided in this paragraph; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of this order or the marketing areas of 
Federal Orders 1007, 1011, or 1046, or within the Kentucky counties of 
Allen, Barren, Metcalfe, Monroe, Simpson, and Warren.
    (d) Transportation credits shall be computed as follows:
    (1) The market administrator shall subtract from the pounds of milk 
described in paragraphs (c) (1) and (2) of this section the pounds of 
bulk milk transferred from the pool plant receiving the supplemental 
milk if milk was transferred to a nonpool plant on the same calendar day 
that the supplemental milk was received. For this purpose, the 
transferred milk shall be subtracted from the most distant load of 
supplemental milk received, and then in sequence with the next most 
distant load until all of the transfers have been offset;
    (2) With respect to the pounds of milk described in paragraph (c)(1) 
of this section that remain after the computations described in 
paragraph (d)(1) of this section, the market administrator shall:
    (i) Determine the shortest hard-surface highway distance between the 
shipping plant and the receiving plant;
    (ii) Multiply the number of miles so determined by 0.35 cent;
    (iii) Subtract the other order's Class I price applicable at the 
shipping plant's location from the Class I price applicable at the 
receiving plant as specified in Sec. 1005.53;
    (iv) Subtract any positive difference computed in paragraph 
(d)(2)(iii) of this section from the amount computed in paragraph 
(d)(2)(ii) of this section; and
    (v) Multiply the remainder computed in paragraph (d)(2)(iv) of this 
section by the hundredweight of milk described in paragraph (d)(2) 
introductory text of this section.
    (3) For the remaining milk described in paragraph (c)(2) of this 
section after computations described in paragraph (d)(1) of this 
section, the market administrator shall:
    (i) Determine an origination point for each load of milk by locating 
the nearest city to the last producer's farm from which milk was picked 
up for delivery to the receiving pool plant. Alternatively, the milk 
hauler that is transporting the milk of producers described in paragraph 
(c)(2) of this section may establish an origination point following the 
last farm pickup by stopping at the nearest independently-operated truck 
stop with a certified truck scale and obtaining a weight certificate 
indicating the weight of the truck and its contents, the date and time 
of weighing, and the location of the truck stop;
    (ii) Determine the shortest hard-surface highway distance between 
the receiving pool plant and the truck stop or city, as the case may be;
    (iii) Subtract 85 miles from the mileage so determined;
    (iv) Multiply the remaining miles so computed by 0.35 cent;
    (v) If the origination point determined pursuant to paragraph 
(d)(3)(i) of this section is in a Federal order marketing area, subtract 
the Class I price applicable at the origination point pursuant to the 
provisions of such other order (as if the origination point were a plant 
location) from the Class I price applicable at the distributing plant 
receiving the milk. If the origination point is not in any Federal order 
marketing area, determine the Class I price at the origination point 
based upon the provisions of this order and subtract this price from the 
Class I price applicable at the distributing plant receiving the milk;
    (vi) Subtract any positive difference computed in paragraph 
(d)(3)(v) of this section from the amount computed in paragraph 
(d)(3)(iv) of this section; and

[[Page 166]]

    (vii) Multiply the remainder computed in paragraph (d)(3)(vi) by the 
hundredweight of milk described in paragraph (d)(3) introductory text of 
this section.
[62 FR 39740, July 23, 1997]

        Administrative Assessment and Marketing Service Deduction



Sec. 1005.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1005.9(c) that were delivered to pool plants of other handlers;
    (b) Receipts from a handler described in Sec. 1005.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1005.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1005.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1005.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1005.60(d) and (f); and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
specified in Sec. 1005.76(a)(2).
[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993]



Sec. 1005.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section, each 
handler, in making payments to producers for milk (other than milk of 
such handler's own production) pursuant to Sec. 1005.73, shall deduct 5 
cents per hundredweight, or such amount not exceeding 5 cents per 
hundredweight, as may be prescribed by the Secretary, and shall pay such 
deductions to the market administrator on or before the 15th day after 
the end of the month. Such money shall be used by the market 
administrator to provide market information and to check the accuracy of 
the testing and weighing of their milk for producers who are not 
receiving such service from a cooperative association.
    (b) In the case of producers who are members of a cooperative 
association which the Secretary has determined is actually performing 
the services set forth in paragraph (a) of this section, each handler 
shall (in lieu of the deduction specified in paragraph (a) of this 
section), make such deductions from the payments to be made to such 
producers as may be authorized by the membership agreement or marketing 
contract between such cooperative association and such producers, and on 
or before the 13th day after the end of each month, pay such deductions 
to the cooperative association of which such producers are members, 
furnishing a statement showing the amount of any such deductions and the 
amount of milk for which such deduction was computed for each producer.



PART 1006--MILK IN UPPER FLORIDA MARKETING AREA--Table of Contents




                           General Provisions

Sec.
1006.1  General provisions.

                               Definitions

1006.2  Upper Florida marketing area.
1006.3  Route disposition.
1006.4  [Reserved]
1006.5  Distributing plant.
1006.6  Supply plant.
1006.7  Pool plant.
1006.8  Nonpool plant.
1006.9  Handler.
1006.10  Producer-handler.
1006.11  [Reserved]
1006.12  Producer.
1006.13  Producer milk.
1006.14  Other source milk.
1006.15  Fluid milk product.
1006.16  Fluid cream product.
1006.17  Filled milk.
1006.18  Cooperative association.
1006.19  [Reserved]
1006.21  Commercial food processing establishment.

                             Handler Reports

1006.30  Reports of receipts and utilization.
1006.31  Payroll reports.

[[Page 167]]

1006.32  Other reports.

                         Classification of Milk

1006.40  Classes of utilization.
1006.41  Shrinkage.
1006.42  Classification of transfers and diversions.
1006.43  General classification rules.
1006.44  Classification of producer milk.
1006.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1006.50  Class prices.
1006.51  Basic formula price.
1006.52  Plant location adjustments for handlers.
1006.53  Announcement of class prices.
1006.54  Equivalent price.

                              Uniform Price

1006.60  Handler's value of milk for computing the uniform price.
1006.61  Computation of uniform price.
1006.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1006.70  Producer-settlement fund.
1006.71  Payments to the producer-settlement fund.
1006.72  Payments from the producer-settlement fund.
1006.73  Payments to producers and to cooperative associations.
1006.74  Butterfat differential.
1006.75  Plant location adjustments for producers and on nonpool milk.
1006.76  Payments by handler operating a partially regulated 
          distributing plant.
1006.77  Adjustment of accounts.
1006.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1006.85  Assessment for order administration.
1006.86  Deduction for marketing services.

    Authority:  Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source:  37 FR 17725, Aug. 30, 1972, unless otherwise noted.

                           General Provisions



Sec. 1006.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1006.2  Upper Florida marketing area.

    The Upper Florida marketing area, hereinafter called the ``marketing 
area'', means all the territory geographically within the boundaries of 
the following counties, all in the State of Florida, including all 
waterfront facilities connected therewith and all territory wholly or 
partly therein occupied by government (municipal, State, or Federal) 
reservations, installations, institutions, or other similar 
establishments.

    Alachua, Baker, Bay, Bradford, Brevard, Calhoun, Citrus, Clay, 
Columbia, Dixie, Duval, Flagler, Franklin, Gadsden, Gilchrist, Gulf, 
Hamilton, Holmes, Jackson, Jefferson, Lafayette, Lake, Leon, Levy, 
Liberty, Madison, Marion, Nassau, Orange, Osceola, Putnam, St. Johns, 
Seminole, Sumter, Suwannee, Taylor, Union, Volusia, Wakulla, Washington.



Sec. 1006.3  Route disposition.

    Route disposition means a delivery (except to a plant) either direct 
or through any distribution facility (including disposition from a plant 
store, vendor, or vending machine) of a fluid milk product classified as 
Class I milk.



Sec. 1006.4  [Reserved]



Sec. 1006.5  Distributing plant.

    Distributing plant means a plant:
    (a) That is approved by a duly constituted health authority for the 
processing or packaging of Grade A milk and from which there is route 
disposition of any fluid milk product during the month in the marketing 
area; or
    (b) That processes or packages filled milk and from which there is 
route disposition of filled milk during the month in the marketing area.



Sec. 1006.6  Supply plant.

    Supply plant means a plant from which a fluid milk product 
acceptable to a duly constituted health authority or filled milk is 
shipped during the month to a pool plant.



Sec. 1006.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:

[[Page 168]]

    (a) A distributing plant that has route distribution, except filled 
milk, during the month of not less than 50 percent of the total Grade A 
fluid milk products, except filled milk, that are physically received at 
such plant or diverted as producer milk to a nonpool plant pursuant to 
Sec. 1006.13, and that has route disposition, except filled milk, in the 
marketing area during the month of not less than 10 percent of such 
receipts.
    (b) A supply plant from which not less than 50 percent of the total 
quantity of Grade A fluid milk products that are physically received 
from dairy farmers at such plant or diverted as producer milk to a 
nonpool plant pursuant to Sec. 1006.13 during the month is shipped as 
fluid milk products, except filled milk, to pool plants meeting the 
requirements of Sec. 1006.7(a).
    (c) A plant, other than a distributing plant, that is located in the 
marketing area and is operated by a cooperative association if pool 
plant status under this paragraph is requested for such plant by the 
cooperative association and 50 percent or more of the producer milk of 
members of the cooperative association is received at pool distributing 
plants either directly from farms or by transfer from plants of the 
cooperative association for which pool plant status under this paragraph 
has been requested, subject to the following conditions:
    (1) The plant is approved by a duly constituted health authority for 
the disposition of Grade A milk in the marketing area; and
    (2) The plant does not qualify as a pool plant under paragraph (b) 
of this section or under the provisions of another Federal order 
applicable to a supply plant.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) An exempt distributing plant;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which a greater quantity of fluid milk products, except filled milk, is 
disposed of during the month from such plant as route disposition in the 
marketing area regulated by the other order than as route disposition in 
this marketing area: Provided, That such a distributing plant which was 
a pool plant under this order in the immediately preceding month shall 
continue to be subject to all of the provisions of this part until the 
third consecutive month in which a greater proportion of its route 
disposition is made in such other marketing area, unless the other order 
requires regulation of the plant without regard to its qualifying as a 
pool plant under this order; and
    (4) Any building, premises, or facilities, the primary function of 
which is to hold or store bottled milk or milk products (including 
filled milk) in finished form, nor shall it include any part of a plant 
in which the operations are entirely separated (by wall or other 
partition) from the handling of producer milk.
[54 FR 6383, Feb. 10, 1989]

    Effective Date Note:  At 62 FR 36651, July 9, 1997, in Sec. 1006.7, 
the words ``50 percent or more of the'' in the introductory text of 
paragraph (c) and paragraph (c)(2) were suspended indefinitely, 
effective Sept. 1, 1997.



Sec. 1006.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of nonpool plants 
are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Exempt distributing plant means a distributing plant operated by 
a governmental agency.
    (d) Partially regulated distributing plant means a nonpool plant 
that is a distributing plant and is not an other order plant, a 
producer-handler plant or an exempt distributing plant.
    (e) Unregulated supply plant means a nonpool plant that is a supply 
plant

[[Page 169]]

and is not an other order plant, a producer-handler or an exempt 
distributing plant.



Sec. 1006.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted from a pool plant to a nonpool plant for the 
account of such cooperative association;
    (c) A cooperative association with respect to milk of its producer-
members which is delivered from the farm to the pool plant of another 
handler in a tank truck owned and operated by or under contract to such 
cooperative association. The milk for which a cooperative association is 
the handler pursuant to this paragraph shall be deemed to have been 
received at the location of the pool plant to which it was delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler; or
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant.



Sec. 1006.10  Producer-handler.

    Producer-handler means any person who meets all the following 
conditions:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by him in accordance with the requirements 
set forth in paragraph (b) of this section, and provides proof 
satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
at his sole risk and under his complete and exclusive management and 
control; and
    (2) Each such farm is owned or operated by him, at his sole risk, 
and under his complete and exclusive management and control;
    (b) Operates a plant in which milk approved by a duly constituted 
health authority for fluid consumption is processed or packaged and from 
which there is route disposition during the month in the marketing area 
pursuant to the following requirements:
    (1) No fluid milk products are received at such plant or by him at 
any other location, except:
    (i) From dairy farm(s) as specified in paragraph (a) of this 
section; and
    (ii) Fluid milk products (other than whole milk) from pool plants in 
an amount that is not in excess of the lesser of 5,000 pounds or 5 
percent of his Class I sales during the month;
    (2) Such plant is operated under his complete and exclusive 
management and control and at his sole risk, and is not used during the 
month to process, package, receive or otherwise handle fluid milk 
products for any other person; and
    (c) Disposes of no other source milk (except that represented by 
nonfat solids used in the fortification of fluid milk products) as Class 
I milk.



Sec. 1006.11  [Reserved]



Sec. 1006.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant or diverted pursuant to Sec. 1006.13 from a 
pool plant to a nonpool plant.
    (b) The term ``producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) The operator of an exempt distributing plant; or
    (3) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I milk under the provisions of such other 
order.
[41 FR 43155, Sept. 30, 1976]



Sec. 1006.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1006.9(c): Provided, That if the milk received at a 
pool plant from a handler described in Sec. 1006.9(c) is purchased on a 
basis other than farm weights, the amount by which the total farm 
weights of such milk exceed the

[[Page 170]]

weights on which the pool plant's purchases are based shall be producer 
milk received by the handler described in Sec. 1006.9(c) at the location 
of the pool plant; or
    (b) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant, subject to the following conditions:
    (1) Such milk shall be deemed to have been received by the diverting 
handler at the plant to which diverted;
    (2) Not less than 10 days' production of the producer whose milk is 
diverted is physically received at a pool plant: Provided, That any 
delivery during the current month from such producer to another order 
plant regulated by the order that regulated such pool plant in the prior 
month shall be counted towards meeting the 10-day production 
requirement;
    (3) To the extent that it would result in nonpool plant status for 
the pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (4) A cooperative association may divert for its account the milk of 
a producer. The total quantity of such milk so diverted by a cooperative 
that exceeds the following specified applicable percentage of producer 
milk that the cooperative association caused to be delivered to and 
physically received at pool plants during the month shall not be 
producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (5) The operator of a pool plant other than a cooperative 
association may divert for its account any milk of producers that is not 
under the control of a cooperative association that is diverting milk 
during the month pursuant to paragraph (b)(4) of this section. The total 
quantity so diverted by the operator of the pool plant that exceeds the 
following specified applicable percentage of milk physically received at 
such plant during the month that is eligible to be diverted by the plant 
operator shall not be producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (6) The diverting handler shall designate the dairy farmers whose 
milk is not producer milk pursuant to paragraphs (b) (4) and (5) of this 
section. If the handler fails to make such designation, milk diverted on 
the last day of the month, then the second-to-last day of the month, and 
so on, shall be excluded until all diversions in excess of the 
prescribed limit are accounted for.
[37 FR 17725, Aug. 30, 1972, as amended at 54 FR 6363, Feb. 10, 1989]

    Effective Date Note:  At 57 FR 61780, Dec. 29, 1992, Sec. 1006.13 
was amended by suspending paragraph (b)(2) indefinitely, effective Dec. 
1, 1992.



Sec. 1006.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source except:
    (1) Producer milk;
    (2) Such products from pool plants; and
    (3) Such products in inventory at the beginning of the month;
    (b) Receipts of packaged fluid cream products and eggnog from other 
plants;
    (c) Products, other than fluid milk products and fluid cream 
products, from any source (including those produced at the plant) which 
are reprocessed, converted into, or combined with another product in the 
plant during the month; and
    (d) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.
[41 FR 43156, Sept. 30, 1976, as amended at 46 FR 51234, Oct. 19, 1981]



Sec. 1006.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks,

[[Page 171]]

buttermilk, and filled milk, including any such beverage products that 
are flavored, cultured, modified with added nonfat milk solids, 
sterilized, concentrated (to not more than 50 percent total milk 
solids), or reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27786, May 11, 1993]



Sec. 1006.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27786, May 11, 1993]



Sec. 1006.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers or flavoring) resembles milk or any 
other fluid milk product, and contains less than 6 percent nonmilk fat 
(or oil).



Sec. 1006.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have full authority in the sale of milk of its members and be 
engaged in making collective sales of or marketing milk or milk products 
for its members.



Sec. 1006.19  [Reserved]



Sec. 1006.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1006.13, 1006.41 and 1006.52.
[58 FR 27786, May 11, 1993]

                             Handler Reports



Sec. 1006.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
(except a handler described in Sec. 1006.9(e) or (f)) shall report to 
the market administrator for such month with respect to each plant at 
which milk is received or at which filled milk is processed or packaged, 
reporting in detail and on forms prescribed by the market administrator;
    (a) The quantities of skim milk and butterfat contained in or 
represented by:
    (1) Producer milk (or, in the case of handlers described in 
Sec. 1006.9(d), Grade A milk received from dairy farmers);
    (2) Fluid milk products and bulk fluid cream products received from 
pool plants of other handlers;
    (3) Other source milk;
    (4) Milk diverted to nonpool plants pursuant to Sec. 1006.13; and
    (5) Inventories of fluid milk products and fluid cream products at 
the beginning and end of the month;
    (b) The utilization of all skim milk and butterfat required to be 
reported

[[Page 172]]

pursuant to this section, including a separate statement showing:
    (1) The respective amounts of skim milk and butterfat disposed of as 
route disposition in the marketing area, showing separately the in-area 
disposition of filled milk; and
    (2) For a handler described in Sec. 1006.9(d), the amount of 
reconstituted skim milk in fluid milk products disposed of in the 
marketing area as route disposition; and
    (c) Such other information with respect to the receipts and 
utilization of skim milk and butterfat as the market administrator may 
prescribe.
[37 FR 17725, Aug. 30, 1972, as amended at 41 FR 43156, Sept. 30, 1976]



Sec. 1006.31  Payroll reports.

    (a) Each handler described in Sec. 1006.9(a), (b), and (c) shall 
report to the market administrator in detail and on forms prescribed by 
the market administrator on or before the 20th day after the end of the 
month his producer payroll for such month which shall show for each 
producer;
    (1) His identity;
    (2) The quantity of milk received from such producer and the number 
of days, if less than the entire month, on which milk was received from 
such producer;
    (3) The average butterfat content of such milk; and
    (4) The net amount of such handler's payment, together with the 
price paid and the amount and nature of any deductions.
    (b) Each handler operating a partially regulated distributing plant 
who does not elect to make payments pursuant to Sec. 1006.76(b) shall 
report to the market administrator on or before the 20th day after the 
end of the month the same information required of handlers pursuant to 
paragraph (a) of this section. In such report, payments to dairy farmers 
delivering Grade A milk shall be reported in lieu of payments to 
producers.



Sec. 1006.32  Other reports.

    (a) Each producer-handler shall make reports to the market 
administrator at such time and in such manner as the market 
administrator may prescribe.
    (b) Each handler who operates an other order plant shall report 
total receipts and utilization or disposition of skim milk and butterfat 
at the plant at such time and in such manner as the market administrator 
may require and allow verification of such reports by the market 
administrator.
    (c) Each handler described in Sec. 1006.9(c) shall report to the 
market administrator, in detail and on forms prescribed by the market 
administrator on or before the 7th day after the end of the month the 
quantities of skim milk and butterfat in producer milk delivered to each 
pool plant in such month.

                         Classification of Milk



Sec. 1006.40  Classes of utilization.

    Except as provided in Sec. 1006.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1006.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:

[[Page 173]]

    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded or grated and are not included in paragraph 
(b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1006.15 and the fluid 
cream product definition pursuant to Sec. 1006.16; and
    (7) In shrinkage assigned pursuant to Sec. 1006.41(a) to the 
receipts specified in Sec. 1006.41(a)(2) and in shrinkage specified in 
Sec. 1006.41(b) and (c).
[58 FR 27786, May 11, 1993]



Sec. 1006.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1006.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section

[[Page 174]]

on which shrinkage is allowed pursuant to such paragraphs; and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1006.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1006.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph shall be two 
percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is diverted purchases such milk on the basis of weights determined 
from its measurement on the farm, the applicable percentage under this 
paragraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II classification is 
requested by the operator of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II classification is requested by 
the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective quantities of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1006.9 (b) and (c), but not in excess of 
0.5 percent of the skim milk and butterfat, respectively, in such milk. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph for the cooperative 
association shall be zero.
[54 FR 6384, Feb. 10, 1989]



Sec. 1006.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant shall be classified as Class I milk 
unless the operators of both plants request the same classification in 
another class. In either case, the classification of such transfers 
shall be subject to the following conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1006.44(a)(12) and the corresponding step of 
Sec. 1006.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1006.44(a)(7) or the corresponding 
step of Sec. 1006.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1006.44(a)(11) or (a)(12) or the 
corresponding steps of

[[Page 175]]

Sec. 1006.44(b), the skim milk or butterfat so transferred, up to the 
total of the skim milk and butterfat, respectively, in such receipts of 
other source milk, shall not be classified as Class I milk to a greater 
extent than would be the case if the other source milk had been received 
at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1006.40.
    (c) Transfers to producer-handlers and to exempt distributing 
plants. Skim milk or butterfat in the following forms that is 
transferred from a pool plant to a producer-handler under this or any 
other Federal order or to an exempt distributing plant shall be 
classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, an exempt 
distributing plant, or a producer-handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i)(A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1006.30 for the month

[[Page 176]]

within which such transaction occurred; and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.
[58 FR 27787, May 11, 1993]



Sec. 1006.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1006.44, the following rules shall apply:
    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports submitted by each 
handler pursuant to Sec. 1006.30 and compute the total pounds of skim 
milk and butterfat, respectively, in each class at each pool plant.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the

[[Page 177]]

pounds of skim milk used or disposed of in such product shall be 
considered to be a quantity equivalent to the nonfat milk solids 
contained in such product plus all the water originally associated with 
such solids.
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1006.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1006.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1006.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[37 FR 17725, Aug. 30, 1972, as amended at 58 FR 27788, May 11, 1993]



Sec. 1006.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1006.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1006.9(b) and (c) by allocating the 
handler's receipts of skim milk and butterfat to such handler's 
utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1006.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1006.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1006.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1006.40(b), 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1006.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;

[[Page 178]]

    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1006.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk 
unconcentrated fluid milk products transferred or diverted to such plant 
and that were not subtracted pursuant to paragraph (a)(7)(vi) of this 
section, if Class II or Class III classification is requested by the 
operator of the other order plant and the handler, but not in excess of 
the pounds of skim milk remaining in Class II and Class III combined;

[[Page 179]]

    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1006.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1006.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation

[[Page 180]]

step from Class II and Class III combined exceeding the pounds of skim 
milk remaining in Class II and Class III at all such plants, the pounds 
of such excess shall be subtracted from the pounds of skim milk 
remaining in Class I after such proration at the pool plants at which 
such other source milk was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1006.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[58 FR 27788, May 11, 1993]



Sec. 1006.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for purposes of allocating receipts from other 
order plants pursuant to Sec. 1006.44(a)(12) and the corresponding step 
of Sec. 1006.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in producer 
milk of all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1006.43(d) and Sec. 1006.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.

[[Page 181]]

    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products of bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association for its members which was utilized in each class at each 
pool plant receiving such milk. For the purpose of this report, the milk 
so received shall be allocated to each class at each pool plant in the 
same ratio as all producer milk received at such plant during the month.
[37 FR 17725, Aug. 30, 1972, as amended at 41 FR 43156, Sept. 30, 1976; 
58 FR 27790, May 11, 1993]

                              Class Prices



Sec. 1006.50  Class prices.

    Subject to the provisions of Sec. 1006.52, the class prices per 
hundredweight for the month shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $3.58.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977; 
47 FR 42964, Sept. 30, 1982; 51 FR 12831, Apr. 16, 1986; 58 FR 27790, 
May 11, 1993; 60 FR 6608, Feb. 2, 1995]



Sec. 1006.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1006.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simply 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.

[[Page 182]]

    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18956, Apr. 14, 1995]



Sec. 1006.52  Plant location adjustments for handlers.

    (a) The Class I price for producer milk and other source milk at a 
plant located outside the State of Florida and more than 70 miles from 
the nearer of the City Halls of Jacksonville or Tallahassee, Florida, or 
within the State of Florida shall be adjusted at the rates set forth in 
the following schedule:

                                                                        
------------------------------------------------------------------------
             Location of plant                      Rate per cwt.       
------------------------------------------------------------------------
Outside the State of Florida:                                           
    In excess of 70 but not more than 85    Subtract 15 cents.          
     miles.                                                             
    For each additional 10 miles or         Subtract 2.0 cents.         
     fraction thereof.                                                  
Inside the State of Florida:                                            
    South of a line forming the southern    Add 30 cents.               
     boundary of the counties of Alachua,                               
     Dixie, Gilchrist, Putnam and St.                                   
     Johns, but outside the defined                                     
     marketing area of Part 1013.                                       
    In the defined marketing area of Part   Add 60 cents.               
     1013.                                                              
    The remaining area within the State of  No adjustment.              
     Florida.                                                           
------------------------------------------------------------------------

    (b) For the purpose of calculating location adjustments, receipts of 
fluid milk products from pool plants shall be assigned any remainder of 
Class I milk at the transferee plant that is in excess of the sum of 
producer milk receipts at such plant and that assigned as Class I to 
receipts from other order plants and unregulated supply plants. Such 
assignment shall be made in sequence according to the location 
adjustment applicable at each plant, beginning with the plant nearest 
the City Hall in Jacksonville, Orlando or Tallahassee, Fla.
    (c) The Class I price resulting from such adjustments specified in 
this section shall not result in a price less than the Class II price 
for the month and the Class I price applicable to other source milk 
shall be adjusted at the rates specified in paragraph (a) of this 
section, except that the adjusted Class I price shall not be less than 
the Class II price for the month.
[37 FR 17725, Aug. 30, 1972, as amended at 49 FR 37567, Sept. 25, 1984; 
52 FR 5071, Feb. 19, 1987; 54 FR 6384, Feb. 10, 1989; 55 FR 17589, Apr. 
26, 1990]



Sec. 1006.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6608, Feb. 2, 1995]

[[Page 183]]



Sec. 1006.54  Equivalent price.

    If for any reason a price quotation required by this part for 
computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price determined 
by the Secretary to be equivalent to the price that is required.

                              Uniform Price



Sec. 1006.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price 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. 1006.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1006.44(a) by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1006.44(a)(14) and the 
corresponding step of Sec. 1006.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1006.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1006.44(a)(9) and the corresponding step of Sec. 1006.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1006.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1006.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1006.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1006.44(a)(7)(v) and (vi) and 
the corresponding step of Sec. 1006.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1006.43(d) and Sec. 1006.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1006.44(a)(11) and the corresponding steps of Sec. 1006.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1006.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1006.76(b)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that

[[Page 184]]

results from any inventory reclassification of bulk concentrated fluid 
milk products that occurs at the transferee plant. Any such applicable 
class price change shall be applied to the plant that used the 
concentrated milk in the event that the concentrated fluid milk products 
were made from bulk unconcentrated fluid milk products received at the 
plant during the prior month.
[58 FR 27790, May 11, 1993]



Sec. 1006.61  Computation of uniform price.

    For each month, the market administrator shall compute a uniform 
price for milk of 3.5 percent butterfat content as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1006.60 for all handlers who filed the reports pursuant to 
Sec. 1006.30 for the month, except those in default of payments required 
pursuant to Sec. 1006.71 for the preceding month;
    (b) [Reserved]
    (c) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1006.75(a);
    (d) Subtract an amount equal to the total value of the plus location 
adjustments computed pursuant to Sec. 1006.75(a);
    (e) Add an amount equal to one-half the unobligated balance in the 
producer-settlement fund;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1006.60(f); and
    (g) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight.
[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977]



Sec. 1006.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of each month the uniform price for 
such month.
[42 FR 46914, Sept. 19, 1977]

                            Payments for Milk



Sec. 1006.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
into such fund pursuant to Secs. 1006.71 and 1006.76 and out of which he 
shall make all payments from such fund pursuant to Sec. 1006.72: 
Provided, That the market administrator shall offset the payment due to 
a handler against payments due from such handler.



Sec. 1006.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amounts specified in paragraph (a)(1) of this section 
exceed the amounts specified in paragraph (a)(2) of this section:
    (1) The net pool obligation pursuant to Sec. 1006.60 for such 
handler; and
    (2) The sum of:
    (i) The value of such handler's producer milk at the uniform price, 
as adjusted pursuant to Sec. 1006.75; and
    (ii) The value at the uniform price applicable at the location of 
the plant(s) from which received (not to be less than the value at the 
Class II price) of other source milk for which a value is computed 
pursuant to Sec. 1006.60(f).
    (b) Each handler who operates an other order plant that is regulated 
under an order providing for individual-handler pooling shall pay to the 
market administrator for the producer-settlement fund, on or before the 
25th day after the end of the month, an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route

[[Page 185]]

disposition in marketing areas regulated by two or more market pool 
orders, the reconstituted skim milk assigned to Class I shall be 
prorated according to such disposition in each marketing area; and
    (2) Compute the value of the quantity of reconstituted skim milk 
assigned in paragraph (b)(1) of this section to Class I disposition in 
this marketing area at the Class I price under this part applicable at 
the location of the other order plant (not to be less than the Class II 
price), and subtract its value at the Class II price.
[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977]



Sec. 1006.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1006.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1006.7(a)(1). If, at such time, the balance in 
the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1006.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (b) of this section, each 
handler shall make payment for producer milk as follows:
    (1) On or before the 20th day of the month to each producer who had 
not discontinued shipping milk to such handler before the 15th day of 
the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received during the first 15 
days of the month, less proper deductions authorized in writing by such 
producer;
    (2) On or before the 5th day of the following month to each producer 
who had not discontinued shipping milk to such handler before the last 
day of the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received from the 16th through 
the last day of the month, less proper deductions authorized in writing 
by such producer; and
    (3) On or before the 15th day of each month to each producer for 
milk received during the preceding month, not less than the uniform 
price per hundredweight, adjusted pursuant to Secs. 1006.74, 1006.75, 
and 1006.86, subject to the following:
    (i) Minus payments made pursuant to paragraphs (a)(1) and (2) of 
this section;
    (ii) Less proper deductions authorized in writing by such producer; 
and
    (iii) If by such date such handler has not received full payment 
from the market administrator pursuant to Sec. 1006.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
paragraph next following after receipt of the balance due from the 
market administrator.
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its members to collect payment 
for their milk and which has so requested any handler in writing, 
together with a written promise of such association to reimburse the 
handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the association, such handler on or before 
the second day prior to the date on which payments are due individual 
producers, shall pay the cooperative association for milk received 
during the month from the producer-members of such association as 
determined by the market administrator an amount not less than the total 
due such producer-members pursuant to paragraph (a) of this section, 
subject to the following:
    (1) Payment pursuant to this paragraph shall be made for milk 
received from any producer beginning on the first day of the month 
following receipt from the cooperative association of its certification 
that such producer is a member, and continuing through the last day of 
the month next preceding receipt of notice from the cooperative 
association of a termination of membership or until the original request 
is

[[Page 186]]

rescinded in writing by the cooperative association; and
    (2) Copies of the written request of the cooperative association to 
receive payments on behalf of its members, together with its promise to 
reimburse and its certified list of members shall be submitted 
simultaneously both to the handler and to the market administrator and 
shall be subject to verification by the market administrator at his 
discretion, through audit of the records of the cooperative association. 
Exceptions, if any, to the accuracy of such certification claimed by any 
producer or by a handler shall be made by written notice to the market 
administrator and shall be subject to his determination.



Sec. 1006.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1006.51 (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.
[60 FR 18957, Apr. 14, 1995]



Sec. 1006.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a pool plant 
shall be reduced or increased according to the location of the pool 
plant at the rates set forth in Sec. 1006.52; and
    (b) For purposes of computations pursuant to Secs. 1006.71 and 
1006.72, the uniform price shall be adjusted at the rates set forth in 
Sec. 1006.52 applicable at the location of the nonpool plant from which 
the milk was received, except that the resulting adjusted price shall 
not be less than the Class II price for the month.
[37 FR 17725, Aug. 30, 1972, as amended at 54 FR 6384, Feb. 10, 1989]



Sec. 1006.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1006.30 and 1006.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1) The obligation that would have been computed pursuant to 
Sec. 1006.60 at such plant shall be determined as though such plant were 
a pool plant, subject to the following modifications:
    (i) Receipts at such nonpool plant from a pool plant or an other 
order plant shall be assigned to the utilization at which classified at 
the pool plant or other order plant;
    (ii) Transfers from such nonpool plant to a pool plant or an other 
order plant shall be classified in the class to which allocated at the 
pool plant or other order plant. Class I milk transferred from such 
nonpool plant to pool plants and other order plants shall be valued at 
the uniform price of the respective order, except that reconstituted 
skim milk (including that in filled milk), and milk or skim milk from 
producer-handlers and exempt plants defined in any order shall be valued 
at the Class II price. No obligation shall apply to Class I milk 
transferred to a pool plant or an other order plant if such Class I 
utilization is assigned to receipts at the partially regulated 
distributing plant from pool plants and other order plants at which such 
milk was classified and priced as Class I milk;

[[Page 187]]

    (iii) Such handler's obligation shall include any charges computed 
pursuant to Sec. 1006.60(f) and any credits computed pursuant to 
Sec. 1006.71(a)(2)(ii) with respect to receipts of Class I milk from an 
unregulated supply plant, except that the credit for receipts of 
reconstituted skim milk (including that in filled milk), and milk or 
skim milk from producer-handlers and exempt plants defined in any order 
shall be at the Class II price, unless an obligation with respect to 
such plant is computed as specified in paragraph (a)(1)(iv) of this 
section;
    (iv) If the operator of the partially regulated distributing plant 
so requests, and provides with his report pursuant to Sec. 1006.30 a 
similar report for each nonpool plant which serves as a supply plant for 
such partially regulated distributing plant by shipments to such plant 
during the month equivalent to the requirements of Sec. 1006.7(b) with 
agreement of the operator of such plant that the market administrator 
may examine the books and records of such plant for purposes of 
verification of such reports, there will be added the amount of the 
obligation computed at such nonpool supply plant in the same manner and 
subject to the same conditions as for the partially regulated 
distributing plant;
    (2) From this obligation, deduct the sum of:
    (i) The gross payments made by such handler, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1006.74, for Grade A milk received during the month from dairy 
farmers at such plant and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section; and
    (ii) Payments to the producer-settlement fund of another order under 
which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the partially regulated distributing plant as follows:
    (i) Any Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) Receipts from a nonpool plant that is not an other order plant 
to the extent that an equivalent amount of skim milk or butterfat 
disposed of to such nonpool plant by handlers fully regulated under any 
order issued pursuant to the Act is classified and priced as Class I 
milk and is not used as an offset on any other payment obligation 
pursuant to any other order;
    (3) Deduct from any remainder the pounds of reconstituted milk made 
from nonfluid milk products, and milk or skim milk contained in receipts 
from producer-handlers and exempt plants defined in any order, which are 
then disposed of as route disposition in the marketing area from the 
partially regulated distributing plant;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total; and
    (5) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant, subtract its value at the uniform 
price applicable at such location, and add the amount obtained from 
multiplying the pounds of labeled reconstituted milk included in 
paragraph (b)(3) of this section by the difference between the Class I 
price applicable at the location of the partially regulated distributing 
plant less $1.00 (but not to be less than the Class III price) and the 
Class III price. For any reconstituted milk that is not so labeled, the 
Class I price shall not be reduced by $1.00. Alternatively, for such 
disposition, payments may be made to the producer-settlement fund of the 
order regulating the producer milk used to produce the nonfluid milk 
ingredients at the difference between the Class I price applicable under 
the other order at the location of the plant where the nonfluid milk 
ingredients were processed (but not to be less than the Class III price) 
and the Class III price. This payment option shall apply only if a 
majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and

[[Page 188]]

payment may only be made to the producer-settlement fund of the order 
pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1006.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977; 
58 FR 27791, May 11, 1993]



Sec. 1006.77  Adjustment of accounts.

    When verification by the market administrator of reports or payments 
of a handler discloses errors resulting in monies due the market 
administrator from such handler, such handler from the market 
administrator, or a producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made not later than the 
date for making payment next following such disclosure.



Sec. 1006.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1006.71, 
1006.73, 1006.76, 1006.77, 1006.85 or 1006.86 shall be increased 1 
percent for each month or portion thereof that such obligation is 
overdue, subject to the following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.
[54 FR 6384, Feb. 10, 1989]

        Administrative Assessment and Marketing Service Deduction



Sec. 1006.85  Assessment for order administration.

    As his pro rata share of the expense of administration of this part, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1006.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1006.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1006.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1006.60(d) and (f); and

[[Page 189]]

    (c) Class I milk disposed of in the marketing area from a partially 
regulated distributing plant that exceeds the hundredweight of Class I 
milk:
    (1) Received during the month at such plant from pool plants and 
other order plants that is not used as an offset under a similar 
provision of another order issued pursuant to the Act; and
    (2) Specified in Sec. 1006.76(b)(2)(ii).
[37 FR 17725, Aug. 30, 1972, as amended at 41 FR 43157, Sept. 30, 1976; 
58 FR 27791, May 11, 1993]



Sec. 1006.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section, each 
handler in making payments for producer milk received during the month 
shall deduct 4 cents per hundredweight or such lesser amount as the 
Secretary may prescribe (except on such handler's own farm production) 
and shall pay such deductions to the market administrator not later than 
the 15th day after the end of the month. Such money shall be used by the 
market administrator to verify or establish weights, samples and tests 
of producer milk and to provide producers with market information. Such 
services shall be performed in whole or in part by the market 
administrator or by an agent engaged by and responsible to him.
    (b) In the case of producers for whom a cooperative association is 
performing, as determined by the Secretary, the services set for in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
as are authorized by such producers and, on or before the 15th day after 
the end of each month, pay over such deductions to the association 
rendering such services.



PART 1007--MILK IN THE SOUTHEAST MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1007.1  General provisions.

                               Definitions

1007.2  Southeast marketing area.
1007.3  Route disposition.
1007.4  Plant.
1007.5  Distributing plant.
1007.6  Supply plant.
1007.7  Pool plant.
1007.8  Nonpool plant.
1007.9  Handler.
1007.10  Producer-handler.
1007.11  [Reserved]
1007.12  Producer.
1007.13  Producer milk.
1007.14  Other source milk.
1007.15  Fluid milk product.
1007.16  Fluid cream product.
1007.17  Filled milk.
1007.18  Cooperative association.
1007.19  Commercial food processing establishment.

                             Handler Reports

1007.30  Reports of receipts and utilization.
1007.31  Payroll reports.
1007.32  Other reports.

                         Classification of Milk

1007.40  Classes of utilization.
1007.41  Shrinkage.
1007.42  Classification of transfers and diversions.
1007.43  General classification rules.
1007.44  Classification of producer milk.
1007.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1007.50  Class prices.
1007.51  Basic formula price.
1007.52  Plant location adjustments for handlers.
1007.53  Announcement of class prices.
1007.54  Equivalent price.

                             Uniform Prices

1007.60  Handler's value of milk for computing the uniform price.
1007.61  Computation of uniform price (including weighted average 
          price).
1007.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1007.70  Producer-settlement fund.
1007.71  Payments to the producer-settlement fund.
1007.72  Payments from the producer-settlement fund.
1007.73  Payments to producers and to cooperative associations.
1007.74  Butterfat differential.
1007.75  Plant location adjustments for producers and on nonpool milk.
1007.76  Payments by a handler operating a

[[Page 190]]

          partially regulated distributing plant.
1007.77  Adjustment of accounts.
1007.78  Charges on overdue accounts.

                       Marketwide Service Payments

1007.80  Transportation credit balancing fund.
1007.81  Payments to the transportation credit balancing fund.
1007.82  Payments from the transportation credit balancing fund.

        Administrative Assessment and Marketing Service Deduction

1007.85  Assessment for order administration.
1007.86  Deduction for marketing services.

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

    Source:  60 FR 29437, June 2, 1995, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1007.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
apply to and are hereby made a part of this order.

                               Definitions



Sec. 1007.2  Southeast marketing area.

    The Southeast marketing area, hereinafter called the marketing area, 
means all territory within the bounds of the following Alabama, Florida, 
Georgia, Mississippi, Tennessee, and Arkansas counties and Louisiana 
parishes, including all piers, docks, and wharves connected therewith 
and all craft moored thereat, and all territory occupied by government 
(municipal, State, or Federal) reservations, installations, 
institutions, or other similar establishments if any part thereof is 
within any of the listed counties or parishes:

                                 Zone 1

                            Arkansas Counties

    Baxter, Clay, Fulton, Greene, Izard, Lawrence, Randolph, and Sharp.

                           Tennessee Counties

    Cheatham, Clay, Davidson, Dickson, Fentress, Henry, Houston, 
Jackson, Lake, Macon, Montgomery, Obion, Overton, Pickett, Robertson, 
Smith, Stewart, Sumner, Trousdale, Weakley, and Wilson.

                                 Zone 2

                            Arkansas Counties

    Newton, Searcy, and Stone.

                           Tennessee Counties

    Bedford, Benton, Bledsoe, Cannon, Carroll, Chester, Coffee, 
Crockett, DeKalb, Decatur, Dyer, Gibson, Grundy, Henderson, Hickman, 
Humphreys, Lewis, Madison, Marshall, Maury, Perry, Putnam, Rutherford, 
Van Buren, Warren, White, and Williamson.

                                 Zone 3

                            Arkansas Counties

    Cleburne, Craighead, Independence, Jackson, Johnson, Mississippi, 
Poinsett, Pope, and Van Buren.

                           Tennessee Counties

    Lauderdale, Tipton, and Haywood.

                                 Zone 4

                            Arkansas Counties

    Conway, Crittenden, Cross, Faulkner, Garland, Lee, Lonoke, Monroe, 
Montgomery, Perry, Polk, Prairie, Pulaski, Saline, St. Francis, White, 
Woodruff, and Yell.

                           Tennessee Counties

    Fayette, Franklin, Giles, Hardeman, Hardin, Lawrence, Lincoln, 
McNairy, Moore, Shelby, and Wayne.

                                 Zone 5

                            Alabama Counties

    Colbert, De Kalb, Franklin, Jackson, Lauderdale, Lawrence, 
Limestone, Madison, Marshall, and Morgan.

                            Arkansas Counties

    Arkansas, Clark, Grant, Hot Spring, Howard, Jefferson, Phillips, 
Pike, and Sevier.

                            Georgia Counties

    Gilmer, Towns, and Union.

                          Mississippi Counties

    Alcorn, Benton, Coahoma, DeSoto, Itawamba, Lafayette, Lee, Marshall, 
Panola, Pontotoc, Prentiss, Quitman, Tate, Tippah, Tishomingo, Tunica, 
and Union.

                                 Zone 6

                            Alabama Counties

    Blount, Cherokee, Cullman, Etowah, Fayette, Lamar, Marion, Walker, 
and Winston.

[[Page 191]]

                            Arkansas Counties

    Bradley, Calhoun, Cleveland, Dallas, Desha, Drew, Hempstead, 
Lincoln, Little River, Nevada, and Ouachita.

                            Georgia Counties

    Bartow, Cherokee, Dawson, Floyd, Gordon, Habersham, Lumpkin, 
Pickens, Rabun, and White.

                          Mississippi Counties

    Bolivar, Calhoun, Chickasaw, Grenada, Monroe, Sunflower, 
Tallahatchie, and Yalobusha.

                                 Zone 7

                            Alabama Counties

    Bibb, Calhoun, Clay, Cleburne, Jefferson, Pickens, Randolph, Shelby, 
St. Clair, Talladega, and Tuscaloosa.

                            Arkansas Counties

    Ashley, Chicot, Columbia, Lafayette, Miller, and Union.

                            Georgia Counties

    Banks, Barrow, Butts, Carroll, Clarke, Clayton, Cobb, Coweta, De 
Kalb, Douglas, Elbert, Fayette, Forsyth, Franklin, Fulton, Greene, 
Gwinnett, Hall, Haralson, Hart, Heard, Henry, Jackson, Jasper, Lincoln, 
Madison, Morgan, Newton, Oconee, Oglethorpe, Paulding, Polk, Putnam, 
Rockdale, Spalding, Stephens, Taliaferro, Walton, and Wilkes.

                          Mississippi Counties

    Attala, Carroll, Choctaw, Clay, Holmes, Humphreys, Leflore, Lowndes, 
Montgomery, Noxubee, Oktibbeha, Washington, Webster, and Winston.

                                 Zone 8

                            Alabama Counties

    Chambers, Chilton, Coosa, Greene, Hale, Lee, Perry, Sumter (north of 
U.S. 80), and Tallapoosa.

                            Georgia Counties

    Baldwin, Bibb, Burke, Columbia, Crawford, Glascock, Hancock, Harris, 
Jefferson, Jones, Lamar, McDuffie, Meriwether, Monroe, Muscogee, Pike, 
Richmond, Talbot, Taylor, Troup, Twiggs, Upson, Warren, Washington, and 
Wilkinson.

                           Louisiana Parishes

    Bienville, Bossier, Caddo, Claiborne, East Carroll, Jackson, 
Lincoln, Morehouse, Ouachita, Richland, Union, Webster, and West 
Carroll.

                          Mississippi Counties

    Issaquena, Kemper, Leake, Madison, Neshoba, Sharkey, and Yazoo.

                                 Zone 9

                            Alabama Counties

    Autauga, Bullock, Dallas, Elmore, Lowndes, Macon, Marengo, 
Montgomery, Russell, Sumter (south of U.S. 80), and Wilcox.

                            Georgia Counties

    Bleckley, Bulloch, Candler, Chattahoochee, Crisp, Dodge, Dooly, 
Effingham, Emanuel, Evans, Houston, Jenkins, Johnson, Laurens, Macon, 
Marion, Montgomery, Peach, Pulaski, Schley, Screven, Stewart, Sumter, 
Tattnall, Telfair, Toombs, Treutlen, Webster, Wheeler, and Wilcox.

                           Louisiana Parishes

    Caldwell, De Soto, Franklin, Madison, Natchitoches (north of State 
Highway 6 and U.S. 84), Red River, Tensas, and Winn.

                          Mississippi Counties

    Claiborne, Clarke, Copiah, Hinds, Jasper, Lauderdale, Newton, 
Rankin, Scott, Simpson, Smith, and Warren.

                                 Zone 10

                            Alabama Counties

    Barbour, Butler, Choctaw, Clarke, Coffee, Conecuh, Covington, 
Crenshaw, Dale, Escambia, Geneva, Henry, Houston, Monroe, Pike, and 
Washington.

                            Georgia Counties

    Appling, Atkinson, Bacon, Baker, Ben Hill, Berrien, Brantley, 
Brooks, Bryan, Calhoun, Camden, Charlton, Chatham, Clay, Clinch, Coffee, 
Colquitt, Cook, Decatur, Dougherty, Early, Echols, Glynn, Grady, Irwin, 
Jeff Davis, Lanier, Lee, Liberty, Long, Lowndes, McIntosh, Miller, 
Mitchell, Pierce, Quitman, Randolph, Seminole, Terrell, Thomas, Tift, 
Turner, Ware, Wayne, and Worth.

                           Louisiana Parishes

    Avoyelles, Catahoula, Concordia, Grant, La Salle, Natchitoches 
(south of State Highway 6 and U.S. 84), Rapides, Sabine, and Vernon.

                          Mississippi Counties

    Adams, Amite, Covington, Forrest, Franklin, Greene, Jefferson, 
Jefferson Davis, Jones, Lamar, Lawrence, Lincoln, Marion, Perry, Pike, 
Walthall, Wayne, and Wilkinson.

[[Page 192]]

                                 Zone 11

                            Alabama Counties

    Baldwin and Mobile.

                            Florida Counties

    Escambia, Okaloosa, Santa Rosa, and Walton.

                           Louisiana Parishes

    Allen, Beauregard, East Feliciana, Evangeline, Pointe Coupee, St. 
Helena, St. Landry, St. Tammany, Tangipahoa (north of State Highway 16), 
Washington, and West Feliciana.

                          Mississippi Counties

    George, Hancock, Harrison, Jackson, Pearl River, and Stone.

                                 Zone 12

                           Louisiana Parishes

    Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, 
Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, 
Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, 
St. John the Baptist, St. Martin, St. Mary, Tangipahoa (north of State 
Highway 16), Terrebonne, Vermilion, and West Baton Rouge.
[60 FR 29437, June 2, 1995, as amended by 61 FR 20125, May 6, 1996]



Sec. 1007.3  Route disposition.

    Route disposition means a delivery to a retail or wholesale outlet 
(except a plant), either directly or through any distribution facility 
(including disposition from a plant store, vendor or vending machine) of 
a fluid milk product classified as Class I milk. Packaged fluid milk 
products that are transferred to a distributing plant from a plant with 
route disposition in the marketing area and which are classified as 
Class I under Sec. 1007.40(a) shall be considered as route disposition 
from the transferor plant, rather than the transferee plant, for the 
single purpose of qualifying it as a pool plant under Sec. 1007.7(a).



Sec. 1007.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products, including filled milk, are received, processed, or 
packaged. Separate facilities without stationary storage tanks that are 
used only as a reload point for transferring bulk milk from one tank 
truck to another or separate facilities used only as a distribution 
point for storing packaged fluid milk products in transit for route 
disposition shall not be a plant under this definition.



Sec. 1007.5  Distributing plant.

    Distributing plant means a plant that is approved by a duly 
constituted regulatory agency for the handling of Grade A milk and at 
which fluid milk products are processed or packaged and from which there 
is route disposition in the marketing area during the month.



Sec. 1007.6  Supply plant.

    Supply plant means a plant that is approved by a duly constituted 
regulatory agency for the handling of Grade A milk and from which fluid 
milk products are transferred during the month to a pool distributing 
plant.



Sec. 1007.7  Pool plant.

    Pool plant means a plant specified in paragraphs (a), (b), (c) or 
(d) of this section, or a unit of plants as specified in paragraph (e) 
of this section, but excluding a plant specified in paragraph (g) of 
this section. The pooling standards described in paragraphs (a) through 
(c) of this section are subject to modification pursuant to paragraph 
(f) of this section:
    (a) A distributing plant from which during the month:
    (1) Total route disposition, except filled milk, is equal to 50 
percent or more of the total quantity of Grade A fluid milk products, 
except filled milk, physically received at such plant or diverted 
therefrom pursuant to Sec. 1007.13; and
    (2) Route disposition, except filled milk, in the marketing area is 
at least the lesser of a daily average of 1,500 pounds or 10 percent of 
the total quantity of fluid milk products, except filled milk, 
physically received or diverted therefrom pursuant to Sec. 1007.13.
    (b) A supply plant from which during each of the months of July 
through November 60 percent (40 percent during each of the months of 
December through June) of the total quantity of

[[Page 193]]

Grade A milk that is received during the month from dairy farmers 
(including producer milk diverted from the plant pursuant to 
Sec. 1007.13 but excluding milk diverted to such plant) and handlers 
described in Sec. 1007.9(c) is transferred to pool distributing plants.
    (c) A plant located within the Southeast marketing area that is 
operated by a cooperative association if pool plant status under this 
paragraph is requested for such plant by the cooperative association and 
during the month producer milk of members of such cooperative 
association is delivered directly from farms to pool distributing plants 
or is transferred to such plants as a fluid milk product from the 
cooperative's plant. Such deliveries, in excess of receipts by transfer 
from pool distributing plants, must equal not less than 60 percent of 
the total producer milk of such cooperative association in each of the 
months of July through November, and 40 percent of such milk in each of 
the months of December through June. The plant's pool plant status shall 
be subject to the following conditions:
    (1) The plant does not qualify as a pool plant under paragraphs (a) 
or (b) of this section or under the provisions of another Federal order 
applicable to a distributing plant or a supply plant; and
    (2) The plant is approved by a duly constituted regulatory agency to 
handle Grade A milk.
    (d) A plant located within the marketing area (other than a 
producer-handler plant or a governmental agency plant) that meets the 
qualifications described in paragraph (a) of this section regardless of 
its quantity of route disposition in any other Federal order marketing 
area.
    (e) Two or more plants operated by the same handler and that are 
located within the Southeast marketing area may qualify for pool status 
as a unit by meeting the total and in-area route disposition 
requirements specified in paragraph (a) of this section and the 
following additional requirements:
    (1) At least one of the plants in the unit must qualify as a pool 
plant pursuant to paragraph (a) of this section;
    (2) Other plants in the unit must process only Class I or Class II 
products and must be located in a pricing zone providing the same or a 
lower Class I price than the price applicable at the distributing plant 
included in the unit pursuant to paragraph (e)(1) of this section; and
    (3) A written request to form a unit, or to add or remove plants 
from a unit, must be filed with the market administrator prior to the 
first day of the month for which it is to be effective.
    (f) The applicable percentages in paragraphs (a) through (c) of this 
section may be increased or decreased up to 10 percentage points by the 
market administrator if, following a written request for such a 
revision, the market administrator finds that such revision is necessary 
to assure orderly marketing and efficient handling of milk in the 
marketing area. Before making such a finding, the market administrator 
shall investigate the need for the revision by conducting an 
investigation and conferring with the Director of the Dairy Division. If 
the investigation shows that a revision might be appropriate, the market 
administrator shall issue a notice stating that the revision is being 
considered and inviting written data, views, and arguments. Any decision 
to revise an applicable percentage must be issued in writing seven days 
before the effective date.
    (g) The term pool plant shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) An exempt plant as defined in Sec. 1007.8(e);
    (3) A plant qualified pursuant to paragraph (a) of this section 
which is not located within the Southeast marketing area, meets the 
pooling requirements of another Federal order, and has had greater sales 
in such other Federal order marketing area for three consecutive months, 
including the current month;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which is located in another order's marketing area and which is required 
to be regulated under such other order because of its location within 
the other order's marketing area; and
    (5) A plant qualified pursuant to paragraph (b) of this section 
which also meets the pooling requirements of another Federal order and 
from which

[[Page 194]]

greater qualifying shipments are made to plants regulated under such 
other order than are made to plants regulated under this part, or such 
plant has automatic pooling status under such other order.



Sec. 1007.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not an other order plant, a producer-handler plant, or an exempt 
plant, from which there is route disposition in consumer-type packages 
or dispenser units in the marketing area during the month.
    (d) Unregulated supply plant means a supply plant that does not 
qualify as a pool supply plant and is not an other order plant, a 
producer-handler plant, or an exempt plant.
    (e) Exempt plant means a plant:
    (1) Operated by a governmental agency from which fluid milk products 
are distributed in the marketing area. Such plant shall be exempt from 
all provisions of this part; or
    (2) Which has monthly route disposition of 100,000 pounds or less 
during the month. Such plant will be exempt from the pricing and pooling 
provisions of this order, but the handler will be required to file 
periodic reports as prescribed by the market administrator to enable 
determination of the exempt status of such handler.



Sec. 1007.9  Handler.

    Handler means:
    (a) Any person who operates one or more pool plants;
    (b) Any cooperative with respect to producer milk which it causes to 
be diverted pursuant to Sec. 1007.13 for the account of such cooperative 
association;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler of such milk 
and will purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1007.8(a);
    (g) Any person who operates an unregulated supply plant; and
    (h) Any person who operates an exempt plant.



Sec. 1007.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a dairy farm and a distributing plant from which there 
is monthly route disposition in excess of 100,000 pounds per month;
    (b) Receives no Class I milk from sources other than his/her own 
farm production and pool plants;
    (c) Disposes of no other source milk as Class I milk; and
    (d) Provides proof satisfactory to the market administrator that the 
care and management of the dairy animals and other resources necessary 
to produce all Class I milk handled (excluding receipts from pool 
plants) and the operation of the processing and packaging business are 
his/her personal enterprise and personal risk.



Sec. 1007.11  [Reserved]



Sec. 1007.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any

[[Page 195]]

person who produces milk approved by a duly constituted regulatory 
agency for fluid consumption as Grade A milk and whose milk is:
    (1) Received at a pool plant directly from such producer;
    (2) Received by a handler described in Sec. 1007.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1007.13.
    (b) Producer shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by such person whose 
milk is delivered to an exempt plant, excluding producer milk diverted 
to such exempt plant pursuant to Sec. 1007.13;
    (3) Any person with respect to milk produced by such person which is 
diverted to a pool plant from an other order plant if the other order 
plant designates such person as a producer under that order and such 
milk is allocated to Class II or Class III utilization pursuant to 
Sec. 1007.44(a)(8)(iii) and the corresponding step of Sec. 1007.44(b); 
or
    (4) Any person with respect to milk produced by such person which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.



Sec. 1007.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1007.9(c);
    (c) Diverted from a pool plant to the pool plant of another handler. 
Milk so diverted shall be deemed to have been received at the location 
of the plant to which diverted; or
    (d) Diverted by the operator of a pool plant or cooperative 
association to a nonpool plant that is not a producer-handler plant, 
subject to the following conditions:
    (1) In any month of December through June, not less than four days' 
production of the producer whose milk is diverted is physically received 
at a pool plant during the month;
    (2) In any month of July through November, not less than ten days' 
production of the producer whose milk is diverted is physically received 
at a pool plant during the month;
    (3) The total quantity of milk so diverted during the month by a 
cooperative association shall not exceed 33 percent during the months of 
July through November, or 50 percent during the months of December 
through June, of the producer milk that the cooperative association 
caused to be delivered to, and physically received at, pool plants 
during the month;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 33 percent during the months of July 
through November, or 50 percent during the months of December through 
June, of the producer milk physically received at such plant (or such 
unit of plants in the case of plants that pool as a unit pursuant to 
Sec. 1007.7(d)) during the month;
    (5) Any milk diverted in excess of the limits prescribed in 
paragraphs (d)(3) and (4) of this section shall not be producer milk. 
The diverting handler shall designate the dairy farmer deliveries that 
will not be producer milk pursuant to paragraphs (d)(3) and (4) of this 
section. If the handler fails to make such designation, no milk diverted 
by such handler shall be producer milk;
    (6) To the extent that it would result in nonpool status for the 
plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (7) The cooperative association shall designate the dairy farm 
deliveries that are not producer milk pursuant to paragraph (d)(6) of 
this section. If the cooperative association fails to make such 
designation, no milk diverted by it to a nonpool plant shall be producer 
milk;

[[Page 196]]

    (8) Diverted milk shall be priced at the location of the plant to 
which diverted; and
    (9) The market administrator may increase or decrease the applicable 
percentages in paragraphs (d) (3) and (4) of this section by up to 10 
percentage points, and may increase or decrease the 10-day and 4-day 
delivery requirements in paragraphs (d) (1) and (2) of this section by 
50 percent if, following a written request for such a revision, the 
market administrator finds that such revision is necessary to assure 
orderly marketing and efficient handling of milk in the marketing area. 
Before making such a finding, the market administrator shall investigate 
the need for the revision by conducting an investigation and conferring 
with the Director of the Dairy Division. If the investigation shows that 
a revision might be appropriate, the market administrator shall issue a 
notice stating that the revision is being considered and inviting 
written data, views, and arguments. Any decision to revise an applicable 
percentage must be issued in writing seven days before the effective 
date.



Sec. 1007.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1007.40(b)(1) from any source other than producers, a handler 
described in Sec. 1007.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1007.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1007.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1007.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1007.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section, fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.



Sec. 1007.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.



Sec. 1007.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).

[[Page 197]]



Sec. 1007.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act;'' and
    (b) To have full authority in the sale of milk of its members and be 
engaged in making collective sales of, or marketing, milk or milk 
products for its members.



Sec. 1007.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility, other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products, and has no 
disposition of fluid milk products or fluid cream products other than 
those that it received in consumer type packages. Producer milk diverted 
to commercial food processing establishments shall be subject to the 
same provisions relating to diversions to plants, including, but not 
limited to, provisions in Secs. 1007.13, 1007.41, and 1007.52.

                             Handler Reports



Sec. 1007.30  Reports of receipts and utilization.

    On or before the 5th day after the end of the month (if postmarked), 
or not later than the 7th day if the report is delivered in person to 
the office of the market administrator, each handler shall report for 
such month to the market administrator, in the detail and on forms 
prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of its pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1007.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order, except Federal Orders 1005, 1011, and 1046, for which a 
transportation credit is requested pursuant to Sec. 1007.82, including 
the date that such milk was received;
    (6) Receipts of producer milk described in Sec. 1007.82(c)(2), 
including the identity of the individual producers whose milk is 
eligible for the transportation credit pursuant to that paragraph and 
the date that such milk was received;
    (7) For handlers submitting transportation credit requests, 
transfers of bulk milk to nonpool plants, including the dates that such 
milk was transferred;
    (8) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1007.40(b)(1); and
    (9) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1007.9(b) and (c) shall report:
    (1) The quantities of skim milk and butterfat contained in receipts 
of milk from producers;
    (2) The utilization or disposition of all such receipts; and
    (3) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec. 1007.82, all of the 
information required in paragraphs (a)(5), (a)(6), and (a)(7) of this 
section.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to its receipts and utilization of 
milk, filled

[[Page 198]]

milk, and milk products in such manner as the market administrator may 
prescribe.
60 FR 29437, June 2, 1995, as amended at 61 FR 41491, Aug. 9, 1996; 62 
FR 39741, July 23, 1997]



Sec. 1007.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1007.9(a), (b), and (c) shall report to the 
market administrator its producer payroll for such month, in detail 
prescribed by the market administrator, showing for each producer:
    (1) Such producer's name and address;
    (2) The total pounds of milk received from such producer, showing 
separately the pounds of milk received from the producer on each 
delivery day;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deduction, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1007.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1007.32  Other reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1007.9 (a), (b), and (c) shall report to the 
market administrator any adjustments to transportation credit requests 
as reported pursuant to Sec. 1007.30(a) (5), (6), and (7).
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Secs. 1007.30 and 1007.31, each handler shall report 
such information as the market administrator deems necessary to verify 
or establish each handler's obligation under the order.
[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996; 62 
FR 39742, July 23, 1997]

                         Classification of Milk



Sec. 1007.40  Classes of utilization.

    Except as provided in Sec. 1007.42, all skim milk and butterfat 
required to be reported pursuant to Sec. 1007.30 shall be classified as 
follows:
    (a) Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk shall be all skim milk and butterfat:
    (1) Disposed in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processing establishment if 
the market administrator is permitted to audit the records of the 
commercial food processing establishment for the purpose of 
verification. Otherwise, such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream, sour half-and-half, 
sour cream mixtures containing nonmilk items, yogurt, and any other 
semi-solid product resembling a Class II product;

[[Page 199]]

    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk shall be all skim milk and butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheese of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat, and butteroil;
    (iii) Any milk product in dry form except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1007.15 and the fluid 
cream product definition pursuant to Sec. 1007.16; and
    (7) In shrinkage assigned pursuant to Sec. 1007.41(a) to the 
receipts specified in Sec. 1007.41(a)(2) and in shrinkage specified in 
Sec. 1007.41 (b) and (c).
    (d) Class III-A milk shall be all skim milk and butterfat used to 
produce nonfat dry milk.



Sec. 1007.41  Shrinkage.

    For the purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1007.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer

[[Page 200]]

milk (excluding milk diverted by the plant operator to another plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1007.9(c), except that 
if the operator of the plant to which the milk is delivered purchased 
such milk on the basis of weights determined from its measurement at the 
farm and butterfat tests determined from farm bulk tank samples, the 
applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchased such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from unregulated supply 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amount of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1007.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1007.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to another pool plant shall be classified as Class I milk unless the 
operators of both plants request the same classification in another 
class. In either case, the classification shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1007.44(a)(12) and the corresponding step of 
Sec. 1007.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products.
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1007.44(a)(7) or the corresponding 
step of Sec. 1007.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1007.44(a) (11) or (12) or the 
corresponding steps of Sec. 1007.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to an other order

[[Page 201]]

plant shall be classified in the following manner. Such classification 
shall apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section.
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be Class I subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to the class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification shall be in accordance with the 
provisions of Sec. 1007.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
plants. Skim milk or butterfat that is transferred or diverted from a 
pool plant to a producer-handler under another Federal order or to an 
exempt plant shall be classified:
    (1) As Class I milk if transferred or diverted to a producer-
handler;
    (2) As Class I milk if transferred to an exempt plant in the form of 
a packaged fluid milk product;
    (3) In accordance with the utilization assigned to it by the market 
administrator if transferred or diverted in the form of a bulk fluid 
milk product or a bulk fluid cream product to an exempt plant. For this 
purpose, the transferee's utilization of skim milk and butterfat in each 
class, in series beginning with Class III, shall be assigned to the 
extent possible to its receipts of skim milk and butterfat, 
respectively, in bulk fluid cream products, pro rata to each source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or transferred in the form of a bulk fluid cream 
product, unless the following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in such handler's report of receipts and utilization 
filed pursuant Sec. 1007.30 for the month within which such transaction 
occurred; and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;

[[Page 202]]

    (ii) Route disposition in the marketing area of each Federal order 
from the nonpool plant and transfers of packaged fluid milk products 
from such nonpool plant to plants fully regulated thereunder shall be 
assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plants from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plants from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant regulated under any Federal milk order, to the extent that such 
transfers to the regulated plant exceed receipts of fluid milk products 
from such plant and are allocated to Class I at the transferee-plant, 
shall be classified to the extent possible in the following sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
    (e) Transfers by a handler described in Sec. 1007.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1007.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1007.44 pro rata with producer milk 
received at the transferee-handler's plant.



Sec. 1007.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1007.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1007.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1007.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1007.40, 1007.41, and 1007.42. The 
combined pounds of skim milk and butterfat so determined in each class

[[Page 203]]

for a handler described in Sec. 1007.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by the 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1007.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association;
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignment 
under Sec. 1007.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1007.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler; and
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III use at the plant.



Sec. 1007.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1007.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1007.9(c), by allocating the handler's 
receipts of skim milk and butterfat to the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1007.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1007.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1007.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was

[[Page 204]]

subject to the provisions of this paragraph or comparable provisions of 
another Federal milk order in the immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1007.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1007.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1007.40(b)(1) that were not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under any Federal milk order and from an exempt distributing 
plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is fully regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased a like amount. 
In such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount;
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1007.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that

[[Page 205]]

the receipts of skim milk in fluid milk products from unregulated supply 
plants that remain at this pool plant is of all such receipts remaining 
at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1007.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5), and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), (a)(8)(i), and (a)(8)(ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased a 
like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant that were not 
subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii) and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then

[[Page 206]]

from Class II, with respect to whichever of the following quantities 
represents the lower proportion of Class I milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1007.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds remaining in Class I after such 
proration at the pool plants at which such other source milk was 
received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1007.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1007.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1007.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.



Sec. 1007.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1007.44(a)(12) and the corresponding 
step of Sec. 1007.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the

[[Page 207]]

month of skim milk and butterfat, respectively, in producer milk of all 
handlers. Such estimate shall be based upon the most current available 
data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Secs. 1007.43(d) and 1007.44 on the 
basis of such report (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests, the percentage of 
producer milk delivered by members of such association that was used in 
each class by each handler receiving such milk. For the purpose of this 
report the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.

                              Class Prices



Sec. 1007.50  Class prices.

    Subject to the provisions of Sec. 1007.52, the class prices for the 
month per hundredweight of milk containing 3.5% butterfat shall be as 
follows:
    (a) The Class I price shall be the basic formula price for the 
second preceding month plus $3.08.
    (b) The Class II price shall be the basic formula price for the 
second preceding month plus $.30.
    (c) The Class III price shall be the basic formula price for the 
month.
    (d) The Class III-A price for the month shall be the average Central 
States nonfat dry milk price for the month, as reported by the 
Department, less 12.5 cents, times an amount computed by subtracting 
from 9 an amount calculated by dividing 0.4 by such nonfat dry milk 
price, plus the butterfat differential times 35 and rounded to the 
nearest cent.
[60 FR 29437, June 2, 1995, as amended by 61 FR 20125, May 6, 1996]



Sec. 1007.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1007.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:

[[Page 208]]

    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.



Sec. 1007.52  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or a handler 
described in Sec. 1007.9(c) and which is classified as Class I milk 
without movement in bulk form to a pool distributing plant at which a 
higher Class I price applies, the price specified in Sec. 1007.50(a) 
shall be adjusted by the amount stated in paragraphs (a) (1) through (6) 
of this section for the location of such plant:
    (1) For a plant located within one of the zones set forth in 
Sec. 1007.2, the adjustment (cents per hundredweight) shall be as 
follows:

                                                                        
                                                                        
                                                                        
Zone 1.................................  Minus 53.                      
Zone 2.................................  Minus 48.                      
Zone 3.................................  Minus 38.                      
Zone 4.................................  Minus 31.                      
Zone 5.................................  Minus 25.                      
Zone 6.................................  Minus 10.                      
Zone 7.................................  No adjustment.                 
Zone 8.................................  Plus 10.                       
Zone 9.................................  Plus 20.                       
Zone 10................................  Plus 32.                       
Zone 11................................  Plus 50.                       
Zone 12................................  Plus 57.                       
                                                                        

    (2) For a plant located in that portion of the Tennessee Valley 
marketing area that is within the State of Georgia, the adjustment shall 
be minus 25 cents.
    (3) For a plant located in the Missouri counties of Dunklin or 
Pemiscot, the adjustment shall be minus 53 cents.
    (4) For a plant located in the Texas counties of Bowie or Cass, the 
adjustment shall be zero.
    (5) For a plant located within another Federal order marketing area, 
other than in those counties specified in paragraphs (a) (2), (3), and 
(4) of this section, the adjustment shall be determined by subtracting 
the Class I differential price in Zone 7 of this order

[[Page 209]]

from the Class I differential price, adjusted for the plant's location, 
under such other Federal order.
    (6) For a plant located outside the areas described in paragraphs 
(a) (1) through (5) of this section, the adjustment shall be computed by 
multiplying 2.5 cents per 10 miles, or fraction thereof (by the shortest 
hard-surfaced highway distance as determined by the market 
administrator), from the nearer of Shreveport, Louisiana; Little Rock, 
Arkansas; Memphis, Tennessee; Jackson, Tennessee; Nashville, Tennessee; 
or Atlanta, Georgia, and subtracting that figure from the location 
adjustment applicable at Shreveport, Little Rock, Memphis, Jackson, 
Nashville, or Atlanta, as the case may be.
    (b) For fluid milk products transferred in bulk form from a pool 
plant to a pool distributing plant at which a higher Class I price 
applies and which are classified as Class I milk, the Class I price 
shall be the Class I price at the transferee-plant subject to a location 
adjustment credit for the transferor-plant which shall be determined by 
the market administrator for skim milk and butterfat, respectively, as 
follows:
    (1) Subtract from the pounds of skim milk remaining in Class I at 
the transferee-plant after the computations pursuant to 
Sec. 1007.44(a)(12) plus the pounds of skim milk in receipts of 
concentrated fluid milk products from other pool plants that are 
assigned to Class I use, an amount equal to:
    (i) The pounds of skim milk in receipts of milk at the transferee-
plant from producers and handlers described in Sec. 1007.9(c); and
    (ii) The pounds of skim milk in receipts of packaged fluid milk 
products from other pool plants;
    (2) Assign any remaining pounds of skim milk in Class I at the 
transferee-plant to the skim milk in receipts of fluid milk products 
from other pool plants, first to the transferor-plants at which the 
highest Class I price applies and then to other plants in sequence 
beginning with the plant at which the next highest Class I price 
applies;
    (3) Compute the total amount of location adjustment credits to be 
assigned to transferor-plants by multiplying the hundredweight of skim 
milk assigned pursuant to paragraph (b)(2) of this section to each 
transferor-plant at which the Class I price is lower than the Class I 
price applicable at the transferor-plant and the transferee-plant, and 
add the resulting amounts;
    (4) Assign the total amount of location adjustment credits computed 
pursuant to paragraph (b)(3) of this section to those transferor-plants 
that transferred fluid milk products containing skim milk classified as 
Class I milk pursuant to Sec. 1007.42(a) and at which the applicable 
Class I price is less than the Class I price at the transferee-plant, in 
sequence beginning with the plant at which the highest Class I price 
applies. Subject to the availability of such credits, the credit 
assigned to each plant shall be equal to the hundredweight of such Class 
I skim milk multiplied by the adjustment rate determined pursuant to 
paragraph (b)(3) of this section for such plant. If the aggregate of 
this computation for all plants having the same adjustment as determined 
pursuant to paragraph (b)(3) of this section exceeds the credits that 
are available to those plants, such credits shall be prorated to the 
volume of skim milk in Class I in transfers from such plants; and
    (5) Location adjustment credit for butterfat shall be determined in 
accordance with the procedure outlined for skim milk in paragraphs (b) 
(1) through (4) of this section.
    (c) The market administrator shall determine and publicly announce 
the zone location of each plant of each handler. The market 
administrator shall notify the handler on or before the first day of any 
month in which a change in a plant location zone will apply.
    (d) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.



Sec. 1007.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and Class II prices for the 
following month, and the Class III and Class III-A prices for the 
preceding month.

[[Page 210]]



Sec. 1007.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                             Uniform Prices



Sec. 1007.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price, 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. 1007.9 (b) and (c) with respect to milk that 
was not received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1007.9(c) that were classified in each class 
pursuant to Secs. 1007.43(a) and 1007.44(c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1007.44(a)(14) and the 
corresponding step of Sec. 1007.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1007.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1007.44(a)(9) and the corresponding step of Sec. 1007.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1007.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1007.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1007.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants, and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1007.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1007.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1007.43(d) and Sec. 1007.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1007.44(a)(11) and the corresponding step of Sec. 1007.44(b), 
excluding such skim milk and butterfat in receipts of 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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1007.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1007.76 (a)(5) or (c); and

[[Page 211]]

    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.



Sec. 1007.61  Computation of uniform price (including weighted average price).

    (a) The market administrator shall compute the weighted average 
price for each month and the uniform price for each month per 
hundredweight of milk of 3.5 percent butterfat content as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1007.60 for all handlers who filed the reports prescribed in 
Sec. 1007.30 for the month and who made payments pursuant to 
Sec. 1007.71 for the preceding month;
    (2) Add not less than one-half the unobligated balance in the 
producer-settlement fund;
    (3) Add an amount equal to the total value of the minus adjustments 
and subtract an amount equal to the total value of the plus adjustments 
computed pursuant to Sec. 1007.75;
    (4) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (i) The total hundredweight of producer milk; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1007.60(f); and
    (5) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The resulting figure, rounded to the nearest cent, shall 
be the weighted average price for each month and the uniform price.
    (b) [Reserved]
[60 FR 29437, June 2, 1995, as amended at 61 FR 41492, Aug. 9, 1996; 61 
FR 69018, Dec. 31, 1996; 62 FR 39742, July 23, 1997]



Sec. 1007.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of the month the uniform price 
pursuant to Sec. 1007.61 for such month.
[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]

                            Payments for Milk



Sec. 1007.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the producer-settlement fund into which the market 
administrator shall deposit all payments made by handlers pursuant to 
Secs. 1007.71, 1007.76, and 1007.77, and out of which the market 
administrator shall make all payments pursuant to Secs. 1007.72 and 
1007.77. Payments due any handler shall be offset by any payments due 
from such handler.



Sec. 1007.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1007.60.
    (2) The sum of:
    (i) The value at the uniform price as adjusted pursuant to 
Sec. 1007.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1007.9(c); and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1007.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler

[[Page 212]]

pooling shall pay to the market administrator an amount computed as 
follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is route disposition from 
such plant in marketing areas regulated by two or more marketwide pool 
orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by the difference between the Class I price under this part 
applicable at the location of the other order plant (but not to be less 
than the Class III price) and the Class III price.
[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1007.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1007.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1007.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1007.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk for which 
payment is not made to a cooperative association pursuant to paragraph 
(b) of this section, as follows:
    (1) On or before the 26th day of each month, for milk received 
during the first 15 days of the month from such producer who has not 
discontinued delivery of milk to such handler before the 23rd day of the 
month at not less than the Class III price for the preceding month or 90 
percent of the weighted average price for the preceding month, whichever 
is higher, less proper deductions authorized in writing by the producer. 
If the producer had discontinued shipping milk to such handler before 
the 25th day of any month, the applicable rate for making payments to 
such producer shall be the Class III price for the preceding month; and
    (2) On or before the 15th day of the following month, an amount 
equal to not less than the uniform price, as adjusted pursuant to 
Secs. 1007.74 and 1007.75, multiplied by the hundredweight of milk 
received from such producer during the month, subject to the following 
adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1007.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producers; and
    (iv) Less proper deductions authorized in writing by such producer.
    (3) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 15th day of such month, 
such handler may reduce payments pursuant to this paragraph to producers 
on a pro rata basis but not by more than the amount of the underpayment. 
Such payments shall be completed thereafter not later than the date for 
making payments pursuant to this paragraph next following after receipt 
of the balance due from the market administrator.
    (b) On or before the day prior to the dates specified in paragraph 
(a) (1) and (2) of this section, each handler shall make payment to the 
cooperative association for milk from producers who market their milk 
through the cooperative association and who have authorized the 
cooperative to collect such payments on their behalf an amount equal to 
the sum of the individual payments otherwise payable for such producer 
milk pursuant to paragraph (a) (1) and (2) of this section.
    (c) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 15th day of such month, 
such handler may

[[Page 213]]

reduce payments pursuant to paragraph (b) of this section to such 
cooperative association on a pro rata basis, prorating such underpayment 
to the volume of milk received from such cooperative association in 
proportion to the total milk received from producers by the handler, but 
not by more than the amount of the underpayment. Such payments shall be 
completed in the following manner:
    (1) If the handler receives full payment from the market 
administrator by the 15th day of the month, the handler shall make 
payment to the cooperative association of the full value of the 
underpayment on the 15th day of the month;
    (2) If the handler has not received full payment from the market 
administrator by the 15th day of the month, the handler shall make 
payment to the cooperative association of the full value of the 
underpayment on or before the date for making such payments pursuant to 
this paragraph next following after receipt of the balance due from the 
market administrator.
    (d) Each handler pursuant to Sec. 1007.9(a) who receives milk from a 
cooperative association as a handler pursuant to Sec. 1007.9(c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payment for their milk, shall pay 
such cooperative for such milk as follows:
    (1) On or before the 25th day of the month for milk received during 
the first 15 days of the month, not less than the Class III price for 
the preceding month or 90 percent of the weighted average price for the 
preceding month, whichever is higher; and
    (2) On or before the 14th day of the following month, not less than 
the uniform price as adjusted pursuant to Secs. 1007.74 and 1007.75, and 
less any payments made pursuant to paragraph (d)(1) of this section.
    (e) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 14th day of such month, 
such handler may reduce payments pursuant to paragraph (d) of this 
section to such cooperative association and complete such payments for 
milk received from such cooperative association in its capacity as a 
handler pursuant to Sec. 1007.9(c), in the manner prescribed in 
paragraph (c) (1) and (2) of this section.
    (f) In making payments to producers pursuant to this section, each 
handler shall furnish each producer, except a producer whose milk was 
received from a handler described in Sec. 1007.9(c), a supporting 
statement in such form that it may be retained by the recipient which 
shall show:
    (1) The month and identity of the producer;
    (2) The daily and total pounds and the average butterfat content of 
producer milk;
    (3) [Reserved]
    (4) The minimum rate at which payment to the producer is required 
pursuant to this order;
    (5) The rate used in making the payment if such rate is other than 
the applicable minimum rate;
    (6) The amount, or rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to such producer or cooperative 
association.
[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1007.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1007.51(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.
[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]

[[Page 214]]



Sec. 1007.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price shall be adjusted according to the location of 
the plant at which the milk was physically received at the rates set 
forth in Sec. 1007.52(a); and
    (b) The weighted average price applicable to other source milk shall 
be adjusted at the rates set forth in section Sec. 1007.52(a) applicable 
at the location of the nonpool plant from which the milk was received, 
except that the adjusted weighted average price shall not be less than 
the Class III price.
[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1007.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1007.30(b) and 1007.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be an amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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 payment obligation under any order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and weighted average price shall not be 
less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1007.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:

[[Page 215]]

    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be computed to the extent possible 
to those receipts at the partially regulated distributing plant from 
pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. Any 
such transfers remaining after the above allocation which are in Class I 
and for which a value is computed for the handler operating the 
partially regulated distributing plant pursuant to Sec. 1007.60 shall be 
priced at the 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 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 of reconstituted skim milk in 
filled milk shall be priced at the lowest price class of the respective 
order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1007.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1007.60(f) less the value of such other source milk 
specified in Sec. 1007.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1007.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributed plant 
during the month equivalent to the requirements of Sec. 1007.7(b), 
subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1007.30(b) and 
1007.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool plant maintains books and records 
showing the utilization of all skim milk and butterfat received at such 
plant which are made available if requested by the market administrator 
for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1007.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of the partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1007.74, for milk received at 
the plant during the month that would have been producer milk had the 
plant been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1007.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1007.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but

[[Page 216]]

not less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.



Sec. 1007.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts, or other verification discloses errors 
resulting in money due the market administrator from a handler, or due a 
handler from the market administrator, or due a producer or cooperative 
association from a handler, the market administrator shall promptly 
notify such handler of any amount so due and payment thereof shall be 
made on or before the next date for making payments as set forth in the 
provisions under which the error(s) occurred.



Sec. 1007.78  Charges on overdue accounts.

    Any unpaid obligation due the market administrator from a handler 
pursuant to Secs. 1007.71, 1007.76, 1007.77, 1007.78, 1007.81, 1007.85, 
and 1007.86 shall be increased 1.5 percent each month beginning with the 
day following the date such obligation was due under the order. Any 
remaining amount due shall be increased at the same rate on the 
corresponding day of each month until paid. The amounts payable pursuant 
to this section shall be computed monthly on each unpaid obligation and 
shall include any unpaid charges previously made pursuant to this 
section. The late charges shall be added to the respective accounts to 
which due. For the purpose of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.
[60 FR 29437, June 2, 1995, as amended at 62 FR 39742, July 23, 1997]

                       Marketwide Service Payments



Sec. 1007.80  Transportation credit balancing fund.

    The market administrator shall maintain a separate fund known as the 
Transportation Credit Balancing Fund into which shall be deposited the 
payments made by handlers pursuant to Sec. 1007.81 and out of which 
shall be made the payments due handlers pursuant to Sec. 1007.82. 
Payments due a handler shall be offset against payments due from the 
handler.
[61 FR 41492, Aug. 9, 1996]



Sec. 1007.81  Payments to the transportation credit balancing fund.

    (a) On or before the 12th day after the end of the month, each 
handler operating a pool plant and each handler specified in Sec. 1007.9 
(b) and (c) shall pay to the market administrator a transportation 
credit balancing fund assessment determined by multiplying the pounds of 
Class I producer milk assigned pursuant to Sec. 1007.44 by $0.07 per 
hundredweight or such lesser amount as the market administrator deems 
necessary to maintain a balance in the fund equal to the total 
transportation credits disbursed during the prior June-January period. 
In the event that during any month of the June-January period the fund 
balance is insufficient to cover the amount of credits that are due, the 
assessment should be based upon the amount of credits that would have 
been disbursed had the fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 5th day of the month the assessment pursuant to paragraph (a) of 
this section for the following month.
[61 FR 41492, Aug. 9, 1996, as amended at 62 FR 39742, July 23, 1997]

[[Page 217]]



Sec. 1007.82  Payments from the transportation credit balancing fund.

    (a) Payments from the transportation credit balancing fund to 
handlers and cooperative associations requesting transportation credits 
shall be made as follows:
    (1) On or before the 13th day after the end of each of the months of 
July through December and any other month in which transportation 
credits are in effect pursuant to paragraph (b) of this section, the 
market administrator shall pay to each handler that received, and 
reported pursuant to Sec. 1007.30(a)(5), bulk milk transferred from an 
other order plant as described in paragraph (c)(1) of this section or 
that received, and reported pursuant to Sec. 1007.30(a)(6), milk 
directly from producers' farms as specified in paragraph (c)(2) of this 
section, a preliminary amount determined pursuant to paragraph (d) of 
this section to the extent that funds are available in the 
transportation credit balancing fund. If an insufficient balance exists 
to pay all of the credits computed pursuant to this section, the market 
administrator shall distribute the balance available in the 
transportation credit balancing fund by reducing payments prorata using 
the percentage derived by dividing the balance in the fund by the total 
credits that are due for the month. The amount of credits resulting from 
this initial proration shall be subject to audit adjustment pursuant to 
paragraph (a)(2) of this section;
    (2) The market administrator shall accept adjusted requests for 
transportation credits on or before the 20th day of the month following 
the month for which such credits were requested pursuant to 
Sec. 1007.32(a). After such date, a preliminary audit will be conducted 
by the market administrator, who will recalculate any necessary 
proration of transportation credit payments for the preceding month 
pursuant to paragraph (a) of this section. Handlers will be promptly 
notified of any payment adjustments based upon this final computation 
and remedial payments to or from the transportation credit balancing 
fund will be made on or before the next payment date for the following 
month;
    (3) Transportation credits paid pursuant to paragraph (a) (1) and 
(2) of this section shall be subject to final verification by the market 
administrator pursuant to Sec. 1007.77. Adjusted payments to or from the 
transportation credit balancing fund will remain subject to the final 
proration established pursuant to paragraph (a)(2) of this section; and
    (4) In the event that a qualified cooperative association is the 
responsible party for whose account such milk is received and written 
documentation of this fact is provided to the market administrator 
pursuant to Sec. 1007.30(c)(3) prior to the date payment is due, the 
transportation credits for such milk computed pursuant to this section 
shall be made to such cooperative association rather than to the 
operator of the pool plant at which the milk was received.
    (b) The market administrator may extend the period during which 
transportation credits are in effect (i.e., the transportation credit 
period) to the months of January and June if a written request to do so 
is received 15 days prior to the beginning of the month for which the 
request is made and, after conducting an independent investigation, 
finds that such extension is necessary to assure the market of an 
adequate supply of milk for fluid use. Before making such a finding, the 
market administrator shall notify the Director of the Dairy Division and 
all handlers in the market that an extension is being considered and 
invite written data, views, and arguments. Any decision to extend the 
transportation credit period must be issued in writing prior to the 
first day of the month for which the extension is to be effective.
    (c) Transportation credits shall apply to the following milk:
    (1) Bulk milk received from a plant regulated under another Federal 
order, except Federal Orders 1005, 1011, and 1046, allocated to Class I 
milk pursuant to Sec. 1007.44(a)(12); and
    (2) Bulk milk received directly from the farms of dairy farmers at 
pool distributing plants subject to the following conditions:
    (i) The quantity of such milk that shall be eligible for the 
transportation

[[Page 218]]

credit shall be determined by multiplying the total pounds of milk 
received from producers meeting the conditions of this paragraph by the 
lower of:
    (A) The marketwide estimated Class I utilization of all handlers for 
the month pursuant to Sec. 1007.45(a); or
    (B) The Class I utilization of all producer milk of the pool plant 
operator receiving the milk after the computations described in 
Sec. 1007.44;
    (ii) The dairy farmer was not a ``producer'' under this order during 
more than 2 of the immediately preceding months of January through June 
and not more than 50 percent of the production of the dairy farmer 
during those 2 months, in aggregate, was received as producer milk under 
this order during those 2 months. However, if January and/or June are 
months in which transportation credits are disbursed pursuant to 
paragraph (a) of this section, these months shall not be included in the 
2-month limit provided in this paragraph; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of this order or the marketing areas of 
Federal Orders 1005, 1011, or 1046, or within the Kentucky counties of 
Allen, Barren, Metcalfe, Monroe, Simpson, and Warren.
    (d) Transportation credits shall be computed as follows:
    (1) The market administrator shall subtract from the pounds of milk 
described in paragraphs (c) (1) and (2) of this section the pounds of 
bulk milk transferred from the pool plant receiving the supplemental 
milk if milk was transferred to a nonpool plant on the same calendar day 
that the supplemental milk was received. For this purpose, the 
transferred milk shall be subtracted from the most distant load of 
supplemental milk received, and then in sequence with the next most 
distant load until all of the transfers have been offset;
    (2) With respect to the pounds of milk described in paragraph (c)(1) 
of this section that remain after the computations described in 
paragraph (d)(1) of this section, the market administrator shall:
    (i) Determine the shortest hard-surface highway distance between the 
shipping plant and the receiving plant;
    (ii) Multiply the number of miles so determined by 0.35 cent;
    (iii) Subtract the other order's Class I price applicable at the 
shipping plant's location from the Class I price applicable at the 
receiving plant as specified in Sec. 1007.52;
    (iv) Subtract any positive difference computed in paragraph 
(d)(2)(iii) of this section from the amount computed in paragraph 
(d)(2)(ii) of this section; and
    (v) Multiply the remainder computed in paragraph (d)(2)(iv) of this 
section by the hundredweight of milk described in paragraph (d)(2) 
introductory text of this section.
    (3) For the remaining milk described in paragraph (c)(2) of this 
section after computations described in paragraph (d)(1) of this 
section, the market administrator shall:
    (i) Determine an origination point for each load of milk by locating 
the nearest city to the last producer's farm from which milk was picked 
up for delivery to the receiving pool plant. Alternatively, the milk 
hauler that is transporting the milk of producers described in paragraph 
(c)(2) of this section may establish an origination point following the 
last farm pickup by stopping at the nearest independently-operated truck 
stop with a certified truck scale and obtaining a weight certificate 
indicating the weight of the truck and its contents, the date and time 
of weighing, and the location of the truck stop;
    (ii) Determine the shortest hard-surface highway distance between 
the receiving pool plant and the truck stop or city, as the case may be;
    (iii) Subtract 85 miles from the mileage so determined;
    (iv) Multiply the remaining miles so computed by 0.35 cent;
    (v) If the origination point determined pursuant to paragraph 
(d)(3)(i) of this section is in a Federal order marketing area, subtract 
the Class I price applicable at the origination point pursuant to the 
provisions of such other order (as if the origination point were a plant 
location) from the Class I price applicable at the distributing plant 
receiving the milk. If the origination

[[Page 219]]

point is not in any Federal order marketing area, determine the Class I 
price at the origination point based upon the provisions of this order 
and subtract this price from the Class I price applicable at the 
distributing plant receiving the milk;
    (vi) Subtract any positive difference computed in paragraph 
(d)(3)(v) of this section from the amount computed in paragraph 
(d)(3)(iv) of this section; and
    (vii) Multiply the remainder computed in paragraph (d)(3)(vi) by the 
hundredweight of milk described in paragraph (d)(3) introductory text of 
this section.
[62 FR 39742, July 23, 1997]

        Administrative Assessment and Marketing Service Deduction



Sec. 1007.85  Assessment for order administration.

    As each handler's pro rata share of the expense of administration of 
the order, each handler shall pay to the market administrator on or 
before the 15th day after the end of the month 5 cents per hundredweight 
or such lesser amount as the Secretary may prescribe with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1007.9(c) that were delivered to pool plants of other handlers;
    (b) Receipts from a handler described in Sec. 1007.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1007.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1007.44(a) (7) and (11) and the corresponding steps 
of Sec. 1007.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1007.60 (d) and (f); and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1007.76(a)(2).



Sec. 1007.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section each 
handler, in making payments to producers for milk (other than milk of 
such handler's own production) pursuant to Sec. 1007.73, shall deduct 7 
cents per hundredweight or such lesser amount as the Secretary may 
prescribe and shall pay such deductions to the market administrator not 
later than the 15th day after the month. Such money shall be used by the 
market administrator to verify or establish weights, samples and tests 
of producer milk and provide market information for producers who are 
not receiving such services from a cooperative association. Such 
services shall be performed in whole or in part by the market 
administrator or an agent engaged by and responsible to the market 
administrator;
    (b) In the case of producers for whom a cooperative association that 
the Secretary has determined is actually performing the services set 
forth in paragraph (a) of this section, each handler shall make, in lieu 
of the deduction specified in paragraph (a) of this section, such 
deductions from the payments to be made to such producers as may be 
authorized by the membership agreement or marketing contract between 
such cooperative association and such producers, and on or before the 
15th day after the end of the month, pay such deductions to the 
cooperative association rendering such services accompanied by a 
statement showing the amount of any such deductions and the amount of 
milk for which such deduction was computed for each producer.



PART 1011--MILK IN THE TENNESSEE VALLEY MARKETING AREA--Table of Contents




    Authority:  Secs. 1-19, 48 Stat. 31, as amended, 7 U.S.C. 601-674.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1011.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.
[41 FR 36796, Sept. 1, 1976]

[[Page 220]]



PART 1012--MILK IN TAMPA BAY MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1012.1  General provisions.

                               Definitions

1012.2  Tampa Bay marketing area.
1012.3  Route disposition.
1012.4  [Reserved]
1012.5  Distributing plant.
1012.6  Supply plant.
1012.7  Pool plant.
1012.8  Nonpool plant.
1012.9  Handler.
1012.10  Producer-handler.
1012.11  [Reserved]
1012.12  Producer.
1012.13  Producer milk.
1012.14  Other source milk.
1012.15  Fluid milk product.
1012.16  Fluid cream product.
1012.17  Filled milk.
1012.18  Cooperative association.
1012.19  [Reserved]
1012.20  Commercial food processing establishment.

                             Handler Reports

1012.30  Reports of receipts and utilization.
1012.31  Payroll reports.
1012.32  Other reports.

                         Classification of Milk

1012.40  Classes of utilization.
1012.41  Shrinkage.
1012.42  Classification of transfers and diversions.
1012.43  General classification rules.
1012.44  Classification of producer milk.
1012.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1012.50  Class prices.
1012.51  Basic formula price.
1012.52  Plant location adjustments for handlers.
1012.53  Announcement of class prices.
1012.54  Equivalent price.

                              Uniform Price

1012.60  Handler's value of milk for computing the uniform price.
1012.61  Computation of uniform price.
1012.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1012.70  Producer-settlement fund.
1012.71  Payments to the producer-settlement fund.
1012.72  Payments from the producer-settlement fund.
1012.73  Payments to producers and to cooperative associations.
1012.74  Butterfat differential.
1012.75  Plant location adjustments for producers and on nonpool milk.
1012.76  Payments by handler operating a partially regulated 
          distributing plant.
1012.77  Adjustment of accounts.
1012.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1012.85  Assessment for order administration.
1012.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended, 7 U.S.C. 601-674.

    Source: 37 FR 17732, Aug. 30, 1972, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1012.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1012.2  Tampa Bay marketing area.

    The Tampa Bay marketing area, hereinafter called the ``marketing 
area'', means all the territory geographically within the boundaries of 
the following counties, all in the State of Florida, including all 
waterfront facilities connected therewith and all territory wholly or 
partly therein occupied by Government (Municipal, State, or Federal) 
reservations, installations, institutions, or other similar 
establishments.

    Charlotte, Collier, De Soto, Hardee, Hernando, Highlands, 
Hillsborough, Lee, Manatee, Pasco, Pinellas, Polk, Sarasota.



Sec. 1012.3  Route disposition.

    Route disposition means a delivery either direct or through any 
distribution facility other than a plant (including disposition from a 
plant store, vendor,

[[Page 221]]

or vending machine) of a fluid milk product classified as Class I milk.



Sec. 1012.4  [Reserved]



Sec. 1012.5  Distributing plant.

    Distributing plant means a plant that is approved by an appropriate 
health authority for the processing or packaging of Grade A milk and 
from which there is route disposition of any fluid milk product during 
the month in the marketing area.



Sec. 1012.6  Supply plant.

    Supply plant means a plant from which a fluid milk product that is 
acceptable to the appropriate health authority for distribution in the 
marketing area as Grade A or filled milk is shipped during the month to 
a pool plant.



Sec. 1012.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) A distributing plant that has route distribution, except filled 
milk, during the month of not less than 50 percent of the total Grade A 
fluid milk products, except filled milk, that are physically received at 
such plant or diverted as producer milk to a nonpool plant pursuant to 
Sec. 1012.13, and that has route disposition, except filled milk, in the 
marketing area during the month of not less than 10 percent of such 
receipts.
    (b) A supply plant from which not less than 50 percent of the total 
quantity of Grade A fluid milk products that is physically received from 
dairy farmers at such plant or diverted as producer milk to a nonpool 
plant pursuant to Sec. 1012.13 during the month is shipped as fluid milk 
products, except filled milk, to pool plants meeting the requirements of 
Sec. 1012.7(a).
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which a greater quantity of fluid milk products, except filled milk, is 
disposed of during the month from such plant as route disposition in the 
marketing area regulated by the other order than as route disposition in 
this marketing area:
    Provided, That such a distributing plant which was a pool plant 
under this order in the immediately preceding month shall continue to be 
subject to all of the provisions of this part until the third 
consecutive month in which a greater proportion of its route disposition 
is made in such other marketing area, unless the other order requires 
regulation of the plant without regard to its qualifying as a pool plant 
under this order; and
    (3) Any building, premises, or facilities, the primary function of 
which is to hold or store bottled milk or milk products (including 
filled milk) in finished form, nor shall it include any part of a plant 
in which the operations are entirely separated (by wall or other 
partition) from the handling of producer milk.
[54 FR 6384, Feb. 10, 1989]



Sec. 1012.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of nonpool plants 
are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant and 
from which fluid milk products in consumer-type packages or dispenser 
units are distributed in the marketing area as route disposition during 
the month.
    (d) Unregulated supply plant means a nonpool plant that is a supply 
plant and is neither an other order plant nor a producer-handler plant.



Sec. 1012.9  Handler.

    Handler means:

[[Page 222]]

    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted from a pool plant to a nonpool plant for the 
account of such cooperative association;
    (c) A cooperative association with respect to milk of its producers 
which is delivered from the farm to the pool plant of another handler in 
a tank truck owned and operated by or under contract to such cooperative 
association. The milk for which a cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received at the 
location of the pool plant to which it was delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler; or
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant.



Sec. 1012.10  Producer-handler.

    Producer-handler means any person who meets all the following 
conditions:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by him in accordance with the requirements 
set forth in paragraph (b) of this section, and provides proof 
satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
at his sole risk and under his complete and exclusive management and 
control; and
    (2) Each such farm is owned or operated by him, at his sole risk, 
and under his complete and exclusive management and control;
    (b) Operates a plant in which milk approved by a duly constituted 
health authority for fluid consumption is processed or packaged and from 
which there is route disposition during the month in the marketing area 
pursuant to the following requirements:
    (1) No fluid milk products are received at such plant or by him at 
any other location, except:
    (i) From dairy farm(s) as specified in paragraph (a) of this 
section; and
    (ii) Fluid milk products (other than whole milk) from pool plants in 
an amount that is not in excess of the lesser of 5,000 pounds or 5 
percent of his Class I sales during the month;
    (2) Such plant is operated under his complete and exclusive 
management and control and at his sole risk, and is not used during the 
month to process, package, receive, or otherwise handle fluid milk 
products for any other person; and
    (c) Disposes of no other source milk (except that represented by 
nonfat solids used in the fortification of fluid milk products) as Class 
I milk.



Sec. 1012.11  [Reserved]



Sec. 1012.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant or diverted pursuant to Sec. 1012.13 from a 
pool plant to a nonpool plant.
    (b) The term ``producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act; or
    (2) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I milk under the provisions of such other 
order.
[41 FR 43157, Sept. 30, 1976]



Sec. 1012.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1012.9(c): Provided, That if the milk received at a 
pool plant from a handler described in Sec. 1012.9(c) is purchased on a 
basis other than farm weights, the amount by which the total farm 
weights of such milk exceed the weights on which the pool plant's 
purchases are based shall be producer milk received by the handler 
described in Sec. 1012.9(c) at the location of the pool plant; or
    (b) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant, subject to the following conditions:

[[Page 223]]

    (1) Such milk shall be deemed to have been received by the diverting 
handler at the plant to which diverted;
    (2) Not less than 10 days' production of the producer whose milk is 
diverted is physically received at a pool plant: Provided, That any 
delivery during the current month from such producer to an other order 
plant regulated by the order that regulated such pool plant in the prior 
month shall be counted towards meeting the 10-day production 
requirement;
    (3) To the extent that it would result in nonpool plant status for 
the pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (4) A cooperative association may divert for its account the milk of 
a producer. The total quantity of such milk so diverted by a cooperative 
that exceeds the following specified applicable percentage of producer 
milk that the cooperative association caused to be delivered to and 
physically received at pool plants during the month shall not be 
producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (5) The operator of a pool plant other than a cooperative 
association may divert for its account any milk of producers that is not 
under the control of a cooperative association that is diverting milk 
during the month pursuant to paragraph (b)(4) of this section. The total 
quantity so diverted by the operator of the pool plant that exceeds the 
following specified applicable percentage of milk physically received at 
such plant during the month that is eligible to be diverted by the plant 
operator shall not be producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (6) The diverting handler shall designate the dairy farmers whose 
milk is not producer milk pursuant to paragraphs (b) (4) and (5) of this 
section. If the handler fails to make such designation, milk diverted on 
the last day of the month, then the second-to-last day of the month, and 
so on, shall be excluded until all diversions in excess of the 
prescribed limit are accounted for.
[37 FR 17732, Aug. 30, 1972, as amended at 54 FR 6385, Feb. 10, 1989]

    Effective Date Note: At 57 FR 61780, Dec. 29, 1992, Sec. 1012.13 was 
amended by suspending paragraph (b)(2) indefinitely, effective Dec. 1, 
1992.



Sec. 1012.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source except:
    (1) Producer milk;
    (2) Such products from pool plants; and
    (3) Such products in inventory at the beginning of the month;
    (b) Receipts of packaged fluid cream products and eggnog from other 
plants;
    (c) Products, other than fluid milk products and fluid cream 
products, from any source (including those produced at the plant) which 
are reprocessed, converted into, or combined with another product in the 
plant during the month; and
    (d) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.
[41 FR 43157, Sept. 30, 1976, as amended at 46 FR 51235, Oct. 19, 1981]



Sec. 1012.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated

[[Page 224]]

skim milk, sweetened condensed milk or skim milk, formulas especially 
prepared for infant feeding or dietary use that are packaged in 
hermetically sealed containers, any product that contains by weight less 
than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27797, May 11, 1993]



Sec. 1012.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27797, May 11, 1993]



Sec. 1012.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers, or flavoring) resembles milk or any 
other fluid milk product, and contains less than 6 percent nonmilk fat 
(or oil).



Sec. 1012.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have full authority in the sale of milk of its members and be 
engaged in making collective sales of or marketing milk or milk products 
for its members.



Sec. 1012.19  [Reserved]



Sec. 1012.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1012.13, 1012.41 and 1012.52.
[58 FR 27797, May 11, 1993]

                             Handler Reports



Sec. 1012.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
(except a handler described in Sec. 1012.9 (e) or (f)) shall report to 
the market administrator for such month with respect to each plant at 
which milk is received or at which filled milk is processed or packaged, 
reporting in detail and on forms prescribed by the market administrator:
    (a) The quantities of skim milk and butterfat contained in or 
represented by:
    (1) Producer milk (including such handler's own production) or, in 
the case of handlers described in Sec. 1012.9(d), milk received from 
dairy farmers;
    (2) Fluid milk products and bulk fluid cream products received from 
pool plants of other handlers;
    (3) Other source milk;
    (4) Milk diverted to nonpool plants pursuant to Sec. 1012.13; and
    (5) Inventories of fluid milk products and fluid cream products at 
the beginning and end of the month;
    (b) The utilization of all skim milk and butterfat required to be 
reported pursuant to this section, including a separate statement 
showing:

[[Page 225]]

    (1) The respective amounts of skim milk and butterfat disposed of as 
route disposition in the marketing area, showing separately the in-area 
disposition of filled milk; and
    (2) For a handler described in Sec. 1012.9(d), the amount of 
reconstituted skim milk in fluid milk products disposed of in the 
marketing area as route disposition; and
    (c) Such other information with respect to the receipts and 
utilization of skim milk and butterfat as the market administrator may 
prescribe.
[37 FR 17732, Aug. 30, 1972, as amended at 41 FR 43157, Sept. 30, 1976]



Sec. 1012.31  Payroll reports.

    (a) Each handler described in Sec. 1012.9 (a), (b), and (c) shall 
report to the market administrator in detail and on forms prescribed by 
the market administrator on or before the 20th day after the end of the 
month his producer payroll for such month which shall show for each 
producer:
    (1) His identity;
    (2) The quantity of milk received from such producer and the number 
of days, if less than the entire month, on which milk was received from 
such producer;
    (3) The average butterfat content of such milk; and
    (4) The net amount of such handler's payment, together with the 
price paid and the amount and nature of any deductions.
    (b) Each handler operating a partially regulated distributing plant 
who does not elect to make payments pursuant to Sec. 1012.76(b) shall 
report to the market administrator on or before the 20th day after the 
end of the month the same information required of handlers pursuant to 
paragraph (a) of this section. In such report, payments to dairy farmers 
delivering Grade A milk shall be reported in lieu of payments to 
producers.



Sec. 1012.32  Other reports.

    (a) Each producer-handler shall make reports to the market 
administrator at such time and in such manner as the market 
administrator may prescribe.
    (b) Each handler who operates an other order plant shall report 
total receipts and utilization or disposition of skim milk and butterfat 
at the plant at such time and in such manner as the market administrator 
may require and allow verification of such reports by the market 
administrator.
    (c) Each handler described in Sec. 1012.9(c) shall report to the 
market administrator in detail and on forms prescribed by the market 
administrator on or before the 7th day after the end of the month the 
quantities of skim milk and butterfat in producer milk delivered to each 
pool plant in such month.

                         Classification of Milk



Sec. 1012.40  Classes of utilization.

    Except as provided in Sec. 1012.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1012.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and

[[Page 226]]

any similar soft, high-moisture cheese resembling cottage cheese in form 
or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1012.15 and the fluid 
cream product definition pursuant to Sec. 1012.16; and
    (7) In shrinkage assigned pursuant to Sec. 1012.41(a) to the 
receipts specified in Sec. 1012.41(a)(2) and in shrinkage specified in 
Sec. 1012.41(b) and (c).
[58 FR 27797, May 11, 1993]



Sec. 1012.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1012.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form

[[Page 227]]

of a bulk fluid milk product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1012.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1012.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is diverted purchases such milk on the basis of weights determined 
from its measurement on the farm, the applicable percentage under this 
paragraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II classification is 
requested by the operator of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II classification is requested by 
the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective quantities of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1012.9 (b) and (c), but not in excess of 
0.5 percent of the skim milk and butterfat, respectively, in such milk. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph for the cooperative 
association shall be zero.
[54 FR 6385, Feb. 10, 1989]



Sec. 1012.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant shall be classified as Class I milk 
unless the operators of both plants request the same classification in 
another class. In either case, the classification of such transfers 
shall be subject to the following conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1012.44(a)(12) and the corresponding step of 
Sec. 1012.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1012.44(a)(7) or the corresponding 
step of Sec. 1012.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1012.44(a)(11) or (a)(12) or the 
corresponding steps of Sec. 1012.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk

[[Page 228]]

to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1012.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i)(A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1012.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are

[[Page 229]]

made available for verification purposes if requested by the market 
administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.
[58 FR 27798, May 11, 1993]



Sec. 1012.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1012.44, the following rules shall apply:
    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports submitted by each 
handler pursuant to Sec. 1012.30 and compute the total pounds of skim 
milk and butterfat, respectively, in each class at each pool plant.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk used or disposed of in such product 
shall be considered to be a quantity equivalent to the nonfat milk 
solids contained in such product plus all the water originally 
associated with such solids.

[[Page 230]]

    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1012.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1012.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1012.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[58 FR 27799, May 11, 1993]



Sec. 1012.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1012.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1012.9(b) and (c) by allocating the 
handler's receipts of skim milk and butterfat to such handler's 
utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1012.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1012.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1012.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1012.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1012.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II; and
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except

[[Page 231]]

other source milk received in the form of an unconcentrated fluid milk 
product) and, if paragraph (a)(5) of this section applies, packaged 
inventory at the beginning of the month of products specified in 
Sec. 1012.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk 
unconcentrated fluid milk products transferred or diverted to such plant 
and that were not subtracted pursuant to paragraph (a)(7)(vi) of this 
section, if Class II or Class III classification is requested by the 
operator of the other order plant and the handler, but not in excess of 
the pounds of skim milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1012.40(b)(1) in inventory 
at the beginning of the

[[Page 232]]

month that were not subtracted pursuant to paragraphs (a)(2)(ii), (a)(5) 
and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1012.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool

[[Page 233]]

plants at which such other source milk was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1012.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[58 FR 27799, May 11, 1993]



Sec. 1012.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for purposes of allocating receipts from other 
order plants pursuant to Sec. 1012.44(a)(12) and the corresponding step 
of Sec. 1012.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in producer 
milk of all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1012.43(d) and Sec. 1012.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report

[[Page 234]]

by the receiving handler, and as necessary, any changes in such 
allocation arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association for its members which was utilized in each class at each 
pool plant receiving such milk. For the purpose of this report, the milk 
so received shall be allocated to each class at each pool plant in the 
same ratio as all producer milk received at such plant during the month.
[37 FR 17732, Aug. 30, 1972, as amended at 41 FR 43158, Sept. 30, 1976; 
58 FR 27801, May 11, 1993]

                              Class Prices



Sec. 1012.50  Class prices.

    Subject to the provisions of Sec. 1012.52, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $3.88.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[42 FR 46914, Sept. 19, 1977, as amended at 47 FR 42965, Sept. 30, 1982; 
51 FR 12831, Apr. 16, 1986; 58 FR 27801, May 11, 1993; 60 FR 6608, Feb. 
2, 1995]



Sec. 1012.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1012.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of

[[Page 235]]

milk used to manufacture butter-nonfat dry milk and the gross value per 
hundredweight of milk used to manufacture Cheddar cheese for the current 
month exceed or are less than the respective gross values for the 
preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18959, Apr. 14, 1995]



Sec. 1012.52  Plant location adjustments for handlers.

    (a) The Class I price for producer milk and other source milk at a 
plant located outside the State of Florida or within the State of 
Florida but outside the defined marketing area shall be adjusted at the 
rates set forth in the following schedule:

                                                                        
------------------------------------------------------------------------
             Location of plant                      Rate per cwt.       
------------------------------------------------------------------------
Outside the State of Florida:                                           
    For each 10 miles or fraction thereof   Subtract 2.0 cents.         
     from the city hall in Tampa, Fla.                                  
Inside the State of Florida:                                            
    In the defined marketing area of Part   Add 30 cents.               
     1013.                                                              
    South of a line forming the southern    No adjustment.              
     boundary of the counties of Alachua,                               
     Dixie, Gilchrist, Putnam and St.                                   
     Johns, but outside the defined                                     
     marketing area of Part 1013.                                       
    The remaining area within the State of  Minus 30 cents.             
     Florida.                                                           
------------------------------------------------------------------------

    (b) For the purpose of calculating location adjustments, receipts of 
fluid milk products from pool plants shall be assigned any remainder of 
Class I milk at the transferee plant that is in excess of the sum of 
producer milk receipts at such plant and that assigned as Class I to 
receipts from other order plants and unregulated supply plants. Such 
assignment shall be made in sequence according to the location 
adjustment applicable at each plant, beginning with the plant nearest 
the Tampa City Hall.
    (c) The Class I price resulting from such adjustments specified in 
this section shall not result in a price less than the Class II price 
for the month and the Class I price applicable to other source milk 
shall be adjusted at the rates specified in paragraph (a) of this 
section, except that the adjusted Class I price shall not be less than 
the Class II price for the month.
[37 FR 17732, Aug. 30, 1972, as amended at 49 FR 37568, Sept. 25, 1984; 
52 FR 5072, Feb. 19, 1987; 54 FR 6386, Feb. 10, 1989; 55 FR 17589, Apr. 
26, 1990]



Sec. 1012.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6608, Feb. 2, 1995]



Sec. 1012.54  Equivalent price.

    If for any reason a price quotation required by this part for 
computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price determined 
by the Secretary to be equivalent to the price that is required.

[[Page 236]]

                              Uniform Price



Sec. 1012.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price 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. 1012.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1012.44(c) by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1012.44(a)(14) and the 
corresponding step of Sec. 1012.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1012.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1012.44(a)(9) and the corresponding step of Sec. 1012.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1012.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1012.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1012.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1012.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1012.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1012.43(d) and Sec. 1012.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1012.44(a)(11) and the corresponding steps of Sec. 1012.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1012.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1012.76(b)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk

[[Page 237]]

unconcentrated fluid milk products received at the plant during the 
prior month.
[58 FR 27801, May 11, 1993]



Sec. 1012.61  Computation of uniform price.

    For each month, the market administrator shall compute a uniform 
price for milk of 3.5 percent butterfat content as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1012.60 for all handlers who filed the reports pursuant to 
Sec. 1012.30 for the month, except those in default of payments required 
pursuant to Sec. 1012.71 for the preceding month;
    (b) [Reserved]
    (c) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1012.75;
    (d) Subtract an amount equal to the total value of the plus location 
adjustments computed pursuant to Sec. 1012.75;
    (e) Add an amount equal to one-half the unobligated balance in the 
producer-settlement fund;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1012.60(f); and
    (g) Subtract not less than four cents nor more than five cents per 
hundredweight.
[37 FR 17732, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977]



Sec. 1012.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of each month the uniform price for 
such month.
[42 FR 46914, Sept. 19, 1977]

                            Payments For Milk



Sec. 1012.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
into such fund pursuant to Secs. 1012.71 and 1012.76 and out of which he 
shall make all payments from such fund pursuant to Sec. 1012.72: 
Provided, That the market administrator shall offset the payment due to 
a handler against payments due from such handler.



Sec. 1012.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amounts specified in paragraph (a)(1) of this section 
exceed the amounts specified in paragraph (a)(2) of this section:
    (1) The net pool obligation pursuant to Sec. 1012.60 for such 
handler; and
    (2) The sum of:
    (i) The value of such handler's producer milk at the uniform price, 
as adjusted pursuant to Sec. 1012.75; and
    (ii) The value at the uniform price applicable at the location of 
the plant(s) from which received (not to be less than the value at the 
Class II price) of other source milk for which a value is computed 
pursuant to Sec. 1012.60(f).
    (b) Each handler who operates an other order plant that is regulated 
under an order providing for individual-handler pooling shall pay to the 
market administrator for the producer-settlement fund, on or before the 
25th day after the end of the month, an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route disposition 
in marketing areas regulated by two or more market pool orders, the 
reconstituted skim milk assigned to Class I shall be prorated according 
to such disposition in each marketing area; and
    (2) Compute the value of the quantity of reconstituted skim milk 
assigned in paragraph (b)(1) of this section to Class I disposition in 
this marketing area at the Class I price under this part applicable at 
the location of the other order

[[Page 238]]

plant (not to be less than the Class II price), and subtract its value 
at the Class II price.
[37 FR 17732, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977]



Sec. 1012.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1012.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1012.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1012.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (b) of this section, each 
handler shall make payment for producer milk as follows:
    (1) On or before the 20th day of the month to each producer who had 
not discontinued shipping milk to such handler before the 15th day of 
the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received during the first 15 
days of the month, less proper deductions authorized in writing by such 
producer;
    (2) On or before the 5th day of the following month to each producer 
who had not discontinued shipping milk to such handler before the last 
day of the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received from the 16th through 
the last day of the month, less proper deductions authorized in writing 
by such producer; and
    (3) On or before the 15th day of each month to each producer for 
milk received during the preceding month, not less than the uniform 
price per hundredweight, adjusted pursuant to Secs. 1012.74, 1012.75, 
and 1012.86, subject to the following:
    (i) Minus payments made pursuant to paragraphs (a)(1) and (2) of 
this section;
    (ii) Less proper deductions authorized in writing by such producer; 
and
    (iii) If by such date such handler has not received full payment 
from the market administrator pursuant to Sec. 1012.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
paragraph next following after receipt of the balance due from the 
market administrator.
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its members to collect payment 
for their milk and which has so requested any handler in writing, 
together with a written promise of such association to reimburse the 
handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the association, such handler on or before 
the second day prior to the date on which payments are due individual 
producers, shall pay the cooperative association for milk received 
during the month from the producer-members of such association as 
determined by the market administrator an amount not less than the total 
due such producer-members pursuant to paragraph (a) of this section, 
subject to the following:
    (1) Payment pursuant to this paragraph shall be made for milk 
received from any producer beginning on the first day of the month 
following receipt from the cooperative association of its certification 
that such producer is a member, and continuing through the last day of 
the month next preceding receipt of notice from the cooperative 
association of a termination of membership or until the original request 
is rescinded in writing by the cooperative association; and
    (2) Copies of the written request of the cooperative association to 
receive payments on behalf of its members, together with its promise to 
reimburse and its certified list of members shall be submitted 
simultaneously both to the handler and to the market administrator and 
shall be subject to verification by the market administrator at his 
discretion, through audit of the

[[Page 239]]

records of the cooperative association. Exceptions, if any, to the 
accuracy of such certification claimed by any producer or by a handler 
shall be made by written notice to the market administrator and shall be 
subject to his determination.



Sec. 1012.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1012.51 (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.
[60 FR 18959, Apr. 14, 1995]



Sec. 1012.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a pool plant 
shall be reduced according to the location of the pool plant at the 
rates set forth in Sec. 1012.52; and
    (b) For purposes of computations pursuant to Secs. 1012.71 and 
1012.72, the uniform price shall be adjusted at the rates set forth in 
Sec. 1012.52 applicable at the location of the nonpool plant from which 
the milk was received, except that the resulting adjusted price shall 
not be less than the Class II price for the month.
[37 FR 17732, Aug. 30, 1972, as amended at 54 FR 6386, Feb. 10, 1989]



Sec. 1012.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1012.30 and 1012.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1) The obligation that would have been computed pursuant to 
Sec. 1012.60 at such plant shall be determined as though such plant were 
a pool plant, subject to the following modifications:
    (i) Receipts at such nonpool plant from a pool plant or an other 
order plant shall be assigned to the utilization at which classified at 
the pool plant or other order plant;
    (ii) Transfers from such nonpool plant to a pool plant or an other 
order plant shall be classified in the class to which allocated at the 
pool plant or other order plant. Class I milk transferred from such 
nonpool plant to pool plants and other order plants shall be valued at 
the uniform price of the respective order, except that reconstituted 
skim milk (including that in filled milk), and milk or skim milk from 
producer-handlers and exempt plants defined in any order shall be valued 
at the Class II price. No obligation shall apply to Class I milk 
transferred to a pool plant or an other order plant if such Class I 
utilization is assigned to receipts at the partially regulated 
distributing plant from pool plants and other order plants at which such 
milk was classified and priced as Class I milk;
    (iii) Such handler's obligation shall include any charges computed 
pursuant to Sec. 1012.60(f) and any credits computed pursuant to 
Sec. 1012.71(a)(2)(ii) with respect to receipts of Class I milk from an 
unregulated supply plant, except that the credit for receipts of 
reconstituted skim milk (including that in filled milk), and milk or 
skim milk from producer-handlers and exempt plants defined in any order 
shall be at the Class II price, unless an obligation with respect to 
such plant is computed as specified in (a)(1)(iv) of this section;

[[Page 240]]

    (iv) If the operator of the partially regulated distributing plant 
so requests and provides with his report pursuant to Sec. 1012.30 a 
similar report for each nonpool plant which serves as a supply plant for 
such partially regulated distributing plant by shipment to such plant 
during the month equivalent to the requirements of Sec. 1012.7(b) with 
agreement of the operator of such plant that the market administrator 
may examine the books and records of such plant for purposes of 
verification of such reports, there will be added the amount of the 
obligation computed at such nonpool supply plant in the same manner and 
subject to the same conditions as for the partially regulated 
distributing plant.
    (2) From this obligation, deduct the sum of:
    (i) The gross payments made by such handler, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1012.74, for Grade A milk received during the month from dairy 
farmers at such plant and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section; and
    (ii) Payments to the producer-settlement fund of another order under 
which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the partially regulated distributing plant as follows:
    (i) Any Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) Receipts from a nonpool plant that is not an other order plant 
to the extent that an equivalent amount of skim milk or butterfat 
disposed of to such nonpool plant by handlers fully regulated under any 
order issued pursuant to the Act is classified and priced as Class I 
milk and is not used as an offset on any other payment obligation 
pursuant to any other order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant and milk or skim milk contained in receipts from 
producer-handlers and exempt plants defined in any order disposed of as 
route disposition in the marketing area;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total;
    (5) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant, subtract its value at the uniform 
price applicable at such location, and add the amount obtained from 
multiplying the pounds of labeled reconstituted milk included in 
paragraph (b)(3) of this section by the difference between the Class I 
price applicable at the location of the partially regulated distributing 
plant less $1.00 (but not to be less than the Class III price) and the 
Class III price. For any reconstituted milk that is not so labeled, the 
Class I price shall not be reduced by $1.00. Alternatively, for such 
disposition, payments may be made to the producer-settlement fund of the 
order regulating the producer milk used to produce the nonfluid milk 
ingredients at the difference between the Class I price applicable under 
the other order at the location of the plant where the nonfluid milk 
ingredients were processed (but not to be less than the Class III price) 
and the Class III price. This payment option shall apply only if a 
majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1012.43(d). Payments

[[Page 241]]

may be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[37 FR 17732, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977; 
58 FR 27802, May 11, 1993]



Sec. 1012.77  Adjustment of accounts.

    When verification by the market administrator of reports or payments 
of a handler discloses errors resulting in monies due the market 
administrator from such handler, such handler from the market 
administrator, or a producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made not later than the 
date for making payment next following such disclosure.



Sec. 1012.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1012.71, 
1012.73, 1012.76, 1012.77, 1012.85, or 1012.86 shall be increased 1 
percent for each month or portion thereof that such obligation is 
overdue, subject to the following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.
[54 FR 6386, Feb. 10, 1989]

        Administrative Assessment and Marketing Service Deduction



Sec. 1012.85  Assessment for order administration.

    As his pro rata share of the expense of administration of this part, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1012.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1012.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1012.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1012.60(d) and (f); and
    (c) Class I milk disposed of in the marketing area from a partially 
regulated distributing plant that exceeds the hundredweight of Class I 
milk:
    (1) Received during the month at such plant from pool plants and 
other order plants that is not used as an offset under a similar 
provision of another order issued pursuant to the Act; and
    (2) Specified in Sec. 1012.76(b)(2)(ii).
[37 FR 17732, Aug. 30, 1972, as amended at 41 FR 43158, Sept. 30, 1976; 
58 FR 27802, May 11, 1993]



Sec. 1012.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section, each 
handler in making payments for producer milk received during the month 
shall deduct 4

[[Page 242]]

cents per hundredweight or such lesser amount as the Secretary may 
prescribe (except on such handler's own farm production) and shall pay 
such deductions to the market administrator not later than the 15th day 
after the end of the month. Such money shall be used by the market 
administrator to verify or establish weights, samples and tests of 
producer milk and to provide producers with market information. Such 
services shall be performed in whole or in part by the market 
administrator or by an agent engaged by and responsible to him.
    (b) In the case of products for whom a cooperative association is 
performing, as determined by the Secretary, the services set forth in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
as are authorized by such producers and, on or before the 15th day after 
the end of each month, pay over such deductions to the association 
rendering such services.



PART 1013--MILK IN SOUTHEASTERN FLORIDA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1013.1  General provisions.

                               Definitions

1013.2  Southeastern Florida marketing area.
1013.3  Route disposition.
1013.4  [Reserved]
1013.5  Distributing plant.
1013.6  Supply plant.
1013.7  Pool plant.
1013.8  Nonpool plant.
1013.9  Handler.
1013.10  Producer-handler.
1013.11  [Reserved]
1013.12  Producer.
1013.13  Producer milk.
1013.14  Other source milk.
1013.15  Fluid milk product.
1013.16  Fluid cream product.
1013.17  Filled milk.
1013.18  Cooperative association.
1013.19  [Reserved]
1013.20  Commercial food processing establishment.

                             Handler Reports

1013.30  Reports of receipts and utilization.
1013.31  Payroll reports.
1013.32  Other reports.

                         Classification of Milk

1013.40  Classes of utilization.
1013.41  Shrinkage.
1013.42  Classification of transfers and diversions.
1013.43  General classification rules.
1013.44  Classification of producer milk.
1013.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1013.50  Class prices.
1013.51  Basic formula price.
1013.52  Plant location adjustments for handlers.
1013.53  Announcement of class prices.
1013.54  Equivalent price.

                              Uniform Price

1013.60  Handler's value of milk for computing the uniform price.
1013.61  Computation of uniform price.
1013.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1013.70  Producer-settlement fund.
1013.71  Payments to the producer-settlement fund.
1013.72  Payments from the producer-settlement fund.
1013.73  Payments to producers and to cooperative associations.
1013.74  Butterfat differential.
1013.75  Plant location adjustments for producers and on nonpool milk.
1013.76  Payments by handler operating a partially regulated 
          distributing plant.
1013.77  Adjustment of accounts.
1013.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1013.85  Assessment for order administration.
1013.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 37 FR 17739, Aug. 30, 1972, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1013.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are

[[Page 243]]

hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1013.2  Southeastern Florida marketing area.

    The Southeastern Florida marketing area, hereinafter called the 
``marketing area,'' means all the territory geographically within the 
boundaries of the following counties, all in the State of Florida, 
including all Government reservations and incorporated municipalities 
within this territory:

    Broward, Dade, Glades, Hendry, Indian River, Martin, Monroe, 
Okeechobee, Palm Beach, St. Lucie.



Sec. 1013.3  Route disposition.

    Route disposition means any delivery to retail or wholesale outlets 
(including delivery by a vendor, or a sale from or through a plant 
store, or by vending machine) of any product in a form designated as 
Class I milk pursuant to Sec. 1013.40(a), but does not include delivery 
to a milk or filled milk receiving or processing plant.



Sec. 1013.4  [Reserved]



Sec. 1013.5  Distributing plant.

    Distributing plant means a plant approved by a duly constituted 
health authority for the processing or packaging of Grade A milk which 
has route disposition of fluid milk products in the marketing area 
during the month.



Sec. 1013.6  Supply plant.

    Supply plant means a plant from which a fluid milk product 
acceptable to a duly constituted health authority is shipped during the 
month to a pool plant.



Sec. 1013.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) A distributing plant that has route distribution, except filled 
milk, during the month of not less than 50 percent of the total Grade A 
fluid milk products, except filled milk, that are physically received at 
such plant or diverted as producer milk to a nonpool plant pursuant to 
Sec. 1013.13, and that has route disposition, except filled milk, in the 
marketing area during the month of not less than 10 percent of such 
receipts.
    (b) A supply plant from which not less than 50 percent of the total 
quantity of Grade A fluid milk products that is physically received from 
dairy farmers at such plant or diverted as producer milk to a nonpool 
plant pursuant to Sec. 1013.13 during the month is shipped as fluid milk 
products, except filled milk, to pool plants meeting the requirements of 
Sec. 1013.7(a).
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which a greater quantity of fluid milk products, except filled milk, is 
disposed of during the month from such plant as route disposition in the 
marketing area regulated by the other order than as route disposition in 
this marketing area: Provided, That such a distributing plant which was 
a pool plant under this order in the immediately preceding month shall 
continue to be subject to all of the provisions of this part until the 
third consecutive month in which a greater proportion of its route 
disposition is made in such other marketing area, unless the other order 
requires regulation of the plant without regard to its qualifying as a 
pool plant under this order; and
    (3) Any building, premises, or facilities, the primary function of 
which is to hold or store bottled milk or milk products (including 
filled milk) in finished form, nor shall it include any part of a plant 
in which the operations are entirely separated (by wall or other 
partition) from the handling of producer milk.
[54 FR 6386, Feb. 10, 1989]



Sec. 1013.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:

[[Page 244]]

    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which skim milk and butterfat in the form of products designated as 
Class I milk pursuant to Sec. 1013.40(a) in consumer-type packages or 
dispenser units are distributed as route disposition in the marketing 
area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant from which skim milk 
and butterfat in the form of products designated as Class I milk 
pursuant to Sec. 1013.40(a) are moved to a pool plant during the month.



Sec. 1013.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted from a pool plant to a nonpool plant for the 
account of such cooperative association;
    (c) Any cooperative association with respect to milk of its 
producer-members which is delivered from the farm to the pool plant of 
another handler in a tank truck owned and operated by or under contract 
to such cooperative association. The milk for which a cooperative 
association is the handler pursuant to this paragraph shall be deemed to 
have been received at the location of the pool plant to which it was 
delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler; or
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant.



Sec. 1013.10  Producer-handler.

    Producer-handler means any person who meets all the conditions of 
paragraphs (a), (b), and (c) of this section:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by him in accordance with the requirements 
set forth in paragraph (b) of this section, and provides proof 
satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
at his sole risk and under his complete and exclusive management and 
control; and
    (2) Each such farm is owned or operated by him, at his sole risk, 
and under his complete and exclusive management and control;
    (b) Operates a plant in which milk approved by a duly constituted 
health authority for fluid consumption is processed or packaged and from 
which there is route disposition during the month in the marketing area 
pursuant to the following requirements:
    (1) No fluid milk products are received at such plant or by him at 
any other location, except:
    (i) From dairy farm(s) as specified in paragraph (a) of this 
section; and
    (ii) Fluid milk products (other than whole milk) from pool plants in 
an amount that is not in excess of the lesser of 5,000 pounds or 5 
percent of his Class I sales during the month;
    (2) Such plant is operated under his complete and exclusive 
management and control and at his sole risk, and is not used during the 
month to process, package, receive, or otherwise handle fluid milk 
products for any other person; and
    (c) Disposes of no other source milk (except that represented by 
nonfat solids used in the fortification of fluid milk products) as Class 
I milk.
    (d) Sections 1013.50 through 1013.86 shall not apply to a producer-
handler.



Sec. 1013.11  [Reserved]



Sec. 1013.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant

[[Page 245]]

or diverted pursuant to Sec. 1013.13 from a pool plant to a nonpool 
plant.
    (b) The term ``producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act; or
    (2) Any person with respect to milk produced by such person that is 
reported as diverted to another order plant if any portion of such 
person's milk so moved is assigned to Class I milk under the provisions 
of such other order.
[54 FR 6386, Feb. 10, 1989]



Sec. 1013.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk:
    (a) Received at a pool plant directly from a producer or a handler 
pursuant to Sec. 1013.9(c): Provided, That if the milk received at a 
pool plant from a handler described in Sec. 1013.9(c) is purchased on a 
basis other than farm weights, the amount by which the total farm 
weights of such milk exceed the weights on which the pool plant's 
purchases are based shall be producer milk received by the handler 
described in Sec. 1013.9(c) at the location of the pool plant; or
    (b) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant, subject to the following conditions:
    (1) Such milk shall be deemed to have been received by the diverting 
handler at the plant to which diverted;
    (2) Not less than 10 days' production of the producer whose milk is 
diverted is physically received at a pool plant: Provided, That any 
delivery during the current month from such producer to another order 
plant regulated by the order that regulated such pool plant in the prior 
month shall be counted towards meeting the 10-day production 
requirement;
    (3) To the extent that it would result in nonpool plant status for 
the pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (4) A cooperative association may divert for its account the milk of 
a producer. The total quantity of such milk so diverted by a cooperative 
that exceeds the following specified applicable percentage of producer 
milk that the cooperative association caused to be delivered to and 
physically received at pool plants during the month shall not be 
producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (5) The operator of a pool plant other than a cooperative 
association may divert for its account any milk of producers that is not 
under the control of a cooperative association that is diverting milk 
during the month pursuant to paragraph (b)(4) of this section. The total 
quantity so diverted by the operator of the pool plant that exceeds the 
following specified applicable percentage of milk physically received at 
such plant during the month that is eligible to be diverted by the plant 
operator shall not be producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (6) The diverting handler shall designate the dairy farmers whose 
milk is not producer milk pursuant to paragraphs (b) (4) and (5) of this 
section. If the handler fails to make such designation, milk diverted on 
the last day of the month, then the second-to-last day of the month, and 
so on, shall be excluded until all diversions in excess of the 
prescribed limit are accounted for.
[37 FR 17739, Aug. 30, 1972, as amended at 54 FR 6386, Feb. 10, 1989]

    Effective Date Note: At 57 FR 61780, Dec. 29, 1992, Sec. 1013.13 was 
amended by suspending paragraph (b)(2) indefinitely, effective Dec. 1, 
1992.



Sec. 1013.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source except:
    (1) Producer milk;
    (2) Such products from pool plants; and
    (3) Such products in inventory at the beginning of the month;

[[Page 246]]

    (b) Receipts of packaged fluid cream products and eggnog from other 
plants;
    (c) Products, other than fluid milk products and fluid cream 
products, from any source (including those produced at the plant) which 
are reprocessed, converted into, or combined with another product in the 
plant during the month; and
    (d) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.
[41 FR 43158, Sept. 30, 1976, as amended at 46 FR 51235, Oct. 19, 1981]



Sec. 1013.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27802, May 11, 1993]



Sec. 1013.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27803, May 11, 1993]



Sec. 1013.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers or flavoring) resembles milk or any 
other fluid milk product, and contains less than 6 percent nonmilk fat 
(or oil).



Sec. 1013.18  Cooperative association.

    Cooperative association means any cooperative association of 
producers which the Secretary determines, after application by the 
association: (a) To be qualified under the provisions of the act of 
Congress of February 19, 1922, as amended, known as the ``Capper-
Volstead Act''; (b) to have full authority in the sale of milk of its 
members and to be engaged in making collective sales of or marketing 
milk or its products for its members; and (c) to have its entire 
activities under the control of its members.



Sec. 1013.19  [Reserved]



Sec. 1013.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1013.13, 1013.41 and 1013.52.
[58 FR 27803, May 11, 1993]

[[Page 247]]

                             Handler Reports



Sec. 1013.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler, 
except a handler pursuant to Sec. 1013.9 (e) or (f), shall report to the 
market administrator for such month, and for each accounting period in 
each month, with respect to each plant at which milk is received or at 
which filled milk is processed or packaged in detail and on forms 
prescribed by the market administrator, as follows:
    (a) The quantities of skim milk and butterfat contained in or 
represented by receipts of:
    (1) Producer milk (or in the case of handlers described in 
Sec. 1013.9(d) Grade A milk received from dairy farmers);
    (2) Fluid milk products and bulk fluid cream products received from 
pool plants;
    (3) Other source milk;
    (4) Milk diverted to nonpool plants pursuant to Sec. 1013.13; and
    (5) Inventories of fluid milk products and fluid cream products at 
the beginning and end of the month or accounting period;
    (b) The utilization of all skim milk and butterfat required to be 
reported pursuant to paragraph (a) of this section, including a separate 
statement showing:
    (1) The respective amounts of skim milk and butterfat disposed of as 
route disposition entirely outside the marketing area, showing 
separately the in-area and outside area route disposition of filled 
milk; and
    (2) For a handler described in Sec. 1013.9(d), the amount of 
reconstituted skim milk in fluid milk products disposed of as route 
disposition in the marketing area;
    (c) Such other information with respect to receipts and utilization 
as the market administrator may request; and
    (d) Each handler who submits reports on the basis of accounting 
periods of less than a month, as described in Sec. 1013.44(d), shall 
submit a summary report of the same information for the entire month.
[37 FR 17739, Aug. 30, 1972, as amended at 41 FR 43159, Sept. 30, 1976]



Sec. 1013.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1013.9 (a), (b), or (c) shall report to the 
market administrator, in detail and on forms prescribed by the market 
administrator, his producer payroll for that month, which shall show for 
each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The days for which milk was received from such producer;
    (4) The average butterfat content of such milk; and
    (5) The net amount of the handler's payment with respect to such 
milk to the producer or cooperative association, together with the price 
paid and the amount and nature of any deductions.
    (b) Each handler making payments pursuant to Sec. 1013.76(a) shall 
report the information required pursuant to paragraph (a) of this 
section. In such reports receipts of Grade A milk from dairy farmers 
shall be reported in lieu of those in producer milk, and payments to 
dairy farmers delivering such milk shall be reported in lieu of payments 
to producers.



Sec. 1013.32  Other reports.

    (a) Each producer-handler shall make reports to the market 
administrator at such time and in such manner as the market 
administrator may prescribe.
    (b) Each handler who operates an other order plant shall report 
total receipts and utilization or disposition of skim milk and butterfat 
at the plant at such time and in such manner as the market administrator 
may require and allow verification of such reports by the market 
administrator.
    (c) Each handler described in Sec. 1013.9(c) shall report to the 
market administrator in detail and on forms prescribed by the market 
administrator on or before the 7th day after the end of the month the 
quantities of skim milk and butterfat in producer milk delivered to each 
pool plant in such month.
    (d) Each handler described in Sec. 1013.9 (a), (b), or (c) shall 
report to the market administrator:

[[Page 248]]

    (1) On or before the first day other source milk as defined in 
Sec. 1013.14(a) is received at his pool plants, his intention to receive 
such product, and on or before the last day such product is received, 
his intention to discontinue receipt of such product; and
    (2) Such other information with respect to his receipts and 
utilization of butterfat and skim milk and at such times as the market 
administrator shall prescribe.

                         Classification of Milk



Sec. 1013.40  Classes of utilization.

    Except as provided in Sec. 1013.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1013.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;

[[Page 249]]

    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1013.15 and the fluid 
cream product definition pursuant to Sec. 1013.16; and
    (7) In shrinkage assigned pursuant to Sec. 1013.41(a) to the 
receipts specified in Sec. 1013.41(a)(2) and in shrinkage specified in 
Sec. 1013.41 (b) and (c).
[58 FR 27803, May 11, 1993]



Sec. 1013.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1013.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1013.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1013.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph shall be two 
percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectivelv, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is diverted purchases such milk on the basis of weights determined 
from its measurement on the farm, the applicable percentage under this 
paragraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II classification is 
requested by the operator of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II classification is requested by 
the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective quantities of skim milk and

[[Page 250]]

butterfat to which percentages are applied in paragraphs (b) (1), (2), 
(4), (5), and (6) of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1013.9 (b) and (c), but not in excess of 
0.5 percent of the skim milk and butterfat, respectively, in such milk. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph for the cooperative 
association shall be zero.
[54 FR 6387, Feb. 10, 1989]



Sec. 1013.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant shall be classified as Class I milk 
unless the operators of both plants request the same classification in 
another class. In either case, the classification of such transfers 
shall be subject to the following conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1013.44(a)(12) and the corresponding step of 
Sec. 1013.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1013.44(a)(7) or the corresponding 
step of Sec. 1013.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1013.44(a)(11) or (a)(12) or the 
corresponding steps of Sec. 1013.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the

[[Page 251]]

other classes shall be classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1013.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1013.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:

[[Page 252]]

    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.
[58 FR 27803, May 11, 1993]



Sec. 1013.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1013.44, the following rules shall apply:
    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports submitted by each 
handler pursuant to Sec. 1013.30(a) and compute the total pounds of skim 
milk and butterfat, respectively, in Class I milk, Class II milk, and 
Class III milk at each pool plant.
    (b) The skim milk contained in any product utilized, produced or 
disposed of by the handler during the month shall be considered to be an 
amount equivalent to the nonfat milk solids contained in such product, 
plus all of the water originally associated with such solids.
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1013.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1013.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1013.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[37 FR 17739, Aug. 30, 1972, as amended at 58 FR 27805, May 11, 1993]



Sec. 1013.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1013.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1013.9 (b) and (c) by allocating the 
handler's receipts of skim milk and butterfat to such handler's 
utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1013.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is

[[Page 253]]

not used as an offset for any other payment obligation under any order;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1013.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1013.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1013.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1013.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1013.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds

[[Page 254]]

of skim milk to be subtracted from Class II and Class III combined 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk unconcentrated 
fluid milk products from an other order plant that are in excess of bulk 
unconcentrated fluid milk products transferred or diverted to such plant 
and that were not subtracted pursuant to paragraph (a)(7)(vi) of this 
section, if Class II or Class III classification is requested by the 
operator of the other order plant and the handler, but not in excess of 
the pounds of skim milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1013.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8) (i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall

[[Page 255]]

be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1013.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream

[[Page 256]]

products from another pool plant according to the classification of such 
products pursuant to Sec. 1013.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[58 FR 27805, May 11, 1993]



Sec. 1013.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for purposes of allocating receipts from other 
order plants pursuant to Sec. 1013.44(a)(12) and the corresponding step 
of Sec. 1013.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in producer 
milk of all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1013.43(d) and Sec. 1013.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests the percentage of 
producer milk delivered by members of such association which was used in 
each class by each handler receiving such milk. For the purpose of this 
report, the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.
[37 FR 17739, Aug. 30, 1972, as amended at 41 FR 43159, Sept. 30, 1976; 
58 FR 27807, May 11, 1993]

                              Class Prices



Sec. 1013.50  Class prices.

    Subject to the provisions of Sec. 1013.52, the Class prices for the 
month per hundredweight of milk containing 3.5 percent butterfat shall 
be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $4.18.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[37 FR 17739, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977; 
47 FR 42967, Sept. 30, 1982; 51 FR 12832, Apr. 16, 1986; 54 FR 6387, 
Feb. 10, 1989; 58 FR 27807, May 11, 1993; 60 FR 6608, Feb. 2, 1995]



Sec. 1013.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base

[[Page 257]]

month'' series, as reported by the Department, adjusted to a 3.5 percent 
butterfat basis using the butterfat differential for the preceding month 
computed pursuant to Sec. 1013.74 and rounded to the nearest cent, plus 
or minus the change in gross value yielded by the butter-nonfat dry milk 
and Cheddar cheese product price formula computed pursuant to paragraphs 
(a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18959, Apr. 14, 1995]



Sec. 1013.52  Plant location adjustments for handlers.

    (a) The Class I price for producer milk and other source milk at a 
plant located outside the State of Florida or within the State of 
Florida but outside

[[Page 258]]

of the defined marketing area shall be adjusted at the rates set forth 
in the following schedule:

                                                                        
------------------------------------------------------------------------
             Location of plant                      Rate per cwt.       
------------------------------------------------------------------------
Outside the State of Florida:                                           
    For each 10 miles or fraction thereof   Subtract 2.0 cents.         
     from the U.S. Post Office in West                                  
     Palm Beach, Fla.                                                   
Inside the State of Florida:                                            
    South of a line forming the southern    Subtract 30 cents.          
     boundary of the counties of Alachua,                               
     Dixie, Gilchrist, Putnam and St.                                   
     Johns, but outside the defined                                     
     marketing area of this order.                                      
    The remaining area within the State of  Subtract 60 cents.          
     Florida.                                                           
------------------------------------------------------------------------

    (b) For the purpose of calculating location adjustments, receipts of 
fluid milk products from pool plants shall be assigned any remainder of 
Class I milk at the transferee plant that is in excess of the sum of 
producer milk receipts at such plant and that assigned as Class I to 
receipts from other order plants and unregulated supply plants. Such 
assignment shall be made in sequence according to the location 
adjustment applicable at each plant, beginning with the plant nearest 
the U.S. Post Office in West Palm Beach.
    (c) The Class I price resulting from such adjustments specified in 
this section shall not result in a price less than the Class II price 
for the month and the Class I price applicable to other source milk 
shall be adjusted at the rates specified in paragraph (a) of this 
section, except that the adjusted Class I price shall not be less than 
the Class II price for the month.
[37 FR 17739, Aug. 30, 1972, as amended at 48 FR 29673, June 28, 1983; 
52 FR 5072, Feb. 19, 1987; 54 FR 6387, Feb. 10, 1989; 55 FR 17589, Apr. 
26, 1990]



Sec. 1013.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6608, Feb. 2, 1995]



Sec. 1013.54  Equivalent price.

    If, for any reason, a price quotation required by this order for 
computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price determined 
by the Secretary to be equivalent to the price which is required.

                              Uniform Price



Sec. 1013.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price 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. 1013.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1013.44(c) by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1013.44(a)(14) and the 
corresponding step of Sec. 1013.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1013.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1013.44(a)(9) and the corresponding step of Sec. 1013.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1013.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1013.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1013.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;

[[Page 259]]

    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1013.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1013.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1013.43(d) and Sec. 1013.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1013.44(a)(11) and the corresponding steps of Sec. 1013.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1013.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1013.76(b)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[58 FR 27807, May 11, 1993]



Sec. 1013.61  Computation of uniform price.

    For each month the market administrator shall compute a uniform 
price for milk of 3.5 percent butterfat as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1013.60 for all handlers who filed the reports prescribed by 
Sec. 1013.30 for the month and who made the payments pursuant to 
Sec. 1013.71 for the preceding month;
    (b) [Reserved]
    (c) Add an amount equal to the total value of the location 
adjustments computed pursuant to Sec. 1013.75;
    (d) Add an amount equal to one-half of the unobligated balance in 
the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1013.60(f); and
    (f) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight.
[37 FR 17739, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977]



Sec. 1013.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of each month the uniform price for 
such month.
[42 FR 46915, Sept. 19, 1977]

[[Page 260]]

                            Payments for Milk



Sec. 1013.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1013.71, 
1013.76, and 1013.77 and out of which he shall make all payments 
pursuant to Secs. 1013.72 and 1013.77: Provided, That any payments due 
to any handler shall be offset by any payments due from such handler.



Sec. 1013.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amounts specified in paragraph (a)(1) of this section 
exceed the amounts specified in paragraph (a)(2) of this section: 
Provided, That the requirement as to date of payment pursuant to this 
section shall be considered to have been met if the payment is made by 
mail postmarked not later than the required payment date:
    (1) The net pool obligation computed pursuant to Sec. 1013.60 for 
such handler; and
    (2) The sum of:
    (i) The value of each handler's producer milk at the uniform price, 
as adjusted pursuant to Sec. 1013.75; and
    (ii) The value at the uniform price applicable at the location of 
the plant(s) from which received (not to be less than the value at the 
Class II price) of other source milk for which a value is computed 
pursuant to Sec. 1013.60(f).
    (b) Each handler operating a plant specified in Sec. 1013.7(c)(4), 
if such plant is subject to the classification and pricing provisions of 
another order which provides for individual-handler pooling, shall pay 
to the market administrator for the producer-settlement fund on or 
before the 25th day after the end of the month an amount computed as 
follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route disposition 
in marketing areas regulated by two or more market pool orders, the 
reconstituted skim milk assigned to Class I shall be prorated according 
to such disposition in each area; and
    (2) Compute the value of the quantity of reconstituted skim milk 
assigned in paragraph (b)(1) of this section to Class I disposition in 
this marketing area at the Class I price under this part applicable at 
the location of the other order plant (not to be less than the Class II 
price), and subtract its value at the Class II price.
[37 FR 17739, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977]



Sec. 1013.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1013.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1013.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1013.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (b) of this section, each 
handler shall make payment to each producer from whom milk is received 
as follows:
    (1) On or before the 20th day of each month to each producer who did 
not discontinue shipping milk to such handler before the 15th day of the 
month, an amount equal to not less than the uniform price for the 
preceding month less 10 percent, multiplied by the hundredweight of milk 
received from such producer during the first 15 days of the month, less 
proper deductions authorized by such producer to be made from payments 
due pursuant to this paragraph;
    (2) On or before the fifth day of the following month to each 
producer who did not discontinue shipping milk to such handler before 
the last day of the

[[Page 261]]

month, an amount equal to not less than the uniform price for the 
preceding month less 10 percent, multiplied by the hundredweight of milk 
received from such producer after the 15th and through the last day of 
the month, less proper deductions authorized by such producer to be made 
from payments due pursuant to this paragraph; and
    (3) On or before the 15th day of the following month, to each 
producer an amount equal to not less than the uniform price computed 
pursuant to Sec. 1013.61 adjusted pursuant to Secs. 1013.74 and 1013.75, 
multiplied by the total pounds of milk received from such producer, 
subject to the following adjustments:
    (i) Less payments made to such producer pursuant to paragraphs 
(a)(1) and (2) of this section;
    (ii) Less marketing service deductions made pursuant to 
Sec. 1013.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producer; and
    (iv) Less proper deductions authorized by such producer: Provided, 
That if by the date specified, such handler has not received full 
payment from the market administrator pursuant to Sec. 1013.72 for such 
month, he may reduce pro rata his payments to producers by not more than 
the amount of such underpayment and payments to producers shall be 
completed thereafter not later than the date for making payments 
pursuant to this paragraph next following after receipt of the balance 
due from the market administrator;
    (b) Upon receipt of a written request from a cooperative association 
which the Secretary determines is authorized by its members to collect 
payment for their milk and receipt of a written promise to reimburse the 
handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the association, each handler shall on or 
before the second day prior to each date on which payments are due 
individual producers, pay the cooperative association for milk received 
from the producer-members of such association as determined by the 
market administrator during the period for which payment is made, an 
amount equal to not less than the total due such producer-members as 
determined pursuant to paragraph (a) of this section; and
    (c) Each handler who received milk from producers for which payment 
is to be made to a cooperative association pursuant to paragraph (b) of 
this section shall report to such cooperative association or to the 
market administrator for transmittal to such cooperative association for 
each such producer as follows:
    (1) On or before the 25th day of the month, the total pounds of milk 
received during the first 15 days of the month; and
    (2) On or before the 10th day of the following month: (i) The total 
pounds of milk received during the month, (ii) the pounds of milk 
received each day, together with the butterfat content of such milk, 
(iii) the amount or rate and nature of any authorized deductions to be 
made from payments, and (iv) the amount and nature of payments due 
pursuant to Sec. 1013.77.
[37 FR 17739, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977; 
54 FR 6387, Feb. 10, 1989]



Sec. 1013.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1013.51 (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.
[60 FR 18960, Apr. 14, 1995]



Sec. 1013.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a pool plant 
shall be reduced according to the location of

[[Page 262]]

the pool plant at the rates set forth in Sec. 1013.52; and
    (b) For purposes of computations pursuant to Secs. 1013.71 and 
1013.72, the uniform price shall be adjusted at the rates set forth in 
Sec. 1013.52 applicable at the location of the nonpool plant from which 
the milk was received, except that the resulting adjusted price shall 
not be less than the Class II price for the month.
[37 FR 17739, Aug. 30, 1972, as amended at 54 FR 6388, Feb. 10, 1989]



Sec. 1013.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1013.30 and 1013.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1) The obligation that would have been computed pursuant to 
Sec. 1013.60 at such plant shall be determined as though such plant were 
a pool plant, subject to the following modifications:
    (i) Receipts at such nonpool plant from a pool plant or an other 
order plant shall be assigned to the utilization at which classified at 
the pool plant or other order plant;
    (ii) Transfers from such nonpool plant to a pool plant or an other 
order plant shall be classified in the class to which allocated at the 
pool plant or other order plant. Class I milk transferred from such 
nonpool plant to pool plants and other order plants shall be valued at 
the uniform price of the respective order, except that reconstituted 
skim milk (including that in filled milk), and milk or skim milk from 
producer-handlers and exempt plants defined in any order shall be valued 
at the Class II price. No obligation shall apply to Class I milk 
transferred to a pool plant or an other order plant if such Class I 
utilization is assigned to receipts at the partially regulated 
distributing plant from pool plants and other order plants at which such 
milk was classified and priced as Class I milk;
    (iii) Such handler's obligation shall include any charges computed 
pursuant to Sec. 1013.60(f) and any credits computed pursuant to 
Sec. 1013.71(a)(2)(ii) with respect to receipts of Class I milk from an 
unregulated supply plant, except that the credit for receipts of 
reconstituted skim milk (including that in filled milk), and milk or 
skim milk from producer-handlers and exempt plants defined in any order 
shall be at the Class II price, unless an obligation with respect to 
such plant is computed as specified in paragraph (a)(1)(iv) of this 
section;
    (iv) If the operator of the partially regulated distributing plant 
so requests, and provides with his reports pursuant to Secs. 1013.30 and 
1013.31(b) similar reports for each nonpool plant which serves as a 
supply plant for such partially regulated distributing plant by 
shipments to such plant during the month equivalent to the requirements 
of Sec. 1013.7(b) with agreement of the operator of such plant that the 
market administrator may examine the books and records of such plant for 
purposes of verification of such reports, there will be added the amount 
of the obligation computed at such nonpool supply plant in the same 
manner and subject to the same conditions as for the partially regulated 
distributing plant;
    (2) From this obligation, there will be deducted the sum of:
    (i) The gross payments made by such handler, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1013.74, for Grade A milk received during the month from dairy 
farmers at such plant and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section; and
    (ii) Payments to the producer-settlement fund of another order under 
which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of

[[Page 263]]

as route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the partially regulated distributing plant as follows:
    (i) Any Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) Receipts from a nonpool plant that is not an other order plant 
to the extent that an equivalent amount of skim milk or butterfat 
disposed of to such nonpool plant by handlers fully regulated under any 
order issued pursuant to the Act is classified and priced as Class I 
milk and is not used as an offset on any other payment obligation 
pursuant to any other order;
    (3) Deduct from any remainder the pounds of reconstituted milk that 
are made from nonfluid milk products and milk or skim milk contained in 
receipts from producer-handlers and exempt plants defined in any other 
order, which are then disposed of as route disposition in the marketing 
area from the partially regulated distributing plant;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total; and
    (5) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant, subtract its value at the uniform 
price applicable at such location, and add the amount obtained from 
multiplying the pounds of labeled reconstituted milk included in 
paragraph (b)(3) of this section by the difference between the Class I 
price applicable at the location of the partially regulated distributing 
plant less $1.00 (but not to be less than the Class III price) and the 
Class III price. For any reconstituted milk that is not so labeled, the 
Class I price shall not be reduced by $1.00. Alternatively, for such 
disposition, payments may be made to the producer-settlement fund of the 
order regulating the producer milk used to produce the nonfluid milk 
ingredients at the difference between the Class I price applicable under 
the other order at the location of the plant where the nonfluid milk 
ingredients were processed (but not to be less than the Class III price) 
and the Class III price. This payment option shall apply only if a 
majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1013.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[37 FR 17739, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977; 
58 FR 27808, May 11, 1993]



Sec. 1013.77  Adjustment of accounts.

    Whenever audit by the market administrator of any reports, books, 
records, or accounts or other verification discloses errors resulting in 
moneys due (a) the market administrator from a handler, (b) a handler 
from the market administrator, or (c) any producer or cooperative 
association from a handler, the market administrator shall promptly 
notify such handler of

[[Page 264]]

any amount so due and payment thereof shall be made on or before the 
next date for making payments set forth in the provisions under which 
such error occurred.



Sec. 1013.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1013.71, 
1013.73, 1013.76, 1013.77, 1013.85, or 1013.86 shall be increased 1 
percent for each month or portion thereof that such obligation is 
overdue, subject to the following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.
[54 FR 6388, Feb. 10, 1989]

        Administrative Assessment and Marketing Service Deduction



Sec. 1013.85  Assessment for order administration.

    (a) As his pro rata share of the expense of administration of the 
order, each handler shall pay to the market administrator on or before 
the 15th day after the end of the month 4 cents per hundredweight or 
such lesser amount as the Secretary may prescribe, with respect to:
    (1) Producer milk (including such handler's own production);
    (2) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1013.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1013.44 (a)(6), (a)(7), and (a)(11) and the 
corresponding steps of Sec. 1013.44(b), except such other source milk 
that is excluded from the computations pursuant to Sec. 1013.60 (d) and 
(f); and
    (3) Class I milk disposed of in the marketing area from a partially 
regulated distributing plant that exceeds the hundredweight of Class I 
milk:
    (i) Received during the month at such plant from pool plants and 
other order plants that is not used as an offset under a similar 
provision of another order issued pursuant to the Act; and
    (ii) Specified in Sec. 1013.76(b)(2)(ii).
    (b) With respect to payments pursuant to paragraph (a) of this 
section, if a handler uses more than one accounting period in a month, 
the rate of payment per hundredweight for such handler shall be the rate 
for monthly accounting periods multiplied by the number of accounting 
periods in the month, or such lesser rate as the Secretary may determine 
is demonstrated as appropriate in terms of the particular costs of 
administering the additional accounting periods.
[37 FR 17739, Aug. 30, 1972, as amended at 41 FR 43159, Sept. 30, 1976; 
58 FR 27808, May 11, 1993]



Sec. 1013.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments to producers for milk pursuant to 
Sec. 1013.73, shall deduct 4 cents per hundredweight, or such lesser 
amount as may be prescribed by the Secretary and shall pay such 
deductions to the market administrator on or before the 15th day after 
the end of the month. Such money shall be used by the market 
administrator to provide market information and to check the accuracy of 
the testing and weighing of their milk for producers who are not 
receiving such services from a cooperative association pursuant to 
paragraph (b) of this section; and
    (b) In the case of producers who are members of a cooperative 
association which the Secretary has determined is actually performing 
the services set forth in paragraph (a) of this section, each handler 
shall (in lieu of the deduction specified in paragraph (a) of this 
section) make such deductions from the payments to be made to producers

[[Page 265]]

as may be authorized by the membership agreement or marketing contract 
between the cooperative association and its members. On or before the 
15th day after the end of each month, the handler shall pay the 
aggregate amount of such deductions to the cooperative association, 
furnishing a statement showing the amount of the deductions and the 
quantity of milk on which the deduction was computed for each producer.



PART 1030--MILK IN CHICAGO REGIONAL MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1030.1  General provisions.

                               Definitions

1030.2  Chicago Regional marketing area.
1030.3  Route disposition.
1030.4  Plant.
1030.5  Distributing plant.
1030.6  Supply plant.
1030.7  Pool plant.
1030.8  Nonpool plant.
1030.9  Handler.
1030.10  Producer-handler.
1030.11  [Reserved]
1030.12  Producer.
1030.13  Producer milk.
1030.14  Other source milk.
1030.15  Fluid milk product.
1030.16  Fluid cream product.
1030.17  Filled milk.
1030.18  Cooperative association.
1030.19  Exempt milk.
1030.20  [Reserved]
1030.21  Commercial food processing establishment.

                             Handler Reports

1030.30  Reports of receipts and utilization.
1030.31  Payroll reports.
1030.32  Other reports.

                         Classification of Milk

1030.40  Classes of utilization.
1030.41  Shrinkage.
1030.42  Classification of transfers and diversions.
1030.43  General classification rules.
1030.44  Classification of producer milk.
1030.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1030.50  Class and component prices.
1030.51  Basic formula price.
1030.52  Plant location adjustments for handlers.
1030.53  Announcement of class and component prices.
1030.54  Equivalent price.
1030.55  Transfer credits on Class I milk.

                       Producer Price Differential

1030.60  Handler's value of milk.
1030.61  Producer price differential.
1030.62  Announcement of producer prices.

                            Payments for Milk

1030.70  Producer-settlement fund.
1030.71  Payments to the producer-settlement fund.
1030.72  Payments from the producer-settlement fund.
1030.73  Payments to producers and to cooperative associations.
1030.74  Butterfat differential.
1030.75  Plant location adjustments for producers and on nonpool milk.
1030.76  Payments by handler operating a partially regulated 
          distributing plant.
1030.77  Adjustment of accounts.
1030.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1030.85  Assessment for order administration.
1030.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 39 FR 15405, May 3, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1030.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1030.2  Chicago Regional marketing area.

    Chicago Regional marketing area, hereinafter called the ``marketing 
area,'' means the territory within the boundaries of the following 
places, including piers, docks, and wharves and territory

[[Page 266]]

wholly or partly within such boundaries occupied by government 
(municipal, State, or Federal) reservations, installations, institutions 
or other similar establishments:
    (a) In the State of Illinois:
    (1) The counties of:

Boone, Carroll, Cook, De Kalb, Du Page, Jo Daviess (except the city of 
East Dubuque), Kane, Kendall, Lake, Lee, McHenry, Ogle, Stephenson, 
Will, Winnebago.

    (2) In Whiteside County:
    (i) The townships of:

Caloma, Hahnaman, Hopkins, Hume, Jordan, Montmorency, Sterling, Tampico.

    (b) In the State of Wisconsin:
    (1) The counties of:

Adams, Brown, Calumet, Columbia, Dane, Dodge, Fond du Lac, Forest, 
Green, Green Lake, Iowa, Jefferson, Juneau, Kenosha, Kewaunee, La 
Crosse, Lafayette, Langlade, Lincoln, Manitowoc, Marquette, Menominee, 
Milwaukee, Monroe, Oconto, Oneida, Outagamie, Ozaukee, Portage, Racine, 
Richland, Rock, Sauk, Shawano, Sheboygan, Vernon, Vilas, Walworth, 
Washington, Waukesha, Waupaca, Waushara, Winnebago.

    (2) In Door County the city of Sturgeon Bay;
    (3) In Marathon County:
    (i) The towns of:

Bergen, Berlin, Bevent, Easton, Elderon, Franzen, Guenther, Harrison, 
Hewitt, Knowlton, Kronenwetter, Maine, Marathon, Mosinee, Norrie, 
Plover, Reid, Rib Mountain, Ringle, Stettin, Texas, Wausau, Weston.

    (ii) The villages of:

Brokaw, Elderon, Hatley, Marathon, Rothschild.

    (iii) The cities of:

Mosinee, Schofield, Wausau.

    (4) In Wood County:
    (i) The towns of:

Cranmoor, Grand Rapids, Port Edwards, Rudolph, Saratoga, Seneca.

    (ii) The villages of:

Biron, Port Edwards.

    (iii) The cities of:

Nekoosa, Wisconsin Rapids.
[39 FR 15405, May 3, 1974, as amended at 54 FR 53526, Dec. 29, 1989]



Sec. 1030.3  Route disposition.

    Route disposition means a delivery (including disposition from a 
retail plant store) of any fluid milk product classified as Class I milk 
to a retail or wholesale outlet other than a milk plant. Disposition of 
a plant through a vendor or through a distribution point shall be 
considered a route delivery at the location of the wholesale or retail 
outlet to which delivery is made.



Sec. 1030.4  Plant.

    Plant means a building together with its facilities and equipment, 
whether owned or operated by one or more persons, constituting a single 
operating unit or establishment that has facilities adequate for 
cleaning tank trucks, is approved by an appropriate health authority, at 
which milk is received from dairy farmers or other plants, and at which 
milk is processed and/or shipped to another plant.
[53 FR 26759, July 15, 1988]



Sec. 1030.5  Distributing plant.

    Distributing plant means a plant from which there is route 
disposition in the marketing area, either directly or through another 
plant, of a Grade A fluid milk product that is processed or packaged in 
such plant during the month.



Sec. 1030.6  Supply plant.

    Supply plant means a plant at which Grade A milk is physically 
unloaded into the plant or a tank truck in the plant and is either 
processed and/or shipped during the month to another milk processing 
plant, except that any plant located on the premises of a pool 
distributing plant pursuant to Sec. 1030.7(a) shall not be considered a 
supply plant unless it is located in a building that is entirely 
separate from the distributing plant.
[53 FR 26759, July 15, 1988]



Sec. 1030.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant or unit described in paragraph (a)(4) of 
this section from which during the month the

[[Page 267]]

disposition of fluid milk products specified in paragraph (a)(2) of this 
section is not less than 10 percent of the receipts specified in 
paragraph (a)(1) of this section and from which the disposition of fluid 
milk products specified in paragraph (a)(3) of this section as a percent 
of the receipts specified in paragraph (a)(1) of this section is not 
less than 45 percent in each of the months of September, October, 
November, and December, 35 percent in each of the months of January, 
February, March, and August, and 30 percent in all other months.
    (1) The total Grade A fluid milk products, except filled milk, 
received during the month at such plant, including producer milk 
diverted to nonpool plants and to pool supply plants pursuant to 
Sec. 1030.13, but excluding producer milk diverted to other pool 
distributing plants, receipts of fluid milk products in exempt milk, 
packaged fluid milk products and bulk fluid milk products by agreement 
for Class II and Class III uses from other pool distributing plants, and 
receipts from other order plants and unregulated supply plants which are 
assigned pursuant to Sec. 1030.44(a)(8) (i)(a) and (ii) and the 
corresponding step of Sec. 1030.44(b).
    (2) Packaged fluid milk products, except filled milk, disposed of as 
either route disposition in the marketing area or moved to other plants 
from which it is disposed of as route disposition in the marketing area. 
Such disposition is to be exclusive of receipts of packaged fluid milk 
products from other pool distributing plants.
    (3) Packaged fluid milk products, except filled milk, disposed of as 
either route disposition or moved to other plants. Such disposition is 
to be exclusive of receipts of packaged fluid milk products from other 
pool distributing plants.
    (4) A unit consisting of at least one distributing plant and one or 
more additional plants of a handler at which milk is processed and 
packaged or manufactured shall be considered as one plant for the 
purpose of meeting the requirements of this paragraph if all such plants 
are located within the State of Wisconsin or that portion of the 
marketing area within the State of Illinois, and if, prior to the first 
day of the month, the handler operating such plants has filed a written 
request for such plants to be considered a unit with the market 
administrator.
    (b) A supply plant or unit of supply plants described in paragraph 
(b)(6) of this section from which the quantity of fluid milk products 
(except filled milk) and condensed skim milk shipped and received and 
physically unloaded into plants described in paragraph (b)(2) of this 
section as a percent of the Grade A milk received at the plant(s) from 
dairy farmers (except dairy farmers described in Sec. 1030.12(b)) and 
handlers described in Sec. 1030.9(c), including producer milk diverted 
pursuant to Sec. 1030.13, but excluding packaged fluid milk products 
that are disposed of from such plant(s) as route disposition, is not 
less than 3 percent for the months of January through August, and 5 
percent for the months of September through December for individual 
plants and 6 percent and 10 percent, respectively, for any unit of 
plants, subject to the following conditions:
    (1) A plant that was a pool plant pursuant to this paragraph during 
each of the months of August through January shall be a pool plant for 
each of the following months of February through July.
    (2) Qualifying shipments pursuant to this paragraph may be made to 
the following plants, except as provided in paragraph (b)(2)(v) of this 
section:
    (i) Pool plants described in paragraph (a) of this section;
    (ii) Plants of producer-handlers;
    (iii) Partially regulated distributing plants, except that credit 
for such shipments shall be limited to the amount of such milk which 
receives a Class I classification at the transferee plant;
    (iv) Distributing plants fully regulated under other Federal orders, 
except that credit for shipments to such plants, shall be limited to the 
quantity shipped to pool distributing plants during the month and 
credits for shipments to other order plants shall not include any such 
shipments made on the basis of agreed-upon Class II or Class III 
utilization; and
    (v) Whenever the authority provided in paragraph (b)(5) of this 
section is applied to increase the shipping requirements specified in 
this section, only

[[Page 268]]

shipments described in paragraph (b)(2)(i) of this section shall count 
as qualifying shipments for the purpose of meeting the increased 
requirements.
    (3) The operator of a supply plant may include as qualifying 
shipments deliveries to pool distributing plants directly from farms of 
producers pursuant to Sec. 1030.13(d).
    (4) The quantity of condensed skim milk and fluid milk products 
moved (including milk divereted) from supply plants to each pool plant 
described in paragraph (a) or (c) of this section that shall count 
towards meeting the shipping requirements of this paragraph shall be a 
net quantity assignable at each such pool plant pro rata to supply 
plants in accordance with total receipts from such plants. The net 
quantity shall be computed by subtracting from the quantity of fluid 
milk products and condensed skim milk received from supply plants the 
following:
    (i) The quantity of condensed skim milk not disposed of in a fluid 
milk product and the quantity of fluid milk products in the form of bulk 
milk and skim milk moved from the pool distributing plant to pool supply 
plants plus any such bulk shipments to nonpool plants as Class II or 
Class III milk other than:
    (A) Transfers or diversions classified pursuant to 
Sec. 1030.40(b)(3); and
    (B) Transfers or diversions on New Year's Day, Memorial Day, July 4, 
Labor Day, Thanksgiving, Christmas, and on any Saturday if no milk is 
received at the pool distributing plant from a supply plant, in an 
amount not in excess of 120 percent of the average daily receipts of 
producer milk pursuant to Sec. 1030.13(a) at the plant during the prior 
month, less the quantity of producer milk diverted pursuant to 
Sec. 1030.13(d) on such day. If no producer milk was received in the 
distributing plant during the prior month, the average daily receipts 
during the current month shall be used for this purpose; and
    (ii) If milk is diverted from the pool distributing plant on the 
date of the receipts from the supply plant, the quantity so diverted, 
except any diversion of milk (not to exceed 3 days' production of any 
individual producer) made because of any emergency situation such as a 
breakdown of trucking equipment or hazardous road conditions if such 
emergency is reported to the market administrator.
    (5) The shipping requirements of this paragraph may be increased or 
decreased if found necessary to obtain needed shipments or to prevent 
uneconomic shipments as follows, subject in either case to the 
conditions specified to paragraph (b)(5)(iii) of this section.
    (i) The market administrator may, for a period of up to three 
months, increase or decrease the shipping requirements of this paragraph 
by up to two percentage points;
    (ii) The Director of the Dairy Division may increase the shipping 
requirements of this paragraph by up to five percentage points or 
decrease them by up to ten percentage points;
    (iii) Before making a finding that a change is necessary for the 
purposes set forth in this section, the market administrator or the 
Director of the Dairy Division shall investigate the need for revision, 
either on such person's own initiative or at the request of interested 
persons. If such investigation shows that a revision might be 
appropriate, a notice shall be issued stating that revision is being 
considered and inviting data, views, and arguments. If a plant that 
would not otherwise qualify as a pool plant during the month does 
qualify as a pool plant because of a reduction in shipping requirements 
pursuant to this paragraph, such plant shall be a nonpool plant for such 
month if the operator of the plant files a written request for nonpool 
status with the market administrator on or before the first day of the 
following month. If an increase is required in any month of February 
through July, the increase shall also apply to any supply plant that has 
pool status for the month pursuant to paragraph (b)(1) of this section.
    (6) Two or more plants shall be considered a unit for the purpose of 
meeting the requirements of this paragraph if the following conditions 
are met:
    (i) The plants are located within the State of Wisconsin or within 
that portion of the State of Illinois within the marketing area;
    (ii) The plants included in the unit are owned or fully leased and 
operated

[[Page 269]]

by the handler establishing the unit and such plants were pool plants 
during the month prior to being included in a unit. Two or more handlers 
may establish a unit of designated plants by certifying to the market 
administrator a marketing agreement specifying the plants to be 
considered as a unit, and specifying which handler will be responsible 
for qualification of the unit. With regard to any leased plants included 
in a unit, the handler that leases a plant(s) and is a party to a 
marketing agreement with respect to plants included in a unit, shall 
satisfy the market administrator that such handler:
    (A) Is responsible pursuant to Sec. 1030.73 for payments to 
producers whose milk is delivered to the leased plant or diverted 
therefrom by the handler;
    (B) Controls and operates the leased plant; and
    (C) Maintains in its books and records the accounts of the leased 
plant(s), including, but not limited to, records reflecting the receipt, 
sale, collection of proceeds, the gross value of the payrolls for all 
producer milk pooled by the handler operating the leased plant, and 
employee payroll or independent contractor records reflecting the 
handler's financial responsibility for operation of the plant.
    (iii) The handler or handlers establishing the unit submits a 
written request to the market administrator on or before July 15 
requesting that such plants qualify as a unit for the period of August 
through July of the following year. In the months of February through 
July, a unit shall not include any plant that was not a pool plant each 
month of the preceding period of August through January. Each plant that 
qualifies as a pool plant within a unit shall continue each month as a 
plant in the unit through the following July unless the plant 
subsequently fails to qualify for pooling or the handler or handlers 
establishing the unit submits a written request to the market 
administrator that the plant be deleted from the unit or that the unit 
be discontinued. Any plant that has been so deleted from a unit, or that 
has failed to qualify in any month, will not be part of the unit for the 
remaining months through July. The handler or handlers that establish a 
unit may add a plant operated by such handler or handlers to a unit, if 
such plant has been a pool plant each prior month of the current unit-
operating period (August through July) and would otherwise be eligible 
to be in a unit, upon submission of a written request to the market 
administrator. Such plant will remain in the unit through the following 
July. Written requests to the market administrator to either delete a 
plant from the unit or to add a plant to the unit shall be submitted to 
the market administrator on or before the 15th day of the month 
preceding the month that such change will be effective. In the event of 
an ownership change or business failure of a handler that is a 
participant in a unit, the unit may be reorganized to reflect such 
changes by submitting a written request to file a new marketing 
agreement with the market administrator;
    (iv) If a unit fails to qualify under the requirements of this 
paragraph, the handler responsible for qualifying the unit shall notify 
the market administrator which plant or plants will be deleted from the 
unit so that the remaining plants may be pooled as a unit. If the 
handler fails to do so, the market administrator shall exclude one or 
more plants, beginning at the bottom of the list of plants in the unit 
and continuing up the list as necessary until the deliveries are 
sufficient to qualify the remaining plants in the unit; and
    (v) Each plant in a unit shall ship to a plant or plants pursuant to 
paragraph (a) or (c) of this section not less than 3 percent of the 
plant's receipts of milk from producers or 47,000 pounds, whichever is 
less, of condensed skim milk or fluid milk products in each of five 
months during the period of August through January, subject to the 
provisions of paragraph (b)(4) of this section. If the unit shipping 
requirements are reduced to zero pursuant to paragraph (b)(5)(ii) of 
this section, shipments by each plant in a unit shall not be required.
    (c) Any plant that qualifies as a pool plant in each of the 
immediately preceding three months pursuant to paragraph (a) of this 
section or the shipping percentages in paragraph (b) of this section 
that is unable to meet such

[[Page 270]]

performance standards for the current month because of unavoidable 
circumstances determined by the market administrator to be beyond the 
control of the handler operating the plant, such as a natural disaster 
(ice storm, wind storm, flood), fire, breakdown of equipment, or work 
stoppage, shall be considered to have met the minimum performance 
standards during the period of such unavoidable circumstances, but such 
relief shall not be granted for more than two consecutive months.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant or exempt distributing plant;
    (2) A plant that is fully subject to the pricing and pooling 
provisions of another order issued pursuant to the Act, unless it is 
qualified as a pool plant pursuant to paragraph (a), (b) or (c) of this 
section and a greater volume of fluid milk products, except filled milk, 
is disposed of from such plant in this marketing area as route 
disposition and to pool plants qualified on the basis of route 
disposition in this marketing area than is so disposed of in the 
marketing area regulated pursuant to such other order; and
    (3) That portion of a plant that is physically separated from the 
Grade A portion of such plant, and is not approved by any regulatory 
agency for the receiving, processing, or packaging of any fluid milk 
product for Grade A disposition.
[53 FR 26759, July 15, 1988; 53 FR 27798, July 22, 1988, as amended at 
56 FR 66954, Dec. 27, 1991; 58 FR 48954, Sept. 21, 1993; 59 FR 44033, 
Aug. 26, 1994]



Sec. 1030.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of nonpool plants 
are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not an other order plant, a producer-handler plant, or an exempt 
distributing plant and from which there is route disposition in 
consumer-type packages or dispenser units in the marketing area during 
the month.
    (d) Unregulated supply plant means a nonpool plant that is not an 
other order plant, a producer-handler plant, or an exempt distributing 
plant from which fluid milk products are shipped during the month to a 
pool plant.
    (e) Exempt distributing plant means a distributing plant operated by 
a governmental agency.



Sec. 1030.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted from a pool plant of another handler pursuant 
to Sec. 1030.13 for the account of such cooperative association;
    (c) Any cooperative association with respect to milk of its 
producers which is received from the farm for delivery to the pool plant 
of another handler in a tank truck owned and operated by or under 
contract to such cooperative association;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler;
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant; or
    (g) Any person in his capacity as a broker negotiating a purchase or 
sale of fluid milk products or fluid cream products from or to a person 
described in paragraph (a) or (d) of this section.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38582, July 29, 1977]



Sec. 1030.10  Producer-handler.

    Producer-handler means any person who operates a dairy farm and a 
distributing plant and who has route disposition in the marketing area 
of only fluid milk products of such person's

[[Page 271]]

own production or fluid milk products received from pool plants: 
Provided, That such person provides proof satisfactory to the market 
administrator that the care and management of all dairy animals and 
other resources necessary to produce the entire volume of fluid milk 
products handled (excluding receipts from pool plants) and the operation 
of the processing and packaging business are the personal enterprise and 
risk of such person.



Sec. 1030.11  [Reserved]



Sec. 1030.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the Grade A 
inspection requirements of a duly constituted health authority and whose 
milk is received at a pool plant or diverted pursuant to Sec. 1030.13.
    (b) ``Producer'' shall not include:
    (1) A dairy farmer who is a government and has nonproducer status 
for the month pursuant to Sec. 1030.19;
    (2) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (3) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1030.44(a)(8)(ii) and the corresponding step of Sec. 1030.44(b);
    (4) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order; and
    (5) A dairy farmer with respect to milk produced by him that is 
received at a handler's pool plant during the months of January through 
July if any milk from the same farm operated by such dairy farmer was a 
receipt of producer milk in any ``payback'' month during the preceding 
year under another order that provided for a seasonal incentive payment 
plan whereby funds previously withheld in the computation of the uniform 
price to producers were paid back to producers through the uniform price 
computation in subsequent months of the year.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38582, July 29, 1977]



Sec. 1030.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk of a 
producer that is:
    (a) Received at a pool plant directly from producers by being 
physically unloaded into processing facilities, a storage tank, or 
another tank truck, as further provided below:
    (1) Any shrinkage of milk received from producers' farms which was 
not unloaded in a pool plant shall also be producer milk under this 
paragraph; and
    (2) In the event that part of a load of milk is first received at 
another plant(s) and the remaining part is then unloaded in the pool 
plant, the quantity of milk so received at each such plant shall be 
prorated over the total quantity of milk picked up at each producer's 
farm.
    (b) Received at a pool plant from a handler described in 
Sec. 1030.9(c).
    (c) Received by a handler described in Sec. 1030.9(c) to the extent 
of the shrinkage of skim milk and butterfat received from producers' 
farms which was not received in a pool plant pursuant to paragraph (b) 
of this section. In applying Secs. 1030.52 and 1030.75, such skim milk 
and butterfat shall be deemed to have been received at the location of 
the pool plant to which delivery is normally made.
    (d) Diverted by the operator of a pool plant, or by a handler 
described in Sec. 1030.9(b), to another pool plant or to a nonpool plant 
(that is not a producer-handler plant), subject to the following 
conditions:
    (1) During each of the months of August through January, milk from a 
dairy farmer shall not be eligible for diversion unless at least one 
day's production is received and physically unloaded at the pool plant 
where such milk is reported as producer milk;
    (2) Milk from a dairy farmer who was not a producer during the 
previous month shall not be eligible for diversion unless at least one 
day`s production is received and physically unloaded during the month at 
the pool

[[Page 272]]

plant where such milk is reported as producer milk;
    (3) The quantity of each producer's milk to be considered as 
diverted milk when a portion of a tank load of milk, picked up at the 
farms of two or more producers, is unloaded at another plant, shall be 
determined by prorating the total quantity unloaded at such other plant 
over the total quantity of milk picked up at each producer's farm;
    (4) To the extent that milk diverted by a cooperative association as 
a handler described in Sec. 1030.9(b) during any month would result in a 
plant failing to qualify as a pool plant under Sec. 1030.7, such 
diverted milk shall not be producer milk;
    (5) Diverted milk shall be priced at the location of the plant to 
which diverted, except that, in the case of a distributing plant, if 
during the month not more than 4 days' production of a producer is 
diverted from such plant or if the diverted milk is part of a tank truck 
load of milk that exceeds the milk storage capacity of such distributing 
plant, such milk shall be priced at the location of the plant from which 
diverted.
[42 FR 38582, July 29, 1977, as amended at 49 FR 32340, Aug. 14, 1984; 
49 FR 33205, Aug. 22, 1984; 53 FR 26761, July 15, 1988]



Sec. 1030.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1030.40(b)(1) from any source other than producers, handlers 
described in Sec. 1030.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1030.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1030.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1030.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1030.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27808, May 11, 1993]



Sec. 1030.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27808, May 11, 1993]



Sec. 1030.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product,

[[Page 273]]

and contains less than 6 percent nonmilk fat (or oil).



Sec. 1030.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or milk products 
for its members.



Sec. 1030.19  Exempt milk.

    Exempt milk means milk received at a pool plant in bulk from the 
dairy farmer who produced it, to the extent of the quantity of any 
packaged fluid milk products returned to the dairy farmer if:
    (a) The dairy farmer is a government which is not engaged in the 
route disposition of any of the returned products; and
    (b) The dairy farmer has, by written notice to the market 
administrator and the receiving handler, elected nonproducer status for 
a period of not less than 12 months beginning with the month in which 
the election was made and continuing for each subsequent month until 
canceled in writing, and the election is in effect for the current 
month.



Sec. 1030.20  [Reserved]



Sec. 1030.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1030.13, 1030.41 and 1030.52.
[58 FR 27808, May 11, 1993]

                             Handler Reports



Sec. 1030.30  Reports of receipts and utilization.

    On or before the 10th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler described in Sec. 1030.9(a) shall report for each 
plant of the handler (except if a handler requests and the request is 
approved by the market administrator, a handler may file a consolidated 
report for supply plants and a consolidated report for distributing 
plants); and each handler described in Sec. 1030.9 (b) and (c) shall 
report the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), and the value of 
the somatic cell adjustment contained in or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the handlers from the pool plant to other plants; and
    (ii) Receipts of milk from handlers described in Sec. 1030.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants, including a separate statement of the net receipts 
from each supply plant computed pursuant to Sec. 1030.7(b)(4);
    (ii) Receipts of fluid milk products not included in paragraph 
(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. 1030.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of

[[Page 274]]

skim milk, butterfat, milk protein, other nonfat solids, and somatic 
cell information, as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (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.
[39 FR 15405, May 3, 1974, as amended at 49 FR 32340, Aug. 14, 1984; 49 
FR 33205, Aug. 22, 1984; 60 FR 57149, Nov. 14, 1995]



Sec. 1030.31  Payroll reports.

    (a) On or before the 25th day after the end of each month, each 
handler described in Sec. 1030.9 (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 the 
information specified in Sec. 1030.73(e).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1030.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
[39 FR 15405, May 3, 1974, as amended at 60 FR 57149, Nov. 14, 1995]



Sec. 1030.32  Other reports.

    (a) Each handler described in Sec. 1030.9(a), (b), and (g), shall 
report to the market administrator on or before the 10th day after the 
end of the month in detail and on forms prescribed by the market 
administrator as follows:
    (1) Each handler described in Sec. 1030.9(g) shall report the 
quantities of skim milk and butterfat in fluid milk products and fluid 
cream products moved for his account from each pool plant and received 
at each pool plant or partially regulated distributing plant during the 
month; and
    (2) Each handler pursuant to Sec. 1030.9(a) and (b) shall report for 
each load of milk diverted for his account:
    (i) The quantity of each producer's milk so diverted;
    (ii) The date(s) of pickup of each producer's milk; and
    (iii) The name and location of the plants to which and from which 
milk was diverted; and
    (3) Each handler who, during the month, received milk from a dairy 
farmer from whom he had not received milk during the previous calendar 
month, shall report the name and address of the dairy farmer and the 
plant to which each such person previously delivered milk. Each handler 
who discontinues receiving milk from a producer during the month shall 
report each such producer's name, address, and the plant to which such 
person transferred.
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Secs. 1030.30 and 1030.31, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish such handler's obligation under the order.
[42 FR 38582, July 29, 1977]

                         Classification of Milk



Sec. 1030.40  Classes of utilization.

    Except as provided in Sec. 1030.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1030.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6

[[Page 275]]

percent or more nonmilk fat (or oil) that resembles a fluid cream 
product, except as otherwise provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1030.15 and the fluid 
cream product definition pursuant to Sec. 1030.16; and

[[Page 276]]

    (7) In shrinkage assigned pursuant to Sec. 1030.41(a) to the 
receipts specified in Sec. 1030.41(a)(2) and in shrinkage specified in 
Sec. 1030.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27808, May 11, 1993, as amended at 58 FR 63286, Dec. 1, 1993]



Sec. 1030.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1030.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant (or at all of a handler's supply plants 
and/or reserve supply plants combined or at all of a handler's 
distributing plants combined if such reports are filed pursuant to 
Sec. 1030.30) to the respective quantities of skim milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section, excluding that received in the form of a packaged 
fluid milk product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1030.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1030.9(c) and in milk 
diverted to such plant from another pool plant, except that if the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this subparagraph shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants 
(or pool plants of other handlers, if applicable);
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other pool plants (or pool 
plants of other handlers, if applicable) and to nonpool plants that is 
not in excess of the respective amounts of skim milk and butterfat to 
which percentages are applied in paragraphs (b) (1), (2), (4), (5), and 
(6) of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1030.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38583, July 29, 1977; 49 
FR 32340, Aug. 14, 1984]

[[Page 277]]



Sec. 1030.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred or 
diverted in the form of a fluid milk product or a bulk fluid cream 
product from a pool plant to another pool plant (or to the pool plant of 
another handler if a combined report is filed pursuant to Sec. 1030.30 
by the transferor-handler) shall be classified as Class I milk unless 
the operators of both plants request the same classification in another 
class. The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1030.44(a)(12) and the corresponding 
step of Sec. 1030.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1030.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
exempt distributing plants. Skim milk or butterfat in the following 
forms that is transferred from a pool plant to a producer-handler under 
this or any other Federal order or transferred or diverted from a pool 
plant to an exempt distributing plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt distributing plant shall be classified:

[[Page 278]]

    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1030.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified

[[Page 279]]

on the basis of the second plant's utilization using the same assignment 
priorities at the second plant that are set forth in this subparagraph.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38583, July 29, 1977; 58 
FR 27809, May 11, 1993]



Sec. 1030.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1030.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1030.30 and shall compute separately for each pool plant (or 
plants, if applicable) and for each cooperative association with respect 
to milk for which it is the handler pursuant to Sec. 1030.9 (b) or (c) 
the pounds of skim milk and butterfat, respectively, in each class in 
accordance with Secs. 1030.40, 1030.41, and 1030.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1030.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1030.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1030.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[42 FR 38583, July 29, 1977, as amended at 58 FR 27809, May 11, 1993; 58 
FR 63286, Dec. 1, 1993]



Sec. 1030.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in Sec. 1030.9 
(a), (b), and (c) by allocating the handler's receipts of skim milk and 
butterfat to his utilization pursuant to paragraphs (a) through (c) of 
this section. For this purpose only, a handler described in 
Sec. 1030.9(a) who operates more than one pool plant may elect to have 
his receipts allocated for each of his pool plants separately or for all 
of his pool plants combined, except that, if he has receipts that would 
be allocated pursuant to paragraph (a) (11) or (12) of this section or 
the corresponding steps of paragraph (b) of this section, his total 
receipts shall be allocated for all of his pool plants combined.
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1030.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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; and
    (ii) Receipts of exempt milk;
    (iii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable

[[Page 280]]

provisions of another Federal milk order in the immediately preceding 
month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1030.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1030.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1030.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1030.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1030.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (vii) Receipts of fluid milk products (other than exempt milk) from 
a government which has elected nonproducer status for the month pursuant 
to Sec. 1030.19; and
    (viii) Receipts of fluid milk products from persons described in 
Sec. 1030.12(b)(5);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III, but not in excess of such quantities, the pounds of skim milk 
in each of the following;
    (i) Receipts of fluid milk products from an unregulated supply plant 
that were not subtracted pursuant to paragraphs (a) (2)(i) and (7)(v) of 
this section:
    (A) For which the handler requests a classification other than Class 
I; or
    (B) Which are in excess of the pounds of skim milk determined by 
multiplying the pounds of skim milk remaining in Class I (excluding any 
duplication of Class I utilization resulting from reported Class I 
transfers between pool plants of the handler) by 1.25 and subtracting 
the sum of the pounds of skim milk in receipts of producer milk, fluid

[[Page 281]]

milk products from other pool plants, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(iv) of this section; and
    (ii) Receipts of bulk fluid milk products from an other order plant 
that are in excess of bulk fluid milk products transferred or diverted 
to such plant and that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section, if Class II or Class III classification is 
requested by the operator of the other order plant and the handler;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1030.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(iii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subtract from the pounds of skim milk remaining in each class, 
pro rata to such quantities in Class I and in Class II and Class III 
combined (excluding any duplication of utilization in each class 
resulting from transfers between pool plants of the handler), with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, the pounds of skim milk in 
receipts of fluid milk products from an unregulated supply plant that 
were not subtracted pursuant to paragraphs (a) (2)(i), (7)(v), and 
(8)(i) of this section and that were not offset by transfers or 
diversions of fluid milk products to the same unregulated supply plant 
from which fluid milk products to be allocated at this step were 
received;
    (12) Subtract in the order specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a) (7)(vi) and (8)(ii) of this 
section:
    (i) From each class, in series beginning with Class III, the pounds 
determined by multiplying the pounds of such net receipts by the larger 
of the percentage of estimated combined Class II and Class III 
utilization of skim milk announced for the month by the market 
administrator pursuant to Sec. 1030.45(a) or the percentage that the 
combined Class II and Class III utilization remaining is of the total 
remaining utilization of skim milk of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler); and
    (ii) From Class I, the remainder of such receipts;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from other pool plants (or from pool plants of 
other handlers if Sec. 1030.43(d) applies) according to the 
classification of such products pursuant to Sec. 1030.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38583, July 29, 1977; 58 
FR 27809, May 11, 1993]



Sec. 1030.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1030.44(a)(12) and the corresponding 
step of Sec. 1030.44(b), estimate and publicly announce the

[[Page 282]]

utilization (to the nearest whole percentage) in each class during the 
month of skim milk and butterfat, respectively, in producer milk of all 
handlers. Such estimate shall be based upon the most current available 
data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1030.43(d) and Sec. 1030.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 17th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association for its members which was utilized in each class at each 
pool plant receiving such milk. For the purpose of this report, the milk 
so received shall be allocated to each class at each pool plant in the 
same ratio as all producer milk received at such plant during the month.
[39 FR 15405, May 3, 1974, as amended at 58 FR 27810, May 11, 1993]

                              Class Prices



Sec. 1030.50  Class and component prices.

    Subject to the provisions of Sec. 1030.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the component 
prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per hundredweight 
of milk containing 3.5 percent butterfat shall be the basic formula 
price for the second preceding month plus $1.40.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
    (e) Class I differential price. The Class I differential price shall 
be the difference between the current month's Class I and Class III 
prices (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 prices (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 and 
Class III-A prices (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 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) Other solids price. Other solids are herein defined as solids-
not-fat other than protein. The other solids price per

[[Page 283]]

pound, rounded to the nearest one-hundredth cent, shall be the basic 
formula price at test less the average butterfat test of the basic 
formula price as reported by the Department times the butterfat price, 
less the average protein test of the basic formula price as reported by 
the Department for the month times the protein price, and dividing the 
resulting amount by the average other solids test of the basic formula 
price as reported by the Department. If the resulting price is less than 
zero, then the protein price will be reduced so that the other solids 
price equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in thousands) 
of the milk, multiplying the difference by the somatic cell adjustment 
rate, and rounding to the nearest full cent.
[39 FR 15405, May 3, 1974, as amended at 46 FR 43377, Aug. 28, 1981; 51 
FR 12832, Apr. 16, 1986; 58 FR 63286, Dec. 1, 1993; 60 FR 6608, Feb. 2, 
1995; 60 FR 57149, Nov. 14, 1995]



Sec. 1030.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1030.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values

[[Page 284]]

determined pursuant to paragraph (c) of this section by determining the 
relative proportion that the data included in each of the following 
paragraphs is of the total of the data represented in paragraphs (d)(1) 
and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk and;
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18960, Apr. 14, 1995]



Sec. 1030.52  Plant location adjustments for handlers.

    A location adjustment for each handler shall be computed by the 
market administrator as follows:
    (a) The market administrator shall determine the location adjustment 
rate for each plant at which milk is to be priced under this part 
pursuant to the following schedule, except that in no event shall the 
adjustment result in a price less than the Class III price for the 
month:

                                                                        
------------------------------------------------------------------------
                                                               Location 
                                                    Distance  adjustment
                                                    in miles     rate   
                       Zone                        from city  (cents per
                                                    hall in    hundred- 
                                                    Chicago     weight) 
------------------------------------------------------------------------
1................................................       0-40         0  
2................................................      41-55        -3.0
3................................................      56-70        -6.0
4................................................  \1\ 71-85        -9.0
5................................................  \2\ 86-10            
                                                           0       -12.0
6................................................    101-115       -14.3
7................................................    116-130       -16.6
8................................................    131-145       -18.9
9................................................    146-160       -21.2
10...............................................    161-175       -23.5
11...............................................    176-190       -25.8
12...............................................    191-205       -28.1
13...............................................    206-220       -30.4
14...............................................    221-235       -32.7
15...............................................    236-250       -35.0
16...............................................      (\3\)       -36.0
------------------------------------------------------------------------
\1\ Including Milwaukee County, Wis., and Winnebago County, Ill.        
\2\ Excluding Milwaukee County, Wis., and Winnebago County, Ill.        
\3\ Beyond 250.                                                         

    (b) For the purpose of this section and Secs. 1030.55 and 1030.75, 
the distances to be computed shall be on the basis of the shortest 
highway mileage as determined by the market administrator--with 
fractions rounded up to the next whole mile.
    (1) The market administrator shall notify each handler of the zone 
or mileage determination from the city hall in Chicago for each plant 
and for each handler's pool distributing plant the mileage to each 
transferor pool plant.
    (2) Mileage determinations are subject to redetermination at all 
times. In the event a handler requests a redetermination of the mileage 
pertaining to any plant, the market administrator shall notify the 
handler of such redetermination within 30 days after the receipt of such 
request. Any financial obligations resulting from a change in mileage 
shall not be retroactive for any period prior to the redetermination 
announced by the market administrator.
    (c) A handler who operates a pool distributing plant (or plants) 
shall receive a location adjustment computed as follows:
    (1) Determine the aggregate quantity of Class I milk, excluding 
beginning inventory of packaged fluid milk products, at such plant (or 
all pool plants of such handler for which the handler's total receipts 
are allocated for all such handler's pool plants combined pursuant to 
Secs. 1030.43(d) and 1030.44 after eliminating duplication for transfer 
between such plants);

[[Page 285]]

    (2) Subtract the receipts of exempt milk and the quantity of 
packaged fluid milk products received at the handler's pool plant(s) 
from the pool plants of other handlers (or other pool plants, if 
applicable) and from nonpool plants if assigned to Class I milk;
    (3) Subtract the quantity of bulk fluid milk products shipped from 
the handler's pool plant(s) to pool plants of other handlers (or other 
pool plants, if applicable) and to nonpool plants that are classified as 
Class I;
    (4) Subtract the Class I milk packaged by pool supply plants and 
disposed of as route disposition or to other plants;
    (5) Subtract the quantity of bulk fluid milk products received at 
the handler's pool plant(s) from other order plants and unregulated 
supply plants that are assigned to Class I pursuant to Secs. 1030.43(d) 
and 1030.44;
    (6) Assign the remaining quantity pro rata to receipts during the 
month from each source as specified in paragraphs (c)(6) (i) and (ii) of 
this section:
    (i) Receipts at the handler's pool distributing plant(s) of producer 
milk, except that if the quantity prorated to any distributing plant 
exceeds the Class I disposition from such plant, such quantity shall be 
reduced to the amount of such Class I disposition and the quantity of 
milk represented in such reduction shall be prorated to receipts of 
producer milk at other distributing plants of the handler (limited in 
each instance to the amount of Class I disposition at each such plant) 
and receipts of bulk fluid milk products at such distributing plants 
from other pool plants; and
    (ii) Receipts of bulk fluid milk products at such distributing 
plants from each other pool plant according to the quantity of such 
receipts from each such source;
    (7) If receipts during the month at such distributing plants of 
producer milk, milk diverted from other pool plants, and bulk fluid milk 
products from other pool plants are less than the quantity to be 
assigned pursuant to paragraph (c)(6) of this section, prorate the 
amount of such excess in the same manner over such receipts in the next 
prior month in which there were receipts in excess of those assigned in 
that month pursuant to this paragraph (c)(7) of this section;
    (8) Multiply by the location adjustment rates applicable at the 
transferor plants, the quantity assigned to receipts of producer milk 
and milk diverted from other pool plants at such distributing plant 
pursuant to paragraphs (c) (6)(i) and (7) of this section;
    (9) Multiply by the location adjustment rates applicable at the 
transferor plants, the lesser of:
    (i) 110 percent of the quantities assigned to receipts from each 
other pool plant pursuant to paragraph (c)(6)(ii) of this section; or
    (ii) Receipts specified in paragraph (c)(6)(ii) of this section;
    (10) Multiply by the location adjustment rates applicable at the 
transferor plants, the quantities assigned pursuant to paragraph (c)(7) 
of this section to receipts from other pool plants in prior months;
    (11) Multiply the quantity of bulk fluid milk products shipped from 
the handler's pool plant(s) to nonpool plants and classified as Class I 
by the location adjustment rate applicable at the shipping plant;
    (12) Multiply the quantity of Class I milk packaged by pool supply 
plants and disposed of as route disposition or to other plants by the 
location adjustment rates applicable at the pool supply plants from 
which disposition is made; and
    (13) Add together the minus amounts obtained pursuant to paragraphs 
(c) (8), (9), (10), (11), and (12) of this section.
    (d) A handler (other than one described in paragraph (c) of this 
section) who operates a pool supply plant shall receive a location 
adjustment credit on receipts at such plant of producer milk and milk 
diverted from other pool plants that is classified as Class I but is not 
shipped as a bulk fluid milk product to a pool distributing plant.
    (e) The Class I price applicable to other source milk shall be 
reduced at the rates set forth in paragraph (a) of this section.
[42 FR 38583, July 29, 1977, as amended at 52 FR 39612, Oct. 23, 1987; 
58 FR 27810, May 11, 1993]

[[Page 286]]



Sec. 1030.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (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 other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
[60 FR 57150, Nov. 14, 1995]



Sec. 1030.54  Equivalent price.

    If for any reason a price quotation or other pricing factor required 
by this order for computing class prices or for other purposes is not 
available in the manner described, the market administrator shall use a 
price quotation or price factor determined by the Secretary to be 
equivalent to that required.



Sec. 1030.55  Transfer credits on Class I milk.

    (a) For each handler who operates a pool distributing plant (or 
plants) a transportation credit on milk received from each other pool 
plant shall be computed by the market administrator as follows, except 
that paragraph (a)(2) of this section shall not apply when the Class I 
milk price adjusted for location pursuant to Sec. 1030.52(a) is higher 
at the transferor plant than at the transferee plant:
    (1) Multiply the number of hundredweights of the quantities of milk 
subject to the computations pursuant to Sec. 1030.52(c) (9) and (10) 
times the product of 0.28 cents times the number of miles between the 
transferor plant and the transferee plant; and
    (2) Subtract an amount computed by multiplying the absolute value 
difference between the location adjustment rates specified in 
Sec. 1030.52(a) applicable at the transferee and transferor plants times 
the hundredweights of milk used in the computation in paragraph (a)(1) 
of this section. If the amount computed pursuant to this paragraph is 
greater than the amount computed in paragraph (a)(1) of this section the 
transportation credit will be zero.
    (b) For each handler who transfers milk from a pool plant to a pool 
distributing plant (or plants) an assembly credit shall be computed by 
the market administrator at the rate of 8 cents per hundredweight of 
such handler's transfers of milk included in the computations pursuant 
to Sec. 1030.52(c)(9) and (10).
[52 FR 39612, Oct. 23, 1987; 52 FR 42760, Nov. 6, 1987]

                       Producer Price Differential



Sec. 1030.60  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 described in Sec. 1030.9 (a), (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. 1030.44(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. 1030.44(c) by 
the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1030.44(a) by the skim 
milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1030.44(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;
    (5) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1030.44(a) by the 
average

[[Page 287]]

other solids content of producer skim milk received by the handler, and 
multiplying the resulting pounds of other solids by the other solids 
price;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1030.30(a)(1) by the 
percentage of the total producer milk allocated pursuant to 
Sec. 1030.44(c) that is allocated to Class II and Class III; and
    (7) 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;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1030.44(a)(14) and the 
corresponding step of Sec. 1030.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1030.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1030.44(a)(9) and the corresponding step of Sec. 1030.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1030.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1030.44(a)(7)(i) through (iv), (vii), and (viii) and the 
corresponding step of Sec. 1030.44(b), excluding receipts of bulk fluid 
cream products from an other order plant and bulk concentrated fluid 
milk products from pool plants, other order plants and unregulated 
supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1030.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1030.44(b);
    (f) Add the 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. 1030.43(d) and 
Sec. 1030.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1030.44(a)(11) and the 
corresponding steps of Sec. 1030.44(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;
    (g) Subtract an amount equal to the minus location adjustment 
computed pursuant to Sec. 1030.52(c)(13) or (d);
    (h) Subtract an amount equal to any credits applicable pursuant to 
Sec. 1030.55;
    (i) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1030.43(d);
    (j) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1030.76(a)(5) or (c); and
    (k) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee

[[Page 288]]

plant. Any such applicable class price change shall be applied to the 
plant that used the concentrated milk in the event that the concentrated 
fluid milk products were made from bulk unconcentrated fluid milk 
products received at the plant during the prior month.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38584, July 29, 1977; 52 
FR 39613, Oct. 23, 1987; 58 FR 27810, May 11, 1993; 60 FR 57150, Nov. 
14, 1995]



Sec. 1030.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight for Zone 1. If the unreserved cash 
balance in the producer settlement fund to be included in the 
computation is less than 2 cents per hundredweight of producer milk on 
all reports, the report of any handler who has not made the payments 
required pursuant to Sec. 1030.71 for the preceding month shall not be 
included in the computation of the producer price differential. The 
report of such handler shall not be included in the computation for 
succeeding months until the handler has made full payment of outstanding 
monthly obligations. Subject to the aforementioned conditions, the 
market administrator shall compute the producer price differential in 
the following manner:
    (a) Combine into one total for all handlers:
    (1) The values computed pursuant to Sec. 1030.60 (a)(1), (a)(2), 
(a)(7), and (b) through (k) for all handlers; and
    (2) Add values computed pursuant to Sec. 1030.60 (a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of the somatic cell adjustment;
    (b) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1030.75(a);
    (c) Add an amount representing not less than one-half the 
unobligated balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1030.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight.
[39 FR 15405, May 3, 1974, as amended at 60 FR 57150, Nov. 14, 1995]



Sec. 1030.62  Announcement of producer prices.

    On or before the 14th 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 other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
[60 FR 57151, Nov. 14, 1995]

                            Payments for Milk



Sec. 1030.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement'' fund into which he shall deposit all payments 
received pursuant to paragraph (a) of this section and out of which he 
shall make all payments required pursuant to paragraph (b) of this 
section.
    (a) Payments made by handlers pursuant to Secs. 1030.71, 1030.76, 
1030.77 and 1030.78.
    (b) Payments due handlers pursuant to Secs. 1030.72 and 1030.77: 
Provided, That payments due any handler shall be offset by payments due 
from such handler pursuant to Secs. 1030.71, 1030.76, 1030.77, 1030.78, 
1030.85 and 1030.86.



Sec. 1030.71  Payments to the producer-settlement fund.

    (a) On or before the 16th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount

[[Page 289]]

specified in paragraph (a)(1) of this section exceeds the amount 
specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1030.60.
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk as determined pursuant to Sec. 1030.44(c) by the producer 
price differential as adjusted pursuant to Sec. 1030.75;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk by the other solids price;
    (iv) The total value of the somatic cell adjustment to producer 
milk; and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1030.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1030.52 for 
the location of the plant from which received.
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant and the Class III price.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38584, July 29, 1977; 60 
FR 57151, Nov. 14, 1995]



Sec. 1030.72  Payments from the producer-settlement fund.

    On or before the 17th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1030.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1030.71(a)(1): Provided, That if the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
necessary funds become available.



Sec. 1030.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk received 
from such producer and for which payment is not made to a cooperative 
association pursuant to paragraph (b) or (c) of this section as follows:
    (1) On or before the 3rd day after the end of each month, to each 
producer who has not discontinued shipping milk to such handler before 
the end of the month, for producer milk received during the first 15 
days of the month at a rate per hundredweight not less than the Class 
III price for milk of 3.5 percent butterfat for the preceding month, 
less proper deductions authorized in writing by such producer;
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Secs. 1030.75 and 1030.86;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;

[[Page 290]]

    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a) of this 
section; and
    (vii) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer; and
    (3) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1030.72 for such month, it may 
reduce pro rata its payment to producers by not more than the amount of 
such underpayment. Payment to producers shall be completed thereafter 
not later than the date for making payments pursuant to paragraph (a) of 
this section next following receipt of the balance due from the market 
administrator.
    (b) Payments required in paragraph (a) of this section shall be made 
by a handler to a cooperative association qualified under Sec. 1030.18, 
or its duly authorized agent, for producer milk if the cooperative 
association is authorized to collect such payments for such producers 
and has presented the handler with a written request for such payments. 
Payments to the cooperative association pursuant to this paragraph shall 
be subject to the condition that the association has provided the 
handler with a written promise to reimburse the handler the amount of 
any actual loss incurred by the handler because of any improper claim on 
the part of the cooperative association. The amount of payment shall be 
equal to the sum of the individual payments otherwise payable for such 
producer milk and shall be paid by the handler as follows:
    (1) On or before the 1st day after the end of each month for 
producer milk received during the first 15 days of the month; and
    (2) On or before the 16th day after the end of each month for milk 
received during such month.
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from pool plant(s) operated by a cooperative 
association as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 1st day 
after the end of the month during which the milk was received at a rate 
per hundredweight not less than the Class III price for milk of 3.5 
percent butterfat for the preceding month; and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 16th day after 
the end of the month during which the milk was received as follows:
    (i) The hundredweight of Class I milk received times the Class I 
differential price for the month plus the pounds of Class I skim milk 
times the skim milk price for the month;
    (ii) The hundredweight of Class II milk received times the Class II 
differential price for the month;
    (iii) The hundredweight of Class III-A milk received times the Class 
III-A differential price for the month;
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described under Sec. 1030.9(c) as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 1st day 
after the end of the month during which the milk was received at a rate 
per hundredweight not less than the Class III price for milk of 3.5 
percent butterfat for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 16th day after the end of the 
month during which the milk was received as follows:

[[Page 291]]

    (i) The hundredweight of milk received times the producer price 
differential as adjusted pursuant to Sec. 1030.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (d)(1) of this 
section; and
    (vii) Less proper authorized deductions.
    (e) In making payments for producer milk pursuant to paragraphs 
(a)(2) or (b)(2) of this section, each handler shall furnish each 
producer or cooperative association to whom such payment is made a 
supporting statement in such form that it may be retained by the 
recipient which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds for each producer;
    (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 total pounds of other solids contained in the producer's 
milk;
    (6) The somatic cell count of the producer's milk;
    (7) The minimum rate or rates at which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
[39 FR 15405, May 3, 1974, as amended at 60 FR 57151, Nov. 14, 1995]



Sec. 1030.74  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. 1030.51(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.
[60 FR 57152, Nov. 14, 1995]



Sec. 1030.75  Plant location adjustments for producers and on nonpool milk.

    (a) The producer price differential for producer milk received at a 
plant shall be adjusted according to the location of the plant at the 
rates set forth in Sec. 1030.52(a).
    (b) The producer price differential applicable to other source milk 
shall be adjusted at the rates set forth in Sec. 1030.52(a), except that 
the adjusted producer differential price shall not be less than zero.
[60 FR 57152, Nov. 14, 1995]



Sec. 1030.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1030.30(b) and 1030.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and

[[Page 292]]

    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (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; and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1030.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1030.60 
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 of reconstituted skim milk in filled milk shall be priced 
at the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1030.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1030.60(f) less the value of such other source milk 
specified in Sec. 1030.71(a)(2)(v), a value of milk determined pursuant 
to Sec. 1030.60 for each

[[Page 293]]

nonpool plant that is not an other order plant which serves as a supply 
plant for such partially regulated distributing plant by making 
shipments to the partially regulated distributing plant during the month 
equivalent to the requirements of Sec. 1030.7(b), subject to the 
following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1030.30(b) and 
1030.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1030.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1030.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1030.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1030.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 15405, May 3, 1974, as amended at 42 FR 38584, July 29, 1977; 58 
FR 27810, May 11, 1993; 60 FR 57152, Nov. 14, 1995]



Sec. 1030.77  Adjustment of accounts.

    When verification by the market administrator of reports or payment 
of any handler discloses errors resulting in monies due (a) the market 
administrator from such handler, (b) such handler from the market 
administrator, or (c) any producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made not later than the 
date for making payment next following such disclosure.



Sec. 1030.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1030.71, 
Sec. 1030.76, Sec. 1030.77, Sec. 1030.85 or Sec. 1030.86, shall be 
increased three-fourths of one percent on the 7th day after the due date 
each month.
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
interest charges previously computed pursuant to this section;

[[Page 294]]

    (b) For the purpose of this section, any unpaid obligation that is 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator shall 
be considered to have been due when it would have been due if such 
report had been submitted at the proper time; and
    (c) Payment of any interest obligation computed pursuant to this 
section in an amount less than $10 shall be delayed until the 
accumulated interest obligation of such handler equals or exceeds $10.

        Administrative Assessment and Marketing Service Deduction



Sec. 1030.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 18th 
day after the end of each month 4 cents per hundredweight, or such 
lesser amount as the Secretary may prescribe, with respect to:
    (a) Producer milk (including such handler's own farm production and 
including for a handler described in Sec. 1030.9(c) producer milk 
described in Sec. 1030.13(d));
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1030.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1030.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1030.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1030.60(d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1030.76(a)(2).
[39 FR 15405, May 3, 1974, as amended at 58 FR 27811, May 11, 1993]



Sec. 1030.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to each producer pursuant to Sec. 1030.73 
shall deduct 5 cents per hundredweight or such lesser amount as the 
Secretary may prescribe with respect to producer milk received by such 
handler (except such handler's own farm production) during the month, 
and shall pay such deductions to the market administrator not later than 
the 18th day after the end of the month. Such monies shall be used by 
the market administrator to verify or establish weights, samples, and 
tests of producer milk and to provide producers with market information. 
Such services shall be performed by the market administrator or by an 
agent engaged by and responsible to him.
    (b) In the case of member producers for whom a cooperative 
association is performing, as determined by the Secretary, the services 
set forth in paragraph (a) of this section, each handler shall make, in 
lieu of the deductions specified in paragraph (a) of this section such 
deductions as are authorized by such producers and, on or before the 
18th day after the end of each month, pay over such deductions to the 
association rendering such services.



PART 1032--MILK IN SOUTHERN ILLINOIS-EASTERN MISSOURI MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1032.1  General provisions.

                               Definitions

1032.2  Southern Illinois--Eastern Missouri marketing area.
1032.3  Route disposition.
1032.4  [Reserved]
1032.5  Distributing plant.
1032.6  Supply plant.
1032.7  Pool plant.
1032.8  Nonpool plant.
1032.9  Handler.
1032.10  Producer-handler.
1032.11  [Reserved]
1032.12  Producer.
1032.13  Producer milk.
1032.14  Other source milk.
1032.15  Fluid milk product.
1032.16  Fluid cream product.
1032.17  Filled milk.
1032.18  Cooperative association.
1032.19  Commercial food processing establishment.

[[Page 295]]

                             Handler Reports

1032.30  Reports of receipts and utilization.
1032.31  Payroll reports.
1032.32  Other reports.

                         Classification of Milk

1032.40  Classes of utilization.
1032.41  Shrinkage.
1032.42  Classification of transfers and diversions.
1032.43  General classification rules.
1032.44  Classification of producer milk.
1032.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1032.50  Class prices.
1032.51  Basic formula price.
1032.52  Plant location adjustments for handlers.
1032.53  Announcement of class prices.
1032.54  Equivalent price.

                              Uniform Price

1032.60  Handler's value of milk for computing uniform price.
1032.61  Computation of uniform price (including weighted average 
          price).
1032.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1032.70  Producer-settlement fund.
1032.71  Payments to the producer-settlement fund.
1032.72  Payments from the producer-settlement fund.
1032.73  Payments to producers and to cooperative associations.
1032.74  Butterfat differential.
1032.75  Plant location adjustments for producers and on nonpool milk.
1032.76  Payments by handler operating a partially regulated 
          distributing plant.
1032.77  Adjustment of accounts.
1032.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1032.85  Assessment for order administration.
1032.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 39 FR 15417, May 3, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1032.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1032.2  Southern Illinois--Eastern Missouri marketing area.

    Southern Illinois--Eastern Missouri marketing area, hereinafter 
called the ``marketing area'', means all territory within the boundaries 
of the following counties and the city of St. Louis, including all 
municipal corporations therein and all institutions owned or operated by 
the Federal, State, county or municipal governments located wholly or 
partially within such territory:

                   Base Zone--In the State of Illinois

Bond
Calhoun
Christian
Clark
Clay
Clinton
Coles
Crawford
Cumberland
Edwards
Effingham
Fayette
Greene
Jasper
Jefferson
Jersey
Lawrence
Macoupin
Madison (Alton Township only)
Marion
Montgomery
Richland
Shelby
Wabash
Washington
Wayne

                 Northern Zone--In the State of Illinois

Champaign
DeWitt
Douglas
Edgar
Logan
Macon
McLean
Menard
Morgan
Moultrie
Piatt
Sangamon
Vermilion

                 Southern Zone--In the State of Illinois

Franklin
Hamilton
Jackson
Madison (except Alton Township)
Monroe
Perry
Randolph
Saline
St. Clair
White
Williamson

[[Page 296]]



                        In the State of Missouri

Bollinger
Cape Girardeau
Crawford
Franklin
Jefferson
Perry
St. Charles
St. Francois
St. Louis (City)
St. Louis
Ste. Genevieve
Warren
Washington
[53 FR 10058, Mar. 29, 1988]



Sec. 1032.3  Route disposition.

    Route disposition means any delivery to a retail or wholesale outlet 
(except to a plant) either direct or through any distribution facility 
of a fluid milk product classified as Class I milk.
[53 FR 10058, Mar. 29, 1988]



Sec. 1032.4  [Reserved]



Sec. 1032.5  Distributing plant.

    Distributing plant means any plant at which fluid milk products are 
processed and packaged and from which there is route disposition of 
Grade A fluid milk products in the marketing area during the month.



Sec. 1032.6  Supply plant.

    Supply plant means any plant at which Grade A milk is received from 
dairy farmers and from which fluid milk products are transferred to a 
distributing plant.
[39 FR 15417, May 3, 1974; as amended at 53 FR 10058, Mar. 29, 1988]



Sec. 1032.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which:
    (1) Route disposition, except filled milk, in the marketing area 
during the month is at least the lesser of a daily average of 7,000 
pounds or 10 percent of the total quantity of bulk fluid milk products 
physically received at such plant and diverted therefrom pursuant to 
Sec. 1032.13; and
    (2) Total route disposition, except filled milk, is at least 50 
percent of the total quantity of bulk fluid milk products physically 
received at such plant and diverted therefrom pursuant to Sec. 1032.13 
during the months of August through February and 40 percent during the 
other months.
    (b) A supply plant from which during December at least 40 percent, 
and at least 50 percent in all other months, of the total receipts of 
milk from dairy farmers (including producer milk diverted from such 
plant pursuant to Sec. 1032.13 but excluding milk diverted to such 
plant) and handlers described in Sec. 1032.9(c) is transferred to and 
physically received at plants described in paragraph (a) of this 
section, except that the minimum qualifying percentage shall be 25 
percent for a plant(s) operated by a cooperative association that 
delivered producer milk during each of the immediately preceding months 
of September through August and at least 75 percent of the total 
producer milk marketed in that 12-month period by such cooperative 
association was delivered to and physically received at plants described 
in paragraph (a) of this section.
    (c) Any supply plant which qualified pursuant to paragraph (b) of 
this section in each of the immediately preceding months of September 
through January shall be a pool plant for the months of February through 
August unless the operator of such plant notifies the market 
administrator in writing before the first day of any such month of his 
intention to withdraw such plant as a pool plant, in which case such 
plant shall thereafter be a nonpool plant until it again meets the 
shipping requirements set forth in paragraph (b) of this section.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order and from which during the month there is a greater quantity of 
route disposition, except filled milk, in the marketing area covered by 
the other order than in this marketing area: Provided, That such a 
distributing plant which was a

[[Page 297]]

pool plant under this order in the immediately preceding month shall 
continue to be subject to all of the provisions of this part until the 
third consecutive month in which a greater proportion of such plant's 
total route disposition is made in such other marketing area, unless the 
other order requires regulation of the plant without regard to its 
maintaining pool status under this order on the basis of the proviso of 
this paragraph;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another Federal order and from which during the 
month there is a greater quantity of route disposition, except filled 
milk, in the Southern Illinois-Eastern marketing area than in the other 
marketing area, and such other order which fully regulates the plant 
does not contain provisions to exempt the plant from regulation even 
though such plant has greater such route disposition in the marketing 
area of the Southern Illinois-Eastern order; and
    (4) Any plant qualified pursuant to paragraph (c) of this section 
for any portion of the period of February through August, inclusive, 
that the milk at such plant is subject to the classification and pricing 
provisions of another order issued pursuant to the Act.
[39 FR 15417, May 3, 1974, as amended at 52 FR 3216, Feb. 3, 1987; 53 FR 
10058, Mar. 29, 1988]



Sec. 1032.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant, from which fluid milk 
products are shipped to a pool plant.



Sec. 1032.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk of its members 
diverted for its account pursuant to Sec. 1032.13;
    (c) Any cooperative association with respect to the milk of its 
members which is received from the farm for delivery to the pool plant 
of another handler in a tank truck owned and operated by, or under 
contract to such cooperative association. The cooperative association, 
prior to the first day of the month of delivery, shall notify in writing 
the market administrator and the handler to whose plant the milk is 
delivered, that it will be the handler for the milk. For purposes of 
location adjustments to producers, milk so delivered shall be deemed to 
have been received by the cooperative association at a pool plant at the 
location of the pool plant to which it is delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1032.7(d); and
    (g) Any person in his capacity as the operator of an unregulated 
supply plant.



Sec. 1032.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a distributing plant and processes milk from his own 
farm production and who disposes of all or a portion of such milk as 
route disposition in the marketing area but who receives no milk from 
other dairy farmers or fluid milk products from nonpool plants: 
Provided, That the skim milk and butterfat disposed of in the form of 
fluid milk products designated as Class I milk pursuant to 
Sec. 1032.40(a) does not

[[Page 298]]

exceed the skim milk and butterfat, respectively, in the form of milk 
from his own farm production, and in the form of fluid milk products 
from pool plants of other handlers, allowing for inventory derived from 
such sources; and
    (b) Assumes as his personal enterprise and risk the processing and 
distribution of fluid milk products and the maintenance, care, and 
management of dairy animals and other resources necessary to produce his 
own farm milk production.



Sec. 1032.11  [Reserved]



Sec. 1032.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the Grade A 
inspection requirements of a duly constituted health authority, and 
whose milk is received at a pool plant or diverted as producer milk 
pursuant to Sec. 1032.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1032.44(a)(8)(iii) and the corresponding step of Sec. 1032.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other plant if any portion of such person's 
milk so moved is assigned to Class I under the provisions of such other 
order.



Sec. 1032.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer that is:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1032.9(c);
    (b) Received by a handler described in Sec. 1032.9(c) in excess of 
the quantity delivered to a pool plant(s);
    (c) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant;
    (d) Diverted from a pool plant to a nonpool plant (other than a 
producer-handler plant) for the account of the handler described in 
Sec. 1032.9 (a) or (b), subject to the following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion 
during the months of August through April unless such producer's milk is 
delivered to and physically received at a pool plant at least once 
during each such month;
    (2) The total amount of milk diverted by a cooperative association 
during each of the months of September through November and January 
through April, shall not exceed 35 percent of the producer milk that 
such cooperative caused to be delivered to and diverted from pool plants 
in each such month and 45 percent of such producer milk deliveries and 
diversions by the cooperative in each of the months of August and 
December;
    (3) The operator of a pool plant (other than a cooperative 
association) may divert any milk that is not under the control of a 
cooperative association that is diverting milk during the month pursuant 
to (d)(2) of this section. The total amount of milk diverted during each 
of the months of September through November and January through April 
shall not exceed 35 percent of such plant operator's producer milk 
received at and diverted from such pool plant and 45 percent of such 
plant operator's producer milk receipts and diversions in each of the 
months of August and December;
    (4) The quantity of milk diverted in excess of the applicable 
percentage limit prescribed in paragraph (d) (2) or (3) of this section 
shall not be producer milk. In such event, the handler diverting such 
milk may designate the dairy farmer deliveries that shall not be 
producer milk. If the handler fails to make such designation, milk 
diverted on the last day of the month, then the next-to-last day of the 
month, and so on, shall be excluded until such exclusions cover the 
excess quantity;
    (5) The quantity of milk diverted for the account of a cooperative 
association from a pool plant of another handler that would cause the 
pool plant to be a nonpool plant shall not be producer milk. In such 
event, the diverting handler may designate the dairy

[[Page 299]]

farmer deliveries that shall not be producer milk. If the handler fails 
to make such designation, milk diverted on the last day of the month, 
then the next-to-last day of the month, and so on, shall be excluded 
until such exclusions cover the excess quantity; and
    (e) Milk diverted pursuant to paragraph (c) or (d) of this section 
shall be priced at the location of the plant to which diverted.
[53 FR 10059, Mar. 29, 1988]



Sec. 1032.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1032.40 (b)(1) from any source other than producers, handlers 
described in Sec. 1032.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1032.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1032.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1032.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1032.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27811, May 11, 1993]



Sec. 1032.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27811, May 11, 1993]



Sec. 1032.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1032.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To be engaged in making collective sales, or marketing milk or 
its products for its members.



Sec. 1032.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid

[[Page 300]]

cream products are disposed of, or producer milk is diverted, that uses 
such receipts as ingredients in food products and has no disposition of 
fluid milk products or fluid cream products other than those received in 
consumer-type packages. Producer milk diverted to commercial food 
processing establishments shall be subject to the same provisions 
relating to diversions to plants, including but not limited to, 
provisions in Secs. 1032.13, 1032.41 and 1032.52.
[58 FR 27811, May 11, 1993]

                             Handler Reports



Sec. 1032.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1032.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1032.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1032.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.



Sec. 1032.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1032.9(a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1032.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1032.32  Other reports.

    In addition to the reports required pursuant to Secs. 1032.30 and 
1032.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.

                         Classification of Milk



Sec. 1032.40  Classes of utilization.

    Except as provided in Sec. 1032.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1032.30 shall be 
classified as follows:

[[Page 301]]

    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence

[[Page 302]]

beyond the handler's control, to the extent that the quantities 
destroyed or lost can be verified from records satisfactory to the 
market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1032.15 and the fluid 
cream product definition pursuant to Sec. 1032.16; and
    (7) In shrinkage assigned pursuant to Sec. 1032.41(a) to the 
receipts specified in Sec. 1032.41(a)(2) and in shrinkage specified in 
Sec. 1032.41(b) and (c).
[58 FR 27811, May 11, 1993]



Sec. 1032.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1032.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1032.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1032.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph (b)(2) 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1032.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.

[[Page 303]]



Sec. 1032.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1032.44(a)(12) and the corresponding 
step of Sec. 1032.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1032.44(a)(7) 
or the corresponding step of Sec. 1032.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1032.44(a)(11) or (12) or the corresponding steps of 
Sec. 1032.44(b), the skim milk or butterfat so transferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1032.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:

[[Page 304]]

    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1032.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent Sec. 1032.41(b); possible in the 
following sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned,

[[Page 305]]

pro rata among such plants, to the extent possible first to any 
remaining Class I utilization, then to Class II utilization, and then to 
Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
[39 FR 15417, May 3, 1974, as amended at 58 FR 27812, May 11, 1993]



Sec. 1032.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1032.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1032.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1032.9(b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1032.40, 
1032.41, and 1032.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed or by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1032.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1032.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1032.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[39 FR 15417, May 3, 1974, as amended at 58 FR 27812, May 11, 1993]



Sec. 1032.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1032.9(a) for each of his pool plants separately and of each 
handler described in Sec. 1032.9(b) and (c) by allocating the handler's 
receipts of skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1032.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk

[[Page 306]]

order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1032.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1032.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1032.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1032.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1032.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at

[[Page 307]]

the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1032.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased

[[Page 308]]

by a like amount (decreasing as necessary Class III and then Class II). 
In such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provision of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1032.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraphs (a)(12)(i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraphs (a)(12)(i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1032.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';

[[Page 309]]

    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computation pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 15417, May 3, 1974, as amended at 58 FR 27812, May 11, 1993]



Sec. 1032.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1032.44(a)(12) and the corresponding 
step of Sec. 1032.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1032.43(d) and Sec. 1032.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests, the class utilization of 
producer milk received by each handler from a cooperative association or 
from members of the association. For the purpose of this report, the 
milk caused to be so delivered by an association shall be prorated to 
each class in the proportion that the total receipts of milk received 
from producers by such handler were used in each class.
[39 FR 15417, May 3, 1974, as amended at 58 FR 27813, May 11, 1993]

                              Class Prices



Sec. 1032.50  Class prices.

    Subject to the provisions of Sec. 1032.52, the class prices for the 
month per hundredweight of milk containing 3.5 percent butterfat shall 
be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $1.92.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[39 FR 15417, May 3, 1974, as amended at 46 FR 43378, Aug. 28, 1981; 51 
FR 12832, Apr. 16, 1986; 60 FR 6609, Feb. 2, 1995]



Sec. 1032.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1032.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price

[[Page 310]]

data determined pursuant to paragraph (b) of this section and annual 
yield factors, for the preceding month and separately for the current 
month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18961, Apr. 14, 1995]



Sec. 1032.52  Plant location adjustments for handlers.

    (a) For producer milk received at a plant which is classified as 
Class I milk, the price specified in Sec. 1032.50(a) shall be adjusted 
for the location of such plant by the following amount:
    (1) For a plant located within one of the zones designed in 
Sec. 1032.2, the adjustment shall be as follows:

                                                                        
------------------------------------------------------------------------
                                          Adjustment per hundredweight  
------------------------------------------------------------------------
Zone:                                                                   
  Base Zone...........................  No adjustment.                  
  Northern Zone.......................  Minus 17 cents                  
  Southern Zone.......................  Plus 9 cents.                   

[[Page 311]]

                                                                        
------------------------------------------------------------------------

    (2) For a plant located outside the marketing area but in any of the 
following territory the adjustment shall be as follows:
    (i) Minus 17 cents. In counties of Adams, Brown, Cass, Pike, 
Schuyler and Scott in the State of Illinois or in the counties of 
Fountain, Parke, Vermillion and Warren in the State of Indiana.
    (ii) No adjustment. In the State of Missouri south and east of 
Interstate Highway 44.
    (iii) No location adjustment shall apply at a plant located in the 
State of Missouri south and east of Interstate Highway 44 that was not 
in an area described in paragraph (a)(2)(i) of this section.
    (3) For a plant located outside the marketing area and the area 
described in paragraph (a)(2) of this section, the adjustment shall be 
minus 20 cents for any such plant located 100 miles or more from the 
city or village limit of Alton, Robinson, or Vandalia, Illinois, 
whichever is nearest, and minus an additional 2.0 cents for each 10 
miles or fraction thereof that such distance exceeds 110 miles.
    (4) In determining location adjustments pursuant to this section, 
mileage shall be based on the shortest hard-surfaced highway distance as 
determined by the market administrator from the latest Mileage Guide as 
published by the Household Goods Carrier's Bureau.
    (b) For purposes of calculating such adjustment, bulk transfers 
between pool plants shall be assigned Class I disposition at the 
transferee-plant only to the extent that 110 percent of Class I 
disposition at the transferee-plant exceeds the sum of receipts at such 
plant from producers and handlers described in Sec. 1032.9(c), and the 
volume assigned as Class I to receipts from other order plants and 
unregulated supply plants, such assignment to be made first to receipts 
of fluid milk products from pool plants at which no location adjustment 
credit is applicable and then in sequence beginning with the plant at 
which the least location adjustment would apply.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[39 FR 15417, May 3, 1974, as amended at 50 FR 46628, Nov. 12, 1985; 52 
FR 3413, Feb. 4, 1987; 53 FR 10059, Mar. 29, 1988]



Sec. 1032.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6609, Feb. 2, 1995]



Sec. 1032.54  Equivalent price.

    If for any reason a price quotation required by this part for 
computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price determined 
by the Secretary to be equivalent to the price which is required.

                              Uniform Price



Sec. 1032.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1032.9(b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1032.44 by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1032.44(a)(14) and the 
corresponding step of Sec. 1032.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1032.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted

[[Page 312]]

from Class I and Class II pursuant to Sec. 1032.44(a)(9) and the 
corresponding step of Sec. 1032.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1032.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1032.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1032.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1032.44(a)(7)(v) and (vi) and 
the corresponding step of Sec. 1032.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1032.43(d) and Sec. 1032.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1032.44(a)(11) and the corresponding steps of Sec. 1032.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1032.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1032.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[39 FR 15417, May 3, 1974, as amended at 58 FR 27813, May 11, 1993]



Sec. 1032.61  Computation of uniform price (including weighted average price).

    For each month the market administrator shall compute the uniform 
price per hundredweight of milk of 3.5 percent butterfat content which 
is received from producers at plants located in the ``base zone'' as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1032.60 for all handlers who filed the reports prescribed by 
Sec. 1032.30 for the month and who made the payments pursuant to 
Secs. 1032.71 and 1032.73 for the preceding month;
    (b) Add an amount equal to the value of the net location and zone 
adjustments (reductions minus increases) applicable to the uniform price 
pursuant to Sec. 1032.75;
    (c) Add an amount equal to one-half of the unobligated balance in 
the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and

[[Page 313]]

    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1032.60(f);
    (e) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``weighted average price,'' and 
the ``uniform price'' for milk received from producers.
[39 FR 15417, May 3, 1974, as amended at 45 FR 23404, Apr. 7, 1980]



Sec. 1032.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 12th day after the end of each month the uniform price for 
such month.

                            Payments for Milk



Sec. 1032.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund,'' which shall function as 
follows:
    (a) All payments made by handlers pursuant to Secs. 1032.71, 
1032.76, and 1032.77 shall be deposited in such fund and out of which 
shall be made all payments pursuant to Secs. 1032.72 and 1032.77: 
Provided, That any payments due to any handler shall be offset by any 
payments due from such handler.
[39 FR 15417, May 3, 1985, as amended at 50 FR 46628, Nov. 12, 1985]



Sec. 1032.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1032.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1032.75, of such handler's receipts of producer milk; and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1032.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.



Sec. 1032.72  Payments from the producer-settlement fund.

    On or before the 17th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1032.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1032.71(a)(1). The market administrator shall 
offset any payment due any handler against any payments due from such 
handler.



Sec. 1032.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraphs (b), (c), and (d) of this 
section, each handler shall make payment for milk received during the 
month as follows:
    (1) On or before the last day of each month to each producer who did 
not discontinue shipping milk to such handler before the 25th day of the 
month an amount equal to not less than the Class III price for the 
preceding month

[[Page 314]]

multiplied by the hundredweight of milk received from such producer 
during the first 15 days of the month, less proper deductions authorized 
by such producer to be made from payments due pursuant to this 
paragraph:
    (2) On or before the 20th day of the following month to each 
producer, an amount equal to not less than the uniform price, as 
adjusted pursuant to Secs. 1032.74 and 1032.75, multiplied by the 
hundredweight of milk received from such producer during the month, 
subject to the following adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1032.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producer; and
    (iv) Less proper deductions authorized in writing by such producer: 
Provided, That, if by such date, such handler has not received full 
payment from the market administrator pursuant to Sec. 1032.72 for such 
month, he may reduce pro rata his payments to producers by not more than 
the amount of such underpayment. Payments to producers shall be 
completed thereafter not later than the date for making payments 
pursuant to this paragraph next following after the receipt of the 
balance due from the market administrator;
    (b) Payments required in paragraph (a) of this section shall be made 
to a cooperative association, qualified under Sec. 1032.18 or its duly 
authorized agent, which the market administrator determines is 
authorized by its members to collect payment for their milk and which 
has so requested any handler in writing. Such handler shall, on or 
before the 18th day of the following month pay the cooperative 
association for milk received during the month from the producer-members 
of such association as determined by the market administrator an amount 
equal to not less than the amount due such producer-members as 
determined pursuant to paragraph (a) of this section, less any 
deductions authorized in writing by such association: Provided, That the 
association has provided the handler with a written promise to reimburse 
the handler the amount of any actual loss incurred by such handler 
because of any improper claim on the part of the cooperative 
association;
    (c) On or before the 18th day after the end of each month, each 
handler shall pay to each cooperative association for milk the handler 
receives at his pool plant from a pool plant(s) operated by such 
association, not less than the minimum prices for milk in each class, as 
adjusted by the butterfat differential specified in Sec. 1032.74, that 
are applicable at the location of the handler's pool plant;
    (d) On or before the 18th day of the following month, each handler, 
in his capacity as the operator of a pool plant, who receives milk for 
which a cooperative association is the handler pursuant to 
Sec. 1032.9(c) shall pay such cooperative association for such milk at 
the uniform price as adjusted pursuant to Secs. 1032.74 and 1032.75;
    (e) None of the provisions of this section shall be construed to 
restrict any cooperative association qualified under section 8c(5)(F) of 
the Act from making payment for milk to its producers in accordance with 
such provision of the Act, and
    (f) Each handler who receives milk during the month from producers 
for which payment is to be made to a cooperative association pursuant to 
paragraph (b) of this section shall report to such cooperative 
association for each such producer on forms approved by the market 
administrator as follows:
    (1) On or before the 25th day of the month, the total pounds of milk 
received during the first 15 days of such month; and
    (2) On or before the 7th day after the end of the month, the total 
pounds of milk received from each producer, together with the butterfat 
content of such milk, and the amount or rate and nature of any 
deductions authorized by the cooperative association.



Sec. 1032.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which shall be 
0.138 times the current

[[Page 315]]

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. 1032.51 (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.
[60 FR 18961, Apr. 14, 1995]



Sec. 1032.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a plant shall be 
adjusted according to the location of the plant at the rates set forth 
in Sec. 1032.52(a); and
    (b) The weighted average price applicable to other source milk shall 
be subject to the same adjustments applicable to the uniform price under 
paragraph (a) of this section, except that the adjusted weighted average 
price shall not be less than the Class III price.
[39 FR 15417, May 3, 1974, as amended at 53 FR 10059, Mar. 29, 1988]



Sec. 1032.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1032.30(b) and 1032.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, 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
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the

[[Page 316]]

nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1032.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1032.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1032.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1032.60(f) less the value of such other source milk 
specified in Sec. 1032.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1032.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1032.7(b) and 
(c), subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1032.30(b) and 
1032.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1032.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1032.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1032.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of an other order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply

[[Page 317]]

plant if paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1032.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 15417, May 3, 1974, as amended at 58 FR 27813, May 11, 1993]



Sec. 1032.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses errors resulting in moneys due (a) 
the market administrator, from such handler, (b) such handler from the 
market administrator, or (c) any producer or cooperative association 
from such handler, the market administrator shall promptly notify such 
handler of any amount so due and payment thereof shall be made on or 
before the next date for making payments as set forth in the provisions 
under which such error occurred.



Sec. 1032.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1032.71, 
Sec. 1032.85, or Sec. 1032.86 shall be increased one-half of 1 percent 
for each month or portion thereof that such payment is overdue.

        Administrative Assessment and Marketing Service Deduction



Sec. 1032.85  Assessment for order administration.

    As his pro rata share of the expense of administering the order, 
each handler (excluding a handler described in Sec. 1032.9(c) with 
respect to milk delivered to pool plants) shall pay to the market 
administrator on or before the 20th day after the end of the month 5 
cents per hundredweight, or such lesser amount as the Secretary may 
prescribe, with respect to:
    (a) His producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1032.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1032.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1032.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1032.60(d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1032.76(a)(2).
[39 FR 15417, May 3, 1974, as amended at 58 FR 27814, May 11, 1993]



Sec. 1032.86  Deduction for marketing services.

    (a) Deduction for marketing services. Except as set forth in 
paragraph (b) of this section, each handler in making payments to 
producers pursuant to Sec. 1032.73, shall deduct 6 cents per 
hundredweight, or such lesser amount as the Secretary may prescribe, 
with respect to all milk received by such handler from producers 
(excluding such handler's own production) during the month, and shall 
pay such deductions to the market administrator on or before the 20th 
day after the end of such month. Such moneys shall be used by the market 
administrator to verify weights, samples, and tests of milk received 
from such producers and to provide them with market information. Such 
services shall be performed in

[[Page 318]]

whole or in part by the market administrator or by an agent engaged by 
and responsible to him.
    (b) Producers cooperative association. In the case of producers for 
whom a cooperative association is actually performing as determined by 
the Secretary, the services set forth in paragraph (a) of this section 
each handler, in lieu of the deduction specified in paragraph (a) of 
this section, shall make such marketing service deductions as are 
authorized by producer-members, and pay the money so deducted to the 
cooperative association on or before the 20th day after the end of the 
month.



PART 1033--MILK IN THE OHIO VALLEY MARKETING AREA--Table of Contents




                           General Provisions

Sec.
1033.1  General provisions.

                               Definitions

1033.2  Ohio Valley marketing area.
1033.3  Route disposition.
1033.4  Plant.
1033.5  Distributing plant.
1033.6  Supply plant.
1033.7  Pool plant.
1033.8  Nonpool plant.
1033.9     Handler.
1033.10  Producer-handler.
1033.12  Producer.
1033.13  Producer milk.
1033.14  Other source milk.
1033.15  Fluid milk product.
1033.16  Fluid cream product.
1033.17  Filled milk.
1033.19  Cooperative association.
1033.20  [Reserved]
1033.21  Commercial food processing establishment.

                             Handler Reports

1033.30  Reports of receipts and utilization.
1033.31  Payroll reports.
1033.32  Other reports.

                         Classification of Milk

1033.40  Classes of utilization.
1033.41  Shrinkage.
1033.42  Classification of transfers and diversions.
1033.43  General classification rules.
1033.44  Classification of producer milk.
1033.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1033.50  Class and component prices.
1033.51  Basic formula price.
1033.52  Plant location adjustments for handlers.
1033.53  Announcement of class and component prices.
1033.54  Use of equivalent prices.

                Differential Pool and Handler Obligations

1033.60  Computation of handlers' obligations to pool.
1033.61  Computation of weighted average differential value.
1033.62  Computation of producer protein price.
1033.63  Uniform price.
1033.64  Announcement of weighted average differential price, producer 
          protein price, and uniform price.
1033.65  Value of producer milk.
1033.66  Computation of somatic cell adjustment.

                            Payments for Milk

1033.70  Producer-settlement fund.
1033.71  Payments to the market administrator.
1033.72  Payments to producers and to cooperative associations.
1033.73  Butterfat differential.
1033.74  Plant location adjustments for producers and on nonpool milk.
1033.76  Payments by handler operating a partially regulated 
          distributing plant.
1033.77  Correction of errors.
1033.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1033.85  Assessment for order administration.
1033.86  Deduction for marketing services.

    Authority: Secs 1-19, 48 Stat. 31, as amended 7 U.S.C. 601-674.

    Source: 40 FR 27464, June 30, 1975, unless otherwise noted.

                           General Provisions



Sec. 1033.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1033.2  Ohio Valley marketing area.

    The Ohio Valley marketing area hereinafter called the ``marketing 
area'', means all the territory, by designated

[[Page 319]]

zones, within the boundaries of the following geographical units, 
including all waterfront facilities connected therewith and all 
territory occupied by government (municipal, State or Federal) 
reservations, installations, institutions, or other similar 
establishments if any part thereof is within the listed geographical 
units:
    (a) ``Zone 1'' shall include the following territory:

                              Ohio Counties

Fulton, Hancock, Henry, Lucas, Putnam, Sandusky (Woodville and Madison 
Townships only), Seneca, Wood.

                            Michigan Counties

Lenawee (Blissfield, Deerfield, Ogden, Palmyra, and Riga Townships 
only).
Monroe (except Ash, Berlin, Dundee, Exeter, London, and Milan 
Townships).

    (b) ``Zone 2'' shall include the following territory:

                              Ohio Counties

Allen, Auglaize, Crawford, Darke, Hardin, Logan, Marion, Mercer, Morrow, 
Richland, Shelby, Union, Van Wert (city of Delphos only), Wyandot.

    (c) ``Zone 3'' shall include the following territory:

                              Ohio Counties

Butler, Champaign, Clark, Clinton, Coshocton (except Adams Township), 
Delaware, Fairfield, Fayette, Franklin, Greene, Guernsey (except Oxford, 
Londonderry, and Millwood Townships), Hocking, Knox, Licking, Madison, 
Miami, Montgomery, Morgan, Muskingum, Noble, Perry, Pickaway, Preble, 
Warren.

    (d) ``Zone 4'' shall include the following territory:

                        Ohio Counties

Adams, Athens, Brown, Clermont, Gallia, Hamilton, Highland, Jackson, 
Lawrence, Meigs, Pike, Ross, Scioto, Vinton, Washington.

                            Kentucky Counties

Boone, Boyd, Bracken, Campbell, Grant, Greenup, Harrison, Kenton, Lewis, 
Mason, Pendleton, Robertson.

                            Indiana Counties

Dearborn, Ohio.

                         West Virginia Counties

Calhoun, Gilmer, Pleasants, Ritchie, Wirt, Wood.

    (e) ``Zone 5'' shall include the following territory:

                            Kentucky Counties

Floyd, Johnson, Lawrence, Magoffin, Martin, Pike.

                         West Virginia Counties

Boone, Cabell, Fayette, Jackson, Kanawha, Lincoln, Logan, Mason, Mingo, 
Putnam, Raleigh, Roane, Wayne, Wyoming.
[40 FR 27464, June 30, 1975, as amended at 52 FR 3414, Feb. 4, 1987. 
Redesignated at 58 FR 27814, May 11, 1993]



Sec. 1033.3  Route disposition.

    Route disposition means a delivery, either directly or through any 
distribution facility (including disposition from a plant store or by a 
vendor or vending machine), of a fluid milk product classified as Class 
I pursuant to Sec. 1033.40(a), except a delivery to a plant. However, 
for the single purpose of determining the qualification of a plant as a 
pool distributing plant packaged fluid milk products transferred as 
Class I milk from a plant (except a plant from which no fluid milk 
products are distributed to wholesale or retail outlets in the marketing 
area) to another plant shall be considered as route disposition of the 
transferor-plant and shall be considered as route disposition in the 
marketing area to the extent of the transferee-plant's route disposition 
in the marketing area.
[42 FR 11234, Feb. 28, 1977. Redesignated and amended at 58 FR 27814, 
May 11, 1993]



Sec. 1033.4  Plant.

    (a) Except as provided in paragraph (b) of this section, plant means 
the land and buildings, together with their surroundings, facilities, 
and equipment, constituting a single operating unit or establishment 
which contains stationary holding facilities and which is operated for 
the bulk handling or processing of milk or milk products (including 
filled milk).
    (b) The term ``plant'' shall not include distribution points 
(separate facilities used primarily for the transfer to vehicles of 
packaged fluid milk

[[Page 320]]

products moved there from processing and packaging plants) or bulk 
reload points (separate facilities at which milk moved from a farm in a 
tank truck is transferred to another tank truck and commingled with 
other milk before entering a plant). If a distribution point or bulk 
reload point is on the premises of a plant, it shall be considered a 
part of the plant operation.
[40 FR 27464, June 30, 1975. Redesignated at 58 FR 27814, May 11, 1993]



Sec. 1033.5  Distributing plant.

    Distributing plant means a plant in which fluid milk products 
approved by a duly constituted health authority for fluid consumption, 
or filled milk, are processed or packaged and from which there is route 
disposition in the marketing area during the month.
[40 FR 27464, June 30, 1975. Redesignated at 58 FR 27814, May 11, 1993]



Sec. 1033.6  Supply plant.

    Supply plant means a plant from which a fluid milk product approved 
by a duly constituted health authority for fluid consumption, or filled 
milk, is delivered to a pool plant during the month.
[40 FR 27464, June 30, 1975, as amended at 49 FR 36073, Sept. 14, 1984. 
Redesignated at 58 FR 27814, May 11, 1993]



Sec. 1033.7  Pool plant.

    Pool plant means a plant described in paragraph (a), (b), or (c) of 
this section that is not a producer-handler plant or a plant that is 
subject to another Federal order as set forth in paragraph (d) of this 
section.
    (a) A distributing plant with:
    (1) Route disposition in the marketing area during each month of not 
less than 15 percent of its total route disposition; and
    (2) Route disposition of not less than 40 percent during each of the 
months of September through February, and 35 percent during each of the 
months of March through August, of its total receipts of fluid milk 
products (including milk diverted from such plant but excluding bulk 
fluid milk products received by transfer or diversion from other plants 
as Class II or Class III milk) that are approved by a duly constituted 
health authority for fluid consumption, subject to the following 
conditions:
    (i) In making the percentage computations in paragraphs (a)(1) and 
(2) of this section, a plant's route disposition and receipts shall be 
exclusive of filled milk and of packaged fluid milk products priced as 
Class I milk under this or any other Federal order;
    (ii) A distributing plant (except a plant that met the route 
disposition percentage on a unit basis under paragraph (a)(2)(iii) of 
this section) that does not meet the minimum route disposition 
percentage specified in paragraph (a)(2) of this section to qualify for 
pool status in the current month shall be deemed to have met such 
qualifying percentage in such month, if the plant met the applicable 
percentage in each of the three immediately preceding months; and
    (iii) Two or more plants operated by the same handler may be 
considered as a unit for the purpose of meeting the total route 
disposition percentage specified in paragraph (a)(2) of this section if 
such handler requests that the plants be so considered and each plant in 
the unit meets the in-area route disposition percentage specified in 
paragraph (a)(1) of this section.
    (b) A supply plant from which 35 percent or more during the months 
of January through November, and 30 percent in December, of the receipts 
at such plant from producers (including producer milk diverted from the 
plant but excluding milk diverted to such plant) and from handlers 
described in Sec. 1033.9(c) is delivered by transfer or diversion as 
fluid milk products except filled milk, to pool distributing plants 
qualified pursuant to paragraph (a) of this section, subject to the 
following conditions:
    (1) The operator of a supply plant may include milk diverted from 
such plant to pool distributing plants as qualifying deliveries in 
meeting up to one-half of the required deliveries;
    (2) Shipments to be used in determining qualifying percentages shall 
be milk transferred or diverted and physically received by distributing 
pool plants, less any transfers or diversions of bulk fluid milk 
products from such distributing pool plants;

[[Page 321]]

    (3) A supply plant that does not meet the minimum delivery 
requirement specified in paragraph (b) of this section to qualify for 
pool status in the current month because a distributing plant to which 
the supply plant delivered its fluid milk products during such month 
failed to qualify as a pool plant pursuant to paragraph (a) of this 
section shall continue to be a pool plant for the current month if such 
supply plant qualified as a pool plant in the three immediately 
preceding months; and
    (4) A supply plant that qualified as a pool plant in each of the 
immediately preceding months of September through February on the basis 
of its deliveries to pool distributing plants shall be a pool plant for 
each of the following months of March through August, unless the plant 
operator files a written request with the market administrator asking 
that such plant not be a pool plant. Such nonpool status shall be 
effective on the first day of the month following the receipt of such 
request and thereafter until the plant again qualifies as a pool plant 
on the basis of its deliveries to a pool distributing plant(s).
    (c) A plant operated by a cooperative association if, during the 
month, 35 percent or more of the producer milk of members of the 
association is delivered to a pool distributing plant(s) either directly 
from the farm or by transfer from such association's plant, subject to 
the following conditions:
    (1) The cooperative requests pool status for such plant;
    (2) The 35-percent delivery requirement may be met for the current 
month or it may be met on the basis of deliveries during the preceding 
12-month period ending with the current month;
    (3) The plant is approved by a duly constituted health authority to 
handle milk for fluid consumption; and
    (4) The plant does not qualify as a pool plant under paragraph (a) 
or (b) of this section or under the similar provisions of another 
Federal order applicable to a distributing plant or a supply plant.
    (d) The term pool plant shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A plant subject to the classification and pricing provisions of 
another order issued pursuant to the Act, unless the plant is qualified 
as a pool plant pursuant to paragraph (a) or (b) of this section during 
the current month and the immediately preceding month and a greater 
volume of fluid milk products, except filled milk, is disposed of in 
each such month from such plant as route disposition in the Ohio Valley 
marketing area than is disposed of from such plant as route disposition 
in the marketing area regulated pursuant to the other order and to 
plants qualified as fully regulated plants under such other order on the 
basis of route disposition in the marketing area;
    (3) A plant qualified pursuant to Sec. 1033.7(a) which also meets 
the requirements of a fully regulated plant pursuant to the provisions 
of another Federal order on the basis of distribution in such other 
marketing area and from which the Secretary determines route 
disposition, except filled milk, during the month in this marketing area 
is greater than route disposition in such other marketing area but which 
plant is, nevertheless, fully regulated under such other Federal order.
[49 FR 36073, Sept. 14, 1984. Redesignated and amended at 58 FR 27815, 
May 11, 1993; 58 FR 43505, Aug. 17, 1993]



Sec. 1033.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of such plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a distributing 
plant that is not an other order plant or a producer-handler plant.
    (d) Unregulated supply plant means a supply plant that is not an 
other order plant or a producer-handler plant.
[40 FR 27464, June 30, 1975. Redesignated at 58 FR 27814, May 11, 1993]

[[Page 322]]



Sec. 1033.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) A cooperative association with respect to the producer milk 
which is diverted to nonpool plants for the account of such association 
pursuant to Sec. 1033.13, excluding producer milk diverted by the 
association as the operator of a pool plant pursuant to paragraph (a) of 
this section;
    (c) A cooperative association with respect to producer milk which is 
delivered for its account from the farm to a pool plant in a tank truck 
owned and operated by, or under contract to such cooperative 
association. Milk delivered pursuant to this paragraph shall not include 
producer milk diverted to another pool plant by the association as the 
operator of a pool plant pursuant to paragraph (a) of this section. Milk 
for which a cooperative association is the handler pursuant to this 
paragraph shall be deemed to have been received by such cooperative 
association at the location of the pool plant to which such milk was 
delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) Any person defined in Sec. 1033.10; and
    (f) Any person in his capacity as the operator of an other order 
plant described in Sec. 1033.7(d).
[40 FR 27464, June 30, 1975, as amended at 49 FR 36074, Sept. 14, 1984. 
Redesignated and amended at 58 FR 27814, May 11, 1993]



Sec.  1033.10  Producer-handler.

    Producer-handler means any person who:
    (a) Operates a dairy farm and a distributing plant;
    (b) Receives no fluid milk products from sources other than his own 
farm production, pool plants, and other order plants;
    (c) Uses no milk products other than fluid milk products for 
reconstitution into fluid milk products; and
    (d) Provides proof satisfactory to the market administrator that the 
care and management of the dairy animals and other resources necessary 
for his own farm production and the operation of the processing, 
packaging, and distribution business are the personal enterprise and 
risk of such person.
[40 FR 27464, June 30, 1975. Redesignated at 58 FR 27814, May 11, 1993]



Sec. 1033.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted health 
authority for fluid consumption, whose milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received at a pool plant from a handler described in 
Sec. 1033.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1033.13.
    (b) ``Producer'' shall not include:
    (1) Any person defined as a producer-handler under a Federal milk 
order (including this part) issued pursuant to the Act;
    (2) Any person with respect to milk produced by such dairy farmer 
which is diverted to a pool plant from another order plant if the other 
order designates such person as a producer under that order and such 
milk is allocated to Class II or Class III utilization pursuant to 
Sec. 1033.44(a)(8)(ii) and the corresponding step of Sec. 1033.44(b); or
    (3) Any person with respect to milk produced by such dairy farmer 
which is reported as diverted to another order plant if any portion of 
such person's milk so moved is assigned to Class I under the provisions 
of such other order.
[49 FR 36074, Sept. 14, 1984. Redesignated and amended at 58 FR 27815, 
May 11, 1993]



Sec. 1033.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk 
from producers which is:
    (a) Received at a pool plant directly from a producer, excluding any 
such milk received by diversion from another pool plant;
    (b) Received at a pool plant from a handler described in 
Sec. 1033.9(c) under the conditions set forth therein;
    (c) Received by a handler described in Sec. 1033.9(c) from producers 
in excess of the quantity delivery to pool plants;
    (d) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant; or

[[Page 323]]

    (e) Diverted from a pool plant to a nonpool plant (other than a 
producer-handler plant) for the account of the handler operating such 
pool plant or for the account of a handler described in Sec. 1033.9(b), 
subject to the following conditions:
    (1) During each of the months of September through November not less 
than one day's production of the producer must be physically received at 
a pool plant;
    (2) The operator of a pool plant may divert the milk of any producer 
that is not under the control of a cooperative association that diverts 
milk during the month pursuant to paragraph (e)(3) of this section. The 
operator of such plant may divert a total quantity of milk not exceeding 
50 percent during the months of September through November, January and 
February, and 60 percent during the month of December, of the producer 
milk physically received at or diverted from such pool plant during the 
month;
    (3) A cooperative association may divert an aggregate quantity of 
milk not exceeding 50 percent during the months of September through 
November, January and February, and 60 percent during the month of 
December, of the producer milk that the cooperative association caused 
to be physically received at or diverted from pool plants during the 
month; and
    (4) Any milk diverted in excess of the limit set forth in paragraph 
(e)(2) or (3) of this section shall not be producer milk. The diverting 
handler shall designate the dairy farmer deliveries that shall not be 
producer milk. If the handler fails to designate the dairy farmer 
deliveries which are ineligible, producer milk status shall be forfeited 
with respect to all milk diverted to nonpool plants by such handler; and
    (f) Milk diverted pursuant to paragraph (d) or (e) of this section 
shall be priced at the location of the plant where it is received, 
except that for the months of March through August the uniform price 
applicable to milk of producers located within the State of Ohio or the 
Michigan counties of Hillsdale, Lenawee, Monroe, Jackson and Washtenaw 
that is diverted to a plant located outside the marketing area and 
outside the State of Ohio shall not be adjusted downward below the 
uniform price for the month applicable at the location of the producer's 
farm, Provided, that 65 percent or more of such producer's milk is 
delivered to a plant or plants at which the same or a higher uniform 
price is applicable during the preceding months of September through 
February.
[49 FR 36074, Sept. 14, 1984. Redesignated and amended at 58 FR 27814, 
May 11, 1993; 58 FR 43506, Aug. 17, 1993]



Sec. 1033.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Fluid milk products and bulk cream from any source except 
producer milk, fluid milk products and bulk cream from pool plants, and 
fluid milk products and bulk cream in inventory at the beginning of the 
month;
    (b) Products, other than fluid milk products and Class II products 
listed in Sec. 1033.40(b)(1) and (4), from any source (including those 
produced at the plant) which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (c) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.
[40 FR 27464, June 30, 1975. Redesignated and amended at 58 FR 27815, 
May 11, 1993]



Sec. 1033.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk

[[Page 324]]

or skim milk, formulas especially prepared for infant feeding or dietary 
use that are packaged in hermetically sealed containers, any product 
that contains by weight less than 6.5 percent nonfat milk solids, and 
whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27814, May 11, 1993]



Sec. 1033.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27815, May 11, 1993]



Sec. 1033.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).
[40 FR 27464, June 30, 1975. Redesignated at 58 FR 27815, May 11, 1993]



Sec. 1033.19  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act'' (7 U.S.C. 291, 
292);
    (b) Has full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or milk products 
for its members; and
    (c) Has its entire organization and all of its activities under the 
control of its members.
[40 FR 27464, June 30, 1975. Redesignated at 58 FR 27814, May 11, 1993]



Sec. 1033.20  [Reserved]



Sec. 1033.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1033.13, 1033.41 and 1033.52.
[58 FR 27815, May 11, 1993]

                             Handler Reports



Sec. 1033.30  Reports of receipts and utilization.

    On or before the sixth day after the end of each month, reports of 
receipts and utilization for such month shall be made to the market 
administrator, in the detail and on forms prescribed by the market 
administrator, as follows:
    (a) Each handler operating a pool plant shall report for each of his 
pool plants:
    (1) Receipts of skim milk and butterfat contained in or represented 
by:
    (i) Producer milk, showing in the case of milk received directly 
from each producer the pounds of milk, the butterfat and milk protein 
contained in the milk, and the somatic cell count of the milk;
    (ii) Fluid milk products and bulk cream from other pool plants;
    (iii) Other source milk, with the identity of each source; and
    (iv) Products listed in Sec. 1033.40(b)(1) from other plants;
    (2) Inventories of fluid milk products and products listed in 
Sec. 1033.40(b)(1) at the beginning and the end of the

[[Page 325]]

month, showing separately such inventories in bulk form and in packaged 
form;
    (3) The utilization or disposition of all skim milk and butterfat 
required to be reported pursuant to this paragraph, showing separately:
    (i) Total route disposition and route disposition in the marketing 
area, showing separately such disposition of filled milk inside and 
outside the marketing area; and
    (ii) Transfers and diversions to other plants, and the butterfat and 
milk protein content of such milk;
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat and milk protein, and somatic cell 
count, as the market administrator may prescribe;
    (b) Each cooperative association shall report:
    (1) The quantities of skim milk, butterfat and milk protein, and 
somatic cell count contained in milk from producers for which it is the 
handler pursuant to Sec. 1033.9 (b) or (c), showing:
    (i) The quantity of milk delivered to each plant; and
    (ii) For each producer the pounds of milk, butterfat and milk 
protein tests, and the somatic cell count;
    (2) The utilization of all skim milk and butterfat required to be 
reported pursuant to paragraph (b)(1) of this section, except that 
contained in producer milk described in Sec. 1033.13(b); and
    (3) Such other information with respect to its receipts and 
utilization of skim milk, butterfat and protein, and somatic cell count 
as the market administrator may prescribe; and
    (c) Each handler operating a partially regulated distributing plant 
shall report as required in paragraph (a) of this section, except that 
receipts of bottling grade milk from dairy farmers shall be reported in 
lieu of receipts of producer milk. Such report shall include a separate 
statement showing the amount of reconstituted skim milk in route 
disposition in the marketing area.
[40 FR 27464, June 30, 1975, as amended at 49 FR 36074, Sept. 14, 1984; 
58 FR 27815, May 11, 1993; 58 FR 43506, Aug. 17, 1993]



Sec. 1033.31  Payroll reports.

    (a) On or before the 20th day after the end of the month, each 
handler who elects to pay producers pursuant to Sec. 1033.72(d) shall 
report to the market administrator the following information with 
respect to the handler's partial and final payments for producer milk 
received during such month:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds of milk and, with respect to final payments, 
the average butterfat and protein content and somatic cell count of the 
milk for which payment is being made;
    (3) The minimum rate of payment required by the order and the rate 
of payment used if such rate is other than the applicable minimum rate;
    (4) The amount and nature of any deductions from the amount 
otherwise due the producer;
    (5) The net amount of payment to the producer; and
    (6) The dates such payments were made.
    (b) On or before the 20th day after the end of the month, each 
handler operating a partially regulated distributing plant who elects to 
make payments pursuant to Sec. 1033.76(a) shall report to the market 
administrator, in the detail and on forms prescribed by the market 
administrator, his payroll for such month for dairy farmers from whom he 
received bottling grade milk. Such payroll shall report for each dairy 
farmer who would have been a producer if the plant had been fully 
regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
    (c) On or before the 22nd day after the end of the month, each 
cooperative association with respect to the milk of producers shall 
submit to the market administrator the association's completed producer 
payroll which shall list the pounds of milk received, the average 
butterfat and milk protein content thereof, the somatic cell count of 
the milk, and the rate and net amount of

[[Page 326]]

the payment made to such dairy farmer, together with the amount and 
nature of any deductions involved.
[49 FR 36075, Sept. 14, 1984. Redesignated and amended at 58 FR 27815, 
May 11, 1993; 58 FR 43506, Aug. 17, 1993]



Sec. 1033.32  Other reports.

    (a) Each producer-handler shall report to the market administrator 
at such time and in such manner as the market administrator may 
prescribe.
    (b) Each handler who operates an other order plant shall report 
total receipts and utilization or disposition of skim milk and butterfat 
at the plant at such time and in such manner as the market administrator 
may require and shall allow verification of such reports by the market 
administrator.
    (c) On or before the 26th day of the month, each handler who 
receives milk from a producer and does not make payment to such producer 
shall report the following information to the market administrator with 
respect to the receipts of milk by such handler during the first 15 days 
of the month:
    (1) The identity of each such producer from whom milk was received;
    (2) The total pounds of producer milk received from such producer;
    (3) The amount and nature of any deductions, as authorized by the 
producer, to be made from the partial payment for such milk;
    (4) The total pounds of milk received from a handler described in 
Sec. 1033.9(c); and
    (5) The total pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (d) On or before the 26th day of the month, each handler who 
receives milk from a producer and makes payment to such producer, shall 
report the following information to the market administrator with 
respect to the receipts of milk by such handler during the first 15 days 
of the month:
    (1) The total pounds of producer milk received from such producers;
    (2) The total deductions authorized by such producers to be made 
from the partial payments for such milk;
    (3) The total pounds of milk received from a handler described in 
Sec. 1033.9(c); and
    (4) The total pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (e) On or before the 6th day after the end of the month, each 
handler who receives milk from a producer and does not make payment to 
such producer shall report to the market administrator the following 
information with respect to the receipts of milk by such handler during 
such month:
    (1) The identity of each producer from whom milk was received;
    (2) The total pounds of producer milk received from such producer, 
its average butterfat and milk protein content, and its somatic cell 
content;
    (3) The amount and nature of any deductions, as authorized by the 
producer, to be made from the final payment for such milk;
    (4) The total pounds of skim milk, butterfat and milk protein, and 
the somatic cell count of milk received from a handler described in 
Sec. 1033.9(c); and
    (5) The total pounds of skim milk, butterfat and protein in bulk 
fluid milk products received from a pool plant operated by a cooperative 
association.
    (f) On or before the second day prior to the reporting dates 
specified in paragraphs (c) and (e) of this section, each cooperative 
association that operates a pool plant from which bulk fluid milk 
products were transferred or diverted to another pool plant within the 
time periods described in paragraphs (c) and (e) of this section shall 
report to each such pool plant operator and the market administrator the 
name and location of each transferor-plant and the total pounds, 
butterfat and milk protein included in the bulk fluid milk products 
transferred or diverted from each such plant.
    (g) In addition to the reports required pursuant to paragraphs (a) 
through (f) of this section and Secs. 1033.30 and 1033.31, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.
[40 FR 27464, June 30, 1975, as amended at 49 FR 36074, Sept. 14, 1984. 
Redesignated and amended at 58 FR 27815, May 11, 1993; 58 FR 43506, Aug. 
17, 1993]

[[Page 327]]

                         Classification of Milk



Sec. 1033.40  Classes of utilization.

    Except as provided in Sec. 1033.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1033.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of

[[Page 328]]

such dumping is not possible, or if the market administrator so 
requires, the handler must notify the market administrator on the next 
business day following such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1033.15 and the fluid 
cream product definition pursuant to Sec. 1033.16; and
    (7) In shrinkage assigned pursuant to Sec. 1033.41(a) to the 
receipts specified in Sec. 1033.41(a)(2) and in shrinkage specified in 
Sec. 1033.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27815, May 11, 1993, as amended at 58 FR 63287, Dec. 1, 1993]



Sec. 1033.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1033.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1033.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1033.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph (b)(2) 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (b)(2), (b)(4), (b)(5), 
and (b)(6) of this section; and

[[Page 329]]

    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1033.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the 
farm, 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.
[58 FR 27816, May 11, 1993, as amended at 58 FR 43506, Aug. 17, 1993]



Sec. 1033.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers shall be subject to the following 
conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1033.44(a)(12) and the corresponding 
step of Sec. 1033.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1033.44(a)(7) 
or the corresponding step of Sec. 1033.44(b), the skim milk or butterfat 
so transferred shall be classified so as to allocate the least possible 
Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1033.44(a) 
(11) or (12) or the corresponding steps of Sec. 1033.44(b), the skim 
milk or butterfat so transferred, up to the total of the skim milk and 
butterfat, respectively, in such receipts of other source milk, shall 
not be classified as Class I milk to a greater extent than would be the 
case if the other source milk had been received at the transferee-plant 
or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products

[[Page 330]]

shall be classified as Class I milk, and skim milk or butterfat 
allocated to the other classes shall be classified as Class III milk; 
and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1033.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1033.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:

[[Page 331]]

    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.
[58 FR 27816, May 11, 1993]



Sec. 1033.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1033.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1033.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1033.9 (b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1033.40, 
1033.41, and 1033.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1033.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association;
    (d) Bulk fluid milk products transferred or diverted from a pool 
plant operated by a cooperative association to another pool plant shall 
be classified in accordance with the rules set forth in Sec. 1033.42(a) 
and the value thereof shall be used to compute the receiving handler's 
pool obligation for such milk pursuant to Sec. 1033.60(a), (b), (h), (i) 
and (j).
    (e) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1033.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1033.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (f) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[58 FR 27818, May 11, 1993, as amended at 58 FR 43507, Aug. 17, 1993; 58 
FR 63287, Dec. 1, 1993]

[[Page 332]]



Sec. 1033.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1033.9(a) for each of its pool plants separately and of each 
handler described in Sec. 1033.9 (b) and (c) by allocating the handler's 
receipts of skim milk and butterfat to its utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1033.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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; and
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1033.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1033.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1033.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1033.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1033.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) and bulk 
cream for which bottling grade certification is not established;
    (iii) Receipts of fluid milk products and bulk cream from 
unidentified sources;
    (iv) Receipts of fluid milk products and bulk cream from a producer-
handler, as defined under this or any other Federal order;
    (v) Receipts of reconstituted skim milk in filled milk from 
unregulated supply plants that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order

[[Page 333]]

plant that is regulated under any Federal milk order providing for 
individual-handler pooling, to the extent that reconstituted skim milk 
is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) Receipts of fluid milk products from an unregulated supply plant 
that were not subtracted pursuant to paragraphs (a)(2)(i) and (a)(7)(v) 
of this section for which the handler requests classification other than 
Class I, but not in excess of the pounds of skim milk remaining in Class 
II and Class III combined;
    (ii) Receipts of fluid milk products from an unregulated supply 
plant that were not subtracted pursuant to paragraphs (a)(2)(i), 
(a)(7)(v), and (a)(8)(i) of this section which are in excess of the 
pounds of skim milk determined pursuant to paragraphs (a)(8)(ii) (A) 
through (C) of this section. Should the pounds of skim milk to be 
subtracted from Class II and Class III combined exceed the pounds of 
skim milk remaining in such classes, the pounds of skim milk in Class II 
and Class III combined shall be increased (increasing as necessary Class 
III and then Class II to the extent of available utilization in such 
classes at the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step (exclusive of transfers between pool plants of the 
same handler) at all pool plants of the handler;
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) Receipts of bulk fluid milk products from an other order plant 
that are in excess of bulk fluid milk products transferred or diverted 
to such plant and that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section, if Class II or Class III classification is 
requested by the operator of the other order plant and the handler, but 
not in excess of the pounds of skim milk remaining in Class II and Class 
III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1033.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (5) and (7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8) (i) and (ii) of this section and that were 
not offset by transfers or diversions of fluid milk

[[Page 334]]

products to the same unregulated supply plant from which fluid milk 
products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1033.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and

[[Page 335]]

    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1033.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[58 FR 27818, May 11, 1993]



Sec. 1033.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1033.44(a)(12) and the corresponding 
step of Sec. 1033.44(b), estimate and publicly announce on or before the 
10th day of the month the utilization (to the nearest whole percentage) 
in each class during the month of skim milk and butterfat, respectively, 
in producer milk of all handlers. Such estimate shall be based upon the 
most current available data and shall be final for such purpose;
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1033.43(e) and Sec. 1033.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and, thereafter, any change 
in such allocation required to correct errors disclosed in the 
verification of such report; and
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order 
plant, the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report of the 
receiving handler and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 14th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association or its members which was utilized in each class at each pool 
plant receiving such milk. For the purpose of this report, the milk so 
received shall be allocated to each class at each pool plant in the same 
ratio as all producer milk received at such plant during the month.
[58 FR 27820, May 11, 1993]

                              Class Prices



Sec. 1033.50  Class and component prices.

    Subject to the provisions of Sec. 1033.52, the class and component 
prices for the month, per hundredweight or per pound, shall be as 
follows:

[[Page 336]]

    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $2.04.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Butterfat price. The butterfat price per pound shall be the 
total of the following steps, rounded to the nearest whole cent:
    (1) The skim milk price per hundredweight for the month, computed 
pursuant to paragraph (f) of this section, divided by 100; and
    (2) The butterfat differential for the month, computed pursuant to 
Sec. 1033.73 multiplied by 10.
    (e) Milk protein price. The price per pound for milk protein shall 
be computed by subtracting from the Class III price the butterfat price 
multiplied by 3.5, and dividing the result by the average protein 
content of the milk on which the basic formula price is based for the 
previous month as reported by the Department and adjusted for the 
current month by the Dairy Division, and rounding the result to the 
nearest whole cent.
    (f) Skim milk price. The skim milk price per hundredweight shall be 
computed by subtracting from the Class III price the butterfat 
differential computed pursuant to Sec. 1033.73 times 35, and rounding 
the result to the nearest whole cent.
    (g) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential value per hundredweight 
of 3.5 percent milk and rounded to the nearest cent.
[40 FR 27464, June 30, 1975, as amended at 40 FR 30087, July 17, 1975; 
47 FR 42968, Sept. 30, 1982; 51 FR 12832, Apr. 16, 1986; 54 FR 49957, 
Dec. 4, 1989; 55 FR 25964, June 26, 1990. Redesignated and amended at 58 
FR 27820, May 11, 1993; 58 FR 43507, Aug. 17, 1993; 58 FR 63287, Dec. 1, 
1993; 60 FR 6609, Feb. 2, 1995]



Sec. 1033.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1033.73 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.

[[Page 337]]

    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18961, Apr. 14, 1995]



Sec. 1033.52  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers that is classified 
as Class I milk without movement in bulk form to a pool distributing 
plant at which a higher Class I price applies, the price specified in 
Sec. 1033.50(a) shall be adjusted on the basis of where the plant 
receiving the milk is located, as follows:
    (1) At a plant located in one of the zones set forth in Sec. 1033.2, 
the adjustment shall be as follows:

                                                                        
                                                                        
                                          Adjustment per hundredweight  
                                                                        
Zone:                                                                   
  1...................................  Minus 24 cents.                 
  2...................................  Minus 14 cents.                 
  3...................................  No adjustment.                  
  4...................................  Plus 7 cents.                   
  5...................................  Plus 15 cents.                  
                                                                        

    (2) At a plant located outside the marketing area and 60 miles or 
less from the city hall of the nearest city listed herein, excluding 
plants located in the area specified in (a)(4) of this section, the 
adjustment shall be the adjustment applicable at Cincinnati, Coshocton, 
Dayton, Lima, Marietta, or Toledo, Ohio; Ashland or Maysville, Kentucky; 
or Beckley or Charleston, West Virginia; whichever city is nearest;
    (3) At a plant located outside the marketing area and more than 60 
miles from the city hall of the nearest city listed in paragraph (a)(2) 
of this section, excluding plants located in the area specified in 
paragraph (a)(4) of this section, the adjustment shall be the adjustment 
applicable at the nearest city, less 11 cents and less an additional 1.5 
cents for each 10 miles or

[[Page 338]]

fraction thereof in excess of 70 miles that such plant is located from 
the city hall of the nearest city listed above. However, at any such 
plant located in the Louisville-Lexington-Evansville marketing area 
under part 1046 of this chapter or east of the Mississippi River and 
south of the northern boundary of Kentucky, West Virginia, or Virginia, 
the adjustment shall be the adjustment applicable at Zone 4;
    (4) At a plant located outside the marketing area in the Ohio 
counties of Defiance, Paulding Van Wert, (except the city of Delphos), 
or Williams, the adjustment shall be minus 24 cents, and
    (5) For the purpose of computing location adjustments pursuant to 
this section, distances shall be measured by the shortest hard-surfaced 
distance as determined by the market administrator.
    (b) For the purpose of determining the quantity of Class I producer 
milk on which a location adjustment shall apply under paragraph (a) of 
this section, the quantity of fluid milk products transferred as Class I 
milk from pool plants to a pool distributing plant at which the Class I 
price is greater than the Class I price at the transferor plant shall be 
assigned pro rata with the receipts of producer milk at the transferee 
plant to the Class I milk remaining at such transferee plant after the 
assignments pursuant to Sec. 1033.44 (a)(1) through (a)(12) and the 
corresponding steps of Sec. 1033.44(b) plus the pounds of skim milk and 
butterfat in receipts of concentrated fluid milk products from other 
pool plants that are assigned to Class I use. The Class I utilization so 
assigned to the transferred fluid milk products then shall be allocated 
first to receipts from plants at which the Class I price is not less 
than the Class I price at the transferee plant, and then to receipts 
from plants with lower Class I prices, in sequence beginning with the 
plant having the highest Class I price.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section.
[40 FR 27464, June 30, 1975, as amended at 49 FR 36075, Sept. 14, 1984; 
52 FR 3414, Feb. 4, 1987. Redesignated and amended at 58 FR 27821, May 
11, 1993]



Sec. 1033.53  Announcement of class and component prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III and Class III-A prices for the preceding month;
    (d) The butterfat differential for the preceding month;
    (e) The butterfat price, the milk protein price, and the skim milk 
price computed pursuant to Sec. 1033.50(d), (e) and (f) for the 
preceding month; and
    (f) The monthly average price for 40-pound blocks of cheese at the 
National Cheese Exchange (Green Bay, Wisconsin) for the preceding month.
[58 FR 43507, Aug. 17, 1993, as amended at 58 FR 63287, Dec. 1, 1993; 60 
FR 6609, Feb. 2, 1995]



Sec. 1033.54  Use of equivalent prices.

    If for any reason a price quotation or factor required by this part 
for computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price or factor 
determined by the Secretary to be equivalent to the price or factor that 
is required.

                Differential Pool and Handler Obligations



Sec. 1033.60  Computation of handlers' obligations to pool.

    The market administrator shall compute each month for each handler 
defined in Sec. 1033.9(a) with respect to each of such handler's pool 
plants, and for each handler defined in Sec. 1033.9(b) and (c), an 
obligation to the pool computed by adding the following values:
    (a) The pounds of producer milk in Class I as determined pursuant to 
Sec. 1033.44, and the pounds of bulk fluid

[[Page 339]]

milk products received from a pool plant operated by a cooperative 
association pursuant to Sec. 1033.43(d) in Class I, both multiplied by 
the difference between the Class I price (adjusted pursuant to 
Sec. 1033.52) and the Class III price;
    (b) The pounds of producer milk in Class II as determined pursuant 
to Sec. 1033.44, and the pounds of bulk fluid milk products received 
from a pool plant operated by a cooperative association pursuant to 
Sec. 1033.43(d) in Class II, both multiplied by the difference between 
the Class II price and the Class III price;
    (c) The value of the product pounds, skim milk, and butterfat in 
overage assigned to each class pursuant to Sec. 1033.44(a)(14) and the 
value of the corresponding protein pounds associated with the skim milk 
subtracted from Class II and Class III pursuant to Sec. 1033.44(a)(14), 
by multiplying the skim milk pounds so assigned by the percentage of 
protein in the handler's receipts of producer skim milk during the 
month, as follows:
    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1033.44(a)(14) and the corresponding step of 
Sec. 1033.44(b), multiplied by the difference between the Class I price 
adjusted for location and the Class III price, plus the hundredweight of 
skim milk subtracted from Class I pursuant to Sec. 1033.44(a)(14) 
multiplied by the skim milk price, plus the butterfat pounds of overage 
subtracted from Class I pursuant to Sec. 1033.44(b) multiplied by the 
butterfat price;
    (2) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1033.44(a)(14) and the corresponding step of 
Sec. 1033.44(b) multiplied by the difference between the Class II price 
and the Class III price, plus the protein pounds in skim milk subtracted 
from Class II pursuant to Sec. 1033.44(a)(14) multiplied by the protein 
price, plus the butterfat pounds of overage subtracted from Class II 
pursuant to Sec. 1033.44(b) multiplied by the butterfat price;
    (3) The protein pounds in skim milk overage subtracted from Class 
III pursuant to Sec. 1033.44(a)(14) multiplied by the protein price, 
plus the butterfat pounds of overage subtracted from Class III pursuant 
to Sec. 1033.44(b) multiplied by the butterfat price;
    (d) The value of the product pounds, skim milk, and butterfat 
subtracted from Class I or Class II pursuant to Sec. 1033.44(a)(9) and 
the corresponding step of Sec. 1033.44(b), and the value of the protein 
pounds associated with the skim milk subtracted from Class II pursuant 
to Sec. 1033.44(a)(9), computed by multiplying the skim milk pounds so 
subtracted by the percentage of protein in the handler's receipts of 
producer skim milk during the previous month, as follows:
    (1) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1033.44(a)(9) and the 
corresponding step of Sec. 1033.44(b) applicable at the location of the 
pool plant at the current month's Class I-Class III price difference and 
the current month's skim milk and butterfat prices, less the Class III 
value of the milk at the previous month's protein and butterfat prices;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1033.44(a)(9) and the 
corresponding step of Sec. 1033.44(b) at the current month's Class II-
Class III price difference and the current month's protein and butterfat 
prices, less the Class III value of the milk at the previous month's 
protein and butterfat prices;
    (e) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1033.44(a)(7) (i) through (iv), 
and the corresponding step of Sec. 1033.44(b), excluding receipts of 
bulk fluid cream products from another order plant, applicable at the 
location of the pool plant at the current month's Class I-Class III 
price difference;
    (f) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1033.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1033.44(b) applicable at the location of 
the transferor-plant at the current month's Class I-Class III price 
difference;
    (g) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1033.44(a)(11) and the 
corresponding step of

[[Page 340]]

Sec. 1033.44(b), excluding such hundredweight in receipts of bulk fluid 
milk products from an unregulated supply plant to the extent that an 
equivalent quantity disposed of to such plant by handlers fully 
regulated by any Federal order is classified and priced as Class I milk 
and is not used as an offset for any other payment obligation under any 
order, applicable at the location of the nearest unregulated supply 
plants from which an equivalent volume was received at the current 
month's Class I-Class III price difference.
    (h) The pounds of skim milk in Class I producer milk, as determined 
pursuant to Sec. 1033.44, and the pounds of skim milk in Class I bulk 
fluid milk products received from a pool plant operated by a cooperative 
association pursuant to Sec. 1033.43(d), both multiplied by the skim 
milk price for the month computed pursuant to Sec. 1033.50(f).
    (i) The pounds of protein in skim milk in Class II and Class III, 
computed by multiplying the skim milk pounds so assigned by the 
percentage of protein in the handler's receipts of producer skim milk 
during the month for each report filed, separately, and the pounds of 
protein in Class II and Class III skim milk in bulk fluid milk products 
received from a pool plant operated by a cooperative association 
pursuant to Sec. 1033.43(d), both multiplied by the protein price for 
the month, computed pursuant to Sec. 1033.50(e) and adjusted pursuant to 
Sec. 1033.66 for the weighted average somatic cell content of the 
handler's receipts of milk.
    (j) The pounds of butterfat in all three classes as determined 
pursuant to Sec. 1033.44, and the pounds of butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association pursuant to Sec. 1033.43(d), both multiplied by the 
butterfat price for the month computed pursuant to Sec. 1033.50(d).
    (k) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use, provided that the handler establishes a 
disposition of labeled reconstituted fluid milk products; and
    (l) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1033.76(c).
    (m) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
    (n) For producer milk in Class III-A, add or subtract as appropriate 
an amount per hundredweight that the Class III-A price is more or less, 
respectively, than the Class III price.
[58 FR 43507, Aug. 17, 1993, as amended at 58 FR 63287, Dec. 1, 1993; 59 
FR 24031, May 10, 1994]



Sec. 1033.61  Computation of weighted average differential value.

    For each month the market administrator shall compute the weighted 
average differential value for milk received from all producers as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1033.60, paragraphs (a) through (g) and (k) and (l), excluding the 
values in paragraphs (a) and (b) associated with bulk fluid milk 
products received from a pool plant operated by a cooperative 
association pursuant to Sec. 1033.43(d), for all handlers who made 
reports pursuant to Sec. 1033.30 and who made payments pursuant to 
Sec. 1033.71 for the preceding month;
    (b) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1033.74(a);

[[Page 341]]

    (c) Subtract an amount equal to the total value of the plus location 
differentials computed pursuant to Sec. 1033.74(a);
    (d) Add an amount equal to not less than one-half the unobligated 
balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1033.60(g).
    (f) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``Weighted Average Differential 
Price''.
[58 FR 43508, Aug. 17, 1993]



Sec. 1033.62  Computation of producer protein price.

    For each month the market administrator shall compute the producer 
protein price to be paid to all producers for the pounds of protein in 
their milk, as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1033.60, paragraphs (h) and (i), excluding the values associated 
with bulk fluid milk products received from a pool plant operated by a 
cooperative association pursuant to Sec. 1033.43(d), for all handlers 
who made reports pursuant to Sec. 1033.30 and who made payments pursuant 
to Sec. 1033.71 for the preceding month;
    (b) Add all of the negative adjustments and subtract all of the 
positive adjustments determined for each producer's somatic cell count 
pursuant to Sec. 1033.66;
    (c) Divide the resulting amount by the total pounds of protein in 
producer milk; and
    (d) Round to the nearest whole cent. The result is the ``Producer 
protein price.''
[58 FR 43508, Aug. 17, 1993]



Sec. 1033.63  Uniform price.

    A uniform price for producer milk containing 3.5 percent butterfat 
shall be computed by adding the weighted average differential price 
determined pursuant to Sec. 1033.61 to the basic formula price for the 
month.
[58 FR 43508, Aug. 17, 1993]



Sec. 1033.64  Announcement of weighted average differential price, producer protein price, and uniform price.

    The market administrator shall announce publicly on or before the 
12th day after the end of the month the weighted average differential 
price computed pursuant to Sec. 1033.61, the producer protein price 
computed pursuant to Sec. 1033.62, and the uniform price computed 
pursuant to Sec. 1033.63(a).
[58 FR 43508, Aug. 17, 1993]



Sec. 1033.65  Value of producer milk.

    The value of producer milk shall be the sum of:
    (a) The weighted average differential price computed pursuant to 
Sec. 1033.61 and adjusted pursuant to Sec. 1033.74, multiplied by the 
total hundredweight of producer milk received from the producer;
    (b) The producer protein price computed pursuant to Sec. 1033.62 and 
adjusted pursuant to Sec. 1033.66, multiplied by the total milk protein 
contained in the producer milk received from the producer; and
    (c) The butterfat price computed pursuant to Sec. 1033.50(d) 
multiplied by the total butterfat contained in the producer milk 
received from the producer.
[58 FR 43508, Aug. 17, 1993]



Sec. 1033.66  Computation of somatic cell adjustment.

    (a) For each producer, an adjustment to the producer 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 table in paragraph (b) of this section by the 
average price for the month of 40-pound blocks of cheese at the National 
Cheese Exchange at Green Bay, WI, as reported monthly by the Dairy 
Division, Agricultural Marketing Service. If a handler has not 
determined a monthly average somatic cell count, it will be determined 
by the market administrator.

[[Page 342]]

    (b) The following table shows the factors and constants to be used 
in computing the somatic cell adjustment:

                                                                        
------------------------------------------------------------------------
                                                              Constants 
                                                                 for    
                                                              computing 
               Somatic cell counts                 Factors   the somatic
                                                                cell    
                                                             adjustment 
------------------------------------------------------------------------
1 to 50,000.....................................      .300        .09375
51,000 to 100,000...............................      .200       .062500
101,000 to 150,000..............................      .150       .046875
151,000 to 200,000..............................      .100       .031250
201,000 to 250,000..............................      .050       .015625
251,000 to 300,000..............................      .025      .0078125
301,000 to 350,000..............................      .000       .000000
351,000 to 400,000..............................      .000       .000000
401,000 to 450,000..............................     -.025     -.0078125
451,000 to 500,000..............................     -.050      -.015625
501,000 to 550,000..............................     -.075     -.0234375
551,000 to 600,000..............................     -.100      -.031250
601,000 to 650,000..............................     -.125     -.0390625
651,000 to 700,000..............................     -.150      -.046875
701,000 to 750,000..............................     -.200      -.062500
751,000 and above...............................     -.250      -.078125
------------------------------------------------------------------------

[58 FR 43509, Aug. 17, 1993]

                            Payments for Milk



Sec. 1033.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund, known as 
the ``producer-settlement fund'', which shall function as follows:
    (a) All payments made by handlers pursuant to Secs. 1033.71, 
1033.76, and 1033.77 shall be deposited in this fund, and all payments 
made pursuant to Secs. 1033.72 and 1033.77 shall be made out of this 
fund;
    (b) The difference between the amount added pursuant to 
Sec. 1033.61(d) and the amount resulting from the subtraction pursuant 
to Sec. 1033.61(f) shall be deposited in, or withdrawn from, this fund, 
as the case may be.
[40 FR 27464, June 30, 1975, as amended at 49 FR 7353, Feb. 29, 1984; 58 
FR 27822, May 11, 1993; 58 FR 43509, Aug. 17, 1993]



Sec. 1033.71  Payments to the market administrator.

    (a) Subject to paragraph (d) of this section, each handler shall pay 
to the market administrator on or before the 26th day of each month an 
amount determined by multiplying the hundredweight of producer milk and 
bulk fluid milk products from a pool plant operated by a cooperative 
association received by such handler during the first 15 days of the 
month by the basic formula price for the preceding month less proper 
deductions and charges authorized in writing by such producers.
    (b) Subject to paragraph (c) of this section, each handler shall pay 
to the market administrator on or before the 15th day after the end of 
each month the value of such handler's milk pursuant to Sec. 1033.60(a) 
through (l) and the value of bulk fluid milk products received from a 
pool plant operated by a cooperative association pursuant to 
Sec. 1033.43(d) as determined pursuant to Sec. 1033.60(a), (b), (h), (i) 
and (j), less:
    (1) The amount obtained from multiplying the weighted average 
differential price applicable at the location of the plants from which 
the other source milk is received (not to be less than zero) by the 
hundredweight of other source milk for which a value is computed 
pursuant to Sec. 1033.60(g);
    (2) Partial payments made pursuant to paragraph (a) of this section 
for such month; and
    (3) Proper deductions and charges authorized in writing by producers 
from whom the handler received milk, except that the total deductions 
and charges made under this section for the month for each producer 
shall not be greater than the total value of the milk received from such 
producer during the month.
    (c) Subject to paragraph (d) of this section, each handler operating 
a distributing plant that is subject to the classification and pricing 
provisions of another order which provides for individual handler 
pooling shall pay to the market administrator for the producer-
settlement fund on or before the 25th day after the end of the month an 
amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route disposition 
in marketing areas regulated by two or more marketwide pool orders, the 
reconstituted skim milk assigned to Class I shall be prorated according 
to the route disposition in each marketing area; and
    (2) Compute the value of the quantity of reconstituted skim milk 
assigned in paragraph (b)(1) of this section to route

[[Page 343]]

disposition in this marketing area at the Class I price under this part 
applicable at the location of the other order plant (not to be less than 
the Class III price) and subtract its value at the Class III price.
    (d) The following conditions shall apply with respect to the 
payments prescribed in paragraphs (a), (b) and (c) of this section:
    (1) Payments to the market administrator shall be deemed not to have 
been made until such payments have been received by the market 
administrator;
    (2) If the date by which payments must be received by the market 
administrator falls on a Saturday or Sunday or any day that is a 
national holiday, payments shall be considered to have been received by 
the due date if they are received not later than the next day on which 
the market administrator's office is open for public business; and
    (3) Payments due the market administrator from a cooperative 
association as a handler may be offset by payments determined by the 
market administrator to be due the cooperative association pursuant to 
Sec. 1033.72.
[49 FR 36076, Sept. 14, 1984, as amended at 58 FR 27822, May 11, 1993; 
58 FR 43509, Aug. 17, 1993]



Sec. 1033.72  Payment to producers and to cooperative associations.

    (a) On or before the 28th day of the month, the market administrator 
shall make payment, subject to paragraphs (c) and (d) of this section, 
to each producer for milk received from such individual producer and to 
each cooperative association for bulk fluid milk products delivered from 
its pool plant to another pool plant during the first 15 days of the 
month by handlers from whom the appropriate payments have been received 
pursuant to Sec. 1033.71(a) at a rate per hundredweight equal to the 
basic formula price for the preceding month, less the deductions 
authorized in writing by producers and charges made by handlers with 
respect to such milk.
    (b) On or before the 17th day after the end of the month, the market 
administrator shall make payment, subject to paragraphs (c) and (d) of 
this section, to each producer for milk received from such individual 
producer and to each cooperative association for bulk fluid milk 
products delivered from its pool plant to another pool plant during the 
month by handlers from whom the appropriate payments have been received 
pursuant to Sec. 1033.71(b) of the amount determined pursuant to 
Sec. 1033.65, less:
    (1) Partial payments made pursuant to paragraph (a) of this section 
with respect to such milk;
    (2) Deductions for marketing services pursuant to Sec. 1033.86; and
    (3) Other deductions authorized in writing by producers and made by 
handlers with respect to such milk.
    (c) In lieu of making payments to individual producers pursuant to 
paragraphs (a) and (b) of this section, the market administrator shall 
pay, on or before the day prior to the dates specified in such 
paragraphs, to each cooperative association that so requests with 
respect to those producers for whom it markets milk and who are 
certified to the market administrator as having authorized the 
cooperative association to receive such payment an amount equal to the 
sum of the individual payments otherwise payable to such producers 
pursuant to paragraphs (a) and (b) of this section.
    (d) In lieu of making payments to individual producers pursuant to 
paragraphs (a) and (b) of this section, the market administrator shall 
pay, on or before the day prior to the dates specified in such 
paragraphs, to each handler who so requests for milk received by the 
handler from producers for whom a cooperative association is not 
collecting payments pursuant to paragraph (c) of this section an amount 
equal to the sum of the individual payments otherwise payable to such 
producers pursuant to paragraphs (a) and (b) of this section. The 
handler then shall pay the individual producers the amounts due them by 
the respective dates specified in paragraphs (a) and (b) of this 
section. Any handler who the market administrator determines is or was 
delinquent with respect to any payment obligation under this order shall 
not be eligible to participate in this payment arrangement until the 
handler has met all prescribed payment obligations for three consecutive

[[Page 344]]

months. In making payments to the individual producers pursuant to this 
paragraph, the handler shall furnish the following information to each 
producer:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds and, with respect to final payments, the 
average butterfat and protein content and somatic cell count of the milk 
for which payment is being made;
    (3) The minimum rate of payment required by the order and the rate 
of payment used if it is other than the applicable minimum rate;
    (4) The amount and nature of any deductions subtracted from the 
amount otherwise due the producer; and
    (5) The net amount of payment to the producer.
    (e) The following conditions shall apply with respect to the 
payments by the market administrator prescribed in paragraphs (a) 
through (d) of this section:
    (1) If the date by which such payments are to be made falls on a 
Saturday or Sunday or on any day that is a national holiday, such 
payments need not be made until the next day on which the market 
administrator's office is open for public business; and
    (2) If the application of Sec. 1033.71(d)(2) of paragraph (e)(1) of 
this section results in a delay in the partial or final payments by 
handlers to the market administrator or by the market administrator to 
producers or cooperative associations, the corresponding partial or 
final payments prescribed in paragraphs (a) through (d) of this section 
may be delayed by the same number of days.
    (f) If the market administrator does not receive the full payment 
required of a handler pursuant to Sec. 1033.71, he shall reduce 
uniformly per hundredweight the payments to producers for milk received 
by such handler by a total amount not in excess of the amount due from 
such handler. The market administrator shall complete the payments to 
producers on or before the next date for making payments pursuant to 
this section following the date on which the remaining payment is 
received from such handler.
    (g) If the unobligated balance in the producer-settlement fund is 
insufficient to make all payments pursuant to this section, except those 
payments due producers as described in paragraph (f) of this section, 
the market administrator shall reduce uniformly per hundredweight the 
payments to producers and shall complete such payments on or before the 
next date for making payments pursuant to this section following the 
date on which the funds become available.
[49 FR 36076, Sept. 14, 1984, as amended at 58 FR 27822, May 11, 1993; 
58 FR 43509, Aug. 17, 1993]



Sec. 1033.73  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1033.51 (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.
[60 FR 18962, Apr. 14, 1995]



Sec. 1033.74  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk at a plant outside the 
Central Zone shall be the Central Zone uniform price adjusted according 
to the location of the plant at the rates set forth in Sec. 1033.52(a); 
and
    (b) For the purpose of computations pursuant to Sec. 1033.71(b)(1), 
the weighted average price shall be adjusted at the rate set forth in 
Sec. 1033.52(a) that is applicable at the location of the nonpool plant 
from which other source milk was received.
[58 FR 27822, May 11, 1993]

[[Page 345]]



Sec. 1033.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1033.30(c) and 1033.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1)(i) The obligation that would have been computed pursuant to 
Sec. 1033.60 at such plant shall be determined as though such plant were 
a pool plant. For purposes of such computation, receipts at such nonpool 
plant from a pool plant or an other order plant shall be assigned to the 
utilization at which classified at the pool plant or other order plant 
and transfers from such nonpool plant to a pool plant or an other order 
plant shall be classified as Class II or Class III milk if allocated to 
such class at the pool plant or other order plant and be valued at the 
weighted average price of the respective order if so allocated to Class 
I milk, except that reconstituted skim milk in filled milk shall be 
valued at the Class III price. No obligation shall apply to Class I milk 
transferred to a pool plant or an other order plant if such Class I 
utilization is assigned to receipts at the partially regulated 
distributing plant from pool plants and other order plants at which such 
milk was classified and priced as Class I milk. There shall be included 
in the obligation so computed a charge in the amount specified in 
Sec. 1033.60(e) and a credit in the amount specified in Sec. 1033.71(b) 
with respect to receipts from an unregulated supply plant, except that 
the credit for receipts of reconstituted skim milk in filled milk shall 
be at the Class III price, unless an obligation with respect to such 
plant is computed as specified below in paragraph (a)(1)(ii) of this 
section.
    (ii) If the operator of the partially regulated distributing plant 
so requests, and provides with his reports pursuant to Secs. 1033.30(c) 
and 1033.31(b) similar reports for each nonpool plant which serves as a 
supply plant for such partially regulated distributing plant by 
shipments to such plant during the month equivalent to the requirements 
of Sec. 1033.7(b), with agreement of the operator of such plant that the 
market administrator may examine the books and records of such plant for 
purposes of verification of such reports, there will be added the amount 
of the obligation computed at such nonpool supply plant in the same 
manner and subject to the same conditions as for the partially regulated 
distributing plant.
    (2) From this obligation deduct the sum of:
    (i) The gross payments made by such handler for bottling grade milk 
(adjusted to a 3.5 percent butterfat basis pursuant to Sec. 1033.73) 
received during the month from dairy farmers at such plant and like 
payments made by the operator of a supply plant(s) included in the 
computations pursuant to paragraph (a)(1) of this section; and
    (ii) Payments to the producer-settlement fund of another order 
issued pursuant to the Act under which such plant is also a partially 
regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat in 
the plant's route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the plant:
    (i) As Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) From a nonpool plant that is not an other order plant to the 
extent that an equivalent amount of skim milk or butterfat disposed of 
to such nonpool plant by handlers under this or any other order issued 
pursuant to the Act is classified and priced as Class I milk and is not 
used as an offset on any other payment obligation under this or any 
other order;

[[Page 346]]

    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total and determine the weighted average butterfat content; and
    (5) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant (not to be less than the Class III 
price) subtract its value at the weighted average price applicable at 
such location (not to be less than the Class III price), and add the 
amount obtained from multiplying the pounds of labeled reconstituted 
milk included in paragraph (b)(3) of this section by the difference 
between the Class I price applicable at the location of the partially 
regulated distributing plant less $1.00 (but not to be less than the 
Class III price) and the Class III price. For any reconstituted milk 
that is not so labeled, the Class I price shall not be reduced by $1.00. 
Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1033.43(e). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[40 FR 27464, June 30, 1975; 40 FR 30087, July 17, 1975, as amended at 
49 FR 36076, Sept. 14, 1984. Redesignated and amended at 58 FR 27822, 
May 11, 1993]



Sec. 1033.77  Correction of errors.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made, for any 
reason, which result in monies due the market administrator from such 
handler, the market administrator shall promptly notify such handler of 
any such amount due, and payment thereof shall be made on or before the 
next date for making payment set forth in the provision under which such 
error occurred following the fifth day after such notice. Any monies 
found to be due a handler from the market administrator shall be paid 
promptly to such handler except that the market administrator shall 
offset any monies due a handler against monies due from such handler.



Sec. 1033.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1033.57, 
1033.71, 1033.72(d), 1033.76, 1033.77, or 1033.78 shall be increased one 
(1) percent beginning on the first day after the due date, and on the 
same day of each succeeding month until such obligation is paid, subject 
to the following conditions:

[[Page 347]]

    (a) Charges on overdue accounts collected pursuant to this section 
shall be deposited into the administrative assessment fund maintained by 
the market administrator;
    (b) Amounts payable pursuant to this section shall be computed by 
the market administrator monthly on the unpaid balance (including any 
unpaid charges previously assessed pursuant to this section) remaining 
on each overdue obligation on such date; and
    (c) Any obligation that was determined at a date later than that 
prescribed by the order because of a handler's failure to submit a 
report to the market administrator when due, shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due.
[49 FR 36077, Sept. 14, 1984]

        Administrative Assessment and Marketing Service Deduction



Sec. 1033.85  Assessment for order administration.

    As a pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, with respect to:
    (a) Receipts of producer milk (including such handler's own farm 
production and milk received from a handler described in Sec. 1033.9(c) 
but excluding bulk fluid milk products delivered from a pool plant 
operated by a cooperative association to another pool plant pursuant to 
Sec. 1033.43(d));
    (b) Receipts of bulk fluid milk products from a pool plant operated 
by a cooperative association pursuant to Sec. 1033.45(d);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1033.43(e) and other source milk allocated to Class 
I pursuant to Sec. 1033.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1033.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1033.60 (d) and (e); and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the Class I milk:
    (1) Received during the month at such plant from pool plants and 
other order plants that is not used as an offset under a similar 
provision of another order issued pursuant to the Act; and
    (2) Specified in Sec. 1033.76(b)(2)(ii).
[49 FR 36077, Sept. 14, 1984. Redesignated and amended at 58 FR 27822, 
May 11, 1993]



Sec. 1033.86  Deduction for marketing services.

    (a) The market administrator, in making payments to each producer 
pursuant to Sec. 1033.72, shall deduct 7 cents per hundredweight, or 
such lesser amount as the Secretary may prescribe, with respect to the 
milk (except a handler's own farm production) of such producer for whom 
the marketing services set forth in paragraph (b) of this section are 
not being performed by a cooperative association as determined by the 
Secretary.
    (b) The monies deducted pursuant to paragraph (a) of this section 
shall be used by the market administrator to verify or establish 
weights, samples, and tests of producer milk and to provide producers 
with market information. Such services shall be performed by the market 
administrator or by an agent engaged by and responsible to him.
[40 FR 27464, June 30, 1975. Redesignated and amended at 58 FR 27822, 
May 11, 1993; 58 FR 43509, Aug. 17, 1993]



PART 1036--MILK IN THE EASTERN OHIO-WESTERN PENNSYLVANIA MARKETING AREA--Table of Contents




                           General Provisions

Sec.
1036.1  General provisions.

                               Definitions

1036.2  Eastern Ohio-Western Pennsylvania marketing area.
1036.3  Route disposition.
1036.4  [Reserved]
1036.5  Distributing plant.
1036.6  Supply plant.
1036.7  Pool plant.
1036.8  Nonpool plant.

[[Page 348]]

1036.9  Handler.
1036.10  Producer-handler.
1036.11  [Reserved]
1036.12  Producer.
1036.13  Producer milk.
1036.14  Other source milk.
1036.15  Fluid milk product.
1036.16  Fluid cream product.
1036.17  Filled milk.
1036.18  Cooperative association.
1036.19  Reload point.
1036.20  [Reserved]
1036.21  Commercial food processing establishment.

                             Handler Reports

1036.30  Reports of receipts and utilization.
1036.31  Payroll reports.
1036.32  Other reports.

                         Classification of Milk

1036.40  Classes of utilization.
1036.41  Shrinkage.
1036.42  Classification of transfers and diversions.
1036.43  General classification rules.
1036.44  Classification of producer milk.
1036.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1036.50  Class and component prices.
1036.51  Basic formula price.
1036.52  Plant location adjustments for handlers.
1036.53  Announcement of class and component prices.
1036.54  Equivalent price.

                Differential Pool and Handler Obligations

1036.60  Computation of handlers' obligations to pool.
1036.61  Computation of weighted average differential value.
1036.62  Computation of producer protein price.
1036.63  Uniform price and handlers' obligations for producer milk.
1036.64  Announcement of weighted average differential price, producer 
          protein price, and uniform price.
1036.65  Value of producer milk.
1036.66  Computation of somatic cell adjustment.

                            Payments for Milk

1036.70  Producer-settlement fund.
1036.71  Payments to the market administrator.
1036.72  Payments from the producer-settlement fund.
1036.73  Payments to producers and to cooperative associations.
1036.74  Butterfat differential.
1036.75  Plant location adjustments for producers and on nonpool milk.
1036.76  Payments by handler operating a partially regulated 
          distributing plant.
1036.77  Adjustment of accounts.
1036.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1036.85  Assessment for order administration.
1036.86  Deductions for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 43 FR 38798, Aug. 31, 1978, unless otherwise noted.

                           General Provisions



Sec. 1036.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1036.2  Eastern Ohio-Western Pennsylvania marketing area.

    The Eastern Ohio-Western Pennsylvania marketing area, hereinafter 
called the ``marketing area,'' means all the territory within the 
boundaries of the following geographical units, including all waterfront 
facilities connected therewith and all territory occupied by government 
(municipal, State, or Federal) reservations, installations, 
institutions, or other similar establishments if any part thereof is 
within the listed geographical units;
    (a) In the State of Ohio:
    (1) The following counties in their entirety:

Ashland, Ashtabula, Belmont, Carroll, Columbiana, Cuyahoga, Geauga, 
Harrison, Holmes, Jefferson, Lake, Lorain, Mahoning, Medina, Monroe, 
Portage, Stark, Summit, Trumbull, Tuscarawas, and Wayne.
    (2) In Guernsey County: The townships of Londonderry, Millwood, and 
Oxford.
    (b) In the State of Pennsylvania:
    (1) The following counties in their entirety:

Allegheny, Armstrong, Beaver, Butler, Crawford, Erie, Fayette, Greene, 
Lawrence, Mercer, Venango, and Washington.
    (2) In Clarion County: The townships of Ashland, Beaver, Licking, 
Madison, Perry, Piney, Richland, Salem, and Toby.

[[Page 349]]

    (3) Westmoreland County (except the townships of Cook, Donegal, 
Fairfield, Ligonier, and St. Clair; and, the boroughs of Bolivar, 
Donegal, Ligonier, New Florence, and Seward).
    (c) In the State of West Virginia, the following counties in their 
entirety: Barbour, Brooke, Doddridge, Hancock, Harrison, Lewis, Marion, 
Marshall, Monongalia, Ohio, Preston, Randolph, Taylor, Tucker, Tyler, 
Upshur, and Wetzel.
[43 FR 38798, Aug. 31, 1978, as amended at 52 FR 242, Jan. 5, 1987]



Sec. 1036.3  Route disposition.

    Route disposition means a delivery (except to a plant), either 
directly or through any distribution facility (including disposition 
from a plant store, vendor, or vending machine), of a fluid milk product 
classified as Class I pursuant to Sec. 1036.40(a)(1).



Sec. 1036.4  [Reserved]



Sec. 1036.5  Distributing plant.

    Distributing plant means a plant in which fluid milk products 
approved by a duly constituted health authority for fluid consumption, 
or filled milk, are processed or packaged and from which there is route 
disposition in the marketing area during the month.



Sec. 1036.6  Supply plant.

    Supply plant means a plant from which a fluid milk product 
acceptable to a duly constituted health authority, or filled milk, is 
transferred or diverted during the month to a pool plant.



Sec. 1036.7  Pool plant.

    Except as provided in paragraph (e) of this section, pool plant 
means:
    (a) A distributing pool plant that has:
    (1) Route disposition, except filled milk, during the month of not 
less than 50 percent (40 percent for each month of April through August) 
of the total receipts of fluid milk products, except filled milk, that 
are approved by a duly constituted health authority for fluid 
consumption and that are physically received at such plant or diverted 
as producer milk pursuant to Sec. 1036.13 to plants other than those 
qualified as pool plants pursuant to this paragraph; and
    (2) Route disposition, except filled milk, in the marketing area 
during the month of not less than 15 percent of the receipts described 
in paragraph (a)(1) of this section.
    (b) A supply plant from which not less than 40 percent during the 
months of September, October and November, not less than 35 percent 
during the months of January and February, and not less than 30 percent 
in all other months, of the total quantity of milk approved by a duly 
constituted health authority for fluid consumption that is physically 
received at such plant from dairy farmers (including milk diverted from 
the plant as producer milk pursuant to Sec. 1036.13 but excluding milk 
received as diverted milk) and handlers defined in Sec. 1036.9(c) is 
transferred or diverted to and physically received in the form of fluid 
milk products, except filled milk, at pool plants qualified under 
paragraph (a) of this section or disposed of as route disposition in the 
marketing area, subject to the following conditions:
    (1) At least one tank load of Grade A fluid milk products (not less 
than 45,000 pounds) must be shipped from the supply plant to a pool 
distributing plant during one of the months of September, October and 
November; and
    (2) Shipments to be used in determining qualifying percentages shall 
be milk transferred or diverted and physically received by distributing 
pool plants, less any transfers or diversions of bulk fluid milk 
products from such distributing pool plants.
    (c) A plant that qualified as a pool plant under paragraph (b) of 
this section on the basis of its transfers and diversions to pool plants 
(exclusive of its route disposition in the marketing area) in each of 
the immediately preceding months of September through February shall be 
a pool plant for the months of March through August unless the milk 
received at the plant does not continue to meet the requirements of a 
duly constituted health authority or a written application is filed by 
the plant operator with the market administrator on or before the first 
day of any such month requesting that the plant be designated as a 
nonpool plant for such month and each subsequent month through August 
during which it

[[Page 350]]

would not otherwise qualify as a pool plant.
    (d) A plant operated by a cooperative association if, during the 
month, 35 percent or more of the producer milk of members of the 
association is delivered to a distributing pool plant(s) or to a nonpool 
plant(s) when a Class II or Class III classification is not requested. 
Deliveries for qualification purposes may be made directly from the farm 
or by transfer from such association's plant, subject to the following 
conditions:
    (1) The cooperative requests pool status for such plant;
    (2) The 35 percent delivery requirement may be met for the current 
month or it may be met on the basis of deliveries during the preceding 
12-month period ending with the current month;
    (3) The plant is approved by a duly constituted health authority to 
handle milk for fluid consumption; and
    (4) The plant does not qualify as a pool plant under paragraph (a), 
(b), or (c) of this section or under the similar provisions of another 
Federal order applicable to a distributing plant or supply plant.
    (e) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant; and
    (2) A plant that is fully subject to the pricing and pooling 
provisions of another order issued pursuant to the Act, unless such 
plant is qualified as a pool plant pursuant to this section and a 
greater volume of fluid milk products, except filled milk, is disposed 
of from such plant in this marketing area as route disposition and to 
pool plants qualified on the basis of route disposition in this 
marketing area than is disposed of from such plant in the marketing area 
regulated pursuant to the other order as route disposition and to plants 
qualified as fully regulated plants under such other order on the basis 
of route disposition in its marketing area.
    (f) The percentage delivery requirement in paragraphs (b) and (d) of 
this section may be increased or decreased by up to 10 percentage points 
by the Director of the Dairy Division if the Director finds that such 
revision is necessary to obtain needed shipments or to prevent 
uneconomic shipments. Before making such a finding, the Director shall 
investigate the need for revision on either the Director's own 
initiative or at the request of interested persons. If the investigation 
shows that a revision might be appropriate, the Director shall issue a 
notice stating that revision is being considered and invite data, views, 
or arguments in favor of or in opposition to the proposed revision.
[43 FR 38798, Aug. 31, 1978, as amended at 51 FR 30326, Aug. 26, 1986; 
54 FR 46363, Nov. 3, 1989; 58 FR 40725, July 30, 1993; 58 FR 43509, Aug. 
17, 1993; 59 FR 48558, Sept. 22, 1994]



Sec. 1036.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing, or bottling plant. The following categories of nonpool 
plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means:
    (1) A nonpool plant that is a distributing plant and is not an other 
order plant or a producer-handler plant; and
    (2) An other order plant with respect to its route disposition in 
the marketing area that is not priced and pooled pursuant to any order 
issued pursuant to the Act.
    (d) Unregulated supply plant means:
    (1) A nonpool plant that is a supply plant and is not an other order 
plant or a producer-handler plant; and
    (2) An other order plant with respect to fluid milk products which 
were received at a pool plant from such a plant and which are not priced 
and pooled pursuant to any order issued pursuant to the Act.



Sec. 1036.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;

[[Page 351]]

    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted for its account from a pool plant of another 
handler to a nonpool plant;
    (c) Any cooperative association with respect to milk of its 
producer-members which is delivered from the farm to the pool plant of 
another handler in a tank truck owned and operated by or under contract 
to such cooperative association. The milk for which a cooperative 
association is the handler pursuant to this paragraph shall be deemed to 
have been received at the location of the pool plant to which it was 
delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) Any producer-handler; and
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant.



Sec. 1036.10  Producer-handler.

    Producer-handler means any person who:
    (a) Operates a dairy farm and a distributing plant;
    (b) Receives no fluid milk products from sources other than his own 
farm production and pool plants;
    (c) Uses no milk products other than fluid milk products for 
reconstitution into fluid milk products; and
    (d) Provides proof satisfactory to the market administrator that the 
care and management of the dairy animals and other resources necessary 
for his own farm production and the operation of the processing and 
packaging business are the personal enterprise and risk of such person.



Sec. 1036.11  [Reserved]



Sec. 1036.12  Producer.

    (a) Producer means any person, except a producer-handler as defined 
in any order (including this part) issued pursuant to the Act, who 
produces milk for fluid consumption in compliance with the inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant or diverted pursuant to Sec. 1036.13 from a 
pool plant to a nonpool plant or another pool plant.
    (b) ``Producer'' shall not include a person with respect to milk 
that is physically received at a pool plant as diverted milk from an 
other order plant if a Class II or Class III classification under this 
order is designated for such milk and it is subject to the pricing and 
pooling provisions of another order issued pursuant to the Act.



Sec. 1036.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer which is:
    (a) With respect to a handler defined in Sec. 1036.9(a):
    (1) Received at the handler's pool plant directly from the producer, 
excluding receipts of milk diverted from another pool plant.
    (2) Received at the handler's pool plant from a handler defined in 
Sec. 1036.9(c) that does not operate a pool plant;
    (3) Diverted pursuant to paragraphs (e) and (f) of this section for 
the handler's account from his pool plant to a nonpool plant that is not 
a producer-handler plant; or
    (4) Diverted for the handler's account from his pool plant to 
another pool plant, subject to the conditions set forth in paragraph (h) 
of this section;
    (b) With respect to a handler defined in Sec. 1036.9(b), diverted 
pursuant to paragraphs (e) and (f) of this section for the handler's 
account from a pool plant of another handler to a nonpool plant that is 
not a producer-handler plant;
    (c) With respect to a handler defined in Sec. 1036.9(c) that does 
not operate a pool plant, received by the handler from the producer's 
farm in excess of the producer's milk that is received by a pool plant 
operator pursuant to paragraph (a)(2) of this section; and
    (d) With respect to a handler defined in Sec. 1036.9(c) that also 
operates a pool plant, received by the handler from the producer's farm.
    (e) During March through August, subject to the conditions of 
paragraph (f) of this section, the operator of a pool plant or a 
cooperative association may divert the milk of a producer without limit.

[[Page 352]]

    (f) Diverted to a nonpool plant for the account of a handler 
operating a pool plant or for the account of a handler described in 
Sec. 1036.9(c), subject to the following conditions:
    (1) The operator of a pool plant may divert the milk of any producer 
that is not under the control of a cooperative association that diverts 
milk during the month pursuant to paragraph (f)(2) of this section. The 
operator of such plant may divert a total quantity of milk not exceeding 
50 percent during the months of September through November, January and 
February, and 60 percent during the month of December, of the producer 
milk physically received at or diverted from such pool plant during the 
month;
    (2) A cooperative association may divert an aggregate quantity of 
milk not exceeding 50 percent during the months of September through 
November, January and February, and 60 percent during the month of 
December, of the producer milk that the cooperative association caused 
to be physically received at or diverted from pool plants during the 
month;
    (3) During each of the months of September through November not less 
than one day's production of a producer must be physically received at a 
pool plant;
    (4) Milk of a producer shall not be eligible for diversion unless 
the milk of such producer has been physically received at least once as 
producer milk at a pool plant and the dairy farmer has not been pooled 
on another federal order since that time;
    (5) To the extent that it would result in nonpool plant status for 
the pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be deemed to have been received at such pool plant and shall not be 
producer milk;
    (6) Any milk diverted in excess of the limit set forth in paragraph 
(f)(1) and (f)(2) of this section shall not be producer milk. The 
diverting handler shall designate the dairy farmer deliveries that shall 
not be producer milk. If the handler fails to do so, producer milk 
status shall be forfeited with respect to all milk diverted to nonpool 
plants by such handler; and
    (7) Milk diverted to another order plant shall be producer milk only 
if a Class II or Class III classification is designated for such milk 
pursuant to the provisions of the other order issued pursuant to the Act 
and such milk is not subject to the pricing and pooling provisions of 
such order.
    (g) [Reserved]
    (h) Milk diverted pursuant to paragraphs (a)(3), (a)(4) and (b) of 
this section shall be deemed to have been received by the diverting 
handler at the location of the plant to which diverted.
[43 FR 38798, Aug. 31, 1978, as amended at 51 FR 30326, Aug. 26, 1986; 
58 FR 43509, Aug. 17, 1993]



Sec. 1036.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Fluid milk products and bulk fluid cream products from any 
source except producer milk, fluid milk products and bulk fluid cream 
products from pool plants, and fluid milk products and bulk fluid cream 
products in inventory at the beginning of the month;
    (b) Receipts of packaged fluid cream products from other plants;
    (c) Products, other than fluid milk products, bulk fluid cream 
products and Class II products listed in Sec. 1036.40(b)(3), from any 
source (including those produced at the plant) which are reprocessed, 
converted into, or combined with another product in the plant during the 
month; and
    (d) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.



Sec. 1036.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added

[[Page 353]]

nonfat milk solids, sterilized, (concentrated to not more than 50 
percent total milk solids), or reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27823, May 11, 1993]



Sec. 1036.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27823, May 11, 1993]



Sec. 1036.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1036.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales or marketing milk or its products 
for its members; and
    (c) To have all of its activities under the control of its members.



Sec. 1036.19  Reload point.

    Reload point means a location at which milk moved from a farm in a 
tank truck is transferred to another tank truck and commingled with 
other milk before entering a plant. A reload operation on the premises 
of a plant shall be considered a part of the plant operation.



Sec. 1036.20  [Reserved]



Sec. 1036.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1036.13, 1036.41 and 1036.52.
[58 FR 27823, May 11, 1993]

                             Handler Reports



Sec. 1036.30  Reports of receipts and utilization.

    On or before the 8th day after the end of each month, reports of 
receipts and utilization for such month shall be made to the market 
administrator, in the detail and on forms prescribed by the market 
administrator, as follows:
    (a) Each handler operating a pool plant shall report for each of his 
pool plants:
    (1) Receipts of skim milk and butterfat contained in or represented 
by:
    (i) Producer milk, showing in the case of milk received directly 
from each producer the pounds of milk, the butterfat and milk protein 
contained in the milk, and the somatic cell count of the milk;

[[Page 354]]

    (ii) Fluid milk products and fluid cream products from other pool 
plants and from a handler defined in Sec. 1036.9(c) that also operates a 
pool plant; and
    (iii) Other source milk;
    (2) Inventories at the beginning and end of the month of the 
following products:
    (i) Fluid milk products; and
    (ii) Fluid cream products, showing separately such inventories in 
bulk form and in packaged form;
    (3) The utilization or disposition of all skim milk and butterfat 
required to be reported pursuant to this paragraph, showing separately:
    (i) Total route disposition and route disposition in the marketing 
area, showing separately such disposition of filled milk inside and 
outside the marketing area; and
    (ii) Transfers and diversions to other plants, and the butterfat and 
milk protein content of such milk;
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat and milk protein, and somatic cell 
count, as the market administrator may prescribe;
    (b) Each cooperative association shall report:
    (1) The quantities of skim milk, butterfat and milk protein, and 
somatic cell count contained in milk from producers for which it is the 
handler pursuant to Sec. 1036.9 (b) or (c), showing:
    (i) The quantity of milk delivered to each plant; and
    (ii) For each producer the pounds of milk, butterfat and milk 
protein tests, and the somatic cell count;
    (2) The utilization of all skim milk and butterfat required to be 
reported pursuant to paragraph (b)(1) of this section, except that 
contained in producer milk described in Sec. 1036.13(b); and
    (3) Such other information with respect to its receipts and 
utilization of skim milk, butterfat and protein, and somatic cell count 
as the market administrator may prescribe; and
    (c) Each handler operating a partially regulated distributing plant 
shall report as required in paragraph (a) of this section except that 
receipts of bottling grade milk from dairy farmers shall be reported in 
lieu of receipts of producer milk. Such report shall include a separate 
statement showing the amount of reconstituted skim milk in route 
disposition in the marketing area.
[43 FR 38798, Aug. 31, 1978, as amended at 58 FR 43510, Aug. 17, 1993]



Sec. 1036.31  Payroll reports.

    (a) On or before the 18th day after the end of each month, each 
handler who pays producers pursuant to Sec. 1036.73(a) shall report to 
the market administrator the following information with respect to the 
handler's partial and final payments for producer milk received during 
such month:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds of milk, and, with respect to final payments, 
the average butterfat and protein content and somatic cell count of the 
milk for which payment is being made;
    (3) The minimum rate of payment required by the order and the rate 
of payment used if such rate is other than the applicable minimum rate;
    (4) The amount and nature of any deductions from the amount 
otherwise due the producer;
    (5) The net amount of payment to the producer; and
    (6) The dates such payments were made.
    (b) On or before the 20th day after the end of the month, each 
handler operating a partially regulated distributing plant who elects to 
make payments pursuant to Sec. 1036.76(a) shall report to the market 
administrator with respect to milk received from each dairy farmer who 
would have been a producer if the plant had been fully regulated the 
following information for such month:
    (1) The name of each dairy farmer;
    (2) The total pounds of milk received from each dairy farmer;
    (3) The average butterfat and milk protein content, and the somatic 
cell count, of such milk;
    (4) The amount and nature of any deductions, as authorized by the 
dairy farmer, from the payment for such milk; and

[[Page 355]]

    (5) The rate of payment per hundredweight and the net amount paid 
each dairy farmer.
[43 FR 38798, Aug. 31, 1978, as amended at 45 FR 36355, May 30, 1980; 58 
FR 43510, Aug. 17, 1993]



Sec. 1036.32  Other reports.

    (a) On or before the 22nd day of each month each delinquent handler 
pursuant to Sec. 1036.73(c) shall report to the market administrator the 
following information with respect to its receipts of milk during the 
first 15 days of the month:
    (1) The identity of each producer from whom milk was received;
    (2) The total pounds of producer milk received from such producer;
    (3) The amount and nature of any deductions, as authorized by the 
producer, to be made from the partial payment for such milk;
    (4) The total pounds of milk received from a handler described in 
Sec. 1036.9(c); and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (b) On or before the 22nd day of each month each handler defined in 
Sec. 1036.9(a), (b) and (c) except a handler who is required to file 
reports pursuant to paragraph (a) of this section shall report to the 
market administrator the following information with respect to its 
receipts of milk during the first 15 days of the month:
    (1) The total pounds of producer milk;
    (2) The total deductions as authorized by the producers to be made 
from the partial payment for such milk;
    (3) The total pounds of milk received from a handler described in 
Sec. 1036.9(c); and
    (4) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (c) On or before the 8th day after the end of each month, each 
delinquent handler (pursuant to Sec. 1036.73(c)), shall report to the 
market administrator the following information with respect to receipts 
of milk during such month.
    (1) The identity of each producer from whom milk was received;
    (2) The total pounds of producer milk received from such producer, 
its average butterfat and milk protein contents, and its average somatic 
count;
    (3) The amount and nature of any deductions, as authorized by the 
producer, to be made from the final payment for such milk;
    (4) The total pounds of skim milk and butterfat received from a 
handler described in Sec. 1036.9(c); and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (d) On or before the second day prior to the reporting dates 
specified in paragraphs (a) and (c) of this section, each cooperative 
association that operates a pool plant from which bulk fluid milk 
products were transferred or diverted to pool plants of other handlers 
within the time periods described in paragraphs (a) and (c) of this 
section shall report to each such pool plant operator and the market 
administrator the name and location of the transferor-plant and the 
total pounds, butterfat and protein, and somatic cell count included in 
the bulk fluid milk products transferred or diverted from each such 
plant.
    (e) In addition to the reports required pursuant to paragraphs (a) 
through (d) of this section and Secs. 1036.30 and 1036.31, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.
    (f) Each producer-handler shall report to the market administrator 
at such time and in such manner as the market administrator may 
prescribe.
    (g) Each handler who operates another order plant shall report total 
receipts and utilization or disposition of skim milk and butterfat at 
the plant at such time and in such manner as the market administrator 
may require and shall allow verification of such reports by the market 
administrator.
[43 FR 38798, Aug. 31, 1978, as amended at 45 FR 36355, May 30, 1980; 58 
FR 43510, Aug. 17, 1993]

[[Page 356]]

                         Classification of Milk



Sec. 1036.40  Classes of utilization.

    Except as provided in Sec. 1036.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1036.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of

[[Page 357]]

such dumping is not possible, or if the market administrator so 
requires, the handler must notify the market administrator on the next 
business day following such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1036.15 and the fluid 
cream product definition pursuant to Sec. 1036.16; and
    (7) In shrinkage assigned pursuant to Sec. 1036.41(a) to the 
receipts specified in Sec. 1036.41(a)(2) and in shrinkage specified in 
Sec. 1036.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27823, May 11, 1993, as amended at 58 FR 63287, Dec. 1, 1993]



Sec. 1036.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1036.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (b)(6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(b)(6) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1036.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1036.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph (b)(2) 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (b)(2), (b)(4), (b)(5), 
and (b)(6) of this section; and

[[Page 358]]

    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1036.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the 
farm, 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.
[58 FR 27824, May 11, 1993, as amended at 58 FR 43510, Aug. 17, 1993]



Sec. 1036.42  Classification of transfers and diversions.

    Skim milk or butterfat in the form of a fluid milk product or a bulk 
fluid cream product shall be classified:
    (a) At the utilization indicated by the operators of both plants, 
otherwise as Class I milk, if transferred or diverted from a pool plant 
to the pool plant of another handler, subject to the following 
conditions:
    (1) The skim milk or butterfat so assigned to each class shall be 
limited to the amount thereof remaining in such class in the transferee 
plant after the computations pursuant to Sec. 1036.44(a)(13) and the 
corresponding step of Sec. 1036.44(b). The amount of skim milk or 
butterfat classified in each class shall include the assigned 
utilization of skim milk or butterfat in transfers of concentrated fluid 
milk products;
    (2) If the transferor plant received during the month other source 
milk to be allocated pursuant to Sec. 1036.44(a)(7) and the 
corresponding step of Sec. 1036.44(b), the skim milk and butterfat so 
transferred or diverted shall be classified so as to allocate the least 
possible Class I utilization to such other source milk; and
    (3) If the transferor plant received during the month other source 
milk to be allocated pursuant to Sec. 1036.44(a)(12) or (13) and the 
corresponding steps of Sec. 1036.44(b), the skim milk and butterfat so 
transferred or diverted up to the total of such receipts shall not be 
classified as Class I milk to a greater extent than would be applicable 
to a like quantity of such other source milk received at the transferee 
plant;
    (b) As Class I milk, if transferred from a pool plant to a producer-
handler plant;
    (c) As Class I milk, if transferred or diverted in bulk to a nonpool 
plant that is neither an other order plant nor a producer-handler plant, 
unless the requirements of paragraphs (c)(1) and (2) of this section are 
met, in which case the skim milk and butterfat so transferred or 
diverted shall be classified in accordance with the assignment resulting 
from paragraph (c)(3) of this section:
    (1) The transferring or diverting handler claims classification as 
Class II or Class III in his report submitted pursuant to Sec. 1036.30;
    (2) The operator of such nonpool plant maintains books and records 
showing the utilization of all skim milk and butterfat received at such 
plant which are made available if requested by the market administrator 
for the purpose of verification; and
    (3) The skim milk and butterfat so transferred or diverted shall be 
classified on the basis of the following assignment of utilization at 
such nonpool plant in excess of receipts of packaged fluid milk products 
from all pool plants and other order plants:
    (i) Any route disposition in the marketing area shall be first 
assigned to the skim milk and butterfat in the fluid milk products so 
transferred or diverted from pool plants, next pro rata to receipts from 
other order plants, and thereafter to receipts from dairy farmers who 
the market administrator determines constitute regular sources of supply 
of milk (approved by a duly constituted health authority for fluid 
consumption) for such nonpool plant;
    (ii) Any route disposition in the marketing area of another order 
issued pursuant to the Act shall be first assigned to receipts from 
plants fully regulated by such order, next pro rata to receipts from 
pool plants and other order plants not regulated by such order, and 
thereafter to receipts from dairy farmers who the market administrator 
determines constitute regular sources of supply of milk (approved by

[[Page 359]]

a duly constituted health authority for fluid consumption) for such 
nonpool plant;
    (iii) Class I utilization (exclusive of that resulting from 
transfers of fluid milk products to pool plants and other order plants) 
in excess of that assigned pursuant to paragraphs (c)(3)(i) and (ii) of 
this section shall be assigned first to remaining receipts from dairy 
farmers who the market administrator determines constitute regular 
sources of supply of milk (approved by a duly constituted health 
authority for fluid consumption) for such nonpool plant and any 
remaining Class I utilization (including that resulting from transfers 
of fluid milk products to pool plants and other order plants) shall be 
assigned pro rata to unassigned receipts at such nonpool plant from all 
pool plants and other order plants; and
    (iv) To the extent that Class I utilization is not so assigned to 
it, the skim milk and butterfat so transferred or diverted shall be 
classified as Class II milk to the extent Class II utilization is 
available and the remainder as Class III milk; and;
    (d) As follows, if transferred to an other order plant in excess of 
receipts from such plant in the same category as described in paragraph 
(d)(1), (2), or (3) of this section:
    (1) If transferred in packaged form, classification shall be in the 
classes to which allocated as fluid milk product under the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (d)(3) of this section);
    (3) If the operators of both the transferor and transferee plants so 
request in the reports of receipts and utilization filed with the 
respective market administrators, movments in bulk form shall be 
classified as Class III milk to the extent of the Class III utilization 
(or comparable utilization under such other order) available for such 
assignment pursuant to the allocation provisions of the transferee 
order;
    (4) If information concerning the classification to which allocated 
under the other order is not available to the market administrator for 
purposes of establishing classification pursuant to this paragraph, 
classification shall be as Class I, subject to adjustment when such 
information is available;
    (5) For purposes of this paragraph, if the transferee order provides 
for only two classes of utilization, skim milk and butterfat allocated 
to a class consisting primarily of fluid milk products shall be 
classified as Class I milk, and skim milk and butterfat allocated to the 
other class shall be classified as Class III milk; and
    (6) If the form in which any fluid milk product is tranferred to an 
other order plant is not defined as a fluid milk product under such 
other order, classification shall be in accordance with the provisions 
of Sec. 1036.40.
[43 FR 38798, Aug. 31, 1978, as amended at 58 FR 27825, May 11, 1993]



Sec. 1036.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1036.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1036.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1036.9(b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1036.40, 
1036.41, and 1036.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1036.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association; and
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use

[[Page 360]]

shall be assigned to Class I use, up to the reconstituted portion of 
labeled reconstituted fluid milk products, on a pro rata basis (except 
for any Class I use of specific concentrated receipts that is 
established by the handler) prior to any assignments under Sec. 1036.44. 
Any remaining skim milk and butterfat in concentrated receipts shall be 
assigned to uses under Sec. 1036.44 on a pro rata basis, unless a 
specific use of such receipts is established by the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[58 FR 27825, May 11, 1993, as amended at 58 FR 63287, Dec. 1, 1993]



Sec. 1036.44  Classification of producer milk.

    After making the computations pursuant to Sec. 1036.43, the market 
administrator shall determine the classification of producer milk for 
each handler as follows: Provided, That the classification of producer 
milk for which a cooperative association is the handler pursuant to 
Sec. 1036.9 (b) or (c) shall be determined separately from the 
operations of any pool plant operated by such cooperative association:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk classified as Class III milk pursuant to 
Sec. 1036.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from other order plants, except that to be subtracted pursuant to 
paragraph (a)(7)(v) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in packaged fluid cream products received from other plants, 
but not in excess of the pounds of skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in fluid cream products in packaged form and in bulk 
concentrated fluid milk products that are in inventory at the beginning 
of the month, but not in excess of the pounds of skim milk remaining in 
Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1036.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1036.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products

[[Page 361]]

specified in Sec. 1036.40(b)(1) that was not subtracted pursuant to 
paragraphs (a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) and bulk 
fluid cream products for which appropriate health approval is not 
established and receipts of fluid milk products and bulk fluid cream 
products, from unidentified sources;
    (iii) Receipts of fluid milk products and bulk fluid cream products 
from a producer-handler, as defined under this or any other Federal 
order;
    (iv) Receipts of reconstituted skim milk in filled milk from 
unregulated supply plants that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (v) Receipts of reconstituted skim milk in filled milk from other 
order plants which are regulated under an order providing for 
individual-handler pooling, to the extent that reconstituted skim milk 
is allocated to Class I at the transferor plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) Receipts of fluid milk products from an unregulated supply plant 
that were not subtracted pursuant to paragraphs (a) (2)(i) and (7)(iv) 
of this section for which the handler requests classification other than 
Class I, but not in excess of the pounds of skim milk remaining in Class 
II and Class III combined;
    (ii) Receipts of fluid milk products from an unregulated supply 
plant that were not subtracted pursuant to paragraphs (a)(2)(i) and 
(a)(7)(iv) of this section which are in excess of the pounds of skim 
milk determined pursuant to paragraphs (a)(8)(ii) (A) through (C) of 
this section. Should the pounds of skim milk to be subtracted from Class 
II and Class III combined exceed the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step (exclusive of transfers between pool plants of the 
same handler) at all pool plants of the handler;
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(v) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) Receipts of bulk fluid milk products from an other order plant 
that are in excess of bulk fluid milk products transferred or diverted 
to such plant and that were not subtracted pursuant to paragraph 
(a)(7)(v) of this section, if Class II or Class III classification is 
requested by the operator of the other order plant and the handler, but 
not in excess of the pounds of skim milk remaining in Class II and Class 
III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1036.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant,

[[Page 362]]

pro rata to the total pounds of skim milk remaining in Class I and in 
Class II and Class III combined at this allocation step at all pool 
plants of the handler (excluding any duplication of utilization in each 
class resulting from transfers between pool plants of the handler), with 
the quantity prorated to Class II and Class III combined being 
subtracted first from Class III and then from Class II, the pounds of 
skim milk in receipts of fluid milk products from an unregulated supply 
plant that were not subtracted pursuant to paragraphs (a)(2)(i), 
(a)(7)(iv), and (a)(8) (i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(v) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1036.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proportion pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and

[[Page 363]]

Class III combined shall be increased (increasing as necessary Class III 
and then Class II to the extent of available utilization in such classes 
at the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1036.42(a);
    (14) Subtract from the pounds of skim milk remaining in each class, 
pro rata to such quantities, the pounds of skim milk in receipts of milk 
from a handler defined in Sec. 1036.9(c) that also operates a pool 
plant;
    (15) If the pounds of skim milk remaining exceed the pounds of skim 
milk in producer milk, subtract such excess from the pounds of skim milk 
remaining in each class in series beginning with Class III. Any amount 
so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to Sec. 1036.44(a)(15) and the corresponding 
step of Sec. 1036.44(b).
[43 FR 38798, Aug. 31, 1978, as amended at 58 FR 27825, May 11, 1993]



Sec. 1036.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1036.44(a)(13) and the corresponding 
step of Sec. 1036.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1036.43(d) and Sec. 1036.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products and bulk fluid cream products to an other order 
plant the classification to which the skim milk and butterfat in such 
fluid milk products and bulk fluid cream products were allocated by the 
market administrator of the other order on the basis of the report of 
the receiving handler, and, as necessary, any changes in such 
classification arising in the verification of such report.

[[Page 364]]

    (d) On or before the 20th day of each month, report to each 
cooperative association that so requests the class utilization of milk 
received during the preceding month by each handler from producers who 
are members of such association, prorating to such receipts the class 
utilization of all producer receipts of such handler.
[43 FR 38798, Aug. 31, 1978, as amended at 58 FR 27827, May 11, 1993]

                              Class Prices



Sec. 1036.50  Class and component prices.

    Subject to the provisions of Sec. 1036.52, the class and component 
prices for the month, per hundredweight or per pound, shall be as 
follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $2.00.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Butterfat price. The butterfat price per pound shall be the 
total of the following steps, rounded to the nearest whole cent:
    (1) The skim milk price per hundredweight for the month, computed 
pursuant to paragraph (f) of this section, divided by 100; and
    (2) The butterfat differential for the month, computed pursuant to 
Sec. 1036.74 multiplied by 10.
    (e) Milk protein price. The price per pound for milk protein shall 
be computed by subtracting from the Class III price the butterfat price 
multiplied by 3.5, and dividing the result by the average protein 
content of the milk on which the basic formula price is based for the 
previous month as reported by the Department and adjusted for the 
current month by the Dairy Division, and rounding the result to the 
nearest whole cent.
    (f) Skim milk price. The skim milk price per hundredweight shall be 
computed by subtracting from the Class III price the butterfat 
differential computed pursuant to Sec. 1036.74 times 35, and rounding 
the result to the nearest whole cent.
    (g) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential value per hundredweight 
of 3.5 percent milk and rounded to the nearest cent.
[43 FR 38798, Aug. 31, 1978, as amended at 47 FR 42969, Sept. 30, 1982; 
51 FR 12832, Apr. 16, 1986; 52 FR 242, Jan. 5, 1987; 58 FR 43510, Aug. 
17, 1993; 58 FR 63287, Dec. 1, 1993; 60 FR 6609, Feb. 2, 1995]



Sec. 1036.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1036.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and

[[Page 365]]

    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross value for the 
preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18962, Apr. 14, 1995]



Sec. 1036.52  Plant location adjustments for handlers.

    (a) At a plant in the marketing area or in the State of 
Pennsylvania, the Class I price for producer milk shall be the Class I 
price computed pursuant to paragraph (a) of Sec. 1036.50.
    (b) At a plant outside the area specified in paragraph (a) of this 
section, the Class I price shall be adjusted by a reduction of 1.5 cents 
for each 10 miles or fraction thereof that such plant is from the city 
hall of the nearest of the following cities: Canton and Cleveland, Ohio; 
Erie, Pittsburgh, and Uniontown, Pennsylvania; and Clarksburg, West 
Virginia. Distance applied pursuant to this paragraph shall be the 
shortest hard-surfaced highway distances as determined by the market 
administrator.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraphs (a) and (b) of this 
section, except that the adjusted Class I price shall not be less than 
the Class III price.
    (d) For the purpose of computing location adjustments pursuant to 
paragraph (b) of this section, fluid milk products physically received 
at a pool plant from other pool plants shall be assigned any remainder 
of Class I milk at such plant that is in excess of 92.5 percent of the 
sum of producer milk receipts at the plant and that assigned as Class I 
to receipts from other order plants and unregulated supply plants. Such 
assignment shall be made in sequence beginning with receipts from

[[Page 366]]

the plant(s) at which the highest Class I price is applicable.
[43 FR 38798, Aug. 31, 1978, as amended at 52 FR 242, Jan. 5, 1987]



Sec. 1036.53  Announcement of class and component prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III and Class III-A prices for the preceding month;
    (d) The butterfat differential for the preceding month; and
    (e) The butterfat price, the milk protein price, and the skim milk 
price computed pursuant to Sec. 1036.50(d), (e) and (f) for the 
preceding month.
    (f) The monthly average price for 40-pound blocks of cheese at the 
National Cheese Exchange (Green Bay, Wisconsin) for the preceding month.
[58 FR 43511, Aug. 17, 1993, as amended at 58 FR 63287, Dec. 1, 1993; 60 
FR 6609, Feb. 2, 1995]



Sec. 1036.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                Differential Pool and Handler Obligations



Sec. 1036.60  Computation of handlers' obligations to pool.

    The market administrator shall compute each month for each handler 
defined in Sec. 1036.9(a), (b), and (c), an obligation to the pool 
computed by adding the following values:
    (a) The pounds of producer milk in Class I as determined pursuant to 
Sec. 1036.44 multiplied by the difference between the Class I price 
(adjusted pursuant to Sec. 1036.52) and the Class III price;
    (b) The pounds of producer milk in Class II as determined pursuant 
to Sec. 1036.44 multiplied by the difference between the Class II price 
and the Class III price;
    (c) The value of the product pounds, skim milk, and butterfat in 
overage assigned to each class pursuant to Sec. 1036.44(a)(15) and the 
value of the corresponding protein pounds associated with the skim milk 
subtracted from Class II and Class III pursuant to Sec. 1036.44(a)(15), 
by multiplying the skim milk pounds so assigned by the percentage of 
protein in the handler's receipts of producer skim milk during the 
month, as follows:
    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1036.44(a)(15) and the corresponding step of 
Sec. 1036.44(b), multiplied by the difference between the Class I price 
adjusted for location and the Class III price, plus the hundredweight of 
skim milk subtracted from Class I pursuant to Sec. 1036.44(a)(15) 
multiplied by the skim milk price, plus the butterfat pounds of overage 
subtracted from Class I pursuant to Sec. 1036.44(b) multiplied by the 
butterfat price;
    (2) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1036.44(a)(15) and the corresponding step of 
Sec. 1036.44(b) multiplied by the difference between the Class II price 
and the Class III price, plus the protein pounds in skim milk subtracted 
from Class II pursuant to Sec. 1036.44(a)(15) multiplied by the protein 
price, plus the butterfat pounds of overage subtracted from Class II 
pursuant to Sec. 1036.44(b) multiplied by the butterfat price;
    (3) The protein pounds in skim milk overage subtracted from Class 
III pursuant to Sec. 1036.44(a)(15) multiplied by the protein price, 
plus the butterfat pounds of overage subtracted from Class III pursuant 
to Sec. 1036.44(b) multiplied by the butterfat price;
    (d) The value of the product pounds, skim milk, and butterfat 
subtracted from Class I or Class II pursuant to Sec. 1036.44(a)(9) and 
the corresponding step of Sec. 1036.44(b), and the value of the protein 
pounds associated with the skim milk subtracted from Class II pursuant 
to Sec. 1036.44(a)(9), computed by multiplying the skim milk pounds so 
subtracted by the percentage of protein in the handler's receipts of 
producer

[[Page 367]]

skim milk during the previous month, as follows:
    (1) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1036.44(a)(9) and the 
corresponding step of Sec. 1036.44(b) applicable at the location of the 
pool plant at the current month's Class I-Class III price difference and 
the current month's skim milk and butterfat prices, less the Class III 
value of the milk at the previous month's protein and butterfat prices;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1036.44(a)(9) and the 
corresponding step of Sec. 1036.44(b) at the current month's Class II-
Class III price difference and the current month's protein and butterfat 
prices, less the Class III value of the milk at the previous month's 
protein and butterfat prices;
    (e) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1036.44(a)(7)(i) through (iii), 
and the corresponding step of Sec. 1036.44(b), excluding receipts of 
bulk fluid cream products from another order plant, applicable at the 
location of the pool plant at the current month's Class I-Class III 
price difference;
    (f) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1036.44(a)(7)(iv) and (v) and 
the corresponding step of Sec. 1036.44(b) applicable at the location of 
the transferor-plant at the current month's Class I-Class III price 
difference;
    (g) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1036.44(a)(12) and the 
corresponding step of Sec. 1036.44(b), excluding such hundredweight in 
receipts of bulk fluid milk products from an unregulated supply plant to 
the extent that an equivalent quantity disposed of to such plant by 
handlers fully regulated by any Federal order is classified and priced 
as Class I milk and is not used as an offset for any other payment 
obligation under any order, applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
at the current month's Class I-Class III price difference.
    (h) The pounds of skim milk in Class I producer milk, as determined 
pursuant to Sec. 1036.44 multiplied by the skim milk price for the month 
computed pursuant to Sec. 1036.50(f).
    (i) The pounds of protein in skim milk in Class II and Class III, 
computed by multiplying the skim milk pounds so assigned by the 
percentage of protein in the handler's receipts of producer skim milk 
during the month for each report filed, separately, multiplied by the 
protein price for the month computed pursuant to Sec. 1036.50(e) and 
adjusted pursuant to Sec. 1036.66 for the weighted average somatic cell 
content of the handler's receipts of milk.
    (j) The pounds of butterfat in all three classes as determined 
pursuant to Sec. 1036.44 multiplied by the butterfat price for the month 
computed pursuant to Sec. 1036.50(d).
    (k) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use, provided that the handler establishes a 
disposition of labeled reconstituted fluid milk products; and
    (l) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1036.76(c).
    (m) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk

[[Page 368]]

unconcentrated fluid milk products received at the plant during the 
prior month.
    (n) For producer milk in Class III-A, add or subtract as appropriate 
an amount per hundredweight that the Class III-A price is more or less, 
respectively, than the Class III price.
[58 FR 43511, Aug. 17, 1993, as amended at 58 FR 63287, Dec. 1, 1993; 59 
FR 24031, May 10, 1994]



Sec. 1036.61  Computation of weighted average differential value.

    For each month the market administrator shall compute the weighted 
average differential value for milk received from all producers as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1036.60, paragraphs (a) through (g) and (k) and (l), for all 
handlers who made reports pursuant to Sec. 1036.30 and who made payments 
pursuant to Sec. 1036.71 for the preceding month;
    (b) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1036.75(a);
    (c) Subtract an amount equal to the total value of the plus location 
differentials computed pursuant to Sec. 1036.75(a);
    (d) Add an amount equal to not less than one-half the unobligated 
balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1036.60(g).
    (f) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``Weighted Average Differential 
Price''.
[58 FR 43512, Aug. 17, 1993]



Sec. 1036.62  Computation of producer protein price.

    For each month the market administrator shall compute the producer 
protein price to be paid to all producers for the pounds of protein in 
their milk, as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1036.60, paragraphs (h) and (i), for all handlers who made reports 
pursuant to Sec. 1036.30 and who made payments pursuant to Sec. 1036.71 
for the preceding month;
    (b) Add all of the negative adjustments and subtract all of the 
positive adjustments determined for each producer's somatic cell count 
pursuant to Sec. 1036.66;
    (c) Divide the resulting amount by the total pounds of protein in 
producer milk; and
    (d) Round to the nearest whole cent. The result is the ``Producer 
protein price.''
[58 FR 43512, Aug. 17, 1993]



Sec. 1036.63  Uniform price and handlers' obligations for producer milk.

    (a) A uniform price for producer milk containing 3.5 percent 
butterfat shall be computed by adding the weighted average differential 
price determined pursuant to Sec. 1036.61 to the basic formula price for 
the month.
    (b) Handler obligations to producers and cooperative associations 
for producer milk shall be determined in accordance with the provisions 
of Secs. 1036.65 and 1036.73.
[58 FR 43512, Aug. 17, 1993]



Sec. 1036.64  Announcement of weighted average differential price, producer protein price, and uniform price.

    The market administrator shall announce publicly on or before the 
13th day after the end of the month the weighted average differential 
price computed pursuant to Sec. 1036.61, the producer protein price 
computed pursuant to Sec. 1036.62, and the uniform price computed 
pursuant to Sec. 1036.63(a).
[58 FR 43512, Aug. 17, 1993]



Sec. 1036.65  Value of producer milk.

    The value of producer milk shall be the sum of:
    (a) The weighted average differential price computed pursuant to 
Sec. 1036.61 and adjusted pursuant to Sec. 1036.75, multiplied by the 
total hundredweight of producer milk received from the producer;
    (b) The producer protein price computed pursuant to Sec. 1036.62 and 
adjusted pursuant to Sec. 1036.66, multiplied by the total milk protein 
contained in the

[[Page 369]]

producer milk received from the producer; and
    (c) The butterfat price computed pursuant to Sec. 1036.50(d) 
multiplied by the total butterfat contained in the producer milk 
received from the producer.
[58 FR 43512, Aug. 17, 1993]



Sec. 1036.66  Computation of somatic cell adjustment.

    (a) For each producer, an adjustment to the producer 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 table in paragraph (b) of this section by the 
average price for the month of 40-pound blocks of cheese at the National 
Cheese Exchange at Green Bay, WI, as reported monthly by the Dairy 
Division, Agricultural Marketing Service. If a handler has not 
determined a monthly average somatic cell count, it will be determined 
by the market administrator.
    (b) The following table shows the factors and constants to be used 
in computing the somatic cell adjustment:

                                                                        
------------------------------------------------------------------------
                                                              Constants 
                                                                 for    
                                                              computing 
               Somatic cell counts                 Factors   the somatic
                                                                cell    
                                                             adjustment 
------------------------------------------------------------------------
1 to 50,000.....................................      .300        .09375
51,000 to 100,000...............................      .200       .062500
101,000 to 150,000..............................      .150       .046875
151,000 to 200,000..............................      .100       .031250
201,000 to 250,000..............................      .050       .015625
251,000 to 300,000..............................      .025      .0078125
301,000 to 350,000..............................      .000       .000000
351,000 to 400,000..............................      .000       .000000
401,000 to 450,000..............................     -.025     -.0078125
451,000 to 500,000..............................     -.050      -.015625
501,000 to 550,000..............................     -.075     -.0234375
551,000 to 600,000..............................     -.100      -.031250
601,000 to 650,000..............................     -.125     -.0390625
651,000 to 700,000..............................     -.150      -.046875
701,000 to 750,000..............................     -.200      -.062500
751,000 and above...............................     -.250      -.078125
------------------------------------------------------------------------

[58 FR 43512, Aug. 17, 1993]

                            Payments for Milk



Sec. 1036.70  Producer-settlement fund.

    (a) The market administrator shall establish and maintain a separate 
fund known as the ``Producer-settlement fund'', into which he shall 
deposit the payments made by handlers pursuant to Secs. 1036.71, 1036.76 
and 1036.77 and from which he shall make all payments pursuant to 
Secs. 1036.72, 1036.73 and 1036.77.
[45 FR 36356, May 30, 1980, as amended at 49 FR 14298, Apr. 11, 1984]



Sec. 1036.71  Payments to the market administrator.

    (a) Subject to paragraph (d) of this section, each handler operating 
a pool plant shall pay to the market administrator on or before the day 
prior to the last day of each month an amount determined by multiplying 
the Class III price for the preceding month (adjusted by the butterfat 
differential, if the handler so elects) by the following receipts during 
the first 15 days of such month:
    (1) Producer milk from producers whose payments are authorized to be 
collected by a cooperative association;
    (2) Bulk fluid milk products by transfer or diversion from a pool 
plant operated by a cooperative association; and
    (3) Milk from a cooperative association in its capacity as a handler 
pursuant to Sec. 1036.9(c) that also operates a pool plant.
    (b) Subject to paragraph (d) of this section, each handler shall pay 
to the market administrator on or before the 17th day after the end of 
each month the value of such handler's milk pursuant to Sec. 1036.60(a) 
through (l), less:
    (1) The amount obtained from multiplying the weighted average 
differential price applicable at the location of the plants from which 
the other source milk is received (not to be less than zero) by the 
hundredweight of other source milk for which a value is computed 
pursuant to Sec. 1036.60(g);
    (2) Payments to be made pursuant to Sec. 1036.73(a) and (c) for 
producer milk received during such month; and
    (3) The value at the weighted average price applicable at the 
location of the plants from which received with respect to other source 
milk for which a value is computed pursuant to Sec. 1036.60(e).
    (c) Subject to paragraph (d) of this section, each handler operating 
a pool plant who receives bulk fluid milk products by transfer or 
diversion from a pool plant operated by a cooperative association, or 
who receives milk from a cooperative association in its capacity as a 
handler pursuant to Sec. 1036.9(c)

[[Page 370]]

that also operates a pool plant, shall pay to the market administrator, 
on or before the 17th day after the end of each month, an amount 
determined by the sum of the following:
    (1) The quantity of such receipts classified as Class I pursuant to 
Sec. 1036.44(a)(15) and the corresponding step of Sec. 1036.44(b) 
multiplied by the difference between the Class I price (adjusted 
pursuant to Sec. 1036.44(a)(15) and the corresponding step of 
Sec. 1036.44(b) multiplied by the difference between the Class I price 
at the receiving plant (adjusted pursuant to Sec. 1036.52) and the Class 
III price;
    (2) The quantity of such receipts classified as Class II pursuant to 
Sec. 1036.44(a)(15) and the corresponding step of Sec. 1036.44(b) 
multiplied by the difference between the Class II price and the Class 
III price;
    (3) The quantity of skim milk in such receipts classified as Class I 
pursuant to Sec. 1036.44(a)(15) multiplied by the skim milk price for 
the month computed pursuant to Sec. 1036.50(f);
    (4) The pounds of protein in the skim milk in such receipts 
classified in Class II and Class III, computed by multiplying the skim 
milk pounds so assigned by the percentage of protein in the handler's 
receipts of skim milk from a pool plant operated by a cooperative 
association, or from a cooperative association in its capacity as a 
handler pursuant to Sec. 1036.9(c);
    (5) The pounds of butterfat in all three classes as determined 
pursuant to Sec. 1036.44(b)(15) multiplied by the butterfat price for 
the month computed pursuant to Sec. 1036.50(d); less
    (6) Any payments made by the handler pursuant to paragraphs (a)(2) 
and (a)(3) of this section for such month.
    (d) The following conditions shall apply with respect to the 
payments prescribed in paragraphs (a), (b) and (c) of this section:
    (1) Payments to the market administrator shall be deemed not to have 
been made until such payments have been received by the market 
administrator;
    (2) If the date by which payments must be received by the market 
administrator falls on a Saturday or Sunday or any day that is a 
national holiday, payments shall not be due until the next day on which 
the market administrator's office is open for public business; and
    (3) Payments due the market administrator from a cooperative 
association handler may be offset by payments determined by the market 
administrator to be due the cooperative association pursuant to 
Sec. 1036.73(b).
    (e) On or before the 25th day after the end of the month, each 
person who operated an other order plant that was regulated during such 
month under an order providing for individual-handler pooling shall pay 
to the market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such disposition from 
such plant in marketing areas regulated by two or more marketwide pool 
orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (e)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[43 FR 38798, Aug. 31, 1978, as amended at 45 FR 36356, May 30, 1980; 58 
FR 43512, Aug. 17, 1993]



Sec. 1036.72  Payments from the producer-settlement fund.

    Subject to Sec. 1036.73(c), on or before the 18th day after the end 
of each month, the market administrator shall pay to each handler the 
amount, if any, by which the net pool obligation pursuant to 
Sec. 1036.60 for such handler is less than the value of such handler's 
receipts of producer milk at the weighted average differential price 
adjusted pursuant for location pursuant to Sec. 1036.75, the protein 
price before adjustments are made for somatic cell count, and the 
butterfat price.
[58 FR 43513, Aug. 17, 1993]

[[Page 371]]



Sec. 1036.73  Payments to producers and to cooperative associations.

    (a) Subject to paragraphs (c) through (f) of this section, each 
handler shall make payment to each producer (whose payments are not 
authorized to be collected by a cooperative association) as follows:
    (1) On or before the last day of the month, to each producer who has 
not discontinued delivery of to such handler, not less than the amount 
determined by multiplying the pounds of producer milk received from such 
producer during the first 15 days of the month by the Class III price 
for the preceding month, less proper deductions authorized by the 
producer; and
    (2) On or before the 18th day after the end of the month, to each 
producer not less than the value determined pursuant to Sec. 1036.65, 
less the following amounts:
    (i) The payment made pursuant to paragraph (a)(1) of this section 
for such month;
    (ii) Proper deductions authorized by the producer;
    (iii) Any marketing service deduction pursuant to Sec. 1036.86; and
    (iv) [Reserved]
    (v) If before such date the handler has not received full payment 
from the market administrator pursuant to Sec. 1036.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
section following the date on which the remaining payment is received 
from the market administrator.
    (b) Subject to paragraphs (e) and (f) of this section, the market 
administrator shall pay to each cooperative association:
    (1) On or before the last day of each month for milk for which 
payment pursuant to Sec. 1036.71(a) has been received by the market 
administrator; and
    (2) On or before the 18th day after the end of each month for milk 
for which payment is received by the market administrator pursuant to 
Sec. 1036.71. Such payment shall be in the amount determined for such 
milk pursuant to Sec. 1036.65, less the payments made pursuant to 
paragraph (b)(1) of this section.
    (c) Any handler who the market administrator determines is or was 
delinquent with respect to any payment obligation under this order shall 
not be eligible to make payments directly to producers for its receipts 
of producer milk pursuant to paragraph (a) of this section. Any such 
payments due producers (except any amount due pursuant to Sec. 1036.72) 
shall be made to the market administrator on or before the day prior to 
the dates specified in paragraph (a) of this section. The market 
administrator shall, in turn, pay such producers the amounts so received 
from the handler plus any amounts due such producers pursuant to 
Sec. 1036.72. This payment arrangement shall be followed until the 
handler has met all prescribed payment obligations for three consecutive 
months.
    (d) In making payments to producers pursuant to paragraphs (a) and 
(c) of this section each producer shall be furnished the following 
information:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds and, with respect to final payments, the 
average butterfat and milk protein content and somatic cell count of the 
milk for which payment is being made;
    (3) The minimum rates of payment required by the order and the rates 
of payment used if such rates are other than the applicable minimum 
rates;
    (4) The amount and nature of any deductions from the amount 
otherwise due the producer; and
    (5) The net amount of payment to the producer.
    (e) The following conditions shall apply with respect to the 
payments prescribed in paragraphs (a) through (d) of this section:
    (1) If the date by which such payments are to be made falls on a 
Saturday or Sunday or on any day that is a national holiday, such 
payments need not to be made until the next day on which the market 
administrator's office is open for public business; and
    (2) If the application of Sec. 1036.71(d)(2) or paragraph (e)(1) of 
this section results in a delay in the partial or final payments by 
handlers to the market

[[Page 372]]

administrator or by the market administrator to handlers, the 
corresponding partial or final payments prescribed in paragraphs (a) 
through (d) of this section may be delayed by the same number of days.
    (f) If the market administrator does not receive the full payment 
required of a handler pursuant to Sec. 1036.71, he shall reduce 
uniformly per hundred-weight the payments due producers and/or 
cooperative associations for their milk received by such handler by a 
total amount not in excess of the amount due from such handler. The 
market administrator shall complete such payments on or before the next 
date for making payments pursuant to this section following the date on 
which the remaining payment is received from such handler. The market 
administrator shall first complete the payment to producers and/or 
cooperative associations who have the oldest outstanding payments due 
them.
[43 FR 38798, Aug. 31, 1978, as amended at 45 FR 36356, May 30, 1980; 49 
FR 23035, June 4, 1984; 58 FR 43513, Aug. 17, 1993; 60 FR 22256, May 5, 
1995]



Sec. 1036.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1036.51(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.
[60 FR 18963, Apr. 14, 1995]



Sec. 1036.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a plant shall be 
adjusted according to the location of such plant at the rates set forth 
in Sec. 1036.52.
    (b) The weighted average price applicable to other source milk shall 
be subject to the same adjustments applicable to the uniform price, 
except that the weighted average price shall not be less than the Class 
III price.



Sec. 1036.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1036.30 and 1036.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1) The obligation that would have been computed pursuant to 
Sec. 1036.60 at such plant shall be determined as though such plant were 
a pool plant, subject to the following modifications;
    (i) Receipts at such nonpool plant from a pool plant or an other 
order plant shall be assigned to the utilization at which classified at 
the pool plant or other order plant;
    (ii) Transfers from such nonpool plants to a pool plant or other 
order plant shall be classified as Class II or Class III milk if 
allocated to such class at the pool plant or other order plant and be 
valued at the weighted average price of the respective order if so 
allocated to Class I milk, except that reconstituted skim milk in filled 
milk shall be valued at the Class III price. No obligation shall apply 
to Class I milk transferred to a pool plant or another order plant is 
such Class I utilization is assigned to receipts at the partially 
regulated distributing plant from pool plants and other order plants at 
which such milk was classified and priced as Class I milk. There shall 
be included in the obligation so computed a charge in the amount 
specified in Sec. 1036.60(e) and a credit in the amount specified in 
Sec. 1036.71(a)(2)(ii) with respect to receipts from an unregulated

[[Page 373]]

supply plant, except that the credit for receipts of reconstituted skim 
milk in filled milk shall be at the Class III price, unless an 
obligation with respect to such plant is computed as specified below in 
paragraph (a)(1)(iii) of this section;
    (iii) If the operator of the partially regulated distributing plant 
so requests, and provides with his report pursuant to Sec. 1036.30 a 
similar report for each nonpool plant which serves as a supply plant for 
such partially regulated distributing plant by shipments to such plant 
during the month equivalent to the requirements of Sec. 1036.7(b) and 
(c), with agreement of the operator of such plant that the market 
administrator may examine the books and records of such plant for 
purposes of verification of such reports, there will be added the amount 
of the obligation computed at such nonpool supply plant in the same 
manner and subject to the same conditions as for the partially regulated 
distributing plant.
    (2) From this obligation, deduct the sum of:
    (i) The gross payments made by such handler for milk (adjusted to a 
3.5-percent butterfat basis pursuant to Sec. 1036.74) received during 
the month from dairy farmers at such plant and like payments made by the 
operator of a supply plant(s) included in the computations pursuant to 
paragraph (a)(1) of this section; and
    (ii) Payments to the producer-settlement fund of another order under 
which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat in 
the plant's route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the plant;
    (i) As Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the act; and
    (ii) From a nonpool plant that is not another order plant to the 
extent that an equivalent amount of skim milk or butterfat disposed of 
to such nonpool plant by handlers fully regulated under this or any 
other order issued pursuant to the act is classified and priced as Class 
I milk and is not used as an offset on any other payment obligation 
under this or any other order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price applicable at the location of the partially regulated 
distributing plant (but not to be less than the Class III price) and the 
weighted average price applicable at the location of the partially 
regulated distributing plant (but not to be less than the Class III 
price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (b)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to

[[Page 374]]

Class I use under Sec. 1036.43(d). Payments may be made to the producer-
settlement fund of the order regulating the producer milk used to 
produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
[43 FR 38798, Aug. 31, 1978, as amended at 45 FR 36357, May 30, 1980; 58 
FR 27827, May 11, 1993]



Sec. 1036.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made, for any 
reason, which result in moneys due the market administrator from such 
handler, due such handler from the market administrator, or due any 
producer or cooperative association from such handler, the market 
administrator shall promptly notify such handler of any such amount due, 
and payment thereof shall be made on or before the next date for making 
payment set forth in the provision under which such error occurred, 
following the 5th day after such notice. The market administrator shall 
offset any moneys due a handler against moneys due from such handler.



Sec. 1036.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1036.71, 
1036.73, 1036.76, 1036.77, 1036.85, and 1036.86 shall be increased 1 
percent beginning on the first day after the due date of such obligation 
and on the same day of each succeeding month until such obligation is 
paid. All such charges on overdue accounts shall be paid to the 
administrative assessment fund maintained by the market administrator.
[45 FR 36357, May 5, 1980]

        Administrative Assessment And Marketing Service Deduction



Sec. 1036.85  Assessment for order administration.

    As his pro rata share of the expense of administration of this part, 
each handler shall pay to the market administrator on or before the 17th 
day after the end of the month 4 cents per hundredweight or such lesser 
amount as the Secretary may prescribe, with respect to milk handled 
during the month as follows:
    (a) Each handler with respect to his receipts of producer milk 
(including such handler's own-farm production and milk received from a 
cooperative association pursuant to Sec. 1036.9(c)), fluid milk products 
transferred or diverted in bulk from a pool plant operated by a 
cooperative association and receipts of concentrated fluid milk products 
from unregulated supply plants and receipts of nonfluid milk products 
assigned to Class I use pursuant to Sec. 1036.43(d) and other source 
milk allocated to Class I pursuant to Sec. 1036.44 (a)(7) and (a)(11) 
and the corresponding steps of Sec. 1036.44(b), except such other source 
milk that is excluded from the computations pursuant to Sec. 1036.60 (d) 
and (e); and
    (b) Each handler in his capacity as the operator of a partially 
regulated distributing plant with respect to his route disposition in 
the marketing area in excess of the skim milk and butterfat subtracted 
pursuant to Sec. 1036.76(b)(2).
[43 FR 38798, Aug. 31, 1978, as amended at 45 FR 36357, May 30, 1980; 58 
FR 27828, May 11, 1993; 58 FR 43513, Aug. 17, 1993]



Sec. 1036.86  Deductions for marketing services.

    (a) Except as set forth in paragraphs (b) and (c) of this section, 
each handler or the market administrator in making payments to producers 
pursuant to Sec. 1036.73(a) and (c) shall deduct 7 cents per 
hundredweight, or such lesser amount as the Secretary may prescribe, 
with respect to milk of such

[[Page 375]]

producer (except a handler's own-farm production) and shall pay such 
deductions to the market administrator not later than the 17th day after 
the end of the month. Such money shall be used by the market 
administrator to verify or establish weights, samples, and tests of 
producer milk and to provide producers with market information. The 
services shall be performed by the market administrator or an agent 
engaged by and responsible to him.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section and for whom the cooperative is not authorized to collect 
payment for milk, each handler shall make in lieu of the deductions 
specified in paragraph (a) of this section, such deductions as are 
authorized by such producers, and, on or before the 18th day after the 
end of each month, pay over such deductions to the association rendering 
such services.
    (c) In the case of producers for whom a cooperative association is 
not performing the services set forth in paragraph (a) but for whom the 
cooperative association is collecting payment for milk pursuant to 
Sec. 1036.73(b) the market administrator shall make the deduction and 
perform the services specified in paragraph (a) of this section.
[45 FR 36357, May 30, 1980, as amended at 58 FR 43513, Aug. 17, 1993]



PART 1040--MILK IN SOUTHERN MICHIGAN MARKETING AREA--Table of Contents




                           General Provisions

Sec.
1040.1  General provisions.

                               Definitions

1040.2  Southern Michigan marketing area.
1040.3  Route disposition.
1040.4  [Reserved]
1040.5  Distributing plant.
1040.6  Supply plant.
1040.7  Pool plant.
1040.8  Nonpool plant.
1040.9  Handler.
1040.10  Producer-handler.
1040.11  [Reserved]
1040.12  Producer.
1040.13  Producer milk.
1040.14  Other source milk.
1040.15  Fluid milk product.
1040.16  Fluid cream product.
1040.17  Filled milk.
1040.18  Cooperative association.
1040.19  Commercial food processing establishment.
1040.20  Reload point.

                             Handler Reports

1040.30  Reports of receipts and utilization.
1040.31  Payroll reports.
1040.32  Other reports.

                         Classification of Milk

1040.40  Classes of utilization.
1040.41  Shrinkage.
1040.42  Classification of transfers and diversions.
1040.43  General classification rules.
1040.44  Classification of producer milk.
1040.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1040.50  Class and component prices.
1040.51  Basic formula price.
1040.52  Plant location adjustments for handlers.
1040.53  Announcement of class and component prices.
1040.54  Equivalent price.

                       Producer Price Differential

1040.60  Handler's value of milk.
1040.61  Producer price differential.
1040.62  Announcement of producer prices.
1040.63  Value of producer milk.

                            Payments for Milk

1040.70  Producer-settlement fund.
1040.71  Payments to the producer-settlement fund.
1040.72  Payments from the producer-settlement fund.
1040.73  Payments to producers and to cooperative associations.
1040.74  Butterfat differential.
1040.75  Plant location adjustments for producers and on nonpool milk.
1040.76  Payments by handler operating a partially regulated 
          distributing plant.
1040.77  Adjustment of accounts.
1040.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1040.85  Assessment for order administration.
1040.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 38 FR 4649, Feb. 20, 1973, unless otherwise noted.

[[Page 376]]

                           General Provisions



Sec. 1040.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1040.2  Southern Michigan marketing area.

    Southern Michigan marketing area, hereinafter referred to as the 
``marketing area,'' means all territory geographically within the places 
listed below, together with all piers, docks, and wharves connected 
therewith, and all craft moored thereat, and all territory wholly or 
partly herein occupied by Government (municipal, State or Federal) 
reservations, installations, institutions, or other similar 
establishments.

                            Michigan Counties

    Alcona, Allegan (Dorr, Leighton, Hopkins, Wayland, Watson, Martin, 
Otsego, and Gunplain Townships only), Alpena, Antrim, Arenac, Barry, 
Bay, Benzie, Calhoun, Charlevoix, Cheboygan, Clare, Clinton, Crawford, 
Eaton, Emmett, Genesee, Gladwin, Grand Traverse, Gratiot, Huron, Ingham, 
Ionia, Iosco, Isabella, Jackson, Kalamazoo, Kalkaska, Kent, Lake, 
Lapeer, Leelanau, Livingston, Macomb, Manistee, Mason, Mecosta, Midland, 
Missaukee, Monroe (Ash and Berlin Townships only), Montcalm, 
Montmorency, Muskegon, Newaygo, Oakland, Oceana, Ogemaw, Osceola, 
Oscoda, Otsego, Ottawa, Presque Isle, Roscommon, Saginaw, St. Clair, 
Sanilac, Shiawassee, Tuscola, Washtenaw, Wayne, Wexford.



Sec. 1040.3  Route disposition.

    Route disposition means a delivery, either directly or through any 
distribution facility (including a delivery by a vendor or sale from a 
plant or plant store) of any fluid milk product classified as Class I 
milk to a wholesale or retail outlet other than a delivery to any milk 
or filled milk plant.



Sec. 1040.4  [Reserved]



Sec. 1040.5  Distributing plant.

    Distributing plant means a plant in which milk approved by any duly 
constituted regulatory agency for fluid consumption in the marketing 
area is processed or packaged and from which there is route disposition 
of fluid milk products in consumer-type packages or dispenser units.
[38 FR 4649, Feb. 20, 1973, as amended at 59 FR 33419, June 29, 1994]



Sec. 1040.6  Supply plant.

    Supply plant means a plant in which milk approved by any duly 
constituted regulatory agency for fluid consumption in the marketing 
area is assembled and either processed or shipped in the form of a bulk 
fluid milk product to another milk processing plant. Such supply plant 
shall be equipped with stationary holding facilities.



Sec. 1040.7  Pool plant.

    Pool plant means:
    (a) A distributing plant:
    (1) From which total route disposition, except filled milk, during 
the month is not less than 50 percent of the combined Grade A milk 
received in bulk at such plant direct from producers, from supply 
plants, from a cooperative association as described in Sec. 1040.9(c) or 
diverted by the plant operator or by a cooperative association pursuant 
to Sec. 1040.13 as producer milk, except as provided in paragraph (c) of 
this section; or
    (2) That qualified as a pool plant in either of the immediately 
preceding 2 months on the basis of performance standards described in 
paragraph (a)(1) of this section, except as provided in paragraph (c) of 
this section; or
    (3) That meets the following conditions, regardless of the 
provisions of paragraph (c) of this section:
    (i) The plant is located in the marketing area;
    (ii) The plant has total route disposition, except filled milk, 
during the month of not less than 50 percent of the combined Grade A 
milk received in bulk at such plant direct from producers, from supply 
plants, from a cooperative association as described in Sec. 1040.9(c) or 
diverted by the plant operator or by a cooperative association pursuant 
to Sec. 1040.13 as producer milk; and
    (iii) The principal activity of such plant is the processing and 
distributing of aseptically processed fluid milk products.

[[Page 377]]

    (b) Except as provided in paragraph (c) of this section, a supply 
plant which during the month meets one of the performance requirements 
specified in paragraph (b) (1), (2), (3) or (4) of this section. All 
supply plants which are operated by one handler, or all the supply 
plants for which a handler is responsible for meeting the preformance 
requirements of this paragraph under a marketing agreement certified to 
the market administrator by both parties, may be considered as a unit 
for the purpose of meeting the performance requirements of paragraph (b) 
(1), (2), (3) or (4) of this section upon written notice to the market 
administrator specifying the plants to be considered as a unit and the 
period during which such consideration shall apply. Such notice and 
notice of any change in designation, shall be furnished on or before the 
fifth working day following the month to which the notice applies. In 
any months of March through August a unit shall not contain any plant 
which was not qualified under this paragraph either individually or as a 
member of a unit during the previous September through February.
    (1) A supply plant from which each month not less than 30 percent of 
the total quantity of Grade A milk received at such plant from producers 
and from a handler described in Sec. 1040.9(c), or diverted therefrom by 
the plant operator or a cooperative association (as described in 
Sec. 1040.9(b)) pursuant to Sec. 1040.13, less any Class I disposition 
of fluid milk products which are processed and packaged in consumer-type 
containers in the plant, is transferred to plants described in paragraph 
(b)(5) of this section. Not more than one-half of the shipping 
percentage specified in this paragraph may be met through the diversion 
of producer milk from the supply plant to pool distributing plants.
    (2) A plant operated by a cooperative association which supplies 
distributing plants qualified under paragraph (a) of this section, if 
the amount of producer milk of members of the association delivered by 
transfer from such association's plant to plants described in paragraph 
(b)(5) of this section and by direct delivery from the farm to plants 
qualified under paragraph (a) of this section is as follows:
    (i) During the month, is not less than that percentage which is 
designated by the market administrator for the current month pursuant to 
paragraph (b)(6) of this section; or
    (ii) During the second through thirteenth preceding months, was not 
less than that percentage which was designated by the market 
administrator for the second through thirteenth preceding months 
pursuant to paragraph (b)(6) of this section, if such plant was 
qualified under this paragraph in each of the preceding 13 months.
    (3) A plant located in the State of Michigan which has been a pool 
plant for twelve consecutive months, but is not otherwise qualified 
under this paragraph, if it has a marketing agreement with a cooperative 
association and it fulfills the following conditions:
    (i) The aggregate monthly quantity supplied by all parties to such 
an agreement as a percentage of the producer milk receipts included in 
the unit during the month is not less than that percentage designated by 
the market administrator for the current month pursuant to paragraph 
(b)(6) of this section; and
    (ii) Shipments for qualification purposes shall include both 
transfers from supply plants to plants described in paragraph (b)(5) of 
this section, and deliveries made direct from the farm to plants 
qualified under paragraph (a) of this section.
    (4) A supply plant that qualifies as a pool plant pursuant to 
paragraph (b) (1), (2), or (3) of this section in each of the months of 
September through February shall be a pool plant for the following 
months of March through August. The automatic pool qualification of a 
plant can be waived if the handler or cooperative requests in writing to 
the market administrator the nonpool status of such plant. The request 
must be made prior to the beginning of any month during the March 
through August period. The plant shall be a nonpool plant for such month 
and thereafter until it requalifies under paragraph (b)(1) of this 
section on the basis of actual shipments therefrom. To requalify as a 
pool plant under paragraph (b) (2) or (3) of this section

[[Page 378]]

or on a unit basis, such plant must first have met the shipping 
requirements of paragraph (b)(1) of this section for 6 consecutive 
months.
    (5) Qualifying transfers from supply plants pursuant to this 
paragraph may be made to the following plants:
    (i) Pool plants described in paragraph (a) of this section; and
    (ii) Distributing plants fully regulated under other Federal orders 
except that credit for transfers to such plants shall be limited to the 
quantity of milk transferred from the supply plant to pool distributing 
plants during the month. Qualifying transfers to other order plants 
shall not include transfers made on the basis of agreed upon Class II or 
Class III utilization.
    (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.
    (6) The shipping percentage that applies to a handler described in 
paragraphs (b)(2) and (b)(3) of this section shall be determined in the 
following manner:
    (i) The market administrator shall calculate the percentage that 
producer deliveries used in Class I represent of the total producer milk 
in that months' pool.
    (ii) The following table shall be used in determining a 
cooperative's delivery requirement in qualifying its balancing plant or 
a unit of such plants as pool plants for the same month of the following 
year:

                                                                        
------------------------------------------------------------------------
                                                              Applicable
 Producer deliveries used in class I as a percent of total     delivery 
                       producer milk                          percentage
------------------------------------------------------------------------
Below 34.99................................................           30
35-39.99...................................................           35
40-44.99...................................................           40
45-49.99...................................................           45
50+........................................................           50
------------------------------------------------------------------------

    (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.
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) An exempt plant;
    (3) A distributing plant from which the Secretary determines there 
is a greater proportion of route disposition (except filled milk) in 
another marketing area regulated by another order issued pursuant to the 
Act than in the Southern Michigan marketing area and such plant is fully 
subject to regulation of such other order: Provided, That a distributing 
plant which was a pool plant under this order in the immediately 
preceding month shall continue to be subject to all of the provisions of 
this part until the third consecutive month in which it has a greater 
proportion of its route disposition (except filled milk) in such other 
marketing area, unless, notwithstanding the provisions of this 
subparagraph, it is regulated by such other order;
    (4) A distributing plant which meets the requirements of paragraph 
(a) of this section which also meets the pooling requirements of another 
order on the basis of its route disposition in such other marketing area 
and from which the Secretary determines there is a greater quantity of 
route disposition (except filled milk) during the month in this 
marketing area than in such other marketing area but which plant is 
nevertheless fully regulated under such other order; and
    (5) A supply plant which during the month is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act, unless such plant is qualified as a pool plant pursuant to 
paragraph (b) of this section and

[[Page 379]]

a greater volume of fluid milk products (except filled milk) is moved to 
pool distributing plants than is moved to plants qualified as fully 
regulated plants under such other order on the basis of route 
disposition in the other marketing area.
[38 FR 4649, Feb. 20, 1973, as amended at 39 FR 33786, Sept. 20, 1974; 
42 FR 38585, July 29, 1977; 46 FR 27903, May 22, 1981; 52 FR 30888, Aug. 
18, 1987; 59 FR 33419, June 29, 1994; 60 FR 45575, Aug. 31, 1995]



Sec. 1040.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
class pricing and pooling provisions of another order issued pursuant to 
the Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined under this or any other Federal order issued pursuant 
to the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant, a producer-handler plant nor an 
exempt plant and from which there is route disposition in consumer-type 
packages or dispenser units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant and from which a fluid 
milk product is shipped during the month to a pool plant.
    (e) Exempt plant means a plant, other than a plant described in 
paragraph (b) of this section, located outside the marketing area from 
which there is route disposition within the marketing area, but from 
which the route disposition wholly or partly within the marketing area 
averages less than 600 pounds per day for the month, and from which no 
milk is transferred to other handlers. Only Secs. 1040.32 and 1000.5 of 
this chapter shall apply to an exempt plant.



Sec. 1040.9  Handler.

    Handler means:
    (a) Any person who operates a pool plant;
    (b) Any cooperative association with respect to producer milk 
diverted in accordance with Sec. 1040.13 for the account of such 
association;
    (c) Any cooperative association with respect to milk it receives for 
its account from the farm of a producer in a tank truck owned and 
operated by, or under the control of, such association, for delivery to 
a pool plant (such milk shall be considered as having been received by 
such cooperative association at a location identical to that of the pool 
plant to which it is delivered);
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) Any producer-handler; and
    (f) Any person in his capacity as the operator of an other order 
plant from which fluid milk products are distributed on routes in the 
marketing area or shipped to a pool plant.
[38 FR 4649, Feb. 20, 1973, as amended at 39 FR 33786, Sept. 20, 1974]



Sec. 1040.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a dairy farm and a milk plant from which there is route 
disposition in the marketing area and who received fluid milk products 
only from his own production or by transfer from a pool plant and no 
milk products other than fluid milk products for reconstitution into 
fluid milk products; and
    (b) Provides proof that: (1) The care and management of all dairy 
animals and other resources necessary to produce the entire volume of 
fluid milk products handled (excluding receipts by transfer from a pool 
plant); and (2) the operation of the processing business is the personal 
enterprise and risk of such person.



Sec. 1040.11  [Reserved]



Sec. 1040.12  Producer.

    Producer means any person, other than a producer-handler under any 
Federal order, who produces milk approved by any duly constituted 
regulatory agency for fluid consumption in the marketing area, which is 
moved to a pool plant or diverted pursuant to Sec. 1040.13 from a pool 
plant to another

[[Page 380]]

plant. The term shall include such a person with respect to milk 
diverted to a pool plant from an other order plant (unless designated 
for Class III use) during any month in which the quantity diverted is 
greater than the quantity of milk physically received from such person 
at the plant from which diverted and such milk is exempt from the 
pooling provisions of the other order.



Sec. 1040.13  Producer milk.

    Producer milk shall be the skim milk and butterfat in milk from 
producers that is:
    (a) Received at a pool plant directly from a producer excluding such 
milk that is diverted from another pool plant;
    (b) Received by a handler described in Sec. 1040.9(c);
    (c) Diverted by the operator of a pool plant to another pool plant; 
and
    (d) Diverted by the operator of a pool plant or by a handler 
described in Sec. 1040.9(b) to a nonpool plant, other than a producer-
handler, subject to the following conditions:
    (1) During each of the months of September through February, not 
less than one day's production of a producer must be physically received 
at a pool plant;
    (2) The total quantity of producer milk diverted by a cooperative 
association or by the operator of a pool plant may not exceed 60 percent 
during each of the months of September through February of the total 
quantity of producer milk for which it is the handler;
    (3) Any milk diverted in excess of the limits described in paragraph 
(d)(2) of this section shall not be producer milk. The diverting handler 
may designate the dairy farmers whose diverted milk will not be producer 
milk, otherwise the total milk diverted on the last day of the month, 
then the second-to-the-last day, and so on in daily allotments will be 
excluded until all of the over-diverted milk is accounted for; and
    (4) Milk which is subject to pooling under another order, shall not 
be producer milk.
[46 FR 27904, May 22, 1981, as amended at 52 FR 30889, Aug. 18, 1987]



Sec. 1040.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source other than producers, handlers described in 
Sec. 1040.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1040.40(b)(1);
    (c) Products (other than fluid milk products and products specified 
in Sec. 1040.40(b)(1)), from any source (including those products 
produced at the plant) which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1040.40(b)(1) for which the handler fails to 
establish disposition.



Sec. 1040.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product

[[Page 381]]

of the same nature and butterfat content.
[58 FR 27828, May 11, 1993]



Sec. 1040.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27828, May 11, 1993]



Sec. 1040.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat so that the 
product (including stabilizers, emulsifiers or flavoring) resembles milk 
or any other fluid milk product; and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1040.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers, which the Secretary determines, after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members and is 
engaged in making collective sales or marketing milk or its products for 
its members; and
    (c) To have all of its activities under the control of its members.



Sec. 1040.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1040.13, 1040.41 and 1040.52.
[58 FR 27828, May 11, 1993]



Sec. 1040.20  Reload point.

    Reload point means a location at which milk moved from a farm in a 
tank truck is transferred directly to another tank truck and commingled 
with other milk before entering a plant. A reload operation on the 
premises of a plant shall be considered a part of the plant operation.

                             Handler Reports



Sec. 1040.30  Reports of receipts and utilization.

    On or before the fifth working day after the end of each month, each 
handler shall report for such month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (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

[[Page 382]]

somatic cell information, as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (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.
[38 FR 4649, Feb. 20, 1973, as amended at 60 FR 45575, Aug. 31, 1995]



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.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1040.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
[38 FR 4649, Feb. 20, 1973, as amended at 60 FR 45575, Aug. 31, 1995]



Sec. 1040.32  Other reports.

    (a) [Reserved]
    (b) In addition to the reports required pursuant to Secs. 1040.30 
and 1040.31, each handler and each operator of an exempt plant shall 
report such other information as the market administrator deems 
necessary to verify or establish such person's obligation under the 
order.
    (c) When a holiday prevents normal business activities on any day 
except Sunday during the first 15 days of the month, those of the dates 
specified in Secs. 1040.30, 1040.62, 1040.71, 1040.72, 1040.73, 1040.76, 
1040.85, and 1040.86 which follows such holiday shall be postponed by 
the number of days lost as a result of such holiday.
[38 FR 4649, Feb. 20, 1973, as amended at 50 FR 24612, June 12, 1985]

                         Classification of Milk



Sec. 1040.40  Classes of utilization.

    Except as provided in Sec. 1040.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1040.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the

[[Page 383]]

commercial food processing establishment for the purpose of 
verification. Otherwise, such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1040.15 and the fluid 
cream product definition pursuant to Sec. 1040.16; and
    (7) In shrinkage assigned pursuant to Sec. 1040.41(a) to the 
receipts specified in Sec. 1040.41(a)(2) and in shrinkage specified in 
Sec. 1040.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27828, May 11, 1993, as amended at 58 FR 63287, Dec. 1, 1993]



Sec. 1040.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a

[[Page 384]]

handler pursuant to Sec. 1040.30, the market administrator shall 
determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, to the respective quantities of skim milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (b)(1) of such section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1040.9(c) and in milk 
diverted to such plant from another pool plant except that in either 
case if the operator of the plant to which the milk is delivered 
purchases the milk on the basis of weights determined by farm bulk tank 
calibration and butterfat tests bulk tank samples, the applicable 
percentage under this subparagraph shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that 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 and butterfat tests determined from farm 
bulk tank samples, the applicable percentage under this paragraph shall 
be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from other order plants, excluding 
milk received by diversion and the quantity for which Class II or Class 
III classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk milk transferred to other plants that is not in excess of the 
respective amounts of skim milk and butterfat to which percentages are 
applied in paragraphs (b)(1), (2), (4), (5), and (6) of this section; 
and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1040.9(b) or (c) but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. 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.
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27829, May 11, 1993; 60 
FR 45575, Aug. 31, 1995]



Sec. 1040.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant except as 
provided in Sec. 1040.43(d) shall be classified as Class I milk unless 
the operators of both plants request the same classification in another 
class. In either case the classification of such transfers or diversions 
shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations

[[Page 385]]

pursuant to Sec. 1040.44(a)(12) and the corresponding step of 
Sec. 1040.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1040.44(a)(7) 
or the corresponding step of Sec. 1040.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1040.44(a)(11) or Sec. 1040.44(a)(12) or the corresponding steps of 
Sec. 1040.44(b), the skim milk or butterfat so transferred or diverted 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section;
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers, or diversions in bulk form shall be 
classified as Class II or Class III to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For the purposes of this paragraph, if the other order provides 
for a different number of classes of utilization than is provided for 
under this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1040.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:

[[Page 386]]

    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1040.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred form such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the

[[Page 387]]

same assignment priorities at the second plant that are set forth in 
this paragraph.
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27829, May 11, 1993]



Sec. 1040.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1040.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1040.30 and shall compute the pounds of skim milk and butterfat, 
respectively, in each class in accordance with Secs. 1040.40, 1040.41, 
and 1040.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1040.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association; and
    (d) Milk in bulk delivered by a cooperative association as a handler 
under Sec. 1040.9(c) or from the pool plant of a cooperative association 
to a handler's pool plant shall be classified according to use or 
disposition by the latter handler and the value thereof at the class 
prices shall be included in his value of milk pursuant to Sec. 1040.60.
    (e) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1040.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1040.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (f) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27829, May 11, 1993; 58 
FR 63287, Dec. 1, 1993]



Sec. 1040.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler by allocating the 
handler's receipts of skim milk and butterfat to his utilization as 
follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1040.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:

[[Page 388]]

    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1040.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Except for the first month that a pool plant is subject to this 
paragraph, subtract from the remaining pounds of skim milk in Class II 
the pounds of skim milk in products specified in Sec. 1040.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1040.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1040.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1040.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) and bulk 
cream for which Grade A certification is not established;
    (iii) Receipts of fluid milk products and bulk cream from 
unidentified sources;
    (iv) Receipts of fluid milk products and bulk cream from a producer-
handler, as defined under this or any other Federal order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step

[[Page 389]]

at the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step (exclusive of transfers between pool plants of the 
same handler) at all pool plants of the handler;
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1040.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs 1040.44(a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;

[[Page 390]]

    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraph (a)(12)(ii), (iii) and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1040.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products and bulk fluid cream 
products from another pool plant according to the classification of such 
products pursuant to Sec. 1040.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received 
pursuant to Sec. 1040.43(d), subtract such excess from the pounds of 
skim milk remaining in each class in series beginning with Class III. 
Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to Sec. 1040.44(a)(14)

[[Page 391]]

and the corresponding step of Sec. 1040.44(b).
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27829, May 11, 1993]



Sec. 1040.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1040.44(a)(12) and the corresponding 
step of Sec. 1040.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1040.43(e) and Sec. 1040.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27831, May 11, 1993]

                              Class Prices



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.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
    (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 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

[[Page 392]]

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 
------------------------------------------------------------------------

[38 FR 4649, Feb. 20, 1973, as amended at 39 FR 30926, Aug. 27, 1974; 47 
FR 42970, Sept. 30, 1982; 58 FR 63287, Dec. 1, 1993; 60 FR 6609, Feb. 2, 
1995; 60 FR 45575, Aug. 31, 1995]



Sec. 1040.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1040.51 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per

[[Page 393]]

hundredweight of milk used to manufacture Cheddar cheese for the current 
month exceed or are less than the respective gross values for the 
preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for the 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18963, Apr. 14, 1995]



Sec. 1040.52  Plant location adjustments for handlers.

    (a) For producer milk received at a pool plant and classified as 
Class I milk without movement in bulk to another pool plant and for 
which a location adjustment is applicable, the Class I price computed 
pursuant to Sec. 1040.50(a) shall be reduced pursuant to paragraph 
(a)(1) or (2) of this section on the basis of the applicable rate per 
hundredweight for the location of such plant.
    (1) Zone rates. For a plant located within the following described 
territory, including the cities located therein, the applicable zone 
rates shall be as follows:

                            Michigan Counties

                         Zone I--No Adjustments

    Clinton, Genesee, Gratiot, Hillsdale, Huron, Ingham, Jackson, 
Lapeer, Lenawee, Livingston, Macomb, Monroe, Oakland, Saginaw, Sanilac, 
St. Clair, Shiawassee, Tuscola, Washtenaw and Wayne.
    Bay (except Gibson, Mount Forest, Pinconning, Garfield and Fraser 
Townships).

                            Zone II--5 Cents

    Allegan, Barry, Berrien, Branch, Calhoun, Cass, Eaton, Ionia, 
Kalamazoo, Kent, Montcalm, Muskegon, Ottawa, St. Joseph and Van Buren.

                            Zone III--7 Cents

    Bay (all townships excluded from Zone I), Alcona, Alpena, Antrim, 
Arenac, Benzie, Charlevoix, Cheboygan, Clare, Crawford, Emmet, Gladwin, 
Grand Traverse, Isabella, Iosco, Kalkaska, Lake, Leelanau, Manistee, 
Mason, Missaukee, Mecosta, Midland, Montmorency, Newago, Oceana, Ogemaw, 
Osceola, Oscoda, Otsego, Presque Isle, Roscommon and Wexford.

    (2) Mileage rate. For any plant at a location outside the territory 
specified in the preceding paragraph (a)(1) of this section, the 
applicable adjustment rate per hundredweight shall be based on the 
shortest highway distance between the plant and the nearest point in 
such territory as determined by the market administrator, and shall be 
the amount of the zone differential applicable at such point plus 2.25 
cents for each 10 miles or fraction thereof from such point.
    (b) For fluid milk products transferred in bulk from a pool plant to 
a pool plant described in Sec. 1040.7(a), the operator of the 
transferee-plant shall receive credit at the applicable zone or mileage 
rate, based on the location of the transferor-plant. The total volume on 
which such credit is computed shall be limited to the amount by which 
108 percent of Class I disposition at the transferee-plant is in excess 
of the sum of receipts at such plant:
    (1) From producers, (2) from cooperative associations pursuant to 
Sec. 1040.9(c), and (3) from other order plants and unregulated supply 
plants which are assigned in Class I, such assignment of receipts from 
the transferor-plant to be

[[Page 394]]

pro rata to receipts of fluid milk products from all transferor pool 
plants.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[38 FR 4649, Feb. 20, 1973, as amended at 54 FR 29328, July 12, 1989]



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;
[60 FR 45576, Aug. 31, 1995]



Sec. 1040.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                       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.
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1040.44(a)(14) and the 
corresponding step of Sec. 1040.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1040.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class

[[Page 395]]

II price, as the case may be, for the current month by the hundredweight 
of skim milk and butterfat subtracted from Class I and Class II pursuant 
to Sec. 1040.44(a)(9) and the corresponding step of Sec. 1040.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1040.43(e) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1040.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1040.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1040.44(a)(7)(v) and (vi) and 
the corresponding step of Sec. 1040.44(b);
    (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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1040.43(e);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1040.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[38 FR 4649, Feb. 20, 1973, as amended at 48 FR 22288, May 18, 1983; 58 
FR 27831, May 11, 1993; 60 FR 45576, Aug. 31, 1995]



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

[[Page 396]]

    (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
    (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.''
[60 FR 45576, Aug. 31, 1995]



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.
[60 FR 45577, Aug. 31, 1995]



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.
[60 FR 45577, Aug. 31, 1995]

                            Payments for Milk



Sec. 1040.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund,'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1040.71, 
1040.76, and 1040.77 and out of which he shall make all payments due 
handlers pursuant to Secs. 1040.72 and 1040.77.



Sec. 1040.71  Payments to the producer-settlement fund.

    (a) On or before the 13th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (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.
    (b) On or before the 25th day after the end of the month each 
handler who operated an other order plant that was regulated during such 
month under an order providing for individual-handler

[[Page 397]]

pooling shall pay to the market administrator an amount computed as 
follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[38 FR 4649, Feb. 20, 1973, as amended at 50 FR 24612, June 12, 1985; 60 
FR 45577, Aug. 31, 1995]



Sec. 1040.72  Payments from the producer-settlement fund.

    On or before the 14th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1040.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1040.71(a)(1). The market administrator shall 
offset any payment due any handler against payments due from such 
handler. If the balance in the producer-settlement fund is insufficient 
to make all payments to all handlers pursuant to this paragraph, the 
market administrator shall reduce uniformly such payments and shall 
complete such payments as soon as the necessary funds become available.



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. If by such date such handler has not received full payment for 
such month pursuant to Sec. 1040.72 he may reduce such payments 
uniformly per hundredweight for all producers, by an amount not in 
excess of the per hundredweight reduction in payment from the market 
administrator; however, the handler shall make such balance of payment 
to those producers to whom it is due on or before the date for making 
payments pursuant to this paragraph next following that on which such 
balance of payment is received from the market administrator.
    (b) Upon receipt of a written request from a cooperative association 
which the Secretary determines is authorized by producers to collect 
payment for their milk and receipt of a written promise to reimburse the 
handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the association, each handler shall pay to 
the cooperative association on or before the second day prior to the end 
of the month an amount equal to the payments authorized pursuant to 
paragraph (d) of this section, and on or before the 13th day of each 
month, in lieu of payments pursuant to paragraph (a) of this section, an 
amount equal to the gross sum due for all such milk received from 
certified producers, less amounts owed by each such producer to the 
handler for supplies purchased from him on prior written order or as 
evidenced by a delivery ticket signed by the producer.
    (1) Each handler shall submit to the cooperative association written 
information on or before the sixth working day of each month which shows 
for each such producer:
    (i) The total pounds of milk received from him during the preceding 
month;
    (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;
    (iii) The number of days on which milk was received; and
    (iv) The amounts withheld by the handler in payment for supplies 
sold;

[[Page 398]]

    (2) A copy of each such request, promise to reimburse and certified 
list of producers shall be filed simultaneously with the market 
administrator by the association and shall be subject to verification at 
his discretion, through audit of the records of the cooperative 
association pertaining thereto. Exceptions, if any, to the accuracy of 
such certification by a producer, or by a handler shall be made by 
written notice to the market administrator, and shall be subject to his 
determination; and
    (3) The foregoing payment and the submissions of information 
pursuant to paragraph (b)(1) of this section shall be made with respect 
to milk of each producer whom the cooperative association certifies is a 
member or has authorized such cooperative association to collect for his 
milk, which is received on and after the first day of the month next 
following receipt of such certification through the last day of the 
month next preceding receipt of notice from the cooperative association 
of a termination of certification or until the original request is 
rescinded in writing by the association.
    (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.
    (d) On or before the last day of each month for producer milk 
received during the first 15 days of the month at not less than the 
Class III milk price for the preceding month, less any proper deductions 
authorized in writing by the producer.
[38 FR 4649, Feb. 20, 1973, as amended at 39 FR 33786, Sept. 20, 1974; 
46 FR 27904, May 22, 1981; 50 FR 24612, June 12, 1985; 60 FR 45577, Aug. 
31, 1995]



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.
[60 FR 45577, Aug. 31, 1995]



Sec. 1040.75  Plant location adjustments for producers and on nonpool milk.

    (a) Subject to the conditions of paragraph (b) of this section, in 
making payments to producers or cooperative associations pursuant to 
Sec. 1040.73 each handler:
    (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.
    (2)  [Reserved]
    (3) Shall add not less than 10 cents per hundredweight with respect 
to milk received from producers and cooperative associations pursuant to 
Sec. 1040.9(c) at a pool plant located within the Michigan counties of 
Macomb, Oakland, and Wayne.
    (b) When milk of an individual producer is physically received at 
more than one location (including any nonpool plant) during the month, 
the location adjustment rate shall be the weighted average (rounded to 
the nearest one-half cent) of the amounts computed for the respective 
locations, except that if 65 percent or more of such producer's milk is 
delivered to a plant or plants at which the same rate is applicable, 
such rate shall be applicable to all deliveries of such producer during 
the month regardless of point of delivery.
    (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.
[38 FR 4649, Feb. 20, 1973, as amended at 42 FR 38585, July 29, 1977; 50 
FR 24612, June 12, 1985; 54 FR 29328, July 12, 1989; 60 FR 45577, Aug. 
31, 1995]

[[Page 399]]



Sec. 1040.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1040.30(b) and 1040.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (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
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1040.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are

[[Page 400]]

classified in the corresponding class pursuant to paragraph (b)(1)(i) of 
this section. 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 of reconstituted skim milk in 
filled milk shall be priced at the lowest class price of the respective 
order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1040.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1040.60(f) less the value of such other source milk 
specified in Sec. 1040.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1040.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1040.7(b)(1), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1040.30(b) and 
1040.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1040.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments (adjusted to 3.5 percent butterfat value 
using the butterfat differential pursuant to Sec. 1040.74) by the 
operator of such partially regulated distributing plant for milk 
received at the plant during the month that would have been producer 
milk if the plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments (adjusted to 3.5 percent butterfat value using the butterfat 
differential pursuant to Sec. 1040.74) by the operator of such nonpool 
supply plant for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1040.43(e). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the

[[Page 401]]

nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27831, May 11, 1993; 60 
FR 45577, Aug. 31, 1995]



Sec. 1040.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made, for any 
reason, which result in moneys due:
    (a) To the market administrator from such handler;
    (b) To such handler from the market administrator; or
    (c) To any producer or cooperative association from such handler, 
the market administrator shall promptly notify such handler of any such 
amount due, and payment thereof shall be made on or before the next date 
for making payment set forth in the provisions under which such error 
occurred, following the fifth day after such notice.



Sec. 1040.78  Charges on overdue accounts.

    Any unpaid obligation of a handler or of the market administrator 
pursuant to Secs. 1040.71, 1040.77, 1040.85, and 1040.86, shall be 
increased one-half of 1 percent on the first day of the month next 
following the due date of such obligation and on the first day of each 
month thereafter until such obligation is paid.

        Administrative Assessment and Marketing Service Deduction



Sec. 1040.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler (excluding a handler described in Sec. 1040.9(c) with 
respect to milk delivered to pool plants) shall pay to the market 
administrator on or before the 13th day after the end of the month 4 
cents per hundredweight, or such lesser amount as the Secretary may 
prescribe, with respect to:
    (a) Producer milk (including milk of such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1040.43(e) and other source milk allocated to Class 
I pursuant to Sec. 1040.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1040.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1040.60(d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1040.76(a)(2).
[38 FR 4649, Feb. 20, 1973, as amended at 58 FR 27832, May 11, 1993; 60 
FR 45578, Aug. 31, 1995]



Sec. 1040.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments pursuant to Sec. 1040.73(a) for milk 
received from each producer (including milk of such handler's own 
production) at a plant not operated by a cooperative association of 
which such producer is a member shall deduct 7 cents per hundredweight, 
or such amount not exceeding 7 cents per hundredweight as the Secretary 
may prescribe, and, on or before the 13th day after the end of each 
month, shall pay such deductions to the market administrator. Such 
moneys shall be used by the market administrator to verify weights, 
samples, and tests of milk received from producers and to provide 
producers with market information, such services to be performed by the 
market administrator or by an agent engaged by and responsible to him;
    (b) In the case of producers whose milk is received at a plant not 
operated by a cooperative association of which such producers are 
members, for which payment is not made pursuant to Sec. 1040.73(b) or 
(c), and for whom a cooperative association is actually performing the 
services described in paragraph (a) of this section, as determined by 
the Secretary, each handler shall make, in lieu of the deductions 
specified in paragraph (a) of this section, such deductions from 
payments required pursuant to Sec. 1040.73 as may be authorized by such 
producers, and pay such deductions on or before the 13th day after the 
end of the month to the

[[Page 402]]

cooperative association rendering such services of which such producers 
are members.
[38 FR 4649, Feb. 20, 1973, as amended at 60 FR 45578, Aug. 31, 1995]



PART 1044--MILK IN MICHIGAN UPPER PENINSULA MARKETING AREA--Table of Contents




                   General Provisions and Definitions

Sec.
1044.1  General provisions.
1044.5  Michigan Upper Peninsula marketing area.
1044.6  Fluid milk product.
1044.7  Route.
1044.8  Fluid milk plant.
1044.9  Nonfluid milk plant.
1044.10  Handler.
1044.11  Producer.
1044.12  Associated producer.
1044.13  Producer-handler.
1044.14  Producer milk.
1044.15  Associated producer milk.
1044.16  Other source milk.
1044.17  Cooperative association.
1044.18  Fluid cream product.
1044.19  Filled milk.
1044.20  [Reserved]
1044.21  Commercial food processing establishment.

                          Market Administrator

1044.22  Additional duties of the market administrator.

                                 Reports

1044.30  Monthly reports of receipts and utilization.
1044.31  Associated producer reports.
1044.32  Payroll reports.
1044.33  Other reports.

                             Classification

1044.40  Classes of utilization.
1044.41  Shrinkage.
1044.42  Classification of transfers.
1044.43  General classification rules.
1044.44  Classification of producer milk.

                             Minimum Prices

1044.50  Class prices.
1044.51  Basic formula price.
1044.52  [Reserved]
1044.53  Handler location adjustments.
1044.54  Equivalent price provision.

                 Handler's Obligation and Uniform Price

1044.60  Computation of the net obligation of each handler.
1044.61  Computation of uniform price.
1044.62  Butterfat differential.
1044.63  Producer location differentials.

                            Payment for Milk

1044.70  Time and method of payment.
1044.71  Expense of administration.
1044.72  Marketing services.
1044.73  Errors in payment.
1044.74  Overdue accounts.

                        Application of Provisions

1044.80  Producer-handler exemption.
1044.81  Exempt handler.
1044.82  Handlers subject to other Federal orders.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

                   General Provisions and Definitions



Sec. 1044.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.
[36 FR 9850, May 29, 1971]



Sec. 1044.5  Michigan Upper Peninsula marketing area.

    (a) Michigan Upper Peninsula marketing area (hereinafter referred to 
as the ``marketing area'') means all the territory including all 
municipal corporations within the zones described below in this section;
    (b) Zone I(a): The city of Menominee and the townships of Menominee, 
Mellen and Ingallston in Menominee County, Michigan; the town of 
Peshtigo and the cities of Marinette and Peshtigo in Marinette County, 
Wisconsin;
    (c) Zone I: Counties of Delta, Dickinson, Gogebic, Iron, Ontonagon 
and all territory in Menominee County not included in Zone I(a), all in 
the State of Michigan; the town of Niagara and the village of Niagara in 
Marinette County; the towns of Aurora and Florence in Florence County 
and the towns of Carey, Kimball, Oma, Pence, Saxon and the cities of 
Hurley and Montreal in Iron County all in the State of Wisconsin;
    (d) Zone 2: Counties of Alger, Baraga, Chippewa, Houghton, Keweenaw, 
Luce, Mackinac, Marquette and Schoolcraft all in the State of Michigan.
[28 FR 4750, May 11, 1963]

[[Page 403]]



Sec. 1044.6  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27832, May 11, 1993]



Sec. 1044.7  Route.

    Route means a delivery (including delivery by a vendor or sale from 
a plant or plant store) of any fluid milk product, other than a delivery 
to any milk or filled milk processing plant.
[34 FR 18649, Nov. 22, 1969]



Sec. 1044.8  Fluid milk plant.

    Fluid milk plant means the premises, buildings and facilities of any 
milk receiving, processing or packaging plant handling milk eligible for 
distribution in the marketing area as Grade A milk or conforming to the 
requirements of Michigan Act No. 169, Public Acts 1929, as amended:
    (a) From which any fluid milk product, except filled milk, is 
disposed of during the month in the marketing area on routes except as 
provided in Sec. 1044.81; or
    (b) From which any milk or skim milk, except skim milk in filled 
milk, is delivered to plants described in paragraph (a) of this section 
on ten or more days in any of the months of July through December or on 
three or more days in any of the months of January through June.
[34 FR 18649, Nov. 22, 1969]



Sec. 1044.9  Nonfluid milk plant.

    Nonfluid milk plant means any milk or filled milk receiving, 
manufacturing or processing plant other than a fluid milk plant. The 
following categories of nonfluid milk plants are further defined as 
follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonfluid milk 
plant that is neither an other order plant nor a producer-handler plant 
and from which fluid milk products in consumer-type packages or 
dispenser units are distributed on routes in the marketing area during 
the month.
    (d) Unregulated supply plant means a nonfluid milk plant that is 
neither an other order plant nor a producer-handler plant and from which 
a fluid milk product is shipped during the month to a fluid milk plant.
[34 FR 18649, Nov. 22, 1969]



Sec. 1044.10  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more fluid 
milk plants;
    (b) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (c) Any cooperative association with respect to milk from producers 
which it causes to be diverted from a fluid milk plant to another plant 
for the account of such cooperative association;
    (d) Any cooperative association, at its election, with respect to 
member milk delivered from the farm to the fluid milk plant of another 
handler in a

[[Page 404]]

tank truck operated by or under contract to the cooperative association. 
To elect this handler status, the market administrator must be notified 
prior to the first day of the month during which these deliveries will 
take place. Milk delivered pursuant to this paragraph is deemed to have 
been received at the location of the milk plant to which it is 
delivered;
    (e) Any person in his capacity as the operator of an other order 
plant that would otherwise qualify as a fluid milk plant; or
    (f) A producer-handler.
[28 FR 4750, May 11, 1963, as amended at 29 FR 10867, July 30, 1964]



Sec. 1044.11  Producer.

    Producer means a person, other than a producer-handler as defined in 
any order (including this part) who produces milk in conformity with the 
sanitation requirements for Grade A milk of any duly constituted health 
authority, or in conformity with the requirements of Michigan Act No. 
169, Public Acts 1929, as amended which milk is:
    (a) Received at a fluid milk plant; or
    (b) Diverted from such plant for the account of a handler.
[29 FR 10867, July 30, 1964]



Sec. 1044.12  Associated producer.

    Associated producer means any person, other than a producer-handler, 
with respect to any of his milk not accepted or accounted for by a 
handler at a fluid milk plant in any month of December through June, 
who:
    (a) Produces milk in conformity with the sanitation requirements for 
Grade A milk of any duly constituted health authority or in conformity 
with the requirements of Michigan Act No. 169, Public Acts 1929, as 
amended;
    (b) Delivered milk to a fluid milk plant in any three of the 
preceding months of July through November; and
    (c) Certifies in writing to the market administrator, on or before 
the first day after each month of December through June in which his 
milk is not accepted or accounted for by a handler at a fluid milk 
plant, that he will deliver his milk to such fluid milk plant and does 
so deliver upon request from the handler to the market administrator.
[28 FR 4750, May 11, 1963]



Sec. 1044.13  Producer-handler.

    Producer-handler means a dairy farmer who distributes fluid milk 
products on a route in the marketing area but receives no fluid milk 
products during the month except his own production or from fluid milk 
plants.
[28 FR 4751, May 11, 1963]



Sec. 1044.14  Producer milk.

    Producer milk means skim milk and butterfat contained in Grade A 
milk received at a fluid milk plant directly from a dairy farmer or a 
handler pursuant to Sec. 1044.10(d): Provided, That:
    (a) Milk diverted pursuant to Sec. 1044.11(b) to a nonfluid milk 
plant that is not subject to the classification and pricing provisions 
of another order issued pursuant to the Act shall be deemed to have been 
received by the diverting handler at the location of the plant from 
which diverted, and
    (b) Milk diverted pursuant to Sec. 1044.11(b) to a fluid milk plant 
shall be deemed to have been received by the diverting handler at the 
location of the plant to which diverted.
[28 FR 4750 May 11, 1963, as amended at 28 FR 11053, Oct. 16, 1963]



Sec. 1044.15  Associated producer milk.

    Associated producer milk means the milk produced by an associated 
producer that is not accepted or accounted for by a handler at a fluid 
milk plant and is used for manufacturing purposes in a nonfluid milk 
plant engaged exclusively in manufacturing operations.
[28 FR 4751, May 11, 1963]



Sec. 1044.16  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts during the month of fluid milk products except: (1) 
Receipts from other fluid milk plants or (2) producer milk; and
    (b) Products, other than fluid milk products, from any source 
(including those produced at the fluid milk plant) which are reprocessed 
or converted to

[[Page 405]]

another product in the fluid milk plant during the month.
[28 FR 4751, May 11, 1963]



Sec. 1044.17  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers, as defined in Sec. 1044.11, which the Secretary determines 
after application by the association is qualified under provisions of 
the Act of Congress of February 18, 1922, as amended, known as the 
``Capper-Volstead Act''.
[28 FR 4751, May 11, 1963]



Sec. 1044.18  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27832, May 11, 1993]



Sec. 1044.19  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milk fat, so that the product 
(including stabilizers, emulsifiers or flavoring) resembles milk or any 
other fluid milk product; and contains less than 6 percent nonmilk fat 
(or oil).
[34 FR 18649, Nov. 22, 1969]



Sec. 1044.20  [Reserved]



Sec. 1044.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1044.14, 1044.41 and 1044.53.
[58 FR 27832, May 11, 1993]

                          Market Administrator



Sec. 1044.22  Additional duties of the market administrator.

    In addition to the duties specified in Sec. 1000.3(c) of this 
chapter, the market administrator shall perform the following duties:
    (a)--(h) [Reserved]
    (i) Publicly announce on or before:
    (1) The fifth day of each month:
    (i) The Class I price and Class II price for the following month;
    (ii) The butterfat differential for the preceding month;
    (iii) The Class III and Class III-A prices for the preceding month; 
and
    (2) The 12th day of each month the uniform price for the proceeding 
month;
    (j) On or before the 8th day after each month of December through 
June, notify each handler of each person who has qualified as an 
associated producer at each of his fluid milk plants;
    (k) On or before the 12th day after each month of December through 
June, notify each handler of the quantity and butterfat test of 
associated producer milk assigned to each of his fluid milk plants and 
the amount to be remitted to the market administrator pursuant to 
Sec. 1044.70(d).
    (l) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1044.43(e) and Sec. 1044.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (m) Furnish to each handler operating a fluid milk plant who has 
shipped fluid milk products to an other order plant, the classification 
to which the skim milk and butterfat in such fluid milk products were 
allocated by the

[[Page 406]]

market administrator of the other order on the basis of the report of 
the receiving handler; and, as necessary, any changes in such 
classification arising in the verification of such report.
[27 FR 4050, Apr. 28, 1962, as amended at 28 FR 4751, May 11, 1963; 29 
FR 10867, July 30, 1964; 36 FR 9850, May 29, 1971; 37 FR 2933, Feb. 10, 
1972; 40 FR 6316, Feb. 11, 1975; 55 FR 53281, Dec. 28, 1990; 58 FR 
27832, May 11, 1993; 58 FR 63288, Dec. 1, 1993; 60 FR 6609, Feb. 2, 
1995]

                                 Reports



Sec. 1044.30  Monthly reports of receipts and utilization.

    On or before the 5th day (exclusive of Sundays and holidays) of each 
month, each handler shall report to the market administrator for the 
preceding month in the detail and on forms prescribed by the market 
administrator as follows:
    (a) Each handler for each fluid milk plant shall report:
    (1) The quantities of butterfat and skim milk contained in or 
represented by:
    (i) Producer milk,
    (ii) Fluid milk products received from other fluid milk plants,
    (iii) Other source milk, and
    (iv) Inventories of fluid milk products on hand at the end of each 
month;
    (2) The utilization of all skim milk and butterfat required to be 
reported pursuant to this section, including a separate statement 
showing in-area and outside area route disposition of filled milk; and
    (3) Such other information with respect to sources and disposition 
as the market administrator may prescribe.
    (b) Each handler specified in Sec. 1044.10(b) who operates a 
partially regulated distributing plant shall report as required in 
paragraph (a) of this section, except that receipts of milk from dairy 
farmers shall be reported in lieu of those in producer milk. Such report 
shall include a separate statement showing the respective amounts of 
skim milk and butterfat disposed of in the marketing area as Class I 
milk on routes.
[29 FR 10867, July 30, 1964, as amended at 34 FR 18649, Nov. 22, 1969]



Sec. 1044.31  Associated producer reports.

    Each associated producer, or a cooperative association on his 
behalf, shall submit in the manner prescribed by the market 
administrator:
    (a) On or before the 5th day after each month of December through 
June, a statement of the quantity and butterfat test of his milk sold 
for manufacturing purposes in such month, and
    (b) On or before the 15th day after each month of December through 
June, delivery receipts or other evidence verifying the quantity and 
butterfat test of his milk sold for manufacturing purposes in such 
month.
[28 FR 4751, May 11, 1963]



Sec. 1044.32  Payroll reports.

    On or before the 20th day of each month each handler shall report 
his producer payroll for each fluid milk plant for the preceding month 
which shall show:
    (a) The pounds of milk received from each producer and the 
percentage of butterfat contained therein;
    (b) The date and net amount of payment to such producer or to a 
cooperative association for such producer's milk, with the price, 
deductions and charges involved and the nature of each.
[28 FR 4751, May 11, 1963]



Sec. 1044.33  Other reports.

    (a) Each producer-handler shall make reports to the market 
administrator at such time and in such manner as the market 
administrator shall request.
    (b) Each handler exempt pursuant to Sec. 1044.81 or 1044.82 shall 
report to the market administrator his disposition of fluid milk 
products on routes within the marketing area at such time and in such 
manner as the market administrator shall prescribe.
    (c) Each handler pursuant to Sec. 1044.10(d) shall report to the 
market administrator in detail and on forms prescribed by the market 
administrator on or before the 5th day of each month the quantities of 
skim milk and butterfat in producer milk delivered to each fluid milk 
plant in the preceding month.
[29 FR 10867, July 30, 1964]

[[Page 407]]

                             Classification



Sec. 1044.40  Classes of utilization.

    Except as provided in Sec. 1044.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1044.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of

[[Page 408]]

such dumping is not possible, or if the market administrator so 
requires, the handler must notify the market administrator on the next 
business day following such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1044.6 and the fluid 
cream product definition pursuant to Sec. 1044.18; and
    (7) In shrinkage assigned pursuant to Sec. 1044.41(a) to the 
receipts specified in Sec. 1044.41(a)(2) and in shrinkage specified in 
Sec. 1044.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27833, May 11, 1993, as amended at 58 FR 63288, Dec. 1, 1993]



Sec. 1044.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1044.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each fluid milk plant to the respective quantities of 
skim milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (b)(6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(b)(6) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1044.10(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1044.10(c) and in milk 
diverted to such plant from another fluid milk plant, except that, in 
either case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph (b)(2) 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other fluid milk 
plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (b)(2), (b)(4), (b)(5), 
and (b)(6) of this section; and

[[Page 409]]

    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1044.10(c) or (d), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.
[58 FR 27833, May 11, 1993]



Sec. 1044.42  Classification of transfers.

    (a) Transfers to fluid milk plants. Skim milk or butterfat 
transferred in the form of a fluid milk product or a bulk fluid cream 
product from a fluid milk plant to another fluid milk plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers shall be subject to the following 
conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1044.44(a)(11) and the corresponding step of 
Sec. 1044.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1044.44(a)(7) or the corresponding 
step of Sec. 1044.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1044.44(a)(11) or the 
corresponding steps of Sec. 1044.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.
    (b) Transfers to other order plants. Skim milk or butterfat 
transferred in the form of a fluid milk product or a bulk fluid cream 
product from a fluid milk plant to an other order plant shall be 
classified in the following manner. Such classification shall apply only 
to the skim milk or butterfat that is in excess of any receipts at the 
fluid milk plant from the other order plant of skim milk and butterfat, 
respectively, in fluid milk products and bulk fluid cream products, 
respectively, that are in the same category as described in paragraph 
(b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers in bulk form shall be classified as Class II 
or Class III milk to the extent of such utilization available for such 
classification pursuant to the allocation provisions of the other order;
    (4) If information concerning the classes to which such transfers 
were allocated under the other order is not available to the market 
administrator for the purpose of establishing classification under this 
paragraph, classification shall be as Class I, subject to adjustment 
when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and

[[Page 410]]

    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1044.40.
    (c) Transfers to producer-handlers and to exempt plants. Skim milk 
or butterfat in the following forms that is transferred from a fluid 
milk plant to a producer-handler under this or any other Federal order 
or to an exempt plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonfluid milk plants. Skim 
milk or butterfat transferred or diverted in the following forms from a 
fluid milk plant to a nonfluid milk plant that is not an other order 
plant, a producer-handler plant or an exempt plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonfluid milk plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1044.30 for the month within which such transaction occurred; 
and
    (B) The nonfluid milk plant operator maintains books and records 
showing the utilization of all skim milk and butterfat received at such 
plant which are made available for verification purposes if requested by 
the market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonfluid milk plant and transfers of packaged fluid milk 
products from such nonfluid milk plant to plants fully regulated 
thereunder shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonfluid milk plant from fluid milk plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonfluid milk plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such 
nonfluid milk plant from fluid milk plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonfluid milk plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonfluid milk plant shall be assigned to the extent 
possible pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonfluid milk plant from fluid milk plants and 
other order plants;
    (iv) Transfers of bulk fluid milk products from the nonfluid milk 
plant to a plant fully regulated under any Federal milk order, to the 
extent that such transfers to the regulated plant exceed receipts of 
fluid milk products from such plant and are allocated to Class I at the 
transferee-plant, shall be assigned to the extent possible in the 
following sequence:
    (A) Pro rata to receipts of fluid milk products at such nonfluid 
milk plant from fluid milk plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonfluid milk plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonfluid 
milk plant shall be assigned to the extent possible in the following 
sequence:

[[Page 411]]

    (A) To such nonfluid milk plant's receipts from dairy farmers who 
the market administrator determines constitute regular sources of Grade 
A milk for such nonfluid milk plant; and
    (B) To such nonfluid milk plant's receipts of Grade A milk from 
plants not fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonfluid milk plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonfluid milk plant from fluid milk plants and other order plants 
shall be assigned, pro rata among such plants, to the extent possible 
first to any remaining Class I utilization, then to Class II 
utilization, and then to Class III utilization at such nonfluid milk 
plant;
    (vii) Receipts of bulk fluid cream products at the nonfluid milk 
plant from fluid milk plants and other order plants shall be assigned, 
pro rata among such plants, to the extent possible first to any 
remaining Class II utilization, then to any remaining Class III 
utilization, and then to Class I utilization at such nonfluid milk 
plant; and
    (viii) In determining the nonfluid milk plant's utilization for 
purposes of this paragraph, any fluid milk products and bulk fluid cream 
products transferred from such nonfluid milk plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in paragraph (d)(2) of this 
section.
[58 FR 27834, May 11, 1993]



Sec. 1044.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1044.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1044.30 and shall compute separately for each fluid milk plant and 
for each cooperative association with respect to milk for which it is 
the handler pursuant to Sec. 1044.10 (c) or (d) the pounds of skim milk 
and butterfat, respectively, in each class in accordance with 
Secs. 1044.40, 1044.41, and 1044.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1044.10 (c) or (d) shall be 
determined separately from the operations of any fluid milk plant 
operated by such cooperative association;
    (d) Bulk fluid milk products transferred or diverted from a fluid 
milk plant operated by a cooperative association to another fluid milk 
plant shall be classified in accordance with the rules set forth in 
Sec. 1044.42(a) and the value thereof at class prices (applicable at the 
location of the transferee-plant) shall be used to compute the receiving 
handler's net obligation for such milk pursuant to Sec. 1044.60; and
    (e) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1044.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1044.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (f) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[58 FR 27835, May 11, 1993, as amended at 58 FR 63288, Dec. 1, 1993]

[[Page 412]]



Sec. 1044.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk at each fluid milk plant described in 
Sec. 1044.10(a) by allocating the plant's receipts of skim milk and 
butterfat to its utilization pursuant to paragraphs (a) through (c) of 
this section.
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1044.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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; and
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the fluid milk plant was 
subject to the provisions of this paragraph or comparable provisions of 
another Federal milk order in the immediately preceding month;
    (3) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from any other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1044.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1044.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph (a)(5) shall apply 
only if the fluid milk plant was subject to the provisions of this 
paragraph or comparable provisions of another Federal milk order in the 
immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1044.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1044.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1044.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from 
unregulated supply plants that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that

[[Page 413]]

reconstituted skim milk is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) Receipts of fluid milk products from an unregulated supply plant 
that were not subtracted pursuant to paragraphs (a)(2)(i) and (a)(7)(v) 
of this section for which the handler requests classification other than 
Class I, but not in excess of the pounds of skim milk remaining in Class 
II and Class III combined;
    (ii) Receipts of fluid milk products from an unregulated supply 
plant that were not subtracted pursuant to paragraphs (a)(2)(i), 
(a)(7)(v), and (a)(8)(i) of this section which are in excess of the 
pounds of skim milk determined pursuant to paragraphs (a)(8)(ii) (A) 
through (C) of this section. Should the pounds of skim milk to be 
subtracted from Class II and Class III combined exceed the pounds of 
skim milk remaining in such classes, the pounds of skim milk in Class II 
and Class III combined shall be increased (increasing as necessary Class 
III and then Class II to the extent of available utilization in such 
classes at the nearest other fluid milk plant of the handler, and then 
at each successively more distant fluid milk plant of the handler) by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class I shall be decreased by a like amount. In such case, 
the pounds of skim milk remaining in each class at this allocation step 
at the handler's other fluid milk plants shall be adjusted in the 
reverse direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step (exclusive of transfers between fluid milk plants 
of the same handler) at all fluid milk plants of the handler;
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all fluid milk plants of the handler of producer 
milk, fluid milk products from fluid milk plants of other handlers, and 
bulk fluid milk products from other order plants that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this fluid milk plant is of all such receipts 
remaining at this allocation step at all fluid milk plants of the 
handler; and
    (iii) Receipts of bulk fluid milk products from an other order plant 
that are in excess of bulk fluid milk products transferred or diverted 
to such plant and that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section, if Class II or Class III classification is 
requested by the operator of the other order plant and the handler, but 
not in excess of the pounds of skim milk remaining in Class II and Class 
III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1044.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5), and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subtract from the pounds of skim milk remaining in each class, 
pro rata to the total pounds of skim milk remaining in each class in all 
fluid milk plants of the receiving handler:
    (i) The pounds of skim milk in receipts of fluid milk products from 
unregulated supply plants that were not subtracted pursuant to 
paragraphs (a)(7)(vi) and (a)(8) (i) and (ii) of this section; and
    (ii) (A) The pounds of skim milk in receipts of fluid milk products 
in bulk from an other order plant(s), in excess in each case of similar 
transfers to the same plant, that were not subtracted pursuant to 
paragraph (a)(8)(iii) of this section;
    (B) Should such proration result in the amount to be subtracted from 
any class exceeding the pounds of skim milk remaining in such class in 
the fluid milk plant at which such skim milk was received, the pounds of 
skim milk in such class shall be increased to the amount to be 
subtracted and the

[[Page 414]]

pounds of skim milk in the other class shall be decreased a like amount. 
In such case the utilization of milk at other fluid milk plant(s) of 
such handler shall be adjusted in the reverse direction by an identical 
amount in sequence beginning with the nearest other fluid milk plant of 
such handler at which such adjustment can be made;
    (12) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from other fluid milk plants according to the 
classification of such products pursuant to Sec. 1044.42(a); and
    (13) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(13) of this section and the 
corresponding step of paragraph (b) of this section.
[58 FR 27835, May 11, 1993]

                             Minimum Prices



Sec. 1044.50  Class prices.

    Subject to the provisions of Sec. 1044.53, the class prices per 
hundredweight for the month shall be as follows:
    (a) Class I price. From the effective date hereof, the Class I price 
in Zone 1 shall be the basic formula price for the second preceding 
month plus $1.15. For plants located in Zone 1(a) the price shall be the 
price specified for Zone 1 less 10 cents; for plants located in Zone 2 
the price shall be the price specified for Zone 1 plus 20 cents. Through 
April 30, 1988, and thereafter until amended, the differential value for 
Zone 2 shall be $1.35 and for plants located outside the marketing area 
and west of Lake Michigan, the price (subject to Sec. 1044.53) shall be 
that specified for Zone 1 and for plants located outside the marketing 
area and east of Lake Michigan, the price (subject to Sec. 1044.53) 
shall be that specified for Zone 2.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
[30 FR 213, Jan. 8, 1965, as amended at 51 FR 12832, Apr. 16, 1986. 
Redesignated and amended at 58 FR 27837, May 11, 1993; 58 FR 63288, Dec. 
1, 1993; 60 FR 6609, Feb. 2, 1995]



Sec. 1044.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1044.62 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.

[[Page 415]]

    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Merchantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18964, Apr. 14, 1995]



Sec. 1044.52  [Reserved]



Sec. 1044.53  Handler location adjustments.

    (a) For milk received at a fluid milk plant located outside the 
marketing area, west of Lake Michigan and more than 50 miles from the 
nearer of the City Hall in Ironwood, Michigan, or the City Hall in Iron 
Mountain, Michigan, the applicable Zone 1 price for Class I milk shall 
be reduced 10 cents, plus 2 cents for each 20 miles or fraction thereof 
in excess of 70 miles.
    (b) For milk received at a fluid milk plant located outside the 
marketing area, east of Lake Michigan, and more than 50 miles from the 
City Hall in St. Ignace, Michigan, the applicable Zone 2 price for Class 
I milk shall be reduced 10 cents, plus 2 cents for each 20 miles or 
fraction thereof in excess of 70 miles.
    (c) Any distance used to determine location adjustments shall be the 
shortest hard surfaced highway distance as determined by the market 
administrator.
[27 FR 4052, Apr. 28, 1962]



Sec. 1044.54  Equivalent price provision.

    Whenever the provisions of this part require the market 
administrator to use a specific price (or prices) for milk or any milk 
product for the purpose of

[[Page 416]]

determining minimum class prices or for any other purpose and the 
specified price is not reported or published, the market administrator 
shall use a price determined by the Secretary to be equivalent to or 
comparable with, the price specified.
[27 FR 4052, Apr. 28, 1962]

                 Handler's Obligation and Uniform Price



Sec. 1044.60  Computation of the net obligation of each handler.

    The net obligation of each handler at fluid milk plant(s) shall be 
computed by the market administrator as follows:
    (a) Multiply the quantity of producer milk in each class, as 
computed pursuant to Sec. 1044.44(c), by the applicable class prices;
    (b) Add the amount obtained from multiplying the overage deducted 
from each class pursuant to Sec. 1044.44(a)(13) and the corresponding 
step of Sec. 1044.44(b) by the applicable class prices;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price for 
the current month by the lesser of:
    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1044.44(a)(9) and the corresponding step of 
Sec. 1044.44(b); or
    (2) The hundredweight of skim milk and butterfat remaining in Class 
III (exclusive of shrinkage) after computations pursuant to 
Sec. 1044.44(a)(11)(i) and the corresponding step of Sec. 1044.44(b) for 
the preceding month; and
    (d) Add or subtract, as the case may be, the amount necessary to 
correct errors in receipts or utilization for previous months as 
disclosed by audit by the market administrator.
[29 FR 10869, July 30, 1964, as amended at 58 FR 27838, May 11, 1993]



Sec. 1044.61  Computation of uniform price.

    For each month the market administrator shall compute the uniform 
price for each handler as follows:
    (a) Add the value obtained pursuant to Sec. 1044.60;
    (b) Add the value of the handler's associated producer milk at the 
Class II price for milk of 3.5 percent butterfat content;
    (c) Add if a deduction was made or subtract if an addition was made, 
in computing the uniform price for such handler to the nearest cent for 
the preceding month, the amount of such adjustment;
    (d) Add an amount equal to the sum of the producer location 
deductions to be made pursuant to Sec. 1044.63; and
    (e) Divide the resulting amount by the handler's total hundredweight 
of producer milk and associated producer milk. The quotient, rounded to 
the nearest cent, shall be the handler's uniform price.
[28 FR 4751, May 11, 1963, as amended at 55 FR 53281, Dec. 28, 1990]



Sec. 1044.62  Butterfat differential.

    The applicable uniform prices to be paid pursuant to Sec. 1044.70 
shall be increased or decreased, for each one-tenth of one percent 
butterfat variation from 3.5 percent by a butterfat differential, 
rounded to the nearest one-tenth cent, which 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, adjust 
pursuant to Sec. 1044.51 (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.
[60 FR 18964, Apr. 14, 1995]



Sec. 1044.63  Producer location differentials.

    For each handler operating two or more fluid milk plants at which 
different Class I prices are applicable pursuant to Sec. 1044.50 or 
Sec. 1044.53, the uniform price pursuant to Sec. 1044.61 at each such 
plant shall be reduced by the amount that its applicable Class I price 
is less than the highest Class I price applicable at such handler's 
fluid milk plants during the month.
[28 FR 4752, May 11, 1963, as amended at 30 FR 213, Jan. 8, 1965; 58 FR 
27838, May 11, 1993]

[[Page 417]]

                            Payment for Milk



Sec. 1044.70  Time and method of payment.

    (a) Except as provided in paragraph (b) or (c) of this section, on 
or before the 15th day after the end of each month each handler who 
received milk from producers shall pay for milk received during such 
month to each producer for milk received from him the uniform price as 
provided in Sec. 1044.61 adjusted by the butterfat differential pursuant 
to Sec. 1044.62 and the location adjustment pursuant to Sec. 1044.63.
    (b)(1) Upon receipt of a written request from a cooperative 
association which the Secretary determines is authorized by its members 
to collect payment for their milk and receipt of a written promise to 
reimburse the handler the amount of any actual loss incurred by him 
because of any claim on the part of the association, each handler shall 
pay to the cooperative association on or before the 13th day of each 
month, in lieu of payments pursuant to paragraph (a) of this section, an 
amount equal to the gross sum due for all milk received from certified 
members, less amount owing by each member-producer to the handler for 
supplies purchased from him on prior written order or as evidenced by a 
delivery ticket signed by the producer and submitted to the cooperative 
association on or before the 13th day of each month, written information 
which shows for each such member-producer:
    (i) The total pounds of milk received from him during the preceding 
month,
    (ii) The total pounds of butterfat contained in such milk.
    (iii) The number of days on which milk was received, and
    (iv) The amounts withheld by the handler in payment for supplies 
sold. The foregoing payment and submission of information shall be made 
with respect to milk of each producer whom the cooperative association 
certifies is a member, which is received on and after the first day of 
the month next following receipt of such certification through the last 
day of the month next preceding receipt of notice from the cooperative 
association of a termination of membership or until the original request 
is rescinded in writing by the association.
    (2) A copy of each such request, promise to reimburse, and a 
certified list of members shall be filed simultaneously with the market 
administrator by the association and shall be subject to verification at 
his discretion, through audit of the records of the cooperative 
association pertaining thereto. Exceptions, if any, shall be made by 
written notice to the market administrator, and shall be subject to his 
determination.
    (c) Each handler shall make payment to a cooperative association for 
milk received from the fluid milk plant of such cooperative association 
on or before the 10th day after the end of the month in which it was 
received, at not less than the applicable class prices.
    (d) On or before the 15th day after each month of December through 
June, each handler shall remit to the market administrator for payment 
to associated producers, an amount obtained by multiplying the quantity 
of his associated producer milk for the month by the difference between 
his uniform price and the Class II price: Provided, That remittances to 
the market administrator pursuant to this paragraph shall be maintained 
by him in a separate fund out of which he shall make payments to 
associated producers on or before the 17th day after each month of 
December through June.
[27 FR 4053, Apr. 28, 1962, as amended at 28 FR 4752, May 11, 1963]



Sec. 1044.71  Expense of administration.

    For the pro rata share of the expense of administration of the 
order, each handler shall pay to the market administrator on or before 
the 13th day after the end of the month five cents per hundredweight or 
such lesser amount as the Secretary may prescribe, with respect to:
    (a) Producer milk (including such handler's own production); and
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1044.43(e) and other source milk allocated to Class 
I pursuant to

[[Page 418]]

Sec. 1044.44(a)(7) and (a)(11)(i) and the corresponding steps of 
Sec. 1044.44(b).
[58 FR 27838, May 11, 1993]



Sec. 1044.72  Marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments pursuant to Sec. 1044.70 for milk received 
from each producer (excluding milk of such handler's own production) at 
a plant not operated by a cooperative association of which such producer 
is a member, shall deduct 6 cents per hundredweight, or such amount not 
exceeding 6 cents per hundredweight, as the Secretary may prescribe, and 
on or before the 13th day after the end of each month shall pay such 
deductions to the market administrator. Such monies shall be used by the 
market administrator to verify weights, samples and tests of milk 
received from producers and to provide producers with market 
information, such services to be performed by the market administrator 
or by an agent engaged by and responsible to him.
    (b) In the case of producers whose milk is received at a fluid milk 
plant not operated by a cooperative association of which such producers 
are members, and for whom a cooperative association is actually 
performing the services described in paragraph (a) of this section, as 
determined by the Secretary, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
from payments required pursuant to Sec. 1044.70 as may be authorized by 
such producers, and pay such deductions on or before the 13th day after 
the end of the month to the cooperative association rendering such 
services of which such producers are members.
    (c) In making payments to associated producers pursuant to the 
proviso of Sec. 1044.70(d), the market administrator shall deduct the 
applicable amounts prescribed for producer milk in paragraphs (a) and 
(b) of this section for such milk.
[27 FR 4052, Apr. 28, 1962, as amended at 28 FR 4752, May 11, 1963]



Sec. 1044.73  Errors in payment.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made for any 
reason, which result in monies due:
    (a) To the market administrator from such handler,
    (b) To such handler from the market administrator, or
    (c) To any producer or cooperative association from such handler, 
the market administrator shall promptly notify such handler of any such 
amount due; and payment thereof shall be made on or before the next date 
for making payment set forth in the provision under which such error 
occurred, following the 5th day after such notice.
[27 FR 4053, Apr. 28, 1962]



Sec. 1044.74  Overdue accounts.

    Any unpaid obligation of a handler or of the market administrator 
pursuant to Secs. 1044.71, 1044.72 and 1044.73 shall be increased one-
half of one percent on the first day of the month next following the due 
date of such obligation and on the first day of each month thereafter 
until such obligation is paid.
[27 FR 4053, Apr. 28, 1962]

                        Application of Provisions



Sec. 1044.80  Producer-handler exemption.

    Only Secs. 1044.33 and 1000.5 of this chapter, as incorporated by 
Sec. 1044.1, shall apply to a producer handler.
[36 FR 9850, May 29, 1971]



Sec. 1044.81  Exempt handler.

    Only Secs. 1044.33 and 1000.5 of this chapter, as incorporated by 
Sec. 1044.1, shall apply to a handler who operates a fluid milk plant, 
of the type specified in Sec. 1044.8(a), located outside the marketing 
area from which an average of less than 600 pounds of fluid milk 
products per day are disposed of during the month in the marketing area 
on route(s).
[36 FR 9850, May 29, 1971]



Sec. 1044.82  Handlers subject to other Federal orders.

    The provisions of this part shall not apply to a handler with 
respect to the

[[Page 419]]

operation of a fluid milk plant during any month in which the milk at 
such plant would be subject to the classification, pricing and payment 
provisions of another marketing agreement or order issued pursuant to 
the Act and the disposition of fluid milk products, except filled milk, 
in the other Federal marketing area exceeds that in the Michigan Upper 
Peninsula marketing area: Provided, That the operator of a fluid milk 
plant which is exempted from the provisions of this part pursuant to 
this section shall, with respect to the total receipts and utilization 
or disposition of skim milk and butterfat at such plant, make reports to 
the market administrator at such time and in such manner as the market 
administrator may require and allow verification of such reports by the 
market administrator.
[34 FR 18650, Nov. 22, 1969]



PART 1046--MILK IN LOUISVILLE-LEXINGTON-EVANSVILLE MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1046.1  General provisions.

                               Definitions

1046.2  Louisville-Lexington-Evansville marketing area.
1046.3  Route disposition.
1046.4  [Reserved]
1046.5  City plant.
1046.6  Country plant.
1046.7  Pool plant.
1046.8  Nonpool plant.
1046.9  Handler.
1046.10  Producer-handler.
1046.11  [Reserved]
1046.12  Producer.
1046.13  Producer milk.
1046.14  Other source milk.
1046.15  Fluid milk product.
1046.16  Fluid cream product.
1046.17  Filled milk.
1046.18  Cooperative association.
1046.19  Commercial food processing establishment.

                             Handler Reports

1046.30  Reports of receipts and utilization.
1046.31  Payroll reports.
1046.32  Other reports.

                         Classification of Milk

1046.40  Classes of utilization.
1046.41  Shrinkage.
1046.42  Classification of transfers and diversions.
1046.43  General classification rules.
1046.44  Classification of producer milk.
1046.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1046.50  Class prices.
1046.51  Basic formula price.
1046.52  Plant location adjustments for handlers.
1046.53  Announcement of class prices.
1046.54  Equivalent price.

                              Uniform Price

1046.60  Handler's value of milk for computing uniform price.
1046.61  Computation of uniform price (including weighted average 
          price).
1046.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1046.70  Producer-settlement fund.
1046.71  Payments to the producer-settlement fund.
1046.72  Payments from the producer-settlement fund.
1046.73  Payments to producers and to cooperative associations.
1046.74  Butterfat differential.
1046.75  Plant location adjustments for producers and on nonpool milk.
1046.76  Payments by handler operating a partially regulated 
          distributing plant.
1046.77  Adjustment of accounts.
1046.78  Charges on overdue accounts.

                       Marketwide Service Payments

1046.80  Transportation credit balancing fund.
1046.81  Payments to the transportation credit balancing fund.
1046.82  Payments from the transportation credit balancing fund.

        Administrative Assessment and Marketing Service Deduction

1046.85  Assessment for order administration.
1046.86  Deduction for marketing services.

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

    Source: 39 FR 15427, May 3, 1974, unless otherwise noted.

[[Page 420]]



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1046.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1046.2  Louisville-Lexington-Evansville marketing area.

    The Louisville-Lexington-Evansville marketing area hereinafter 
called the marketing area, means all the territory geographically within 
the counties listed below and all territory wholly or partly therein 
occupied by municipal corporations and institutions owned or operated by 
Federal, State or local governments:

                            Indiana Counties

    Clark, Crawford, Daviess, Dubois, Floyd, Gibson, Harrison, Knox, 
Martin, Orange, Perry, Pike, Posey, Spencer, Vanderburgh, Warrick, 
Washington.

                            Kentucky Counties

    Adair, Anderson, Bourbon, Boyle, Breckinridge, Bullit, Butler, 
Casey, Clark, Clinton, Cumberland, Daviess, Edmonson, Fayette, Franklin, 
Garrard, Grayson, Green, Hancock, Hardin, Hart, Henderson, Henry, 
Hopkins, Jefferson, Jessamine, Larue, Lincoln, Logan, Madison, Marion, 
McLean, Meade, Mercer, Muhlenberg, Nelson, Ohio, Oldham, Russell, Scott, 
Shelby, Spencer, Taylor, Union, Washington, Wayne, Webster, Woodford.
[39 FR 15427, May 3, 1974, as amended at 61 FR 1149, Jan. 17, 1996]



Sec. 1046.3  Route disposition.

    Route disposition means delivery (including disposition from a plant 
store or from a distribution point and distribution by a vendor) of a 
fluid milk product(s) classified as Class I milk to a wholesale or 
retail outlet(s) other than to a milk or filled milk plant(s). A 
delivery through a distribution point shall be attributed to the plant 
from which the Class I milk is moved through a distribution point to 
wholesale or retail outlets without intermediate movement to another 
milk or filled milk plant.



Sec. 1046.4  [Reserved]



Sec. 1046.5  City plant.

    City plant means a plant where milk is processed or packaged and 
from which there is route disposition in the marketing area of fluid 
milk products permitted to be labeled as ``Grade A'' by a duly 
constituted health authority.



Sec. 1046.6  Country plant.

    Country plant means a milk plant, other than a city plant, which is 
approved by a duly constituted health authority to supply milk or skim 
milk to a city plant(s) for disposition as ``Grade A'' milk and at which 
milk is received during the month from persons described in 
Sec. 1046.12(a)(1) or from a handler described in Sec. 1046.9(c).



Sec. 1046.7  Pool plant.

    Except as provided in paragraph (e) of this section, pool plant 
means:
    (a) A city plant which meets the following requirements:
    (1) The total quantity of fluid products, except filled milk, 
disposed of in Class I is not less than 50 percent in each of the months 
of August through November and January and February, and is not less 
than 40 percent in each of the other months, of the total quantity of 
fluid milk products, except filled milk, physically received at such 
plant or diverted therefrom pursuant to Sec. 1046.13; and
    (2) There is an amount of route disposition in the marketing area, 
except filled milk, equal to not less than an average of 13,500 pounds 
per day or not less than 10 percent of the fluid milk products, except 
filled milk, received during the current month from persons described in 
Sec. 1046.12(a)(1), from a handler described in Sec. 1046.9(c), and from 
country plants.
    (b) A country plant which delivers milk or skim milk to city plants 
during any of the months of August through November and January and 
February equal to not less than 50 percent, and during other months of 
the year equal to not less than 40 percent,

[[Page 421]]

of the milk from persons described in Sec. 1046.12(a)(1) and from 
handlers described in Sec. 1046.9(c) that is physically received at such 
country plant (except by diversion from other plants) or diverted 
therefrom pursuant to Sec. 1046.13. In determining whether a country 
plant has met the required shipments, milk or skim milk transferred or 
diverted from a city plant to a country plant (or a nonpool plant 
located at such site or a nonpool plant operated by the same company) 
that receives milk or skim milk as a transfer or diversion from such 
city plant shall be offset against the country plant's transfer or 
diversion from such city plant to the extent that such milk or skim milk 
movements by the city plant exceed 5 percent of the milk or skim milk 
transferred or diverted from the country plant. The operator of a 
country plant may include milk diverted pursuant to Sec. 1046.13(b) from 
such plant to a city plant in meeting up to one-half of the shipping 
percentage(s) specified in this paragraph.
    (c) Except for March through July 1991 a country plant that was a 
pool plant pursuant to paragraph (b) of this section each month during 
the preceding August through February shall continue to be a pool plant 
during each of the months of March through July, unless the operator of 
such plant notifies the market administrator in writing on or before 
February 15 of withdrawal of the plant from the pool for the months of 
March through July next following. A country plant that qualified as a 
pool plant during each of the months of September 1990 through February 
1991 shall be a pool plant for the months of March through July 1991, 
unless the operator of such plant notifies the market administrator in 
writing on or before February 15 of withdrawal of the plant from the 
pool for the months of March through July next following.

    (d) A country plant which is operated by a cooperative association 
if (1) two-thirds or more of the milk from persons described in 
Sec. 1046.12(a)(1) who are members of such association is delivered 
during the month from farms to the pool plant(s) of other handlers or 
transferred by such association from its plant to the pool plant(s) of 
other handlers or (2) such plant qualified as a pool plant pursuant to 
paragraph (d)(1) of this section during each of the immediately 
preceding consecutive months of October through February.
    (e) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) Unless determined otherwise by the Secretary, a milk plant 
during any month in which the milk at such plant would be subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act, except:
    (i) A plant that qualifies as a pool plant pursuant to paragraph 
(a), (b), (c) or (d) of this section and a greater volume of fluid milk 
products, except filled milk, is disposed of from such plant in the 
Louisville-Lexington-Evansville marketing area to other pool plants and 
to retail or wholesale outlets than in the marketing area regulated 
pursuant to such other order during the current month; and
    (ii) A plant that qualifies as a pool plant pursuant to paragraph 
(a) of this section and which also meets the pooling requirements of 
another Federal order on the basis of route disposition if the plant is 
located in the Louisville-Lexington-Evansville marketing area and this 
order's Class I price applicable at the plant is not less than the Class 
I price that would be applicable at the plant if regulated under the 
order for the Federal order marketing area in which the plant has the 
greatest route disposition; and
    (3) A plant that qualifies as a pool plant pursuant to paragraph (a) 
of this section and which also meets the requirements of a fully 
regulated plant pursuant to the provisions of another Federal order on 
the basis of distribution in such other marketing area and from which 
the Secretary determines route disposition, except filled milk, during 
the month in this marketing area is greater than route disposition in 
such other marketing area but which plant is, nevertheless, fully 
regulated under such other Federal order.
[39 FR 15427, May 3, 1974, as amended at 40 FR 43716, Sept. 23, 1975; 47 
FR 56487, Dec. 17, 1982; 53 FR 21627, June 9, 1988; 56 FR 9275, Mar. 6, 
1991]

[[Page 422]]



Sec. 1046.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of an other order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
other than a producer-handler plant or an other order plant, from which 
there is route disposition in consumer-type packages or dispenser units 
in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant other than a 
producer-handler plant or an other order plant, from which fluid milk 
products are shipped to a pool plant.



Sec. 1046.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk diverted by it 
in accordance with the conditions set forth in Sec. 1046.13;
    (c) Any cooperative association with respect to the milk which is 
delivered for the account of the cooperative association from the farm 
to the pool plant(s) of another handler in a tank truck owned by, 
operated by, or under contract to such cooperative association if the 
cooperative association has notified in writing prior to delivery both 
the market administrator and the handler to whom the milk is delivered 
that it wishes to be the handler for such milk. Such milk shall be 
considered as having been received by the cooperative association at the 
location of the plant to which it was delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler; and
    (f) Any person who operates an other order plant described in 
Sec. 1046.7(e).
[39 FR 15427, May 3, 1974, as amended at 52 FR 17748, May 12, 1987]



Sec. 1046.10  Producer-handler.

    Producer-handler means any person who processes and packages milk 
from his own farm production, distributes any portion of such milk as 
route disposition in the marketing area and receives no fluid milk 
products from other dairy farmers or nonpool plants and no milk products 
other than fluid milk products for reconstitution into fluid milk 
products: Provided, That such person provides proof satisfactory to the 
market administrator that: (a) The care and management of all of the 
dairy animals and other resources necessary to produce the entire amount 
of fluid milk handled (excluding transfers from pool plants) is the 
personal enterprise of and at the personal risk of such person, and (b) 
the operation of the processing and distributing business is the 
personal enterprise of and at the personal risk of such person.



Sec. 1046.11  [Reserved]



Sec. 1046.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person:
    (1) Who produces milk on a dairy farm which is approved by a duly 
constituted health authority for the production of milk for fluid 
disposition (this definition shall include approval of milk by the 
authority to administer the regulations governing the quality of milk 
acceptable to agencies of the United States Government for fluid 
consumption in its institutions or bases located in the marketing area 
during any month in which such milk is disposed of to such institutions 
or bases); and
    (2) Whose milk so produced pursuant to paragraph (a)(1) of this 
section is received at a pool plant or by a handler described in 
Sec. 1046.9(c) or diverted in accordance with the conditions set forth 
in Sec. 1046.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;

[[Page 423]]

    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1046.44(a)(8)(iii) and the corresponding step of Sec. 1046.44(b);
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order; and
    (4) A person with respect to any milk produced by him that is 
received at or diverted from a country plant in any month of March 
through August, unless at least 60 days' production from the farm of 
such person was producer milk during the preceding September through 
February or unless such country plant is a pool plant for the month 
pursuant to Sec. 1046.7 (b) or (d).
[39 FR 15427, May 3, 1974, as amended at 40 FR 43716, Sept. 23, 1975]



Sec. 1046.13  Producer milk.

    Producer milk means that skim milk and butterfat contained in milk 
of a producer which is:
    (a) Received from producers at a pool plant for the account of the 
person operating such plant. When milk is withdrawn at more than one 
pool plant from the same load delivered by a farm tank pickup truck, the 
entire load shall be deemed to have been received at the first pool 
plant at which any of such milk was withdrawn unless;
    (1) There is an agreement among the operators of the pool plants 
receiving such milk providing for other receiving handler(s) to report 
and pay for all or a portion of such milk; or
    (2) The milk involved is that which is delivered to pool plants for 
the account of a handler described in Sec. 1046.9(c).
    (b) Diverted by a handler from a pool plant pursuant to Sec. 1046.7 
(a), (b), or (c) to another pool plant for any number of days of the 
month. Milk so diverted shall be deemed to have been received by the 
diverting handler:
    (1) At the location of the pool plant from which diverted if no 
location adjustment or the same location adjustment is applicable at 
both the plant from which diverted and the plant to which diverted; and
    (2) At the location of the pool plant to which diverted if the 
location adjustment applicable pursuant to Sec. 1046.52 is different at 
the plant from which diverted than at the plant to which diverted.
    (c) Diverted by a handler from a pool plant to a nonpool plant that 
is not a producer-handler plant, subject to the following conditions:
    (1) Such milk shall be accounted for as received by the diverting 
handler at the location of the nonpool plant to which diverted;
    (2) Not less than 2 days' production of a producer whose milk is 
diverted to a nonpool plant is physically received at a pool plant 
during the month;
    (3) Producer milk pursuant to this paragraph shall not include the 
milk of any person during September through February on days that it is 
diverted by a handler to a nonpool plant in excess of 22 days (11 days 
in the case of every-other-day delivery) during the month; and
    (4) Any milk diverted in excess of the limits prescribed in 
paragraph (c)(3) of this section shall not be producer milk. The 
diverting handler shall designate the farmer deliveries that shall not 
be producer milk. If the handler fails to make such designation, no milk 
diverted by such handler pursuant to this paragraph shall be producer 
milk.
    (d) Received by a handler described in Sec. 1046.9(c).
[39 FR 15427, May 3, 1974, as amended at 40 FR 43716, Sept. 23, 1975; 40 
FR 45158, Oct. 1, 1975; 41 FR 47458, Oct. 29, 1976; 47 FR 56487, Dec. 
17, 1982; 53 FR 21627, June 9, 1988]



Sec. 1046.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1046.40(b)(1) from any source other than producers, handlers 
described in Sec. 1046.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1046.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1046.40(b)(1), and products produced at

[[Page 424]]

the plant during the same month) from any source which are reprocessed, 
converted into, or combined with another product in the plant during the 
month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1046.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1046.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27838, May 11, 1993]



Sec. 1046.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27838, May 11, 1993]



Sec. 1046.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1046.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales of or marketing milk or its 
products for its members.



Sec. 1046.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1046.13, 1046.41 and 1046.52.
[58 FR 27838, May 11, 1993]

                             Handler Reports



Sec. 1046.30  Reports of receipts and utilization.

    On or before the 8th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:

[[Page 425]]

    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1046.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order, except Federal Orders 1005, 1007, and 1011, for which a 
transportation credit is requested pursuant to Sec. 1046.82, including 
the date that such milk was received;
    (6) Receipts of producer milk described in Sec. 1046.82(c)(2), 
including the identity of the individual producers whose milk is 
eligible for the transportation credit pursuant to that paragraph and 
the date that such milk was received;
    (7) For handlers submitting transportation credit requests, 
transfers of bulk milk to nonpool plants, including the dates that such 
milk was transferred;
    (8) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1046.40(b)(1); and
    (9) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1046.9 (b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers;
    (2) The utilization or disposition of all such receipts; and
    (3) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec. 1046.82, all of the 
information required in paragraphs (a)(5), (a)(6), and (a)(7) of this 
section.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.
[39 FR 15427, May 3, 1974, as amended at 61 FR 41494, Aug. 9, 1996; 62 
FR 39743, July 23, 1997]



Sec. 1046.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described Sec. 1046.9 (a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1046.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1046.32  Other reports.

    (a) Each handler shall report to the market administrator, as soon 
as possible after first receiving milk from any producer, the name and 
address of such producer, the date upon which such milk was first 
received, and the plant at which such milk was received.
    (b) On or before the 10th day after the request of the market 
administrator, each handler shall submit a schedule of rates which are 
charged and paid for the transportation of milk from the farm of each 
producer to such handler's plant. Changes in such schedule of

[[Page 426]]

rates and the effective dates thereof shall be reported to the market 
administrator within 10 days.
    (c) On or before the 20th day after the end of each month, each 
handler described in Sec. 1046.9 (a), (b), and (c) shall report to the 
market administrator any adjustments to transportation credit requests 
as reported pursuant to Sec. 1046.30(a) (5), (6), and (7).
    (d) In addition to the reports required pursuant to paragraphs (a) 
and (b) of this section and Secs. 1046.30 and 1046.31, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.
    (d) [Reserved].
[39 FR 15427, May 3, 1974, as amended at 48 FR 30346, July 1, 1983; 61 
FR 69018, Dec. 31, 1996; 62 FR 39743, July 23, 1997]

                         Classification of Milk



Sec. 1046.40  Classes of utilization.

    Except as provided in Sec. 1046.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1046.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;

[[Page 427]]

    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1046.15 and the fluid 
cream product definition pursuant to Sec. 1046.16; and
    (7) In shrinkage assigned pursuant to Sec. 1046.41(a) to the 
receipts specified in Sec. 1046.41(a)(2) and in shrinkage specified in 
Sec. 1046.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27838, May 11, 1993, as amended at 58 FR 63288, Dec. 1, 1993]



Sec. 1046.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1046.30, the market administrator 
shall determine the following:
    (a) The total shrinkage of skim milk and butterfat, respectively, at 
each pool plant, which shall be assigned pro rata to:
    (1) The quantity of skim milk and butterfat, respectively, that is 
equal to 50 times the maximum amount that may be computed pursuant to 
paragraph (b) of this section; and
    (2) The quantity of skim milk and butterfat, respectively, in other 
source milk received in bulk form as fluid milk products or bulk fluid 
cream products, excluding any such receipts used in the computations 
pursuant to paragraphs (b) (5) and (6) of this section;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1046.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph (b)(2) 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;

[[Page 428]]

    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1046.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1046.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant or by a 
handler described in Sec. 1046.9(c) to another handler's pool plant 
shall be classified as Class I milk unless both handlers request the 
same classification in another class. In either case, the classification 
of such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1046.44(a)(12) and the corresponding 
step of Sec. 1046.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1046.44(a)(7) 
or the corresponding step of Sec. 1046.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk;
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1046.44(a) 
(11) or (12) or the corresponding steps of Sec. 1046.44(b), the skim 
milk or butterfat, so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or divertee-plant; and
    (4) If a specified classification is not claimed by both handlers in 
the case of transfers or diversions by such a cooperative association, 
such skim milk and butterfat shall be classified pro rata to the 
respective amounts remaining in each class at the pool plant of the 
transferee- or divertee-handler after making the assignments pursuant to 
Sec. 1046.44(a)(12) and the corresponding step of Sec. 1046.44(b), and 
after the assignment of milk for which a specified classification has 
been claimed pursuant to this paragraph.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as

[[Page 429]]

described in paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1046.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1046.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence;
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;

[[Page 430]]

    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[39 FR 15427, May 3, 1974, as amended at 58 FR 27839, May 11, 1993]



Sec. 1046.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1046.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1046.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1046.9(b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1046.40, 
1046.41, and 1046.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1046.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to

[[Page 431]]

the reconstituted portion of labeled reconstituted fluid milk products, 
on a pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1046.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1046.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[39 FR 15427, May 3, 1974, as amended at 58 FR 27839, May 11, 1993; 58 
FR 63288, Dec. 1, 1993]



Sec. 1046.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1046.9(a) for each of his pool plants separately and of each 
handler described in Sec. 1046.9(b) and (c) by allocating the handler's 
receipts of skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1046.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1046.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1046.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1046.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1046.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form

[[Page 432]]

of an unconcentrated fluid milk product) and, if paragraph (a)(5) of 
this section applies, packaged inventory at the beginning of the month 
of products specified in Sec. 1046.40(b)(1) that was not subtracted 
pursuant to paragraphs (a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor plant; 
and
    (vii) Receipts of milk from a dairy farmer described in 
Sec. 1046.12(b)(4);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a) (2)(i), and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1046.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1046.40(b)(1) in inventory 
at the beginning of the

[[Page 433]]

month that were not subtracted pursuant to paragraphs (a)(2)(ii), 
(a)(5), and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this paragraph exceed the pounds of 
skim milk remaining in such classes, the pounds of skim milk in Class II 
and Class III combined shall be increased (increasing as necessary Class 
III and then Class II to the extent of available utilization in such 
classes at the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1046.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;

[[Page 434]]

    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraphs (a)(12)(i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant or a handler described in 
Sec. 1046.9(c) according to the classification of such products pursuant 
to Sec. 1046.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage.''
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 15427, May 3, 1974, as amended at 39 FR 27684, July 31, 1974; 40 
FR 43716, Sept. 23, 1975; 58 FR 27839, May 11, 1993]



Sec. 1046.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1046.44 (a)(12) and the 
corresponding step of Sec. 1046.44(b), estimate and publicly announce 
the utilization (to the nearest whole percentage) in each class during 
the month, of skim milk and butterfat, respectively, in producer milk of 
all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1046.43(d) and Sec. 1046.44 on 
the basis of such report (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report

[[Page 435]]

by the receiving handler, and, as necessary, any changes in such 
allocation arising from the verification of such report.
    (d) On or before the 15th day after the end of each month, report to 
each cooperative association, which so requests, with respect to milk 
delivered by such association or by its members to each handler during 
the month:
    (1) The percentage of such receipts classified in each class; and 
(2) the percentage relationship of such receipts to the total pounds of 
Class I milk available to assign to such receipts exclusive of the Class 
I milk disposed of by such handler to the pool plant(s) of other 
handlers and to nonpool plants. For the purpose of these reports, the 
milk received from such association shall be treated on a pro rata basis 
of the total producer milk received by such handler during the month.
[39 FR 15427, May 3, 1974, as amended at 58 FR 27840, May 11, 1993]

                              Class Prices



Sec. 1046.50  Class prices.

    Subject to the provisions of Sec. 1046.52, the class prices for the 
month per hundredweight of milk containing 3.5 percent butterfat shall 
be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $2.11.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
[39 FR 15427, May 3, 1974, as amended at 46 FR 43379, Aug. 28, 1981; 51 
FR 12832, Apr. 16, 1986; 58 FR 63288, Dec. 1, 1993; 60 FR 6609, Feb. 2, 
1995]



Sec. 1046.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1046.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average

[[Page 436]]

for the month of the Western Dry Buttermilk price, as reported by the 
Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18964, Apr. 14, 1995]



Sec. 1046.52  Plant location adjustments for handlers.

    (a) For milk received from producers or from a handler described in 
Sec. 1046.9(c) at a plant and which is classified as Class I milk 
subject to the limitations pursuant to paragraph (b) of this section, 
the Class I price shall be adjusted as follows:
    (1) For such milk that is physically received at plants located in 
the Kentucky counties of Bell, Breathitt, Caldwell, Christian, Clay, 
Harlan, Hopkins, Knott, Knox, Laurel, Leslie, Letcher, Logan, Lyon, 
McCreary, Muhlenberg, Perry, Pulaski, Todd, Trigg and Whitley, the Class 
I price shall be increased by a location adjustment of 15 cents;
    (2) For such milk that is physically received at plants located in 
the Kentucky counties of Ballard, Calloway, Carlisle, Fulton, Graves, 
Hickman, Livingston, Marshall and McCracken and the Missouri counties of 
Mississippi, New Madrid, Pemiscot and Scott, the Class I price shall be 
increased by a location adjustment of 28 cents;
    (3) For such milk that is physically received at plants located east 
of the Mississippi River and south of the northern boundary of Tennessee 
or the northern boundary of North Carolina, the Class I price shall be 
increased by a location adjustment of 41 cents;
    (4) For such milk that is physically received at plants located in 
the marketing area or the state of Kentucky and outside the areas 
specified in paragraph (a)(1), (2), or (3) of this section, no location 
adjustment shall apply; and
    (5) For such milk that is physically received at plants located 
outside the areas specified in paragraph (a)(1), (2), (3), or (4) of 
this section, and 85 miles or more from the City Halls in Louisville and 
Lexington, Kentucky, and Evansville, Indiana, by the shortest hard-
surfaced highway distance as determined by the market administrator, the 
Class I price shall be reduced by a location adjustment of 2.5 cents for 
each 10 miles or fraction thereof that such plant is from the City Hall 
in Louisville, Lexington, or Evansville, whichever is nearest.
    (b) For purposes of calculating such adjustment, transfers between 
pool

[[Page 437]]

plants shall be assigned to that Class I disposition at the transferee-
plant which is in excess of the sum of receipts at such plant from 
producers and handlers described in Sec. 1046.9(c), and the volume 
assigned as Class I to receipts from other order plants and unregulated 
supply plants, such assignment to be made first to transferor-plants at 
which no location adjustment credit is applicable and then in sequence 
beginning with the plant at which the least location adjustment would 
apply.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[39 FR 15427, May 3, 1974, as amended at 51 FR 26226, July 22, 1986; 52 
FR 5072, Feb. 19, 1987]



Sec. 1046.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6609, Feb. 2, 1995]



Sec. 1046.54  Equivalent price.

    If for any reason a price quotation required by this part for 
computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price determined 
by the Secretary to be equivalent to the price which is required.

                              Uniform Price



Sec. 1046.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1046.9(b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1046.44 by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1046.44(a)(14) and the 
corresponding step of Sec. 1046.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1046.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1046.44(a)(9) and the corresponding step of Sec. 1046.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1046.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1046.44(a)(7) (i) through (iv) and (vii) and the corresponding step 
of Sec. 1046.44(b), excluding receipts of bulk fluid cream products from 
an other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1046.44(a)(7)(v) and (vi) and 
the corresponding step of Sec. 1046.44(b); and
    (f) Add the amount obtained from multiplying the Class I 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. 1046.43(d) and Sec. 1046.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1046.44(a)(11) and the corresponding steps of Sec. 1046.44(b), 
excluding such skim milk and butterfat in receipts of

[[Page 438]]

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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1046.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1046.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[39 FR 15427, May 3, 1974, as amended at 40 FR 43716, Sept. 23, 1975; 49 
FR 35931, Sept. 13, 1984; 58 FR 27840, May 11, 1993]



Sec. 1046.61  Computation of uniform price (including weighted average price).

    (a) The market administrator shall compute the weighted average 
price for each month and the uniform price for each month per 
hundredweight for milk of 3.5 percent butterfat content as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1046.60 for all handlers who filed the reports prescribed in 
Sec. 1046.30 for the month and who made the payments pursuant to 
Sec. 1046.71 for the preceding month;
    (2) Add one-half the unobligated balance in the producer-settlement 
fund;
    (3) Add an amount equal to the total value of the minus location 
adjustments and subtract an amount equal to the total value of the plus 
location adjustments computed pursuant to Sec. 1046.75;
    (4) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (i) The total hundredweight of producer milk; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1046.60(f); and
    (5) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The resulting figure, rounded to the nearest cent, shall 
be the weighted average price for each month and the uniform price.
    (b) [Reserved]
[48 FR 30346, July 1, 1983, as amended by 61 FR 41494, Aug. 9, 1996; 61 
FR 69018, Dec. 31, 1996; 62 FR 918, Jan. 7, 1997; 62 FR 39743, July 23, 
1997]



Sec. 1046.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 12th day after the end of each month the uniform price 
pursuant to Sec. 1046.61 for such month.
[39 FR 15427, May 3, 1974, as amended at 48 FR 30347, July 1, 1983; 61 
FR 69018, Dec. 31, 1996]

                            Payments for milk



Sec. 1046.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1046.71, 
1046.76, and 1046.77 subject to the provisions of Sec. 1046.78, and from 
which he shall make all payments pursuant to Secs. 1046.72 and 1046.77: 
Provided, That payments due any handler shall

[[Page 439]]

be offset by payments due from such handler.



Sec. 1046.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1046.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1046.75, of such handler's receipts of producer milk; and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1046.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[39 FR 15427, May 3, 1974, as amended at 48 FR 30347, July 1, 1983; 61 
FR 69018, Dec. 31, 1996]



Sec. 1046.72  Payments from the producer-settlement fund.

    On or before the 16th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1046.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1046.71(a)(1): Provided, That the market 
administrator shall offset any payment due any handler against payments 
due from such handler, and if the balance in the producer-settlement 
fund is insufficient to make all payments pursuant to this paragraph, 
the market administrator shall reduce uniformly such payments and shall 
complete such payments as soon as the necessary funds are available.



Sec. 1046.73  Payments to producers and to cooperative associations.

    Except as provided in paragraph (c) of this section, each handler 
shall make payment to each producer for milk received from such producer 
as follows:
    (a) On or before the last day of each month for milk received during 
the first 15 days of the month from such producer who has not 
discontinued delivery of milk to such handler, at not less than the 
Class III price for the preceding month or 90 percent of the weighted 
average price for the preceding month, whichever is higher.
    (b) On or before the 17th day of the following month, an amount 
equal to not less than the uniform price, as adjusted pursuant to 
Secs. 1046.74 and 1046.75, multiplied by the hundredweight of milk 
received from such producer during the month subject to the following 
adjustments:
    (1) Plus or minus adjustments for errors made in previous payments 
to such producer;
    (2) Minus payments made to such producer pursuant to paragraph (a) 
of this section;
    (3) Minus deductions for marketing services made pursuant to 
Sec. 1046.86; and
    (4) Minus proper deductions authorized by such producer which, in 
the case of a deduction for hauling, shall be in writing and signed by 
such producer or, in the case of members of a cooperative association 
which is marketing

[[Page 440]]

the producer's milk, by such association.
    (c)(1) Upon receipt of a written request from a cooperative 
association which the market administrator determines is authorized by 
its members to collect payment for their milk and receipt of a written 
promise to reimburse the handler the amount of any actual loss incurred 
by him because of any improper claim on the part of the cooperative 
association in lieu of payments pursuant to paragraphs (a) and (b) of 
this section, each handler shall pay to the cooperative association on 
or before the second day prior to the dates specified in paragraphs (a) 
and (b), respectively, of this section, an amount equal to the sum of 
the individual payments otherwise payable to such producers without the 
deductions provided by paragraphs (b)(2) and (3) of this section: 
Provided, That deductions for supplies authorized by such producer may 
be made. The foregoing payment shall be made with respect to milk of 
each producer whom the cooperative association certifies is a member 
effective on and after the first day of the month next following receipt 
of such certification through the last day of the month next preceding 
receipt of notice from the cooperative association of a termination of 
membership or until the original request is rescinded in writing by the 
cooperative association.
    (2) A copy of each such request, promise to reimburse and certified 
list of members shall be filed simultaneously with the market 
administrator by the cooperative association and shall be subject to 
verification at his discretion through audit of the records of the 
cooperative association pertaining thereto. Exceptions, if any, to the 
accuracy of such certification by a producer claimed to be a member, or 
by a handler, shall be made by written notice to the market 
administrator and shall be subject to his determination.
    (d) In making the payments to producers pursuant to paragraph (b) of 
this section, each handler shall furnish each producer a supporting 
statement which shall show the following:
    (1) The month and identity of the producer;
    (2) The total pounds and the average butterfat content of milk 
received from such producer;
    (3) [Reserved].
    (4) The minimum rate at which payment to the producer is required 
under the order;
    (5) The rate used in making the payment if such rate(s) is other 
than the applicable minimum rate;
    (6) The amount or rate per hundredweight and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to such producer.
    (e) In making payments to a cooperative association pursuant to 
paragraph (c) of this section, each handler shall report to such 
cooperative association for each such producer on forms approved by the 
market administrator as follows:
    (1) On or before the 20th day of the month, the total pounds of milk 
received during the first 15 days of such month;
    (2) On or before the 7th day of the following month, the total 
pounds of milk received each month, together with the butterfat content 
of such milk and the amount of deductions claimed by such handler; and
    (3) On or before the 7th day after the end of each month of March 
through June, the total pounds of base milk received.
    (f) Each handler shall pay to the cooperative association for milk 
received from it as a handler described in Sec. 1046.9(c) as follows:
    (1) On or before 2 days prior to the last day of the month for milk 
received during the first 15 days of the month, an amount computed at 
not less than the applicable rate pursuant to paragraph (a) of this 
section; and
    (2) On or before the 10th day after the end of the following month 
for milk received during the month an amount computed at not less than 
the value of such milk at the minimum prices for milk in each class, as 
adjusted by the butterfat differential specified in Sec. 1046.74 
applicable at the location of the receiving handler's pool plant and any 
transportation credit that is due the cooperative association pursuant 
to Sec. 1046.82(a), less the payment made

[[Page 441]]

pursuant to paragraph (f)(1) of this section.
[39 FR 15427, May 3, 1974, as amended at 40 FR 43717, Sept. 23, 1975; 48 
FR 30347, July 1, 1983; 61 FR 41495, Aug. 9, 1996; 61 FR 69019, Dec. 31, 
1996]



Sec.  1046.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which shall be 
0.138 times the current month's butter price less 0.0028 times the 
preceding months'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. 1046.51 (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.
[60 FR 18965, Apr. 14, 1995, as amended at 61 FR 69019, Dec. 31, 1996]



Sec. 1046.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price received at a plant shall be adjusted 
according to the location of the plant at the rates set forth in 
Sec. 1046.52; and
    (b) For purposes of computations pursuant to Secs. 1046.71 and 
1046.72 the weighted average price shall be adjusted at the rates set 
forth in Sec. 1046.52 applicable at the location of the nonpool plant(s) 
from which the milk was received, except that the adjusted weighted 
average price shall not be less than the Class III price.
[41 FR 47458, Oct. 29, 1976, as amended at 48 FR 30347, July 1, 1983; 61 
FR 69019, Dec. 31, 1996]



Sec. 1046.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1046.30(b) and 1046.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, 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
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating

[[Page 442]]

the producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1046.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plants;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1046.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1046.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1046.60(f) less the value of such other source milk 
specified in Sec. 1046.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1046.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1046.7(b) and 
(c), subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1046.30(b) and 
1046.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1046.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1046.74, for milk received at 
the plant during the month

[[Page 443]]

that would have been producer milk if the plant had been fully 
regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1046.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1046.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 15427, May 3, 1974, as amended at 58 FR 27840, May 11, 1993]



Sec. 1046.77  Adjustment of accounts.

    (a) Whenever verification by the market administrator of payments by 
any handler discloses errors made in payments to the producer-settlement 
fund pursuant to Sec. 1046.71 or to the transportation credit balancing 
fund pursuant to Sec. 1046.81, the market administrator shall promptly 
bill such handler for any unpaid amount and such handler shall, within 
15 days, make payment to the market administrator of the amount so 
billed. Whenever verification discloses that payment is due from the 
market administrator to any handler pursuant to Sec. 1046.72 or 
Sec. 1046.82, the market administrator shall make payment to such 
handler within 15 days or, in the case of the transportation credit 
balancing fund, as soon as funds become available. If a handler is due 
additional payment for a month in which payments to handlers were 
prorated pursuant to Sec. 1046.82(a), the additional payment pursuant to 
this section shall be multiplied by the final proration percentage 
computed in Sec. 1046.82(a)(2).
    (b) Whenever verification by the market administrator of the payment 
by a handler to any producer or cooperative association for milk 
received by such handler discloses payment of less than is required by 
Sec. 1046.73, the handler shall pay such balance due such producer or 
cooperative association not later than the time of making payment to 
producers or cooperative associations next following such disclosure.
[62 FR 39743, July 23, 1997]



Sec. 1046.78  Charges on overdue accounts.

    Any unpaid obligation of a handler or of the market administrator 
pursuant to Sec. 1046.71, Sec. 1046.72, Sec. 1046.73, Sec. 1046.76, 
Sec. 1046.77, Sec. 1046.81, Sec. 1046.85, or Sec. 1046.86 shall be 
increased one-half of one percent on the first of the month next 
following the due date of such obligation and on the first day of each 
month thereafter until such obligation is paid.
[39 FR 15427, May 3, 1974, as amended at 62 FR 39743, July 23, 1997]

                       Marketwide Service Payments



Sec. 1046.80  Transportation credit balancing fund.

    The market administrator shall maintain a separate fund known as the 
Transportation Credit Balancing Fund into which shall be deposited the 
payments made by handlers pursuant to Sec. 1046.81 and out of which 
shall be made the payments due handlers pursuant to Sec. 1046.82. 
Payments due a handler shall

[[Page 444]]

be offset against payments due from the handler.
[39 FR 15427, May 3, 1974, as amended at 61 FR 41495, Aug. 9, 1996]



Sec. 1046.81  Payments to the transportation credit balancing fund.

    (a) On or before the 15th day after the end of the month, each 
handler operating a pool plant and each handler specified in Sec. 1046.9 
(b) and (c) shall pay to the market administrator a transportation 
credit balancing fund assessment determined by multiplying the pounds of 
Class I producer milk assigned pursuant to Sec. 1046.44 by $0.06 per 
hundredweight or such lesser amount as the market administrator deems 
necessary to maintain a balance in the fund equal to the total 
transportation credits disbursed during the prior June-January period. 
In the event that during any month of the June-January period the fund 
balance is insufficient to cover the amount of credits that are due, the 
assessment should be based upon the amount of credits that would have 
been disbursed had the fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 5th day of the month the assessment pursuant to paragraph (a) of 
this section for the following month.
[62 FR 39744, July 23, 1997]



Sec. 1046.82  Payments from the transportation credit balancing fund.

    (a) Payments from the transportation credit balancing fund to 
handlers and cooperative associations requesting transportation credits 
shall be made as follows:
    (1) On or before the 16th day after the end of each of the months of 
July through December and any other month in which transportation 
credits are in effect pursuant to paragraph (b) of this section, the 
market administrator shall pay to each handler that received, and 
reported pursuant to Sec. 1046.30(a)(5), bulk milk transferred from 
another order plant as described in paragraph (c)(1) of this section or 
that received, and reported pursuant to Sec. 1046.30(a)(6), milk 
directly from producers' farms as specified in paragraph (c)(2) of this 
section, a preliminary amount determined pursuant to paragraph (d) of 
this section to the extent that funds are available in the 
transportation credit balancing fund. If an insufficient balance exists 
to pay all of the credits computed pursuant to this section, the market 
administrator shall distribute the balance available in the 
transportation credit balancing fund by reducing payments prorata using 
the percentage derived by dividing the balance in the fund by the total 
credits that are due for the month. The amount of credits resulting from 
this initial proration shall be subject to audit adjustment pursuant to 
paragraph (a)(2) of this section;
    (2) The market administrator shall accept adjusted requests for 
transportation credits on or before the 20th day of the month following 
the month for which such credits were requested pursuant to 
Sec. 1046.32(c). After such date, a preliminary audit will be conducted 
by the market administrator, who will recalculate any necessary 
proration of transportation credit payments for the preceding month 
pursuant to paragraph (a) of this section. Handlers will be promptly 
notified of an overpayment of credits based upon this final computation 
and remedial payments to or from the transportation credit balancing 
fund will be made on or before the next payment date for the following 
month;
    (3) Transportation credits paid pursuant to paragraph (a) (1) and 
(2) of this section shall be subject to final verification by the market 
administrator pursuant to Sec. 1046.77. Adjusted payments to or from the 
transportation credit balancing fund will remain subject to the final 
proration established pursuant to paragraph (a)(2) of this section; and
    (4) In the event that a qualified cooperative association is the 
responsible party for whose account such milk is received and written 
documentation of this fact is provided to the market administrator 
pursuant to Sec. 1046.30(c)(3) prior to the date payment is due, the 
transportation credits for such milk computed pursuant to this section 
shall be made to such cooperative association by the pool plant operator 
pursuant to Sec. 1046.73(f)(2).

[[Page 445]]

    (b) The market administrator may extend the period during which 
transportation credits are in effect (i.e., the transportation credit 
period) to the months of January and June if a written request to do so 
is received 15 days prior to the beginning of the month for which the 
request is made and, after conducting an independent investigation, 
finds that such extension is necessary to assure the market of an 
adequate supply of milk for fluid use. Before making such a finding, the 
market administrator shall notify the Director of the Dairy Division and 
all handlers in the market that an extension is being considered and 
invite written data, views, and arguments. Any decision to extend the 
transportation credit period must be issued in writing prior to the 
first day of the month for which the extension is to be effective.
    (c) Transportation credits shall apply to the following milk:
    (1) Bulk milk received from a plant regulated under another Federal 
order, except Federal Orders 1005, 1007, and 1011, and allocated to 
Class I milk pursuant to Sec. 1046.44(a)(12); and
    (2) Bulk milk received directly from the farms of dairy farmers at 
pool distributing plants subject to the following conditions:
    (i) The quantity of such milk that shall be eligible for the 
transportation credit shall be determined by multiplying the total 
pounds of milk received from producers meeting the conditions of this 
paragraph by the lower of:
    (A) The marketwide estimated Class I utilization of all handlers for 
the month pursuant to Sec. 1046.45(a); or
    (B) The Class I utilization of all producer milk of the pool plant 
operator receiving the milk after the computations described in 
Sec. 1046.44;
    (ii) The dairy farmer was not a ``producer'' under this order during 
more than 2 of the immediately preceding months of January through June 
and not more than 50 percent of the production of the dairy farmer 
during those 2 months, in aggregate, was received as producer milk under 
this order during those 2 months. However, if January and/or June are 
months in which transportation credits are disbursed pursuant to 
paragraph (a) of this section, these months shall not be included in the 
2-month limit provided in this paragraph; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of this order or the marketing areas of 
Federal Orders 1005, 1007, or 1011, or within the Kentucky counties of 
Allen, Barren, Metcalfe, Monroe, Simpson, and Warren.
    (d) Transportation credits shall be computed as follows:
    (1) The market administrator shall subtract from the pounds of milk 
described in paragraphs (c) (1) and (2) of this section the pounds of 
bulk milk transferred from the pool plant receiving the supplemental 
milk if milk was transferred to a nonpool plant on the same calendar day 
that the supplemental milk was received. For this purpose, the 
transferred milk shall be subtracted from the most distant load of 
supplemental milk received, and then in sequence with the next most 
distant load until all of the transfers have been offset;
    (2) With respect to the pounds of milk described in paragraph (c)(1) 
of this section that remain after the computations described in 
paragraph (d)(1) of this section, the market administrator shall:
    (i) Determine the shortest hard-surface highway distance between the 
shipping plant and the receiving plant;
    (ii) Multiply the number of miles so determined by 0.35 cent;
    (iii) Subtract the other order's Class I price applicable at the 
shipping plant's location from the Class I price applicable at the 
receiving plant as specified in Sec. 1046.52;
    (iv) Subtract any positive difference computed in paragraph 
(d)(2)(iii) of this section from the amount computed in paragraph 
(d)(2)(ii) of this section; and
    (v) Multiply the remainder computed in paragraph (d)(2)(iv) of this 
section by the hundredweight of milk described in paragraph (d)(2) 
introductory text of this section.
    (3) For milk described in paragraph (c)(2) of this section, the 
market administrator shall:
    (i) Determine an origination point for each load of milk by locating 
the nearest city to the last producer's farm

[[Page 446]]

 from which milk was picked up for delivery to the receiving pool plant. 
Alternatively, the milk hauler that is transporting the milk of 
producers described in paragraph (c)(2) of this section may establish an 
origination point following the last farm pickup by stopping at the 
nearest independently-operated truck stop with a certified truck scale 
and obtaining a weight certificate indicating the weight of the truck 
and its contents, the date and time of weighing, and the location of the 
truck stop;
    (ii) Determine the shortest hard-surface highway distance between 
the receiving pool plant and the truck stop or city, as the case may be;
    (iii) Subtract 85 miles from the mileage so determined;
    (iv) Multiply the remaining miles so computed by 0.35 cent;
    (v) If the origination point determined pursuant to paragraph 
(d)(3)(i) of this section is in a Federal order marketing area, subtract 
the Class I price applicable at the origination point pursuant to the 
provisions of such other order (as if the origination point were a plant 
location) from the Class I price applicable at the distributing plant 
receiving the milk. If the origination point is not in any Federal order 
marketing area, determine the Class I price at the origination point 
based upon the provisions of this order and subtract this price from the 
Class I price applicable at the distributing plant receiving the milk;
    (vi) Subtract any positive difference computed in paragraph 
(d)(3)(v) of this section from the amount computed in paragraph 
(d)(3)(iv) of this section; and
    (vii) Multiply the remainder computed in paragraph (d)(3)(vi) by the 
hundredweight of milk described in paragraph (d)(3) introductory text of 
this section.
[62 FR 39744, July 23, 1997]

        Administrative Assessment and Marketing Service Deduction



Sec. 1046.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler, excluding a handler described in Sec. 1046.9(c), shall pay 
to the market administrator on or before the 15th day after the end of 
the month three cents per hundredweight, or such lesser amount as the 
Secretary may prescribe, with respect to:
    (a) Producer milk (including such handler's own production) and milk 
received from a handler described in Sec. 1046.9(c);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1046.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1046.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1046.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1046.60 (d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1046.76(a)(2).
[39 FR 15427, May 3, 1974, as amended at 58 FR 27840, May 11, 1993]



Sec. 1046.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments to producers pursuant to Sec. 1046.73(b), 
shall deduct 5 cents per hundredweight, or such amount not in excess 
thereof as the Secretary may prescribe, with respect to all milk 
received by such handler from producers (other than such handler's own 
farm production) during the month and shall pay such deductions to the 
market administrator on or before the 15th day after the end of such 
month. Such moneys shall be used by the market administrator to verify 
weights, samples, and tests of milk received from such producers and to 
provide such producers with market information. Such services shall be 
performed in whole or in part by the market administrator or by an agent 
engaged by and responsible to him.
    (b) Each cooperative association which is actually performing the 
services described in paragraph (a) of this section, as determined by 
the market administrator, may file with a handler a claim for authorized 
deductions from

[[Page 447]]

 the payments otherwise due to its producer members for milk delivered 
to such handler. Such claim shall contain a list of the producers for 
whom such deductions apply, an agreement to indemnify the handler in the 
making of the deductions, and a certification that the association has 
an unterminated membership contract with each producer. In making 
payments to producers for milk received during the month, each handler 
shall make, in lieu of the deduction specified in paragraph (a) of this 
section, deductions in accordance with the association's claim and shall 
pay the amount deducted to the association within 15 days after the end 
of the month.



PART 1049--MILK IN THE INDIANA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1049.1  General provisions.

                               Definitions

1049.2  Indiana marketing area.
1049.3  Route disposition.
1049.4  [Reserved]
1049.5  Distributing plant.
1049.6  Supply plant.
1049.7  Pool plant.
1049.8  Nonpool plant.
1049.9  Handler.
1049.10  Producer-handler.
1049.11  [Reserved]
1049.12  Producer.
1049.13  Producer milk.
1049.14  Other source milk.
1049.15  Fluid milk product.
1049.16  Fluid cream product.
1049.17  Filled milk.
1049.18  Cooperative association.
1049.19  Commercial food processing establishment.

                             Handler Reports

1049.30  Reports of receipts and utilization.
1049.31  Payroll reports.
1049.32  Other reports.

                         Classification of Milk

1049.40  Classes of utilization.
1049.41  Shrinkage.
1049.42  Classification of transfers and diversions.
1049.43  General classification rules.
1049.44  Classification of producer milk.
1049.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1049.50  Class and component prices.
1049.51  Basic formula price.
1049.52  Plant location adjustments for handlers.
1049.53  Announcement of class and component prices.
1049.54  Equivalent price.

                Differential Pool and Handler Obligations

1049.60  Computation of handlers' obligations to pool.
1049.61  Computation of weighted average differential value.
1049.62  Computation of producer protein price.
1049.63  Uniform price and handlers' obligations for producer milk.
1049.64  Announcement of weighted average differential price, producer 
          protein price, and uniform price.
1049.65  Value of producer milk.
1049.66  Computation of somatic cell adjustment.

                            Payments for Milk

1049.70  Producer-settlement fund.
1049.71  Payments to the producer-settlement fund.
1049.72  Payments from the producer-settlement fund.
1049.73  Payments to producers and to cooperative associations.
1049.74  Butterfat differential.
1049.75  Plant location adjustments for producers and on nonpool milk.
1049.76  Payments by handler operating a partially regulated 
          distributing plant.
1049.77  Adjustment of accounts.
1049.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1049.85  Assessment for order administration.
1049.86  Deduction for marketing services.

                    Advertising and Promotion Program

1049.105  Dairy research and promotion order.
1049.106  Qualified program.
1049.107  Deduction for advertising and promotion program.
1049.110  Agency.
1049.111  Composition of the Agency.
1049.112  Term of office.
1049.113  Selection of Agency members.
1049.114  Agency operating procedure.
1049.115  Powers of the Agency.
1049.116  Duties of the Agency.
1049.117  Advertising, research, education, and promotion program.
1049.118  Limitation of expenditures by the Agency.

[[Page 448]]

1049.119  Personal liability.
1049.120  Procedure for requesting refunds.
1049.121  Duties of the market administrator.
1049.122  Liquidation.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; (7 U.S.C. 601-674).

    Source: 39 FR 31288, Aug. 28, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1049.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1049.2  Indiana marketing area.

    Indiana marketing area (hereinafter referred to as the ``marketing 
area'') means all of the territory within the boundaries of the 
following counties, including territory wholly or partly within such 
boundaries occupied by Government (municipal, State, or Federal) 
reservations, installations, institutions or other similar 
establishments:
    (a) In Indiana, the counties of:

Adams, Allen, Bartholomew, Blackford, Boone, Brown, Cass, Clay, Clinton, 
Decatur, De Kalb, Delaware, Elkhart, Fayette, Fountain, Franklin, 
Fulton, Grant, Hamilton, Hancock, Hendricks, Henry, Howard, Huntington, 
Jackson, Jay, Jefferson, Jennings, Johnson, Kosciusko, Lagrange, Lake, 
La Porte, Lawrence, Madison, Marion, Marshall, Miami, Monroe, 
Montgomery, Morgan, Noble, Owen, Parke, Porter, Putnam, Randolph, 
Ripley, Rush, St. Joseph, Shelby, Starke, Steuben, Switzerland, 
Tippecanoe, Tipton, Union, Vermillion, Vigo, Wabash, Warren, Wayne, 
Wells, Whitley.

    (b) In Michigan, the counties of:

Berrien, Branch, Cass, St. Joseph.
[42 FR 56950, Oct. 31, 1977]



Sec. 1049.3  Route disposition.

    Route disposition means a delivery (including that packaged for 
another person, another distributing plant, disposition from a plant 
store or from a distribution point, and distribution by a vendor or 
vending machine) of any packaged fluid milk product classified as Class 
I milk other than a delivery in bulk form to any milk or filled milk 
processing plant.
[58 FR 43513, Aug. 17, 1993]



Sec. 1049.4  [Reserved]



Sec. 1049.5  Distributing plant.

    Distributing plant means a plant approved by any duly constituted 
health authority for the processing or packaging of milk for fluid 
consumption in the marketing area and from which there is route 
disposition during the month in the marketing area.



Sec. 1049.6  Supply plant.

    Supply plant means a plant in which some milk approved by any duly 
constituted health authority for fluid consumption in the marketing area 
is assembled and shipped in bulk as a fluid milk product and is 
physically unloaded and received into a distributing plant during the 
month.
[58 FR 43513, Aug. 17, 1993]



Sec. 1049.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) A distributing plant with:
    (1) Total route disposition of not less than 40 percent during each 
of the months of September through February, 35 percent during each of 
the months of March through July, and 30 percent during the month of 
August, of its total receipts of fluid milk products (including milk 
diverted from such plant but excluding bulk fluid milk products received 
by transfer or diversion from other plants as Class II or Class III 
milk) that are approved by a duly constituted health authority for fluid 
consumption, subject to the following conditions:
    (i) In making the percentage computations in paragraphs (a) (1) and 
(2) of this section, a plant's route disposition and receipts shall be 
exclusive of filled milk and of packaged fluid milk products received 
from other pool or other Federal order plants;

[[Page 449]]

    (ii) A plant meeting such percentage requirement for the two 
immediately preceding months and the requirement of paragraph (a)(2) of 
this section for the current month may remain qualified under this 
paragraph in the current month; and
    (iii) A plant meeting the requirements of this paragraph in each of 
the months of September through May, inclusive, shall continue to have 
pool plant status in the months of June and July immediately following 
if the plant meets the requirements of paragraph (a)(2) of this section;
    (2) Route disposition within the marketing area during the month of 
at least 10 percent of such receipts, such route disposition to be 
exclusive of packaged fluid milk products received from other plants and 
filled milk.
    (b) A supply plant from which not less than 40 percent during the 
months of September through February and not less than 35 percent during 
the months of March through August, of the Grade A milk received from 
producers (including producer milk diverted from the plant but excluding 
milk diverted to such plant) and from handlers described in 
Sec. 1049.9(c) at such plant during the month is shipped to plants 
qualifying for the month pursuant to paragraph (a) of this section. A 
plant qualified pursuant to this paragraph in each of the immediately 
preceding months of September through February shall remain so qualified 
for the months of April through August unless written application is 
filed with the market administrator on or before the first day of any 
such month to designate such plant as a nonpool plant for such month and 
for each subsequent month through August during which it would otherwise 
not qualify under this paragraph. Pool supply plant qualification shall 
be subject to the following conditions:
    (1) The operator of a supply plant may include milk diverted from 
such plant to pool distributing plants as qualifying deliveries in 
meeting up to one-half of the required deliveries;
    (2) Shipments to be used in determining qualifying percentages shall 
be milk transferred or diverted and physically received by distributing 
pool plants, less any transfers or diversions of bulk fluid milk 
products from such distributing pool plants; and
    (3) The shipping percentage requirements of this paragraph may be 
increased or decreased temporarily by up to 10 percentage points by the 
market administrator if such person finds that such revision is 
necessary to obtain needed shipments or to prevent uneconomic shipments. 
Before making such a finding, the market administrator shall investigate 
the need for revision on either such person's own initiative or at the 
request of interested persons. If the investigation shows that a 
temporary revision might be appropriate, the market administrator shall 
issue a notice stating that revision is being considered and invite 
data, views, or arguments in favor of or in opposition to the proposed 
temporary revision.
    (c) Any plant that qualifies as a pool plant in each of the 
immediately preceding three months pursuant to paragraph (a) of this 
section or by meeting the shipping percentages in paragraph (b) of this 
section that is unable to meet such performance standards for the 
current month because of unavoidable circumstances determined by the 
market administrator to be beyond the control of the handler operating 
the plant, such as a natural disaster (ice storm, wind storm, flood) 
fire, breakdown of equipment, or work stoppage, shall be considered to 
have met the minimum performance standards during the period of such 
unavoidable circumstances, but such relief shall not be granted for more 
than two consecutive months.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant from which the Secretary determines there 
is a greater proportion of route disposition (except filled milk) in 
another marketing area regulated by another order issued pursuant to the 
Act and such plant is fully subject to regulation of such other order: 
Provided, That a distributing plant which was a pool plant under this 
order in the immediately preceding month shall continue to be subject to 
all of the provisions of this part until the third consecutive month in 
which it has a greater proportion of its route disposition (except 
filled

[[Page 450]]

milk) in such other marketing area, unless, notwithstanding the 
provisions of this paragraph, it is regulated by such other order;
    (3) A distributing plant which meets the requirements of paragraph 
(a) of this section which also meets the requirements of another order 
on the basis of its route disposition in such other marketing area and 
from which the Secretary determines there is a greater quantity of route 
disposition (except filled milk) during the month in this marketing area 
than in such other marketing area but which plant is nevertheless fully 
regulated under such other order;
    (4) A supply plant which during the month is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act, unless such plant is qualified as a pool plant pursuant to 
paragraph (b) of this section and a greater volume of fluid milk 
products (except filled milk) is moved to pool distributing plants 
qualified on the basis of route disposition in this marketing area; and
    (5) That portion of a plant that is physically separated from the 
Grade A portion of such plant, is operated separately and is not 
approved by any health authority for the receiving, processing or 
packaging of any fluid milk product for Grade A disposition.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 43513, Aug. 17, 1993]



Sec. 1049.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool supply plant that is 
not an other order plant or a producer-handler plant, from which fluid 
milk products are shipped during the month to a pool plant.



Sec. 1049.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to producer milk 
diverted for the account of such association pursuant to Sec. 1049.13;
    (c) Any cooperative association with respect to milk it receives for 
its account from the farm of a producer in a tank truck owned and 
operated by, or under the control of, such association, for delivery to 
a pool plant operated by another person, unless both the cooperative 
association and the operator of the pool plant notify the market 
administrator that the plant operator will be responsible for payment 
for the milk and is purchasing the milk on the basis of weights 
determined from its measurement at the farm and butterfat tests 
determined from farm bulk tank samples. Milk for which the cooperative 
association is the handler pursuant to this paragraph shall be deemed to 
have been received by the cooperative association at the location of the 
pool plant to which such milk is delivered.
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler; or
    (f) Any person who operates an other order plant described in 
Sec. 1049.7(c).



Sec. 1049.10  Producer-handler.

    Producer-handler means a person who operates a dairy farm and a 
distributing plant and who receives no fluid milk products from other 
dairy farmers or from sources other than pool plants, and no milk 
products other than fluid milk products for reconstitution into fluid 
milk products: Provided, That such person provides proof satisfactory to 
the market administrator that the care and management of all dairy 
animals and other resources used in his own farm production and the 
operation

[[Page 451]]

of the processing and distributing business are at the personal 
enterprise and risk of such person.



Sec. 1049.11  [Reserved]



Sec. 1049.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who, in compliance with Grade A inspection requirements 
of a duly constituted health authority, produces milk for distribution 
as fluid milk products within the marketing area or produces milk 
acceptable for fluid consumption at Federal, State or municipal 
institutions, which milk is received at a pool plant, diverted pursuant 
to Sec. 1049.13, or received by a handler pursuant to Sec. 1049.9(c).
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1049.44(a)(8)(iii) and the corresponding step of Sec. 1049.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.



Sec. 1049.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk 
from producers which is:
    (a) Received at a pool plant directly from a producer, excluding any 
such milk received by diversion from another pool plant;
    (b) Received at a pool plant from a handler described in 
Sec. 1049.9(c) under the conditions set forth therein;
    (c) Received by a handler described in Sec. 1049.9(c) from producers 
in excess of the quantity delivered to pool plants;
    (d) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant; or
    (e) Diverted from a pool plant to a nonpool plant (other than a 
producer-handler plant) for the account of the handler operating such 
pool plant or for the account of a handler described in Sec. 1049.9(b), 
subject to the following conditions:
    (1) During each of the months of September through November not less 
than one day's production of the producer must be physically received at 
a pool plant;
    (2) The operator of a pool plant may divert the milk of any producer 
that is not under the control of a cooperative association that diverts 
milk during the month pursuant to paragraph (e)(3) of this section. The 
operator of such plant may divert a total quantity of milk not exceeding 
50 percent during the months of September through November, January and 
February, and 60 percent during the month of December, of the producer 
milk physically received at or diverted from such pool plant during the 
month;
    (3) A cooperative association may divert an aggregate quantity of 
milk not exceeding 50 percent during the months of September through 
November, January and February, and 60 percent during the month of 
December, of the producer milk that the cooperative association caused 
to be physically received at or diverted from pool plants during the 
month;
    (4) Any milk diverted in excess of the limit set forth in paragraph 
(e) (2) or (3) of this section shall not be producer milk. The diverting 
handler shall designate the dairy farmer deliveries that shall not be 
producer milk. If the handler fails to designate the dairy farmer 
deliveries which are ineligible, producer milk status shall be forfeited 
with respect to all milk diverted to nonpool plants by such handler; and
    (f) Milk diverted pursuant to paragraph (d) or (e) of this section 
shall be priced at the location of the plant where it is received, 
except that the uniform price applicable to milk that is diverted to a 
plant located outside the areas specified in Sec. 1049.52(a) (1) through 
(3) shall not be adjusted downward below the uniform price for the month 
applicable at the location of the producer's farm: Provided, That 65 
percent or more of such producer's milk is delivered to a plant or 
plants in an area specified in Sec. 1049.52(a) (1) through

[[Page 452]]

(3) or to a plant at which the same or a higher uniform price is 
applicable.
[58 FR 43514, Aug. 17, 1993]



Sec. 1049.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1049.40(b)(1) from any source other than producers, or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1049.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1049.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1049.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1049.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27841, May 11, 1993]



Sec. 1049.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27841, May 11, 1993]



Sec. 1049.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1049.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or milk products 
for its members; and
    (c) To have all of its activities under the control of its members.



Sec. 1049.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type

[[Page 453]]

packages. Producer milk diverted to commercial food processing 
establishments shall be subject to the same provisions relating to 
diversions to plants, including but not limited to, provisions in 
Secs. 1049.13, 1049.41 and 1049.52.
[58 FR 27841, May 11, 1993]

                             Handler Reports



Sec. 1049.30  Reports of receipts and utilization.

    On or before the 8th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants, showing the pounds of 
milk, butterfat and milk protein contained in the milk, and the somatic 
cell count of the milk;
    (2) Receipts of milk from handlers pursuant to Sec. 1049.9 (b) or 
(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1049.40(b)(1); and
    (6) The utilization or disposition of all skim milk and butterfat 
required to be reported pursuant to this paragraph, showing separately:
    (i) Total route dispositions and route disposition in the marketing 
area, showing separately such disposition of filled milk inside and 
outside the marketing area; and
    (ii) Transfers and diversions to other plants, the butterfat and 
milk protein content of such milk, and the somatic cell count of the 
milk;
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each cooperative association shall report:
    (1) The quantities of skim milk, butterfat and milk protein, and 
somatic cell count contained in milk from producers for which it is the 
handler pursuant to Sec. 1049.9 (b) or (c), showing:
    (i) The quantities of such receipts delivered to each pool plant of 
other handlers; and
    (ii) The classification of such receipts diverted pursuant to 
Sec. 1049.13.
    (2) [Reserved]
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 43514, Aug. 17, 1993]



Sec. 1049.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1049.9 (a), (b) and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content, average milk protein content, and 
average somatic cell count of such milk; and
    (4) The price per hundredweight, butterfat and milk protein prices 
and somatic cell adjustment to the producer protein price, the gross 
amount due, the amount and nature of any deductions, and the net amount 
paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1049.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in

[[Page 454]]

the same manner as prescribed for reports required by paragraph (a) of 
this section.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 43515, Aug. 17, 1993]



Sec. 1049.32  Other reports.

    In addition to the reports required pursuant to Secs. 1049.30 and 
1049.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 43515, Aug. 17, 1993]

                         Classification of Milk



Sec. 1049.40  Classes of utilization.

    Except as provided in Sec. 1049.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1049.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes, distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this

[[Page 455]]

section, that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1049.15 and the fluid 
cream product definition pursuant to Sec. 1049.16; and
    (7) In shrinkage assigned pursuant to Sec. 1049.41(a) to the 
receipts specified in Sec. 1049.41(a)(2) and in shrinkage specified in 
Sec. 1049.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27841, May 11, 1993, as amended at 58 FR 63288, Dec. 1, 1993]



Sec. 1049.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1049.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (7) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(7) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of skim milk and butterfat, respectively, in 
milk received from a handler pursuant to Sec. 1049.9(c), except that if 
the handler operating the pool plant files notice with the market 
administrator that he is purchasing such milk on the basis of weights 
determined from its measurement at the farm and butterfat tests 
determined from farm bulk tank samples, the applicable percentage under 
this paragraph shall be 2.0 percent;
    (3) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk diverted to such plant from another pool plant, except that if 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph (b)(3) shall be 2 percent;
    (4) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
(b)(4) shall be zero;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;

[[Page 456]]

    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (7) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (8) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (2), (3), (5), (6) and (7) 
of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1049.9(b) or (c) but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the 
farm, 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.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 43515, Aug. 17, 1993]



Sec. 1049.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk and butterfat 
transferred or diverted in the form of a fluid milk product to a pool 
plant from another pool plant or by a handler pursuant to Sec. 1049.9(b) 
or (c) and skim milk and butterfat transferred in the form of a bulk 
fluid cream product between pool plants shall be classified as Class I 
milk unless both parties to each such transfer or diversion request the 
same classification in another class. In either case, the classification 
of such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1049.44(a)(12) and the corresponding 
step of Sec. 1049.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1049.44(a)(7) 
or the corresponding step of Sec. 1049.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1049.44(a)(11) or (12) or the corresponding steps of 
Sec. 1049.44(b), the skim milk or butterfat so transferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which

[[Page 457]]

allocated under the other order (including allocation under the 
conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other plant is not defined as a fluid milk product under such 
other order, classification under this paragraph shall be in accordance 
with the provisions of Sec. 1049.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product; unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1049.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products

[[Page 458]]

from the nonpool plant shall be assigned to the extent possible pro rata 
to any remaining unassigned receipts of packaged fluid milk products at 
such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 27842, May 11, 1993]



Sec. 1049.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1049.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1049.30 and shall compute separately for each pool plant and each 
handler pursuant to Sec. 1049.9(b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1049.40, 
1049.41 and 1049.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1049.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1049.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1049.44 on a 
pro rata basis, unless a specific use of

[[Page 459]]

such receipts is established by the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III--A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 27842, May 11, 1993; 58 
FR 63288, Dec. 1, 1993]



Sec. 1049.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
pool plant the classification of milk received from producers and from 
handlers pursuant to Sec. 1049.9(b) or (c) and the classification of 
milk received from producers by each handler pursuant to Sec. 1049.9(b) 
or (c) that was not received at a pool plant, as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1049.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1049.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1049.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph (a)(5) shall apply 
only if the pool plant was subject to the provisions of this paragraph 
or comparable provisions of another Federal milk order in the 
immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1049.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1049.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1049.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;

[[Page 460]]

    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and then Class III combined shall be increased (increasing 
as necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be the pounds of skim milk 
remaining in decreased by a like amount. In such case, each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk at all pool plants of the handler in producer milk, receipts of 
fluid milk products from pool plants of other handlers, from handlers 
pursuant to Sec. 1049.9(b) and (c), and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1049.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class

[[Page 461]]

II and Class III combined at this allocation step at all pool plants of 
the handler (excluding any duplication of utilization in each class 
resulting from transfers between pool plants of the handler), with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, the pounds of skim milk in 
receipts of fluid milk products from an unregulated supply plant that 
were not subtracted pursuant to paragraphs (a)(2)(i), (7)(v), and (8)(i) 
and (ii) of this section and that were not offset by transfers or 
diversions of fluid milk products to the same unregulated supply plant 
from which fluid milk products to be allocated at this step were 
received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this paragraph exceed the pounds of 
skim milk remaining in such classes, the pounds of skim milk in Class II 
and Class III combined shall be increased (increasing as necessary Class 
III and then Class II to the extent of available utilization in such 
classes at the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1049.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computation pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available

[[Page 462]]

utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipt from handlers pursuant to 
Sec. 1049.9(b) and (c) and in receipts of fluid milk products and bulk 
fluid cream products from other pool plants according to the 
classification assigned pursuant to Sec. 1049.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 27842, May 11, 1993]



Sec. 1049.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1049.44 (a)(12) and the 
corresponding step of Sec. 1049.44(b), estimate and publicly announce 
the utilization (to the nearest whole percentage) in each class during 
the month of skim milk and butterfat, respectively, in producer milk of 
all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1049.43(d) and Sec. 1049.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 14th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association or its members which was utilized in each class at each pool 
plant receiving such milk. For the

[[Page 463]]

purpose of this report, the milk so received shall be allocated to each 
class at each pool plant in the same ratio as all producer milk received 
at such plant during the month.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 27842, May 11, 1993]

                              Class Prices



Sec. 1049.50  Class and component prices.

    Subject to the provisions of Sec. 1049.52, the class and component 
prices for the month, per hundredweight or per pound, shall be as 
follows:
    (a) Class I. The Class I price shall be the basic formula price for 
the second preceding month plus $1.90.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Butterfat price. The butterfat price per pound shall be the 
total of the following steps, rounded to the nearest whole cent:
    (1) The skim milk price per hundredweight for the month, computed 
pursuant to paragraph (f) of this section, divided by 100; and
    (2) The butterfat differential for the month, computed pursuant to 
Sec. 1049.74 multiplied by 10.
    (e) Milk protein price. The price per pound for milk protein shall 
be computed by subtracting from the Class III price the butterfat price 
multiplied by 3.5, and dividing the result by the average protein 
content of the milk on which the basic formula price is based for the 
previous month as reported by the Department and adjusted for the 
current month by the Dairy Division, and rounding the result to the 
nearest whole cent.
    (f) Skim milk price. The skim milk price per hundredweight shall be 
computed by subtracting from the Class III price the butterfat 
differential computed pursuant to Sec. 1049.74 times 35, and rounding 
the result to the nearest whole cent.
    (g) Class III--A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential value per hundredweight 
of 3.5 percent milk and rounded to the nearest cent.
[39 FR 31288, Aug. 28, 1974, as amended at 46 FR 43380, Aug. 28, 1981; 
51 FR 12832, Apr. 16, 1986; 58 FR 43515, Aug. 17, 1993; 58 FR 63288, 
Dec. 1, 1993; 60 FR 6610, Feb. 2, 1995]



Sec. 1049.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1049.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average

[[Page 464]]

for the month of the Chicago Mercantile Exchange, Grade AA butter price, 
as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18965, Apr. 14, 1995]



Sec. 1049.52  Plant location adjustments for handlers.

    (a) For producer milk received at pool plants located in the 
following zones, which milk is classified as Class I milk or assigned 
Class I location adjustment credit pursuant to paragraph (b) of this 
section, the price computed pursuant to Sec. 1049.50(a) shall be 
adjusted as set forth in paragraphs (a)(1) through (a)(7), as follows, 
except that in no event shall the adjustment result in a price less than 
the Class III price for the month:
    (1) Zero adjustment zone. Any Indiana county not specifically named 
in paragraphs (a)(2) through (a)(5) of this section, and not part of the 
Louisville-Lexington-Evansville marketing area.
    (2) Plus 10-cent adjustment zone. The Indiana counties of Jackson, 
Jefferson, Jennings, Lawrence, Ripley, Scott and Switzerland.
    (3) Minus 10-cent adjustment zone. The Indiana counties of Adams, 
Allen, Benton, Blackford, Carroll, Cass, Fulton, Huntington, Jay, Miami, 
Wabash, Wells, and White.
    (4) Minus 20-cent adjustment zone. The Indiana counties of Dekalb, 
Elkhart, Jasper, Kosciusko, Lagrange, La Porte, Marshall, Newton, Noble, 
Pulaski, Starke, Steuben, St. Joseph, and Whitley; and the Michigan 
counties of Berrien, Branch, Cass and St. Joseph.
    (5) Minus 35-cent adjustment zone. The Indiana counties of Lake and 
Porter.
    (6) At locations in other Federal order marketing areas, the 
appropriate price adjustment shall be the difference between the 
applicable Class I price effective at such plant location under the 
order for the area in which the plant is located and the Class I price 
specified in Sec. 1049.50(a). For purposes of this paragraph, the 
locations in the Ohio counties of Defiance, Paulding, Van Wert and 
Williams, and

[[Page 465]]

the Michigan counties of Hillsdale, Lenawee and Monroe that are not part 
of any Federal milk order marketing area, will be considered to be in 
pricing zone 1 of the Ohio Valley milk marketing area.
    (7) At locations outside any Federal order marketing area and north 
of 38 degrees latitude, the applicable adjustment rate per hundredweight 
shall be based on the shortest highway distance between the plant and 
the nearest of the Monument Circle, Indianapolis, Indiana, or the main 
post offices of Fort Wayne, South Bend, or Valparaiso, Indiana, and 
shall be minus 2.0 cents for each 10 miles or fraction thereof from such 
point in addition to the amount of the location adjustment pursuant to 
paragraphs (a) (1) through (5) of this section applicable at the 
respective point.
    (b) For the purpose of calculating adjustments pursuant to this 
section, transfers between pool plants shall be assigned Class I 
disposition at the transferee-plant, in excess of the receipts at such 
plant from producers and handlers pursuant to Sec. 1049.9 (b) and (c) 
and the volume assigned as Class I to receipts from other order plants 
and unregulated supply plants, such assignment to be made first to 
transferor-plants at which the Class I price is not less than the Class 
I price at the transferee plant, and then to receipts from plants with 
lower Class I prices in sequence beginning with the plant having the 
highest Class I price.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[39 FR 31288, Aug. 28, 1974, as amended at 44 FR 42151, July 19, 1979; 
52 FR 3414, Feb. 4, 1987; 58 FR 43515, Aug. 17, 1993]



Sec. 1049.53  Announcement of class and component prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III and Class III-A prices for the preceding month;
    (d) The butterfat differential for the preceding month; and
    (e) The butterfat price, the milk protein price, and the skim milk 
price computed pursuant to Sec. 1049.50 (d), (e) and (f) for the 
preceding month.
    (f) The monthly average price for 40-pound blocks of cheese at the 
National Cheese Exchange (Green Bay, Wisconsin) for the preceding month.
[58 FR 43515, Aug. 17, 1993, as amended at 58 FR 63288, Dec. 1, 1993; 60 
FR 6610, Feb. 2, 1995]



Sec. 1049.54  Equivalent price.

    If for any reason a price quotation or factor required by this part 
for computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price or factor 
determined by the Secretary to be equivalent to the price or factor 
which is required.

                Differential Pool and Handler Obligations



Sec. 1049.60  Computation of handlers' obligations to pool.

    The market administrator shall compute each month for each pool 
plant of each handler, and for each handler pursuant to Sec. 1049.9 (b) 
and (c), an obligation to the pool computed by adding the following 
values:
    (a) The pounds of producer milk in Class I as determined pursuant to 
Sec. 1049.44 multiplied by the difference between the Class I price 
(adjusted pursuant to Sec. 1049.52) and the Class III price;
    (b) The pounds of producer milk in Class II as determined pursuant 
to Sec. 1049.44 multiplied by the difference between the Class II price 
and the Class III price;
    (c) The value of the product pounds, skim milk, and butterfat in 
overage assigned to each class pursuant to Sec. 1049.44(a)(14) and the 
value of the corresponding protein pounds associated with the skim milk 
subtracted from Class II and Class III pursuant to Sec. 1049.44(a)(14), 
by multiplying the skim milk pounds so assigned by the percentage of 
protein in the handler's receipts of producer skim milk during the 
month, as follows:

[[Page 466]]

    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1049.44(a)(14) and the corresponding step of 
Sec. 1049.44(b), multiplied by the difference between the Class I price 
adjusted for location and the Class III price, plus the hundredweight of 
skim milk subtracted from Class I pursuant to Sec. 1049.44(a)(14) 
multiplied by the skim milk price, plus the butterfat pounds of overage 
subtracted from Class I pursuant to Sec. 1049.44(b) multiplied by the 
butterfat price;
    (2) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1049.44(a)(14) and the corresponding step of 
Sec. 1049.44(b) multiplied by the difference between the Class II price 
and the Class III price, plus the protein pounds in skim milk subtracted 
from Class II pursuant to Sec. 1049.44(a)(14) multiplied by the protein 
price, plus the butterfat pounds of overage subtracted from Class II 
pursuant to Sec. 1049.44(b) multiplied by the butterfat price;
    (3) The protein pounds in skim milk overage subtracted from Class 
III pursuant to Sec. 1049.44(a)(14) multiplied by the protein price, 
plus the butterfat pounds of overage subtracted from Class III pursuant 
to Sec. 1049.44(b) multiplied by the butterfat price;
    (d) The value of the product pounds, skim milk, and butterfat 
subtracted from Class I or Class II pursuant to Sec. 1049.44(a)(9) and 
the corresponding step of Sec. 1049.44(b), and the value of the protein 
pounds associated with the skim milk subtracted from Class II pursuant 
to Sec. 1049.44(a)(9), computed by multiplying the skim milk pounds so 
subtracted by the percentage of protein in the handler's receipts of 
producer skim milk during the previous month, as follows:
    (1) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1049.44(a)(9) and the 
corresponding step of Sec. 1049.44(b) applicable at the location of the 
pool plant at the current month's Class I-Class III price difference and 
the current month's skim milk and butterfat prices, less the Class III 
value of the milk at the previous month's protein and butterfat prices;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1049.44(a)(9) and the 
corresponding step of Sec. 1049.44(b) at the current month's Class II-
Class III price difference and the current month's protein and butterfat 
prices, less the Class III value of the milk at the previous month's 
protein and butterfat prices;
    (e) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1049.44(a)(7) (i) through (iv), 
and the corresponding step of Sec. 1049.44(b), excluding receipts of 
bulk fluid cream products from another order plant, applicable at the 
location of the pool plant at the current month's Class I-Class III 
price difference;
    (f) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1049.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1049.44(b) applicable at the location of 
the transferor-plant at the current month's Class I-Class III price 
difference;
    (g) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1049.44(a)(11) and the 
corresponding step of Sec. 1049.44(b), excluding such hundredweight in 
receipts of bulk fluid milk products from an unregulated supply plant to 
the extent that an equivalent quantity disposed of to such plant by 
handlers fully regulated by any Federal order is classified and priced 
as Class I milk and is not used as an offset for any other payment 
obligation under any order, applicable at the location of the nearest 
unregulated supply plants from which an equivalent volume was received 
at the current month's Class I-Class III price difference.
    (h) The pounds of skim milk in Class I producer milk, as determined 
pursuant to Sec. 1049.44 multiplied by the skim milk price for the month 
computed pursuant to Sec. 1049.50(f).
    (i) The pounds of protein in skim milk in Class II and Class III, 
computed by multiplying the skim milk pounds so assigned by the 
percentage of protein in the handler's receipts of producer skim milk 
during the month for each report filed, separately, multiplied by the 
protein price for the month computed pursuant to Sec. 1049.50(e) and 
adjusted pursuant to

[[Page 467]]

Sec. 1049.66 for the weighted average somatic cell content of the 
handler's receipts of milk.
    (j) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use, provided that the handler establishes a 
disposition of labeled reconstituted fluid milk products; and
    (k) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1049.76(c).
    (l) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
    (m) For producer milk in Class III-A, add or subtract as appropriate 
an amount per hundredweight that the Class III-A price is more or less, 
respectively, than the Class III price.
[58 FR 43516, Aug. 17, 1993, as amended at 58 FR 63288, Dec. 1, 1993; 59 
FR 24031, May 10, 1994]



Sec. 1049.61  Computation of weighted average differential value.

    For each month the market administrator shall compute the weighted 
average differential value for milk received from all producers as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1049.60, paragraphs (a) through (g) and (j) and (k), for all 
handlers who made reports pursuant to Sec. 1049.30 and who made payments 
pursuant to Sec. 1049.71 for the preceding month;
    (b) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1049.75(a);
    (c) Subtract an amount equal to the total value of the plus location 
differentials computed pursuant to Sec. 1049.75(a);
    (d) Add an amount equal to not less than one-half the unobligated 
balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1049.60(g).
    (f) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``Weighted Average Differential 
Price''.
[58 FR 43516, Aug. 17, 1993]



Sec. 1049.62  Computation of producer protein price.

    For each month the market administrator shall compute the producer 
protein price to be paid to all producers for the pounds of protein in 
their milk, as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1049.60, paragraphs (h) and (i), for all handlers who made reports 
pursuant to Sec. 1049.30 and who made payments pursuant to Sec. 1049.71 
for the preceding month;
    (b) Add all of the negative adjustments and subtract all of the 
positive adjustments determined for each producer's somatic cell count 
pursuant to Sec. 1049.66;
    (c) Divide the resulting amount by the total pounds of protein in 
producer milk; and
    (d) Round to the nearest whole cent. The result is the ``Producer 
protein price.''
[58 FR 43517, Aug. 17, 1993]



Sec. 1049.63  Uniform price and handlers' obligations for producer milk.

    (a) A uniform price for producer milk containing 3.5 percent 
butterfat shall

[[Page 468]]

be computed by adding the weighted average differential price determined 
pursuant to Sec. 1049.61 to the basic formula price for the month.
    (b) Handler obligations to producers and cooperative associations 
for producer milk shall be determined in accordance with the provisions 
of Secs. 1049.65 and 1049.73.
[58 FR 43517, Aug. 17, 1993]



Sec. 1049.64  Announcement of weighted average differential price, producer protein price, and uniform price.

    The market administrator shall announce publicly on or before the 
14th day after the end of the month the weighted average differential 
price computed pursuant to Sec. 1049.61, the producer protein price 
computed pursuant to Sec. 1049.62, and the uniform price computed 
pursuant to Sec. 1049.63(a).
[58 FR 43517, Aug. 17, 1993]



Sec. 1049.65  Value of producer milk.

    The value of producer milk shall be the sum of:
    (a) The weighted average differential price computed pursuant to 
Sec. 1049.61 and adjusted pursuant to Sec. 1049.75, multiplied by the 
total hundredweight of producer milk received from the producer;
    (b) The producer protein price computed pursuant to Sec. 1049.62 and 
adjusted pursuant to Sec. 1049.66, multiplied by the total milk protein 
contained in the producer milk received from the producer; and
    (c) The butterfat price computed pursuant to Sec. 1049.50(d) 
multiplied by the total butterfat contained in the producer milk 
received from the producer.
[58 FR 43517, Aug. 17, 1993]



Sec. 1049.66  Computation of somatic cell adjustment.

    (a) For each producer, an adjustment to the producer 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 table in paragraph (b) of this section by the 
average price for the month of 40-pound blocks of cheese at the National 
Cheese Exchange at Green Bay, WI, as reported monthly by the Dairy 
Division, Agricultural Marketing Service. If a handler has not 
determined a monthly average somatic cell count, it will be determined 
by the market administrator.
    (b) The following table shows the factors and constants to be used 
in computing the somatic cell adjustment:

                                                                        
------------------------------------------------------------------------
                                                              Constants 
                                                                 for    
                                                              computing 
               Somatic cell counts                 Factors   the somatic
                                                                cell    
                                                             adjustment 
------------------------------------------------------------------------
1 to 50,000.....................................      .300        .09375
51,000 to 100,000...............................      .200       .062500
101,000 to 150,000..............................      .150       .046875
151,000 to 200,000..............................      .100       .031250
201,000 to 250,000..............................      .050       .015625
251,000 to 300,000..............................      .025      .0078125
301,000 to 350,000..............................      .000       .000000
351,000 to 400,000..............................      .000       .000000
401,000 to 450,000..............................     -.025     -.0078125
451,000 to 500,000..............................     -.050      -.015625
501,000 to 550,000..............................     -.075     -.0234375
551,000 to 600,000..............................     -.100      -.031250
601,000 to 650,000..............................     -.125     -.0390625
651,000 to 700,000..............................     -.150      -.046875
701,000 to 750,000..............................     -.200      -.062500
751,000 and above...............................     -.250      -.078125
------------------------------------------------------------------------

[58 FR 43517, Aug. 17, 1993]

                            Payments for Milk



Sec. 1049.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
received pursuant to Secs. 1049.71, 1049.76, 1049.77 and 1049.78 and out 
of which he shall make all payments pursuant to Secs. 1049.72 and 
1049.77: Provided, That a payment due a handler shall be offset against 
payments due the market administrator from such handler pursuant to 
Secs. 1049.71, 1049.76, 1049.77, 1049.78, 1049.85 and 1049.86.



Sec. 1049.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total obligation of the handler for such month as determined 
pursuant to Sec. 1049.60.
    (2) The sum of:

[[Page 469]]

    (i) The value of such handler's receipts of producer milk at the 
weighted average differential price adjusted pursuant to Sec. 1049.75;
    (ii) The value of the protein in such handler's receipts of producer 
milk at the producer protein price computed pursuant to Sec. 1049.62; 
and
    (iii) The value at the weighted average differential price 
applicable at the location of the plant from which received of other 
source milk for which a value is computed pursuant to Sec. 1049.60(g).
    (b) On or before the 25th day after the end of the month each person 
who operated an other plant that was regulated during such month under 
an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[39 FR 31288; Aug. 28, 1974, as amended at 44 FR 71403, Dec. 11, 1979; 
58 FR 43517, Aug. 17, 1993]



Sec. 1049.72  Payments from the producer-settlement fund.

    On or before the 16th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1049.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1049.71(a)(1). If the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this 
section, the market administrator shall reduce uniformly such payments 
and shall complete such payments as soon as the necessary funds become 
available.



Sec. 1049.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk for which 
payment is not made to a cooperative association pursuant to paragraph 
(b) of this section, as follows:
    (1) On or before the last day of each month, for producer milk 
received during the first 15 days of the month at not less than the 
Class III price for the preceding month; and
    (2) On or before the 18th day after the end of the month to each 
producer, not less than the value determined pursuant to Sec. 1049.65, 
less any payment made pursuant to paragraph (a)(1) of this section, and 
less the deduction for advertising and promotion made pursuant to 
Sec. 1049.107. If by such date the handler has not received full payment 
from the market administrator pursuant to Sec. 1049.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
paragraph next following receipt of the balance due from the market 
administrator.
    (b) Each handler shall make payment to the cooperative association 
for producer milk, if such cooperative association is authorized to 
collect such payments for its members and exercises such authority, an 
amount equal to the sum of the individual payments otherwise payable for 
such producer milk, as follows:
    (1) On or before two days prior to the last day of each month for 
producer milk received during the first 15 days of the month; and
    (2) On or before the 16th day after the end of each month for milk 
received during such month.
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from the cooperative association as follows:

[[Page 470]]

    (1) In the case of milk received from a pool plant(s) operated by a 
cooperative association:
    (i) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before two days 
prior to the last day of such month not less than the Class III price 
for the preceding month;
    (ii) For milk received during the month the handler shall pay the 
cooperative association on or before the 10th day of the following month 
not less than the applicable class prices pursuant to Sec. 1049.50 
adjusted by the butterfat differential specified in Sec. 1049.74 and 
less any payments made pursuant to paragraph (c)(1)(i) of this section; 
and
    (2) Each handler pursuant to Sec. 1049.9(a) who receives milk from a 
cooperative association as a handler pursuant to Sec. 1049.9(b) or (c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payment for their milk, shall pay 
such cooperative for such milk as follows:
    (i) On or before two days prior to the last day of the month for 
milk received during the first 15 days of the month, not less than the 
Class III price for the preceding month;
    (ii) On or before the 16th day of the following month for milk 
received during the month, not less than the value of milk determined 
pursuant to Sec. 1049.65, less any payments made pursuant to paragraph 
(c)(2)(i) of this section.
    (d) In making payments for producer milk pursuant to this section, 
each handler shall furnish each producer or cooperative association from 
whom he has received milk a supporting statement in such form that it 
may be retained by the recipient which shall show:
    (1) The month and identity of the producer;
    (2) The daily and total pounds of producer milk, its butterfat and 
milk protein content, and the somatic cell count of the milk;
    (3) The minimum rate or rates at which payment to the producer is 
required pursuant to this order;
    (4) The rate which is used in making the payment if such rate is 
other than the applicable minimum rate;
    (5) The amount, or the rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (6) The net amount of payment to such producer or cooperative 
association.
[39 FR 31288, Aug. 28, 1974, as amended at 44 FR 42152, July 19, 1979; 
49 FR 23031, June 4, 1984; 58 FR 43517, Aug. 17, 1993]



Sec. 1049.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1049.51 (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.
[60 FR 18966, Apr. 14, 1995]



Sec. 1049.75  Plant location adjustments for producers and on nonpool milk.

    (a) The weighted average differential price for producer milk 
received at pool plants or diverted to nonpool plants shall be adjusted 
according to the location of the plants at which it was received or was 
deemed to have been received at the rates set forth in Sec. 1049.52(a), 
except that the adjusted weighted average differential price plus the 
withholding rate for the Advertising and Promotion program computed in 
Sec. 1049.121(e), shall be not less than zero for the month.
    (b) For purposes of computations pursuant to Secs. 1049.71 and 
1049.72 the weighted average differential price shall be adjusted at the 
rates set forth in Sec. 1049.52 applicable at the location of the 
nonpool plant from which the milk was received, except that the adjusted

[[Page 471]]

weighted average differential price shall not be less than zero.
[58 FR 43518, Aug. 17, 1993]



Sec. 1049.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1049.30(b) and 1049.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and the weighted average price shall not 
be less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1049.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the

[[Page 472]]

fully regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1049.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1049.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1049.60(f) less the value of such other source milk 
specified in Sec. 1049.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1049.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1049.7(b), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1049.30(b) and 
1049.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1049.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1049.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1049.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1049.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the

[[Page 473]]

nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 31288; Aug. 28, 1974, as amended at 44 FR 71403, Dec. 11, 1979; 
58 FR 27843, May 11, 1993]



Sec. 1049.77  Adjustment of accounts.

    Whenever verification by the market administrator of reports or 
payments of any handler discloses errors resulting in money due (a) the 
market administrator from such handler, (b) such handler from the market 
administrator, or (c) any producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made not later than the 
date for making payment next following such disclosure.



Sec. 1049.78  Charges on overdue accounts.

    (a) Any unpaid obligation of a handler pursuant to Sec. 1049.71, 
Sec. 1049.76, Sec. 1049.77(a), Sec. 1049.78, Sec. 1049.85, or 
Sec. 1049.86(a) shall be increased 1 percent beginning on the first day 
after the due date of such obligation and on the same day of each 
succeeding month until such obligation is paid. All such charges on 
overdue accounts shall be paid to the administrative assessment fund 
maintained by the market administrator.
    (b) Any obligation that was determined at a date later than that 
prescribed by the order because of a handler's failure to submit a 
report to the market administrator when due, shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due.
[58 FR 43518, Aug. 17, 1993]

        Administrative Assessment and Marketing Service Deduction



Sec. 1049.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler (except a handler pursuant to Sec. 1049.9(b) or (c) for 
milk delivered to pool plants) shall pay to the market administrator on 
or before the 15th day after the end of the month 4 cents per 
hundredweight, or such lesser amount as the Secretary may prescribe, 
with respect to:
    (a) Producer milk (including such handler's own farm production) and 
milk received from handler pursuant to Sec. 1049.9(b) or (c);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1049.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1049.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1049.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1049.60 (d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1049.76(a)(2).
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 27843, May 11, 1993]



Sec. 1049.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to each producer pursuant to Sec. 1049.73 
shall deduct 7 cents per hundredweight or such lesser amount as the 
Secretary may prescribe with respect to producer milk received by such 
handler (except such handler's own farm production) during the month, 
and shall pay such deductions to the market administrator not later than 
the 15th day after the end of the month. Such money shall be used by the 
market administrator to verify or establish weights, samples, and tests 
of producer milk and to provide producers with market information. Such 
services shall be performed by the market administrator or by an agent 
engaged by and responsible to him.
    (b) In the case of producers for whom a cooperative association is 
performing, as determined by the Secretary, the services set forth in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
as are authorized by such producers and, on or before the 15th day after 
the end of each month,

[[Page 474]]

pay over such deductions to the association rendering such services.
[39 FR 31288, Aug. 28, 1974, as amended at 58 FR 43518, Aug. 17, 1993]

                    Advertising and Promotion Program



Sec. 1049.105  Dairy research and promotion order.

    Dairy Research and Promotion Order means the order (7 CFR part 1150) 
established by the Secretary pursuant to title I, subtitle B, of the 
Dairy and Tobacco Adjustment Act of 1983, Pub. L. 98-180, 97 Stat. 1128, 
as approved November 29, 1983, and any amendments thereto.
[49 FR 23031, June 4, 1984]



Sec. 1049.106  Qualified program.

    Qualified program means a State or regional dairy product promotion, 
research or nutrition education program certified by the Secretary as a 
qualified program pursuant to Section 1150.153 of the Dairy Research and 
Promotion Order.
[49 FR 23031, June 4, 1984]



Sec. 1049.107  Deduction for advertising and promotion program.

    On or before the 18th day after the end of each month, each handler 
described in Sec. 1049.9 (a), (b), or (c) shall remit to the market 
administrator as a deduction from payments to producers an amount equal 
to the rate per hundredweight specified in Sec. 1049.121(e) times the 
volume of milk pooled by each such producer for such month. When making 
such deductions from payments to producers, the handler shall credit any 
payments required under authority of State law applicable to such 
producers for an advertising and promotion program that is a qualified 
program. Such credit shall not exceed the amount of each producer's 
deduction computed pursuant to this section.
[49 FR 23031, June 4, 1984]



Sec. 1049.110  Agency.

    Agency means an agency organized by producers and producers' 
cooperative associations, in such form and with methods of operation 
specified in this part, which is authorized to expend funds made 
available pursuant to Sec. 1049.121(b)(1), on approval by the Secretary, 
for the purposes of establishing or providing for establishment of 
research and development projects, advertising (excluding brand 
advertising), sales promotion, educational, and other programs, designed 
to improve or promote the domestic marketing and consumption of milk and 
its products. Members of the Agency shall serve without compensation but 
shall be reimbursed for reasonable expenses incurred in the performance 
of duties as members of the Agency.



Sec. 1049.111  Composition of the Agency.

    Each cooperative association or combination of cooperative 
associations as provided for under Sec. 1049.113(b) with 3 percent or 
more of the total participating producers (producers who have not 
requested refunds for the most recent quarter) is authorized one Agency 
representative plus one additional Agency representative for each 
additional full 10 percent of the participating member producers it 
represents. Cooperative associations with less than 3 percent of the 
total participating producers that have elected not to combine pursuant 
to Sec. 1049.113(b), and participating producers who are not members of 
cooperatives are authorized to select from such group, in total, one 
Agency representative for the first full 3 percent plus one additional 
Agency representative for each additional full 10 percent that such 
producers constitute of the total participating producers. For the 
purpose of the Agency's initial organization, all persons defined as 
producers shall be considered as participating producers.



Sec. 1049.112  Term of office.

    The term of office of each member of the Agency shall be 1 year, or 
until a replacement is designated by the cooperative association or is 
otherwise appropriately elected.



Sec. 1049.113  Selection of Agency members.

    The selection of Agency members shall be made pursuant to paragraphs 
(a), (b), and (c) of this section. Each person selected shall qualify by 
filing

[[Page 475]]

with the market administrator a written acceptance promptly after being 
notified of such selection.
    (a) Each cooperative association authorized one or more 
representatives to the Agency shall notify the market administrator of 
the name and address of each representative who shall serve at the 
pleasure of the cooperative.
    (b) For purposes of this program, cooperative associations may elect 
to combine their participating memberships and, if the combined total of 
participating producers of such cooperatives is 3 percent or more of the 
total participating producers, such cooperatives shall be eligible to 
select a representative(s) to the Agency under the rules of 
Sec. 1049.111 and paragraph (a) of this section.
    (c) Selection of Agency members to represent participating nonmember 
producers and participating producer members of a cooperative 
association(s) having less than the required 3 percent of the producers 
participating in the advertising and promotion program and who have not 
elected to combine memberships as provided in paragraph (b) of this 
section, shall be supervised by the market administrator in the 
following manner:
    (1) In June of each year the market administrator shall give notice 
to participating producer members of such cooperatives and participating 
nonmember producers of their opportunity to nominate one or more Agency 
representatives, as the case may be, and also shall specify the number 
of representatives to be selected.
    (2) Following the closing date for nominations, the market 
administrator shall announce the nominees who are eligible for Agency 
membership and shall conduct a referendum among the individual producers 
eligible to vote. Election to membership shall be determined on the 
basis of the nominee (or nominees) receiving the largest number of 
eligible votes. If an elected representative subsequently discontinues 
producer status or is otherwise unable to complete his term of office, 
the market administrator shall appoint as his replacement the 
participating producer who received the next highest number of eligible 
votes.
[39 FR 31288, Aug. 28, 1974, as amended at 44 FR 71403, Dec. 11, 1979]



Sec. 1049.114  Agency operating procedure.

    A majority of the Agency members shall constitute a quorum and any 
action of the Agency shall require a majority of concurring votes of 
those present and voting, unless the Agency determines that more than a 
simple majority shall be required.



Sec. 1049.115  Powers of the Agency.

    The Agency is empowered to:
    (a) Administer the terms and provisions within the scope of Agency 
authority pursuant to Sec. 1049.110.
    (b) Make rules and regulations to effectuate the purposes of Pub. L. 
91-670;
    (c) Recommend amendments to the Secretary; and
    (d) With the approval of the Secretary, enter into contracts and 
agreements with persons or organizations as deemed necessary to carry 
out advertising and promotion programs and projects specified in 
Secs. 1049.110 and 1049.117.



Sec. 1049.116  Duties of the Agency.

    The Agency shall perform all duties necessary to carry out the terms 
and provisions of this program including, but not limited to, the 
following:
    (a) Meet, organize, and select from among its members a chairman and 
such other officers and committees as may be necessary, and adopt and 
make public such rules as may be necessary for the conduct of its 
business;
    (b) Develop programs and projects pursuant to Secs. 1049.110 and 
1049.117;
    (c) Keep minutes, books, and records, and submit books and records 
for examination by the Secretary and furnish any information and reports 
requested by the Secretary;
    (d) Prepare and submit to the Secretary for approval prior to each 
quarterly period a budget showing the projected amounts to be collected 
during the quarter and how such funds are to be disbursed by the Agency;
    (e) When desirable, establish an advisory committee(s) of persons 
other than Agency members;

[[Page 476]]

    (f) Employ and fix the compensation of any person deemed to be 
necessary to its exercise of powers and performance of duties;
    (g) Establish the rate of reimbursement to the members of the Agency 
for expenses in attending meetings, and pay the expenses of 
administering the Agency; and
    (h) Provide for the bonding of all persons handling Agency funds in 
an amount and with surety thereon satisfactory to the Secretary.



Sec. 1049.117  Advertising, research, education, and promotion program.

    The Agency shall develop and submit to the Secretary for approval 
all programs or projects undertaken under the authority of this part. 
Such programs or projects may provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate programs or projects for the advertising and promotion of 
milk and milk products on a nonbrand basis;
    (b) The utilization of the services of other organizations to carry 
out Agency programs and projects if the Agency finds that such 
activities will benefit producers under this part; and
    (c) The establishment, support, and conduct of research and 
development projects and studies that the Agency finds will benefit all 
producers under this part.



Sec. 1049.118  Limitation of expenditures by the Agency.

    (a) Not more than 5 percent of the funds received by the Agency 
pursuant to Sec. 1049.121(b)(1) shall be utilized for administrative 
expense of the Agency.
    (b) Agency funds shall not, in any manner, be used for political 
activity or for the purpose of influencing governmental policy or 
action, except in recommending to the Secretary amendments to the 
advertising and promotion program provisions of this part.
    (c) Agency funds may not be expended to solicit producer 
participation.
    (d) Agency funds may be used only for programs and projects 
promoting the domestic marketing and consumption of milk and its 
products.



Sec. 1049.119  Personal liability.

    No member of the Agency shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever to any person 
for errors in judgment, mistakes, or other acts, either of commission or 
omission, of such member in performance of his duties, except for acts 
of willful misconduct, gross negligence, or those which are criminal in 
nature.



Sec. 1049.120  Procedure for requesting refunds.

    Any producer may apply for refund under the procedure set forth 
under paragraphs (a) through (c) of this section.
    (a) Refund shall be accomplished only through application filed with 
the market administrator in the form prescribed by the market 
administrator and signed by the producer. Only that information 
necessary to identify the producer and the records relevant to the 
refund may be required of such producer. As long as the Dairy Research 
and Promotion Order is in effect, any producer who files a request for 
refund in accordance with this section may designate a qualified program 
to receive such refund.
    (b) Except as provided in paragraphs (c) and (d) of this section, 
the request shall be submitted within the first 15 days of December, 
March, June, or September for milk to be marketed during the ensuing 
calendar quarter beginning on the first day of January, April, July and 
October, respectively.
    (c) Except as provided in paragraph (d) of this section, a dairy 
farmer who first acquires producer status under this part after the 15th 
day of December, March, June or September, as the case may be, and prior 
to the end of the ensuing calendar quarter may, upon application filed 
with the market administrator pursuant to paragraph (a) of this section, 
be eligible for refund on all marketings against which an assessment is 
withheld during such calendar quarter pursuant to Sec. 1049.121(b).
    (d) A dairy farmer who, with respect to any calendar quarter, has 
appropriately filed a request for the refund of program assessments on 
his marketings of milk under another order that

[[Page 477]]

provides for an advertising and promotion program will be eligible on 
the basis of his request filed under the other order for a similar 
refund with respect to his producer milk marketed under this order 
during such quarter for which deductions were made pursuant to 
Sec. 1049.121(b).
[39 FR 31288; Aug. 28, 1974, as amended at 44 FR 71403, Dec. 11, 1979; 
49 FR 23031, June 4, 1984]



Sec. 1049.121  Duties of the market administrator.

    Except as specified in Sec. 1049.116, the market administrator, in 
addition to other duties specified by this part, shall perform all the 
duties necessary to administer the terms and provisions of the 
advertising and promotion program including, but not limited to, the 
following:
    (a) In July of each year, conduct a referendum to determine 
representation on the Agency pursuant to Sec. 1049.113(c).
    (b) Each month deposit into an advertising and promotion fund, 
separately accounted for, an amount equal to the funds received from 
handlers pursuant to Sec. 1049.107. The amount deposited shall be 
disbursed as follows:
    (1) To the Agency each month, all such funds less any necessary 
amount held in reserve to cover refunds pursuant to paragraph (b) (3) or 
(4) of this section, and payments to cover expenses of the market 
administrator incurred in the administration of the advertising and 
promotion program (including audit).
    (2) [Reserved]
    (3) As long as the Dairy Research and Promotion Order is in effect, 
paragraph (b)(4) of this section shall apply in lieu of this paragraph. 
After the end of each calendar quarter, make a refund to each producer 
who has made application for such refund pursuant to Sec. 1049.120. Such 
refund shall be that amount which was obtained pursuant to Sec. 1049.107 
for each calendar quarter.
    (4) As long as the Dairy Research and Promotion Order is in effect, 
remit to any qualified programs any refunds designated by producers to 
be paid to such programs no later than the last day of the month 
following the month in which the milk was marketed. If a refund request 
does not designate a qualified program to receive such money, the refund 
shall be remitted to the National Dairy Promotion and Research Board, 
which is defined in the Dairy Research and Promotion Order.
    (c) Promptly after the effective date of this amending order, and 
thereafter with respect to new producers, forward to each producer a 
copy of the provisions of the advertising and promotion program 
(Secs. 1049.105 through 1049.122).
    (d) Audit the Agency's records of receipts and disbursements.
    (e) As soon as possible after the beginning of each year, compute 
the rate of withholding by multiplying the simple average of the monthly 
uniform prices for the last quarter of the preceding year by 0.75 
percent and rounding to the nearest whole cent. This rate shall apply 
during the 12-month period beginning with April of the current year: 
Provided, That the rate shall be 10 cents per hundredweight as long as 
the Dairy Research and Promotion Order is in effect.
    (f) As soon as possible after the rate of withholding is computed, 
notify in writing each producer currently on the market and any new 
producer that subsequently enters the market of the withholding rate. 
This notification shall be repeated annually thereafter only if there is 
any change in the rate from the previous period.
[44 FR 71403, Dec. 11, 1979, as amended at 49 FR 23031, June 4, 1984]



Sec. 1049.122  Liquidation.

    In the event that the provisions of this advertising and promotion 
program are terminated, any remaining uncommitted funds applicable 
thereto shall revert to the producer-settlement fund of Sec. 1049.70.



PART 1050--MILK IN CENTRAL ILLINOIS MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1050.1  General provisions.

                               Definitions

1050.2  Central Illinois marketing area.
1050.3  Route disposition.

[[Page 478]]

1050.4  [Reserved]
1050.5  Distributing plant.
1050.6  Supply plant.
1050.7  Pool plant.
1050.8  Nonpool plant.
1050.9  Handler.
1050.10  Producer-handler.
1050.11  [Reserved]
1050.12  Producer.
1050.13  Producer milk.
1050.14  Other source milk.
1050.15  Fluid milk product.
1050.16  Fluid cream product.
1050.17  Filled milk.
1050.18  Cooperative association.
1050.19  Commercial food processing establishment.

                             Handler Reports

1050.30  Reports of receipts and utilization.
1050.31  Payroll reports.
1050.32  Other reports.

                         Classification of Milk

1050.40  Classes of utilization.
1050.41  Shrinkage.
1050.42  Classification of transfers and diversions.
1050.43  General classification rules.
1050.44  Classification of producer milk.
1050.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1050.50  Class prices.
1050.51  Basic formula price.
1050.52  Plant location adjustments for handlers.
1050.53  Announcement of class prices.
1050.54  Equivalent price.

                              Uniform Price

1050.60  Handler's value of milk for computing uniform price.
1050.61  Computation of uniform price (including weighted average 
          price).
1050.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1050.70  Producer-settlement fund.
1050.71  Payments to the producer-settlement fund.
1050.72  Payments from the producer-settlement fund.
1050.73  Payments to producers and to cooperative associations.
1050.74  Butterfat differential.
1050.75  Plant location adjustments for producers and on nonpool milk.
1050.76  Payments by handler operating a partially regulated 
          distributing plant.
1050.77  Adjustment of accounts.
1050.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1050.85  Assessment for order administration.
1050.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 39 FR 15448, May 3, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1050.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1050.2  Central Illinois marketing area.

    The Central Illinois marketing area, hereinafter called the 
``marketing area'', means all the territory within the following 
counties, all of which are in the State of Illinois, together with all 
municipal corporations therein and all institutions owned or operated by 
the Federal, State, county, or municipal governments located wholly or 
partially within such counties:

                                 Zone I

    Cass, Ford, Fulton, Knox, Livingston, Marshall, Mason, McDonough, 
Peoria, Stark, Tazewell, Warren, Woodford.

                                 Zone II

    Bureau, Grundy, Iroquois, Kankakee, La Salle, Putnam.



Sec. 1050.3  Route disposition.

    Route disposition means a delivery (including disposition from a 
plant store or from a distribution point and distribution by a vendor or 
vending machine) of any fluid milk product classified as Class I milk to 
a retail or wholesale outlet other than a pool plant or a nonpool plant.

[[Page 479]]



Sec. 1050.4  [Reserved]



Sec. 1050.5  Distributing plant.

    Distributing plant means any plant at which fluid milk products are 
processed and packaged and from which there is route disposition of 
Grade A fluid milk products in the marketing area during the month.



Sec. 1050.6  Supply plant.

    Supply plant means any plant at which Grade A milk is received from 
dairy farmers and from which fluid milk products are moved to a 
distributing plant.



Sec. 1050.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means a plant specified in paragraph (a), (b), or (c) of this section. 
For purposes of determining pool plant status pursuant to this section, 
Grade A receipts from dairy farmers shall include all quantities of milk 
diverted pursuant to Sec. 1050.13(b) and (c) by an operator of a pool 
plant.
    (a) A distributing plant from which during the month there is:
    (1) Route disposition of fluid milk products, except filled milk, in 
the marketing area equal to 10 percent or more of its Grade A receipts 
from dairy farmers, handlers described in Sec. 1050.9(c), and other pool 
plants, such receipts to be exclusive of fluid milk products (except 
filled milk) transferred without specific Class II or Class III 
designation to other pool plants described in this paragraph, or from 
which there is an average of not less than 7,000 pounds per day of route 
disposition, except filled milk, in the marketing area; and
    (2) Total route disposition of fluid milk products, except filled 
milk, equal to 50 percent or more of its Grade A receipts from dairy 
farmers, handlers described in Sec. 1050.9(c), and other pool plants, 
such receipts to be exclusive of fluid milk products (except filled 
milk) transferred without specific Class II or Class III designation to 
other pool plants described in this paragraph, during the months of 
August through February and 40 percent during all other months.
    (b) A supply plant from which during the month an amount equal to 50 
percent or more of its receipts of Grade A milk from dairy farmers and 
handlers described in Sec. 1050.9(c) is moved to and received at a pool 
plant(s) described in paragraph (a) of this section which have at least 
50 percent Class use (not including filled milk) of the total of such 
supply plant milk and producer milk receipts in the months of August 
through February and 40 percent in other months.
    (c) Any supply plant which qualified pursuant to paragraph (b) of 
this section in each of the immediately preceding months of September 
through January shall be a pool plant for the months of February through 
August unless the operator of such plant notifies the market 
administrator in writing before the first day of any such month of his 
intention to withdraw such plant as a pool plant, in which case such 
plant shall thereafter be a nonpool plant until it again meets the 
shipping requirements set forth in paragraph (b) of this section.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which during the month there is a greater quantity of route disposition, 
except filled milk, in the marketing area regulated by the other order 
than in the Central Illinois marketing area: Provided, That such a 
distributing plant which was a pool plant under this order in the 
immediately preceding month shall continue to be subject to all of the 
provisions of this part until the third consecutive month in which a 
greater proportion of such route disposition is made in such other 
marketing area, unless the other order requires regulation of the plant 
without regard to its qualifying as a pool plant under this order 
subject to the proviso of this paragraph;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another Federal order and from which during the 
month there is greater quantity of route disposition,

[[Page 480]]

except filled milk, in the Central Illinois marketing area than in the 
other marketing area, and such other order which fully regulates the 
plant does not contain provisions to exempt the plant from regulation 
even though such plant has greater route disposition in the marketing 
area of the Central Illinois order; and
    (4) Any plant qualified pursuant to paragraph (c) of this section 
for any portion of the period of February through August, inclusive, 
that the milk at such plant is subject to the classification and pricing 
provisions of another order issued pursuant to the Act.



Sec. 1050.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant, from which fluid milk 
products are shipped to a pool plant.



Sec. 1050.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk of producers 
diverted for its account pursuant to Sec. 1050.13;
    (c) Any cooperative association with respect to milk it receives for 
its account from the farm of a producer in a tank truck owned and 
operated by, or under the control of, such association, for delivery to 
a pool plant(s);
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1050.7(d); and
    (g) Any person in his capacity as the operator of an unregulated 
supply plant.



Sec. 1050.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a distributing plant and processes milk from his own 
farm production and who disposes of all or a portion of such milk as 
route disposition in the marketing area but who receives no milk from 
other dairy farmers or fluid milk products from nonpool plants: 
Provided, That the skim milk and butterfat disposed of in the form of 
fluid milk products designated as Class I milk pursuant to 
Sec. 1050.40(a) does not exceed the skim milk and butterfat, 
respectively, in the form of milk from his own farm production, and in 
the form of fluid milk products from pool plants of other handlers, 
allowing for inventory derived from such sources; and
    (b) Assumes as his personal enterprise and risk the processing and 
distributing of fluid milk products and the maintenance, care and 
management of dairy animals and other resources necessary to produce his 
own farm milk production.



Sec. 1050.11  [Reserved]



Sec. 1050.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the Grade A 
inspection requirements of a duly constituted health authority, and 
whose milk is (1) received at a pool plant, (2) diverted pursuant to 
Sec. 1050.13, or (3) accounted for by a cooperative association pursuant 
to Sec. 1050.13(b).
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and

[[Page 481]]

such milk is allocated to Class II or Class III utilization pursuant to 
Sec. 1050.44(a)(8)(iii) and the corresponding step of Sec. 1050.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.



Sec. 1050.13  Producer milk.

    Producer milk means all skim milk and butterfat contained in milk 
from producers that is:
    (a) Received at a pool plant from producers or from a handler 
described in Sec. 1050.9(c);
    (b) Represented by the difference between the quantity of milk 
received by a handler described in Sec. 1050.9(c) at producers' farms 
and the quantity of such milk delivered to pool plants. For the purposes 
of Secs. 1050.52 and 1050.75, such milk shall be deemed to have been 
received by such handler at the pool plant to which all other producer 
milk in the same tank truck was delivered;
    (c) Diverted by a handler from a pool plant for the account of the 
plant operator to another pool plant(s) for not more days of production 
of such producer's milk than is physically received at a pool plant(s) 
from which diverted. For pricing purposes such diverted milk shall be 
deemed to be received by the diverting handler at the location of the 
plant to which diverted;
    (d) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant, subject to the conditions of this paragraph. For 
pricing purposes, milk so diverted shall be deemed to be received at the 
plant from which diverted, unless the plant to which the milk is 
diverted is located more than 110 miles from the city hall in Peoria, 
Ill. (by shortest highway distance as determined by the market 
administrator) in which case the milk shall be deemed to be received by 
the diverting handler at the location of the plant to which diverted:
    (1) During May, June and July the operator of a pool plant or a 
cooperative association may divert the milk production of a producer on 
any number of days;
    (2) Subject to the conditions set forth in paragraph (d)(4) of this 
section, during the months of August through April the operator of a 
pool plant may divert the milk of a producer for not more days of 
production of such producer's milk than it is physically received at the 
pool plant from which diverted: Provided, That the total quantity of 
producer milk diverted does not exceed 35 percent of the physical 
receipts of producer milk at the handler's pool plant during the month, 
exclusive of milk of producers who are members of a cooperative 
association that is diverting milk and the milk of other producers that 
is diverted pursuant to paragraph (d)(3) of this section;
    (3) Subject to the conditions set forth in paragraph (d)(4) of this 
section, during the months of August through April a cooperative 
association may divert the milk of producers for not more days of 
production of each producer's milk than is physically received at a pool 
plant: Provided, That the total quantity of producer milk does not 
exceed 35 percent of (i) its member milk physically received at pool 
plants during such month and (ii) other producer milk for which the 
cooperative association is the handler pursuant to Sec. 1050.9(c) during 
such month;
    (4) In the case where a cooperative association has notified the 
market administrator and the handler in writing prior to the first day 
of the month that milk of specified member producers will not be 
diverted by the cooperative and is not to be included in computing the 
cooperative association's diversion percentage for the month, milk of 
such producers shall be deducted from the cooperative's total receipts 
of member milk for the purposes specified in paragraph (c)(3) of this 
section and added to the total milk receipts included in computing the 
diversions of the pool plant handler who receives their milk for the 
purposes specified in paragraph (c)(2) of this section; and
    (5) When milk is diverted in excess of the limits specified in 
paragraphs (d)(2) and (3) of this section, eligibility as producer milk 
under this section shall be forfeited on the excess quantity. In such 
event the diverting handler shall specify the dairy farmers whose milk 
is

[[Page 482]]

ineligible as producer milk. If a handler fails to designate such dairy 
farmers whose milk is ineligible, producer milk status shall be 
forfeited with respect to all milk diverted to nonpool plants by such 
handler.

    Effective Date Notes: 1. At 60 FR 7435, Feb. 8, 1995, in 
Sec. 1050.13, paragraph (d)(2), the words ``: Provided, That the total 
quantity of producer milk diverted does not exceed 35 percent of the 
physical receipts of producer milk at the handler's pool plant during 
the month, exclusive of milk of producers who are members of a 
cooperative association that is diverting milk and the milk of other 
producers that is diverted pursuant to paragraph (d)(3) of this 
section'' were suspended for an indefinite period beginning Jan. 1, 
1995.
    2. At 60 FR 18344, Apr. 11, 1995, in Sec. 1050.13, paragraph (d)(2), 
the words ``not'' and ``it'' where they first appear were suspended for 
an indefinite period effective Apr. 11, 1995.



Sec. 1050.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1050.40(b)(1) from any source other than producers, handlers 
described in Sec. 1050.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1050.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1050.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1050.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1050.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27843, May 11, 1993]



Sec. 1050.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27843, May 11, 1993]



Sec. 1050.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1050.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and

[[Page 483]]

    (b) To be engaged in making collective sales, or marketing milk or 
its products for its members.



Sec. 1050.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1050.13, 1050.41 and 1050.52.
[58 FR 27844, May 11, 1993]

                             Handler Reports



Sec. 1050.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1050.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1050.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1050.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.



Sec. 1050.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1050.9(a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1050.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1050.32  Other reports.

    (a) Not later than the 7th day after the end of the month, each 
handler operating a pool plant shall report to the market administrator, 
for each of his pool plants separately, the name and address of each 
producer from whom milk was received during the month

[[Page 484]]

with statements showing dates on which such producer started shipping 
and the date on which milk shipments stopped.
    (b) In addition to the reports required pursuant to Secs. 1050.30 
and 1050.31 and paragraph (a) of this section, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish such handler's obligation under the order.

                         Classification of Milk



Sec. 1050.40  Classes of utilization.

    Except as provided in Sec. 1050.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1050.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;

[[Page 485]]

    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1050.15 and the fluid 
cream product definition pursuant to Sec. 1050.16; and
    (7) In shrinkage assigned pursuant to Sec. 1050.41(a) to the 
receipts specified in Sec. 1050.41(a)(2) and in shrinkage specified in 
Sec. 1050.41 (b) and (c).
[58 FR 27844, May 11, 1993]



Sec. 1050.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1050.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in bulk fluid form;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1050.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1050.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph (b)(2) 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III

[[Page 486]]

classification is requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1050.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1050.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1050.44(a)(12) and the corresponding 
step of Sec. 1050.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1050.44(a)(7) 
or the corresponding step of Sec. 1050.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1050.44(a)(11) or (12) or the corresponding steps of 
Sec. 1050.44(b), the skim milk or butterfat so tranferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other

[[Page 487]]

order is not available to the market administrator for the purpose of 
establishing classification under this paragraph, classification shall 
be as Class I, subject to adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1050.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1050.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:

[[Page 488]]

    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[39 FR 15448, May 3, 1974, as amended at 58 FR 27844, May 11, 1993]



Sec. 1050.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1050.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1050.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1050.9(b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1050.40, 
1050.41, and 1050.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1050.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1050.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1050.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[39 FR 15448, May 3, 1974, as amended at 58 FR 27845, May 11, 1993]



Sec. 1050.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1050.9(a) for each of his pool plants separately and of each 
handler described in Sec. 1050.9(b) and (c) by allocating the handler's 
receipts of

[[Page 489]]

skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1050.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1050.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1050.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1050.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1050.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1050.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an

[[Page 490]]

unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i) and (7)(v) of this section for which the handler requests a 
classification other than Class I, but not in excess of the pounds of 
skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1050.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this paragraph exceed the pounds of 
skim milk remaining in such classes, the pounds of skim milk in Class II 
and Class III

[[Page 491]]

combined shall be increased (increasing as necessary Class III and then 
Class II to the extent of available utilization in such classes at the 
nearest other pool plant of the handler, and then at each successively 
more distant pool plant of the handler) by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class I 
shall be decreased by a like amount. In such case, the pounds of skim 
milk remaining in each class at this allocation step at the handler's 
other pool plants shall be adjusted in the reverse direction by a like 
amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1050.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse directions by a like 
amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall

[[Page 492]]

be decreased by a like amount (decreasing as necessary Class III and 
then Class II). In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount beginning with the 
nearest plant at which Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1050.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 15448, May 3, 1974, as amended at 58 FR 27845, May 11, 1993]



Sec. 1050.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1050.44(a)(12) and the corresponding 
step of Sec. 1050.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1050.43(d) and Sec. 1050.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operation a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests, the class utilization of 
producer milk received by each handler from a cooperative association or 
from members of the association. For the purpose of this report, the 
milk caused to be so delivered by an association shall be prorated to 
each class in the proportion that the total receipts of milk received 
from producers by such handler were used in each class.
[39 FR 15448, May 3, 1974, as amended at 58 FR 27845, May 11, 1993]

                              Class Prices



Sec. 1050.50  Class prices.

    Subject to the provisions of Sec. 1050.52, the class prices for the 
month per hundredweight of milk containing 3.5 percent butterfat shall 
be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $1.61.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.

[[Page 493]]

    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[39 FR 15448, May 3, 1974, as amended at 46 FR 43381, Aug. 28, 1981; 51 
FR 12832, Apr. 16, 1986; 60 FR 6610, Feb. 2, 1995]



Sec. 1050.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1050.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.

[[Page 494]]

    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18966, Apr. 14, 1995]



Sec. 1050.52  Plant location adjustments for handlers.

    (a) The Class I price for producer milk at a plant located outside 
the State of Illinois or in the State of Illinois but north of the 
northernmost boundaries of the counties of Mercer, Henry, Bureau, La 
Salle, Grundy, and Kankakee shall be reduced 10 cents if such plant is 
50 miles or more from the City Hall in Peoria, Illinois, plus an 
additional 2.0 cents for each 10 miles or fraction thereof that such 
distance exceeds 60 miles. Distances applied pursuant to this paragraph 
shall be the shortest hard-surfaced highway distances as determined by 
the market administrator from the latest Mileage Guide as published by 
the Household Goods Carrier's Bureau.
    (b) For purposes of calculating such adjustment, bulk transfers 
between pool plants shall be assigned Class I disposition at the 
transferee-plant only to the extent that 105 percent of Class I 
disposition at the transferee-plant exceeds the sum of receipts at such 
plant from producers and cooperative associations pursuant to 
Sec. 1050.9(c), and the volume assigned as Class I to receipts from 
other order plants and unregulated supply plants; such assignment to be 
made first to transferor-plants at which no location adjustment credit 
is applicable and then in sequence beginning with the plant at which the 
least location adjustment would apply.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[39 FR 15448, May 3, 1974, as amended at 52 FR 3415, Feb. 4, 1987]



Sec. 1050.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6610, Feb. 2, 1995]



Sec. 1050.54  Equivalent price.

    If for any reason a price quotation required by this part for 
computing class prices or for other purposes is not available in the 
manner described, the market administrator shall use a price determined 
by the Secretary to be equivalent to the price which is required.

                              Uniform Price



Sec. 1050.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1050.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1050.44 by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1050.44(a)(14) and the 
corresponding step of Sec. 1050.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1050.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1050.44(a)(9) and the corresponding step of Sec. 1050.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the

[[Page 495]]

Class I price applicable at the location of the pool plant and the Class 
III price by the hundredweight of skim milk and butterfat assigned to 
Class I pursuant to Sec. 1050.43(d) and the hundredweight of skim milk 
and butterfat subtracted from Class I pursuant to Sec. 1050.44(a)(7) (i) 
through (iv) and the corresponding step of Sec. 1050.44(b), excluding 
receipts of bulk fluid cream products from an other order plant and bulk 
concentrated fluid milk products from pool plants, other order plants 
and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1050.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1050.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1050.43(d) and Sec. 1050.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1050.44(a)(11) and the corresponding steps of Sec. 1050.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1050.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1050.76 (a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[39 FR 15448, May 3, 1974, as amended at 58 FR 27845, May 11, 1993]



Sec. 1050.61  Computation of uniform price (including weighted average price).

    For each month the market administrator shall compute the uniform 
price per hundredweight of milk of 3.5 percent butterfat content which 
is received from producers at plants at which no location adjustment 
pursuant to Sec. 1050.52 is applicable as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1050.60 for all handlers who filed the reports prescribed by 
Sec. 1050.30 for the month and who made the payments pursuant to 
Sec. 1050.71 for the preceding month;
    (b) Add an amount equal to the sum of the location and zone 
adjustments computed pursuant to Sec. 1050.75;
    (c) Add an amount equal to one-half of the unobligated balance in 
the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1050.60(f);
    (e) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight.

[[Page 496]]

The result shall be the ``weighted average price,'' and the ``uniform 
price'' for milk received from producers.
[39 FR 15448, May 3, 1974, as amended at 45 FR 23404, Apr. 7, 1980]



Sec. 1050.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 12th day after the end of each month the uniform price for 
such month.

                            Payments for Milk



Sec. 1050.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund,'' which shall function as 
follows:
    (a) All payments made by handlers pursuant to Secs. 1050.71, 
1050.76, and 1050.77 shall be deposited in such fund and from which 
shall be made all payments pursuant to Secs. 1050.72 and 1050.77: 
Provided, That any payments due to any handler shall be offset by any 
payments due from such handler; and
    (b) All amounts subtracted pursuant to Sec. 1050.61(g) shall be 
deposited in this fund and set aside as an obligated balance until 
withdrawn to effectuate Sec. 1050.73 in accordance with the requirements 
of Sec. 1050.61(h).



Sec. 1050.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1050.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1050.75, of such handler's receipts of producer milk; and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1050.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.



Sec. 1050.72  Payments from the producer-settlement fund.

    On or before the 17th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1050.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1050.71(a)(1). The market administrator shall 
offset any payment due any handler against payments due from such 
handler.



Sec. 1050.73  Payments to producers and to cooperative associations.

    (a) On or before the 20th day of the following month, each handler 
shall make payment to each producer for milk received from such producer 
during such month:
    (1) An amount equal to not less than the uniform price, as adjusted 
pursuant to Secs. 1050.74 and 1050.75, multiplied by the hundredweight 
of milk received from such producer during the month, subject to the 
following adjustments:

[[Page 497]]

    (i) Less deductions for marketing services made pursuant to 
Sec. 1050.86;
    (ii) Plus or minus adjustments for errors made in previous payments 
made to such producer; and
    (iii) Less proper deductions authorized in writing by such producer: 
Provided, That, if by such date, such handler has not received full 
payment from the market administrator pursuant to Sec. 1050.72 for such 
month, he may reduce pro rata his payments to producers by not more than 
the amount of such underpayment. Payments to producers shall be 
completed thereafter not later than the date for making payments 
pursuant to this paragraph next following after the receipt of the 
balance due from the market administrator;
    (b) Payments required in paragraph (a) of this section for milk 
caused to be delivered to such handler by a cooperative association 
qualified under Sec. 1050.18 shall be made to such association, or its 
duly authorized agent, which the market administrator determines is 
authorized by such producers to collect payment for their milk and which 
has so requested the handler in writing. Such handler shall, on or 
before the 18th day of the following month, pay the cooperative 
association for milk received during the month from producers at the 
direction of such association as determined by the market administrator 
an amount equal to not less than the amounts due such producers as 
determined pursuant to paragraph (a) of this section, less any 
deductions authorized in writing by such association: Provided, That the 
association has provided the handler with a written promise to reimburse 
the handler the amount of any actual loss incurred by such handler 
because of any improper claim on the part of the cooperative 
association;
    (c) On or before the 18th day after the end of each month, each 
handler shall pay to each cooperative association for milk the handler 
received at his pool plant from a pool plant(s) operated by such 
association, not less than the minimum prices for milk in each class, as 
adjusted by the butterfat differential specified in Sec. 1050.74, that 
are applicable at the location of the handler's pool plant;
    (d) On or before the 18th day of the following month, each handler, 
in his capacity as operator of a pool plant, who receives milk for which 
a cooperative association is the handler pursuant to Sec. 1050.9(c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payments for their milk, shall pay 
such cooperative association for such milk at the uniform price as 
adjusted pursuant to Secs. 1050.74 and 1050.75; and
    (e) Each handler who received milk during the month from producers 
for which payment is to be made to a cooperative association pursuant to 
paragraph (b) of this section shall report on or before the 7th day 
after the end of the month to such cooperative association for each such 
producer on forms approved by the market administrator:
    (1) The total pounds of milk received from each producer together 
with the butterfat content of such milk; and
    (2) The amount or rate and nature of any deductions authorized by a 
cooperative association.



Sec. 1050.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1050.51 (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.
[60 FR 18966, Apr. 14, 1995]



Sec. 1050.75  Plant location adjustments for producers and on nonpool milk.

    (a) In making payments pursuant to Sec. 1050.73, the uniform price 
per hundredweight for producer milk received at a

[[Page 498]]

plant outside Zone I shall be adjusted according to the location of the 
plant at the rates set forth in Sec. 1050.52.
    (b) For purposes of computation pursuant to Secs. 1050.71 and 
1050.72, the weighted average price shall be adjusted in the same manner 
as the uniform price is adjusted pursuant to paragraph (a) of this 
section for the location of the nonpool plant from which the milk was 
received, except that the adjusted weighted average price shall not be 
less than the Class III price.



Sec. 1050.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1050.30(b) and 1050.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, 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
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1050.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same

[[Page 499]]

class in which such products were classified at the fully regulated 
plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1050.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1050.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1050.60(f) less the value of such other source milk 
specified in Sec. 1050.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1050.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1050.7 (b) and 
(c), subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1050.30(b) and 
1050.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1050.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1050.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1050.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1050.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of

[[Page 500]]

the total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 15448, May 3, 1974, as amended at 58 FR 27846, May 11, 1993]



Sec. 1050.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses errors resulting in moneys due (a) 
the market administrator from such handler, (b) such handler from the 
market administrator, or (c) any producer or cooperative association 
from such handler, the market administrator shall promptly notify such 
handler of any amount so due and payment thereof shall be made on or 
before the next date for making payments as set forth in the provisions 
under which such error occurred.



Sec. 1050.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1050.71, 
Sec. 1050.85, or Sec. 1050.86 shall be increased one-half of 1 percent 
for each month or portion therof that such payment is overdue.

        Administrative Assessment and Marketing Service Deduction



Sec. 1050.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler (excluding a handler described in Sec. 1050.9(c) with 
respect to milk delivered to pool plants) shall pay to the market 
administrator on or before the 20th day after the end of the month 5 
cents per hundredweight or such less amount as the Secretary may 
prescribe with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1050.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1050.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1050.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1050.60 (d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1050.76(a)(2).
[39 FR 15448, May 3, 1974, as amended at 58 FR 27846, May 11, 1993]



Sec. 1050.86  Deduction for marketing services.

    (a) Deduction for marketing services. Except as set forth in 
paragraph (b) of this section, each handler in making payments to 
producers, pursuant to Sec. 1050.73, shall deduct 6 cents per 
hundredweight, or such lesser amount as the Secretary may prescribe, 
with respect to all milk received by such handler from producers 
(excluding such handler's own production) during the month, and shall 
pay such deductions to the market administrator on or before the 20th 
day after the end of such month. Such monies shall be used by the market 
administrator to verify weights, samples, and tests of milk received 
from such producers and to provide them with market information. Such 
services shall be performed in whole or in part by the market 
administrator or by an agent engaged by and responsible to him.
    (b) Producer's cooperative association. In the case of producers for 
whom a cooperative association is actually performing, as determined by 
the Secretary, the services set forth in paragraph (a) of this section 
each handler, in lieu of the deduction specified in paragraph (a) of 
this section, shall make such marketing service deductions as are 
authorized by producer-members, and pay the money so deducted to the 
cooperative association on or before the 20th day after the end of the 
month.

[[Page 501]]



PARTS 1051-1063 [RESERVED]






PART 1064--MILK IN THE GREATER KANSAS CITY MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1064.1  General provisions.

                               Definitions

1064.2  Greater Kansas City marketing area.
1064.3  Route disposition.
1064.5  Distributing plant.
1064.6  Supply plant.
1064.7  Pool plant.
1064.8  Nonpool plant.
1064.9  Handler.
1064.10  Producer-handler.
1064.12  Producer.
1064.13  Producer milk.
1064.14  Other source milk.
1064.15  Fluid milk product.
1064.16  Fluid cream product.
1064.17  Filled milk.
1064.18  Cooperative association.
1064.19  Commercial food processing establishment.

                             Handler Reports

1064.30  Reports of receipts and utilization.
1064.31  Payroll reports.
1064.32  Other reports.

                         Classification of Milk

1064.40  Classes of utilization.
1064.41  Shrinkage.
1064.42  Classification of transfers and diversions.
1064.43  General classification rules.
1064.44  Classification of producer milk.
1064.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1064.50  Class prices.
1064.51  Basic formula price.
1064.52  Plant location adjustments for handlers.
1064.53  Announcement of class prices.
1064.54  Equivalent price.

                              Uniform Price

1064.60  Handler's value of milk for computing uniform price.
1064.61  Computation of uniform price (including weighted average 
          price).
1064.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1064.70  Producer-settlement fund.
1064.71  Payments to the producer-settlement fund.
1064.72  Payments from the producer-settlement fund.
1064.73  Payments to producers and to cooperative associations.
1064.74  Butterfat differential.
1064.75  Plant location adjustments for producers and on nonpool milk.
1064.76  Payments by handler operating a partially regulated 
          distributing plant.
1064.77  Adjustment of accounts.
1064.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1064.85  Assessment for order administration.
1064.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 39 FR 16260, May 8, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1064.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1064.2  Greater Kansas City marketing area.

    Greater Kansas City marketing area, hereinafter called ``marketing 
area,'' means all the territory within the boundaries of the counties 
listed below, including territory within such boundaries occupied by 
government (municipal, State, or Federal) reservations, installations, 
institutions, or other similar establishments:

                            Missouri Counties

    Andrew, Atchison, Bates, Buchanan, Cass, Clay, Clinton, Daviess, De 
Kalb, Gentry, Henry, Holt, Jackson, Johnson, Lafayette, Nodaway, Pettis, 
Platte, St. Clair, Worth.

                             Kansas Counties

    Atchison, Brown, Clay, Cloud, Dickinson, Doniphan, Douglas, Geary, 
Jackson, Jefferson, Johnson, Leavenworth,

[[Page 502]]

Lyon, Marshall, Miami, Morris, Nemaha, Ottawa, Pottawatomie, Republic, 
Riley, Saline, Shawnee, Wabaunsee, Washington, Wyandotte.



Sec. 1064.3  Route disposition.

    Route disposition means a delivery (either direct or through a 
distributing facility such as a distribution point, a plant store, a 
vendor, or vending machine), other than a delivery to a poll plant or a 
nonpool plant, of a fluid milk product classified as Class I milk.



Sec. 1064.5  Distributing plant.

    Distributing plant means a plant from which during the month there 
is route disposition in the marketing area of Grade A fluid milk 
products that are processed or packaged in such plant.



Sec. 1064.6  Supply plant.

    Supply plant means a plant from which a Grade A fluid milk product 
is shipped during the month to a pool plant.



Sec. 1064.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which during the month or the 
immediately preceding month there is:
    (1) Route disposition, except filled milk, in the marketing area 
that is not less than 15 percent of the total Grade A fluid milk 
products, except filled milk, received at such plant, including producer 
milk diverted to other plants pursuant to Sec. 1064.13 by the handler 
operating such plant; and
    (2) Route disposition, except filled milk, that is not less than the 
following percentage of the total Grade A fluid milk products, except 
filled milk, received at such plant, including producer milk diverted to 
other plants pursuant to Sec. 1064.13 by the handler operating such 
plant: Provided, That the combined receipts and disposition of each 
handler who operates more than one distributing plant, each of which 
meets the performance requirements of paragraph (a)(1) of this section, 
shall be used in determining the percentages specified in this 
subparagraph:
    (i) April through June, 35 percent;
    (ii) September and October, 50 percent; and
    (iii) All other months, 45 percent.
    (b) A supply plant from which during the month 50 percent or more of 
the Grade A milk received at such plant from dairy farmers and handlers 
described in Sec. 1064.9(c) (including milk diverted from such plant 
pursuant to Sec. 1064.13(c) but excluding milk diverted to such plant 
pursuant to Sec. 1064.13(c)) is shipped from such plant as fluid milk 
products, except filled milk, to and received at pool distributing 
plants, subject to the following conditions:
    (1) A supply plant which is a pool plant under this paragraph during 
each month of September through January shall be pooled for the 
following months of February through August if the required percentage 
pursuant to this paragraph is not met, unless the plant operator files a 
written request with the market administrator that such plant not be a 
pool plant, such nonpool status to be effective the first month 
following such request and thereafter until the plant qualifies as a 
pool plant on the basis of shipments;
    (2) The shipping percentage specified in this paragraph may be 
increased or decreased temporarily for any of the months of September 
through January up to 20 percentage points by the Director of the Dairy 
Division if the Director finds such revision is necessary to obtain 
needed shipments or to prevent uneconomic shipments. For any of the 
months of February through August, a minimum shipping percentage of up 
to 20 percent may be established by the Director for all pool supply 
plants that are qualified as a pool plant pursuant to paragraph (b)(1) 
of this section. Before making such a finding the Director shall 
investigate the need for revision, either at the Director's initiative 
or at the request of interested persons. If the investigation shows that 
a revision might be appropriate, the Director shall issue a notice 
stating that revision is being considered and inviting data, views, and 
arguments. If a plant which would not otherwise qualify as a pool plant 
during the month qualifies as a pool plant because of a reduction in 
shipping requirements pursuant to this subparagraph, such plant shall be 
a nonpool plant for such month if the operator of the plant files

[[Page 503]]

a written request for nonpool plant status with the market administrator 
at the time the report is filed for such plant pursuant to Sec. 1064.30,
    (c) A supply plant operated by a cooperative association in any 
month in which the member producer milk of such cooperative association 
received at pool distributing plants during the current month, or 
immediately preceding 12-month period ending with the current month, 
either by transfer from such supply plant or directly from member 
producers' farms, is 50 percent or more of such cooperative's total 
member producer milk. Such direct deliveries from member producers' 
farms shall be considered as having been received first at the plant of 
such cooperative association for the purpose of determining the 
qualification of such plant as a pool plant pursuant to this paragraph. 
If two or more cooperative associations desire to qualify a supply plant 
operated by one of the associations as a pool plant on the basis of 
their combined deliveries to pool distributing plants and have filed a 
written request to this effect with the market administrator on or 
before the first day of the month the agreement is effective, such a 
supply plant shall be a pool plant during the month if the above 
specified percentage of the total member producer milk of such 
cooperative associations was received at pool distributing plants during 
the current month, or the immediately preceding 12-month period ending 
with the current month.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant or supply plant operated by a State 
educational institution;
    (3) A plant from which there is route disposition in the marketing 
area of less than an average of 600 pounds per day;
    (4) A distributing plant qualified pursuant to paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order and from which during the month a greater volume of fluid milk 
products, except filled milk, was disposed of as route disposition in 
such other marketing area and to pool plants qualified on the basis of 
route disposition in such other marketing area than was so disposed of 
in this marketing area except that if such plant was subject to all the 
provisions of this part in the immediately preceding month, it shall 
continue to be subject to all the provisions of this part until the 
third consecutive month in which a greater proportion of its fluid 
product disposition, except filled milk, is made in the above described 
manner in such other marketing area, unless, notwithstanding the 
provisions of this subparagraph, it is regulated under such other order;
    (5) A distributing plant qualified pursuant to paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order and from which during the month a greater volume of fluid milk 
products, except filled milk, was disposed of as route disposition in 
this marketing area and to pool plants qualified on the basis of route 
disposition in this marketing area than was so disposed of in such other 
Federal order marketing area but which plant is, nevertheless, fully 
regulated under such other Federal order;
    (6) A supply plant meeting the pooling requirements of paragraph (b) 
of this section which also meets the pooling requirements of another 
Federal order, and which has greater qualifying shipments to plants 
regulated under such other order than are made under this order, unless 
during any month of February through August automatic pool plant status 
for such plant is retained under this part for such month; and
    (7) A supply plant which would be subject to the classification and 
pricing provisions of another order issued pursuant to the Act, unless 
such plant also qualified as a pool plant pursuant to paragraph (c) of 
this section.
[39 FR 16260, May 8, 1974, as amended at 45 FR 3878, Jan. 21, 1980]



Sec. 1064.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and

[[Page 504]]

pooling provisions of another order issued pursuant to the Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
(except the plant of a handler pursuant to Sec. 1064.9(h), an other 
order plant, or a producer-handler plant) from which there is route 
disposition in consumer-type packages or dispenser units in the 
marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant which is not an 
other order plant, a producer-handler plant, or a plant of a handler 
pursuant to Sec. 1064.9(h) from which a fluid milk product is shipped 
during the month to a pool plant.



Sec. 1064.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted pursuant to Sec. 1064.13 for the account of 
such cooperative association;
    (c) Any cooperative association with respect to the milk of its 
producers which is received by the cooperative from the farm for 
delivery to the pool plant of another handler in a tank truck owned or 
operated by or under contract to such cooperative association if the 
cooperative association, prior to delivery, notifies the market 
administrator in writing that it will be the handler for the milk. Such 
milk shall be considered to have been received at the location of the 
pool plant to which delivery is made;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant that is either a 
distributing plant or a supply plant;
    (g) Any person who operates an unregulated supply plant; and
    (h) A State educational institution which operates either a nonpool 
distributing plant or supply plant.



Sec. 1064.10  Producer-handler.

    Producer-handler means a person who operates both a dairy farm and a 
distributing plant at which each of the following conditions is met 
during the month:
    (a) Milk is received from the dairy farm of such person but from no 
other dairy farm;
    (b) The butterfat or skim milk disposed of in the form of a fluid 
milk product does not exceed the butterfat or skim milk, respectively, 
received in the form of milk from the dairy farm of such person and in 
the form of a fluid milk product from pool plants of other handlers; and
    (c) Such person shall furnish proof satisfactory to the market 
administrator that the care and management of the dairy animals and 
other resources necessary for the production of milk in his name and the 
operation of the processing and packaging business are the personal 
enterprise and risk of such person.



Sec. 1064.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with Grade A inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant or diverted pursuant to Sec. 1064.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act or a handler pursuant to Sec. 1064.9(h);
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1064.44(a)(8)(iii) and the corresponding step of Sec. 1064.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.

[[Page 505]]



Sec. 1064.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in Grade A 
milk of a producer which is:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1064.9(c);
    (b) Received by a handler described in Sec. 1064.9(c) from producers 
in excess of the quantity delivered to pool plants; or
    (c) Diverted, subject to the following conditions, from a pool 
distributing plant to a pool supply plant or from a pool plant to a 
nonpool plant that is not a producer-handler plant. Diverted milk is 
milk normally received at a pool plant but which is moved directly from 
a dairy farm to a nonpool plant as specified in this paragraph or from a 
pool distributing plant to a pool supply plant for the account of a 
handler operating the pool distributing plant or a handler described in 
Sec. 1064.9(b). Such milk shall be deemed to have been received by the 
diverting handler at the location of the pool plant from which diverted 
except that milk diverted to a plant located more than 125 miles by the 
shortest highway distance as determined by the market administrator from 
the nearest of the City Halls of Kansas City, Missouri, or Topeka, 
Kansas, shall be deemed to have been received at the location of the 
plant to which diverted in applying Secs. 1064.52 and 1064.75:
    (1) A handler described in Sec. 1064.9(b) may divert for its account 
the milk of any member producer whose milk is received at a pool plant 
for at least 1 day's delivery during the month, without limit during the 
other days of the month. The total quantity of milk so diverted may not 
exceed the larger of the following amounts:
    (i) The total quantity of its member producer milk received at all 
pool plants during the current month, or
    (ii) The average daily quantity of its member producer milk received 
at pool plants during the previous month, multiplied by the number of 
days in the current month.
    (2) A handler operating a pool plant may divert for his account the 
milk of any producer, other than a member of a cooperative association 
which has diverted milk pursuant to paragraph (c)(1) of this section, 
whose milk is received at the handler's pool plant for at least 1 day's 
delivery during the month, without limit during the other days of the 
month. However, the total quantity of milk so diverted may not exceed 
the larger of the following amounts:
    (i) The total quantity of milk received at such plant during the 
current month from producers who are not members of a cooperative 
association that has diverted milk pursuant to paragraph (c)(1) of this 
section; or
    (ii) The average daily quantity of milk received at such plant 
during the previous month from producers who are not members of a 
cooperative association that has diverted milk in the current month 
pursuant to paragraph (c)(1) of this section, multiplied by the number 
of days in the current month.
    (3) Diversions in excess of the applicable percentages pursuant to 
paragraphs (c)(1) and (2) of this section shall first be assigned to 
diversions to nonpool plants and any excess quantity assigned to nonpool 
plants shall not be producer milk and shall not be deemed to have been 
received by the diverting handler. The diverting handler shall specify 
the dairy farmers whose milk shall not be included as producer milk 
pursuant to this subparagraph. Excess diversions to a pool supply plant 
shall be producer milk at the supply plant in applying Secs. 1064.7, 
1064.52 and 1064.75.
[39 FR 16260, May 8, 1974, as amended at 45 FR 3879, Jan. 21, 1980]



Sec. 1064.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1064.40(b)(1) from any source other than producers, handlers 
described in Sec. 1064.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1064.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1064.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another

[[Page 506]]

product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1064.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1064.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27846, May 11, 1993]



Sec. 1064.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27846, May 11, 1993]



Sec. 1064.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1064.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or milk products 
for its members.



Sec. 1064.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1064.13, 1064.41 and 1064.52.
[58 FR 27846, May 11, 1993]

                             Handler Reports



Sec. 1064.30  Reports of receipts and utilization.

    On or before the seventh day after the end of each month, each 
handler shall report for such month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:

[[Page 507]]

    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1064.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1064.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1064.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.



Sec. 1064.31  Payroll reports.

    (a) On or before the 23rd day after the end of each month, each 
handler described in Sec. 1064.9(a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1064.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1064.32  Other reports.

    (a)-(b) [Reserved]
    (c) Each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.
[39 FR 16260, May 8, 1974, as amended at 40 FR 27641, July 1, 1975]

                         Classification of Milk



Sec. 1064.40  Classes of utilization.

    Except as provided in Sec. 1064.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1064.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of

[[Page 508]]

or diverted to a commercial food processor if the market administrator 
is permitted to audit the records of the commercial food processing 
establishment for the purpose of verification. Otherwise, such uses 
shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1064.15 and the fluid 
cream product definition pursuant to Sec. 1064.16; and
    (7) In shrinkage assigned pursuant to Sec. 1064.41(a) to the 
receipts specified in Sec. 1064.41(a)(2) and in shrinkage specified in 
Sec. 1064.41 (b) and (c).
[58 FR 27846, May 11, 1993]



Sec. 1064.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1064.30, the market administrator 
shall determine the following:

[[Page 509]]

    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1064.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1064.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this subparagraph shall be 
2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1064.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1064.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant (to a pool 
supply plant, in the case of diversion) shall be classified as Class I 
milk unless the operators of both plants request the same classification 
in another class. In either case, the classification of such transfers 
or diversions shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1064.44(a)(12) and the corresponding 
step of Sec. 1064.44(b). The

[[Page 510]]

amount of skim milk or butterfat classified in each class shall include 
the assigned utilization of skim milk or butterfat in transfers of 
concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1064.44(a)(7) 
or the corresponding step of Sec. 1064.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1064.44(a)(11) or (12) or the corresponding steps of 
Sec. 1064.44(b), the skim milk or butterfat so transferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators; transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1064.40.
    (c) Transfers to producer-handlers and transfers and diversions to a 
State educational institution plant. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order or transferred or diverted 
from a pool plant to a plant of a handler described in Sec. 1064.9(h) 
shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product, except that if a handler described in Sec. 1064.9(h) certifies 
that the fluid milk product is acquired for use in Class II or Class III 
products for research or educational purposes, such fluid milk product 
shall be classified in the applicable lower class; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat,

[[Page 511]]

respectively, in bulk fluid cream products, pro rata to each source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or a plant of a handler pursuant to Sec. 1064.9(h) shall 
be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1064.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of package fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization,

[[Page 512]]

then to any remaining Class III utilization, and then to Class I 
utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
[39 FR 16260, May 8, 1974, as amended at 58 FR 27847, May 11, 1993]



Sec. 1064.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1064.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1064.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1064.9 (b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1064.40, 
1064.41, and 1064.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1064.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1064.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1064.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[39 FR 16260, May 8, 1974, as amended at 58 FR 27847, May 11, 1993]



Sec. 1064.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1064.9(a) for each of his pool plants separately and of each 
handler described in Sec. 1064.9 (b) and (c) by allocating the handler's 
receipts of skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1064.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and

[[Page 513]]

    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1064.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1064.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This subparagraph shall apply only 
if the pool plant was subject to the provisions of this subparagraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1064.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1064.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1064.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a handler 
described in Sec. 1064.9(h);
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall

[[Page 514]]

be adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1064.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;

[[Page 515]]

    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1064.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1064.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14)

[[Page 516]]

of this section and the corresponding step of paragraph (b) of this 
section.
[39 FR 16260, May 8, 1974, as amended at 58 FR 27847, May 11, 1993]



Sec. 1064.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1064.44(a)(12) and the corresponding 
step of Sec. 1064.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Secs. 1064.43(d) and 1064.44 on the 
basis of such report (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 14th day after the end of each month, report to 
each cooperative association which so requests the amount and class 
utilization of milk received by each handler from such cooperative 
association in its capacity as a handler described in Sec. 1064.9(c) and 
directly from members of such cooperative association. For the purpose 
of this report, the milk so received shall be prorated to each class in 
proportion to the utilization by such handler in each class remaining 
after the allocation pursuant to Sec. 1064.44(a)(1) through (13) and the 
corresponding steps of Sec. 1064.44(b).
[39 FR 16260, May 8, 1974, as amended at 58 FR 27848, May 11, 1993]

                              Class Prices



Sec. 1064.50  Class prices.

    Subject to the provisions of Sec. 1064.52, the class prices for the 
month per hundredweight of milk containing 3.5 percent butterfat shall 
be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $1.92.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[39 FR 16260, May 8, 1974, as amended at 46 FR 43383, Aug. 28, 1981; 51 
FR 12832, Apr. 16, 1986; 60 FR 6610, Feb. 2, 1995]



Sec. 1064.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1064.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph(b) of this section and 
annual yield factors, for the preceding month and separately for the 
current month as follows:

[[Page 517]]

    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18966, Apr. 14, 1995]



Sec. 1064.52  Plant location adjustments for handlers.

    (a) For milk received from producers at a plant located outside the 
marketing area and more than 70 miles by the shortest highway distance 
as determined by the market administrator, from the nearer of the City 
Hall in Kansas City, Missouri, or Topeka, Kansas, which is classified as 
Class I milk or assigned Class I location adjustment credit pursuant to 
paragraph (b) of this section, the price computed pursuant to 
Sec. 1064.50(a) shall be reduced by a per hundredweight rate of 1.7 
cents for each 10 miles or fraction thereof that such plant is located 
from the nearer City hall.
    (b) For purposes of calculating such adjustment, bulk transfers 
between pool plants shall be assigned to the Class I disposition at the 
transferee-plant prorated with the sum of receipts at such plant of 
producer milk and the pounds assigned as Class I to receipts

[[Page 518]]

from other order plants and unregulated supply plants.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[39 FR 16260, May 8, 1974, as amended at 51 FR 44591, Dec. 11, 1986]



Sec. 1064.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6610, Feb. 2, 1995]



Sec. 1064.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                              Uniform Price



Sec. 1064.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1064.9(b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1064.44 by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1064.44(a)(14) and the 
corresponding step of Sec. 1064.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1064.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1064.44(a)(9) and the corresponding step of Sec. 1064.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1064.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1064.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1064.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1064.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1064.44(b); and
    (f) Add the amount obtained from multiplying the Class I 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 Secs. 1064.43(d) and 1064.44(a)(7)(i) and the pounds 
of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1064.44(a)(11) and the corresponding steps of Sec. 1064.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk

[[Page 519]]

products, an amount computed by multiplying $1.00 (but not more than the 
difference between the Class I price applicable at the location of the 
pool plant and the Class III price) by the hundredweight of skim milk 
and butterfat contained in receipts of nonfluid milk products that are 
allocated to Class I use pursuant to Sec. 1064.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1064.76 (a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[39 FR 16260, May 8, 1974, as amended at 58 FR 27848, May 11, 1993]



Sec. 1064.61  Computation of uniform price (including weighted average price).

    For each month the market administrator shall compute in the 
following manner the ``uniform price'' (and ``weighted average price'') 
per hundredweight of milk of 3.5 percent butterfat content received from 
producers:
    (a) Combine into one total the values computed pursuant to 
Sec. 1064.60 for all handlers who filed the reports prescribed by 
Sec. 1064.30 for the month and who made the payments pursuant to 
Secs. 1064.71 and 1064.73 for the preceding month;
    (b) Add an amount equal to the total value of the location 
adjustments computed pursuant to Sec. 1064.75;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1064.60(f); and
    (e) Subtract no less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``weighted average price,'' and 
the ``uniform price'' for milk received from producers.
[44 FR 7654, Feb. 7, 1979, as amended at 49 FR 23032, June 4, 1984]



Sec. 1064.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 12th day after the end of each month the uniform price for 
such month.
[39 FR 16260, May 8, 1974, as amended at 40 FR 27641, July 1, 1975]

                            Payments for Milk



Sec. 1064.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all funds received pursuant to paragraph (a) of this section and 
out of which he shall make all payments required pursuant to paragraph 
(b) of this section.
    (a) Payments made by handlers pursuant to Secs. 1064.71, 1064.76, 
and 1064.77.
    (b) Payments due handlers pursuant to Secs. 1064.72 and 1064.77: 
Provided, That payments due any handler shall be offset by payments due 
from such handler pursuant to Secs. 1064.71, 1064.76, 1064.77, 1064.85, 
and 1064.86.



Sec. 1064.71  Payments to the producer-settlement fund.

    (a) On or before the 14th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:

[[Page 520]]

    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1064.60.
    (2) The sum of:
    (i) The amount required to be paid producers (including payments to 
producers through cooperative associations) pursuant to Sec. 1064.73 
before adjustment for butterfat content and before deductions authorized 
by the producer or cooperative association or for marketing services 
pursuant to Sec. 1064.86; and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1064.60(f).
    (b) [Reserved]
    (c) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (c)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[39 FR 16260, May 8, 1974, as amended at 40 FR 27641, July 1, 1975; 44 
FR 7654, Feb. 7, 1979]



Sec. 1064.72  Payments from the producer-settlement fund.

    On or before the 14th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1064.71 (a)(2) exceeds the amount 
computed pursuant to Sec. 1064.71(a)(1). If at such time the balance in 
the producer-settlement fund is insufficient to make all payments 
pursuant to this paragraph, the market administrator shall reduce 
uniformly such payment and shall complete such payments as soon as the 
necessary funds are available.
[39 FR 16260, May 8, 1974, as amended at 40 FR 27641, July 1, 1975]



Sec. 1064.73  Payments to producers and to cooperative associations.

    (a) On or before the 15th day after the end of each month during 
which the milk was received, to each producer for whom payment is not 
made pursuant to paragraph (c) or (d) of this section, at not less than 
the applicable uniform price pursuant to Sec. 1064.61, adjusted by the 
butterfat differential computed pursuant to Sec. 1064.74 and the 
location adjustment to producers pursuant to Sec. 1064.75, and less the 
following amounts: (1) The payments made pursuant to paragraph (b) of 
this section, (2) deductions for marketing services made pursuant to 
Sec. 1064.86, (3) any deductions authorized by the producer: Provided, 
That if by such date such handler has not received full payment for such 
month pursuant to Sec. 1064.72 he may reduce his total payment to all 
producers uniformly by not less than the amount of reduction in payment 
from the market administrator; the handler shall, however, complete such 
payments not later than the date for making such payments pursuant to 
this paragraph next following receipt of the balance from the market 
administrator.
    (b) On or before the 25th day of each month to each producer (1) for 
whom payment is not received from the handler by a cooperative 
association pursuant to paragraphs (c) and (d) of this section; and (2) 
who had not discontinued shipping milk to such handler before the 18th 
day of the month, a partial payment with respect to milk received from 
such producer during the first 15 days of the month at the approximate 
value of such milk, not to be less than the Class III price for the 
preceding month, without deduction for hauling.

[[Page 521]]

    (c) To a cooperative association which has filed a written request 
for such payment with such handler and with respect to producers for 
whose milk the market administrator determines such cooperative 
association is authorized to collect payment as follows:
    (1) On or before the 20th day of the month, an amount equal to not 
less than the sum of the individual payments otherwise payable to 
producers pursuant to paragraph (b) of this section less any deductions 
authorized in writing by such cooperative associations; and
    (2) On or before the 14th day after the end of each month an amount 
equal to not less than the sum of the individual payments otherwise 
payable to producers pursuant to paragraph (a) of this section, less 
proper deductions authorized in writing by such cooperative association.
    (d) To a cooperative association with respect to milk for which such 
association is acting in the capacity of a handler pursuant to 
Sec. 1064.9(c):
    (1) On or before the 20th day of the month an amount equal to the 
rate specified in paragraph (b) of this section times the volume 
received during the first 15 days of the month; and
    (2) On or before the 14th day after the end of each month an amount 
equal to not less than the value of such milk at the uniform price 
pursuant to Sec. 1064.61, as adjusted pursuant to Secs. 1064.74 and 
1064.75, less payment made pursuant to paragraph (d)(1) of this section.
    (e) In making payments to producers pursuant to paragraph (a) of 
this section, each handler shall furnish each producer with a supporting 
statement in such form that it may be retained by the producer, which 
shall show:
    (1) The month and the identity of the handler and of the producer;
    (2) The pounds per shipment, the total pounds, and the average 
butterfat test of milk delivered by the producer;
    (3) The minimum rate or rates at which payment to the producer is 
required under the provisions of Secs. 1064.73, 1064.74, and 1064.75;
    (4) The rate which is used in making payment, if such rate is other 
than the applicable minimum rate;
    (5) The amount or the rate per hundredweight of each deduction 
claimed by the handler, including any deduction claimed under paragraph 
(b) of this section and Sec. 1064.86 together with a description of the 
respective deductions; and
    (6) The net amount of payment to the producer.
    (f) Each handler who receives milk from producers, payment for which 
is to be made to a cooperative association pursuant to paragraph (c) of 
this section, shall report to such cooperative association with respect 
to each such producer, on forms approved by the market administrator, as 
follows:
    (1) On or before the 23rd day of the month, the total pounds of milk 
received during the first 15 days of the month; and
    (2) On or before the seventh day after the end of the month:
    (i) The pounds per shipment, the total pounds of milk and the 
average butterfat test of milk received from such producer during the 
month;
    (ii) The amount or rate and nature of any deductions; and
    (iii) The amount of any payments due such producer pursuant to 
Sec. 1064.77.
[39 FR 16260, May 8, 1974, as amended at 44 FR 7654, Feb. 7, 1979; 49 FR 
23032, June 4, 1984; 53 FR 10357, Mar. 31, 1988]



Sec. 1064.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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 Secs. 1064.51 (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.
[60 FR 18967, Apr. 14, 1995]

[[Page 522]]



Sec. 1064.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price pursuant to Sec. 1064.61 for producer milk 
received at a pool plant or diverted from a pool plant shall be reduced 
according to the location of the pool plant at the rate set forth in 
Sec. 1064.52, subject to Sec. 1064.13(c).
    (b) For purposes of computations pursuant to Secs. 1064.71 and 
1064.72 the weighted average price shall be adjusted at the rates set 
forth in Sec. 1064.52 applicable at the location of the nonpool plant 
from which the milk was received, except that the adjusted weighted 
average price shall not be less than the Class III price.
[39 FR 16260, May 8, 1974, as amended at 40 FR 27642, July 1, 1975; 44 
FR 7654, Feb. 7, 1979]



Sec. 1064.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant, 
except a plant described in Sec. 1064.7(d)(3), shall pay on or before 
the 25th day after the end of the month to the market administrator for 
the producer-settlement fund the amount computed pursuant to paragraph 
(a) of this section. If the handler submits pursuant to Secs. 1064.30(b) 
and 1064.31(b) the information necessary for making the computations, 
such handler may elect to pay in lieu of such payment the amount 
computed pursuant to paragraph (b) of this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and the weighted average price shall not 
be less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1064.60 for the partially regulated distributing plant if the plant 
had been a

[[Page 523]]

pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1064.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1064.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1064.60(f) less the value of such other source milk 
specified in Sec. 1064.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1064.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1064.7(b), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1064.30(b) and 
1064.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1064.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1064.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1064.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1064.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the

[[Page 524]]

nonfluid milk ingredients at the difference between the Class I price 
applicable under the other order at the location of the plant where the 
nonfluid milk ingredients were processed (but not to be less than the 
Class III price) and the Class III price. This payment option shall 
apply only if a majority of the total milk received at the plant that 
processed the nonfluid milk ingredients is regulated under one or more 
Federal orders and payment may only be made to the producer-settlement 
fund of the order pricing a plurality of the milk used to produce the 
nonfluid milk ingredients. This payment option shall not apply if the 
source of the nonfluid ingredients used in reconstituted fluid milk 
products cannot be determined by the market administrator.
[39 FR 16260, May 8, 1974, as amended at 44 FR 7654, Feb. 7, 1979; 58 FR 
27848, May 11, 1993]



Sec. 1064.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses errors resulting in moneys due the 
market administrator or any producer or cooperative association from 
such handler, the market administrator shall promptly notify such 
handler of the amount due and payment therefor shall be made within 5 
days if such amount is due the market administrator, or on or before the 
next date for making payments to producers or a cooperative association, 
if such amount is due them. Whenever such audit discloses errors 
resulting in moneys due such handler from the market administrator, 
payment shall be made within 5 days.



Sec. 1064.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1064.71, 
1064.73, 1064.77, 1064.85, and 1064.86 shall be increased one-half of 1 
percent on the first day of the month next following the due date of 
such obligation and on the first day of each month thereafter until such 
obligation is paid.

        Administrative Assessment and Marketing Service Deduction



Sec. 1064.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 12th 
day after the end of the month 3 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, of:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1064.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1064.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1064.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1064.60 (d) and (f); and
    (c) Class I milk disposed of from a partially regulated distributing 
plant (except from a plant described in Sec. 1064.7(d)(3)) as route 
disposition in the marketing area that exceeds the skim milk and 
butterfat subtracted pursuant to Sec. 1064.76(a)(2).
[39 FR 16260, May 8, 1974, as amended at 58 FR 27849, May 11, 1993]



Sec. 1064.86  Deduction for marketing services.

    (a) Deductions. Except as set forth in paragraph (b) of this 
section, each handler in making payments to producers other than himself 
pursuant to Sec. 1064.73(a), shall deduct 6 cents per hundredweight or 
such lesser amount as the Secretary may prescribe with respect to all 
milk received by such handler from producers during the month, and shall 
pay such deductions to the market administrator on or before the 12th 
day after the end of such month. Such moneys shall be used by the market 
administrator to verify weights, samples, and tests of milk received 
from and to provide market information to such producers.
    (b) Deductions with respect to members of a cooperative association. 
In the case of producers for whom a cooperative association is actually 
performing, as

[[Page 525]]

determined by the Secretary, the services set forth in paragraph (a) of 
this section, each handler shall, in lieu of the deductions specified in 
paragraph (a) of this section, make such deductions from the payments to 
be made directly to producers pursuant to Sec. 1064.73(a), as are 
authorized by such producers, and on or before the 12th day after the 
end of each month, pay over such deductions to the association of which 
such producers are members, accompanied by a statement showing the 
amount of the deduction and the quantity of milk for which it was 
computed for each such producer.



PART 1065--MILK IN THE NEBRASKA-WESTERN IOWA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1065.1  General provisions.

                               Definitions

1065.2  Nebraska-Western Iowa marketing area.
1065.3  Route disposition.
1065.5  Distributing plant.
1065.6  Supply plant.
1065.7  Pool plant.
1065.8  Nonpool plant.
1065.9  Handler.
1065.10  Producer-handler.
1065.12  Producer.
1065.13  Producer milk.
1065.14  Other source milk.
1065.15  Fluid milk product.
1065.16  Fluid cream product.
1065.17  Filled milk.
1065.18  Cooperative association.
1065.19  Commercial food processing establishment.

                             Handler Reports

1065.30  Reports of receipts and utilization.
1065.31  Payroll reports.
1065.32  Other reports.

                         Classification of Milk

1065.40  Classes of utilization.
1065.41  Shrinkage.
1065.42  Classification of transfers and diversions.
1065.43  General classification rules.
1065.44  Classification of producer milk.
1065.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1065.50  Class and component prices.
1065.51  Basic formula price.
1065.52  Plant location adjustments for handlers.
1065.53  Announcement of class and component prices.
1065.54  Equivalent price.

                       Producer Price Differential

1065.60  Handler's value of milk.
1065.61  Producer price differential.
1065.62  Announcement of producer prices.

                            Payments for Milk

1065.70  Producer-settlement fund.
1065.71  Payments to the producer-settlement fund.
1065.72  Payments from the producer-settlement fund.
1065.73  Payments to producers and to cooperative associations.
1065.74  Butterfat differential.
1065.75  Plant location adjustments for producers and on nonpool milk.
1065.76  Payments by handler operating a partially regulated 
          distributing plant.
1065.77  Adjustment of accounts.
1065.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1065.85  Assessment for order administration.
1065.86  Deduction for marketing services.

                    Advertising and Promotion Program

1065.105  Dairy research and promotion order.
1065.106  Qualified program.
1065.107  Deduction for advertising and promotion programs.
1065.110  Agency.
1065.111  Composition of Agency.
1065.112  Term of office.
1065.113  Selection of Agency members.
1065.114  Agency operating procedure.
1065.115  Powers of the Agency.
1065.116  Duties of the Agency.
1065.117  Advertising, research, education, and promotion program.
1065.118  Limitation of expenditures by the Agency.
1065.119  Personal liability.
1065.120  Procedure for requesting refunds.
1065.121  Duties of the market administrator.
1065.122  Liquidation.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 39 FR 16273, May 8, 1974, unless otherwise noted.

[[Page 526]]



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1065.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1065.2  Nebraska-Western Iowa marketing area.

    The Nebraska-Western Iowa marketing area (hereinafter referred to as 
the ``marketing area'') means all the territory within the boundaries of 
the counties and townships listed below, including such territory as is 
now occupied and as may be occupied in the future by Government 
(municipal, State or Federal) reservations, installations, institutions, 
or other similar establishments. Where such establishment is partly 
within and partly without the designated boundaries, the marketing area 
shall include the entire area encompassed by such establishment.
    (a) Nebraska counties:

    Adams, Antelope, Banner, Boone, Box, Butte, Buffalo, Burt, Butler, 
Cass, Cedar, Cheyenne, Clay, Colfax, Cuming, Custer, Dakota, Dawes, 
Dawson, Deuel, Dixon, Dodge, Douglas, Fillmore, Franklin, Frontier, 
Furnas, Gage, Garden, Gosper, Greeley, Hall, Hamilton, Harlan, Howard, 
Jefferson, Johnson, Kearney, Keith, Kimball, Knox, Lancaster, Lincoln, 
Madison, Merrick, Morrill, Nance, Nemaha, Nuckolls, Otoe, Phelps, 
Pierce, Platte, Polk, Red Willow, Saline, Sarpy, Saunders, Scotts Bluff, 
Seward, Sheridan, Sherman, Sioux, Stanton, Thayer, Thurston, Valley, 
Washington, Wayne, Webster, and York.

    (b) Iowa counties:

    Cass, Cherokee, Crawford, Fremont, Harrison, Ida, Mills, Monona, 
Montgomery, O'Brien, Page, Plymouth, Pottawattamie, Sac, Shelby, Sioux, 
and Woodbury.

    (c) South Dakota counties. That portion of Union County comprising 
Jefferson Township, North Sioux City, and the unorganized territory 
adjacent thereto, as defined and mapped in the United States 1960 Census 
of Population.
[46 FR 19813, Apr. 1, 1981]



Sec. 1065.3  Route disposition.

    Route disposition means a delivery (including delivery by a vendor 
or through a distribution point, or sale from a plant store) of a fluid 
milk product classified as Class I to retail or wholesale outlets other 
than a delivery in bulk to a milk plant.



Sec. 1065.5  Distributing plant.

    Distributing plant means a plant which is approved by a duly 
constituted health authority for the processing or packaging of Grade A 
milk and from which there is route disposition of any fluid milk product 
during the month in the marketing area.



Sec. 1065.6  Supply plant.

    Supply plant means a plant from which milk or skim milk acceptable 
to a duly constituted health authority for distribution in the marketing 
area as Grade A milk, is shipped during the month to a pool plant 
qualified pursuant to Sec. 1065.7.
[39 FR 16273, May 8, 1974]

    Editorial Note: At 57 FR 45563, Oct. 2, 1992, in Sec. 1065.6, the 
words ``during the month'' were suspended indefinitely, effective Sept. 
1, 1992.



Sec. 1065.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which there is:
    (1) Route disposition (except filled milk) in the marketing area 
during the month equal to not less than 15 percent of the Grade A milk 
received at such plant from dairy farmers, supply plants (exclusive of 
transfers and diversions from plants qualifying as pool plants pursuant 
to this paragraph), and handlers described in Sec. 1065.9(c); and
    (2) Total route disposition (except filled milk) during the month or 
the immediately preceding month equal to not less than 35 percent of the 
Grade A milk received at the plant during such month from the sources 
specified in paragraph (a)(1) of this section.
    (b) A supply plant from which during the month the volume of fluid 
milk products, except filled milk, transferred and diverted to pool 
distributing plants is 30 percent or more of the total

[[Page 527]]

Grade A milk received at the plant from dairy farmers (including 
producer milk diverted from the plant but excluding producer milk 
diverted to the plant pursuant to Sec. 1065.13) and handlers described 
in Sec. 1065.9(c), subject to the following additional conditions:
    (1) Not more than one-half of the shipping percentage specified in 
this paragraph may be met through the diversion of milk from the supply 
plant to pool distributing plants;
    (2) The volume of fluid milk products included as qualifying 
shipments to any pool distribution plant pursuant to this paragraph 
shall be reduced by the volume of any fluid milk products transferred or 
diverted by the operator of such pool distributing plant to the supply 
plant or to any other plant operated by the operator of the supply 
plant.
    (3) The shipping requirements of this paragraph may be increased or 
decreased up to 20 percentage points by the Director of the Dairy 
Division if that person finds such revision is necessary to obtain 
needed shipments or to prevent uneconomic shipments. Before making such 
a finding, the Director shall investigate the need for revision either 
at the Director's own initiative or at the request of interested 
persons. If the investigation shows that a revision might be 
appropriate, the Director shall issue a notice stating that the revision 
is being considered and invite data, views, and arguments; and
    (4) A supply plant that qualifies as a pool plant in each of the 
months of September through March shall be a pool plant for the 
following months of April through August unless written application is 
filed with the market administrator by the plant operator requesting the 
plant be designated a nonpool plant. In such case, nonpool status will 
be effective the first month following such notice and thereafter until 
the plant again qualifies as a pool plant on the basis of transfers and 
diversions. Any plant that qualifies as a pool plant pursuant to this 
paragraph will be subject to any shipping requirement announced pursuant 
to paragraph (b)(3) of this section.
    (c) A supply plant operated by a cooperative association if, during 
the month, 51 percent or more of the producer milk of members of the 
association is received at a pool distributing plant(s) of another 
handler(s), or is transferred to such plant(s) from the association's 
supply plant.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A plant qualified pursuant to paragraph (a) of this section from 
which a lesser volume of fluid milk products (not including filled milk) 
is disposed of in the Nebraska-Western Iowa marketing area than in the 
marketing area of another marketing agreement or order issued pursuant 
to the Act and which is fully subject to the classification and pricing 
provisions of such other agreement or order;
    (3) Any plant qualified pursuant to paragraph (b) of this section 
for any portion of the period of April through August, inclusive, that 
producer milk at such plant is subject to the classification and pricing 
provisions of another order issued pursuant to the Act; and
    (4) That portion of a plant that is physically apart from the Grade 
A portion of such plant, is operated separately and is not approved by a 
duly constituted health authority for the receiving, processing, or 
packaging of any fluid milk product for Grade A disposition.
[39 FR 16273, May 8, 1974, as amended at 39 FR 44002, Dec. 20, 1974; 42 
FR 38171, July 27, 1977; 46 FR 19814, Apr. 1, 1981; 54 FR 41241, Oct. 6, 
1989]

    Effective Date Note: At 57 FR 45563, Oct. 2, 1992, in 
Sec. 1065.7(b)(1), the words ``not more than one half of'' were 
suspended indefinitely, effective Sept. 1, 1992.



Sec. 1065.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.

[[Page 528]]

    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant from which fluid milk 
products are shipped during the month to a pool plant.



Sec. 1065.9  Handler.

    Handler means:
    (a) Any person who operates a pool plant. In case a corporation with 
recognized divisions which are operated as separate business units 
operates two or more pool plants, each such division shall be the 
handler with respect to the pool plant(s) it operates;
    (b) Any cooperative association with respect to milk of its member 
producers which is diverted pursuant to Sec. 1065.13 for the account of 
such association;
    (c) A cooperative association with respect to milk of its member 
producers which is delivered from the farm to the pool plant of another 
handler in a tank truck owned and operated by, or under contract to, 
such cooperative association. The milk shall be deemed to have been 
received from producers by the cooperative association at the location 
of the plant to which it is delivered. Milk delivered pursuant to this 
paragraph shall not include milk of its member producers diverted to 
pool plants by the association as a handler pursuant to paragraph (a) of 
this section;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler; and
    (f) Any person who operates an other order plant described in 
Sec. 1065.7(d).
[39 FR 16273, May 8, 1974, as amended at 46 FR 19814, Apr. 1, 1981]



Sec. 1065.10  Producer-handler.

    Producer-handler means any person who is both a dairy farmer and the 
operator of a distributing plant, and who meets all of the following 
conditions:
    (a) Receipts of fluid milk products at his plant are solely milk of 
his own production and fluid milk products from pool plants of other 
handlers;
    (b) Receives no milk products other than fluid milk products for 
reconstituting into fluid milk products; and
    (c) The maintenance, care, and management of the dairy animals and 
other resources necessary to produce the milk, and the processing, 
packaging, and distribution of the milk (including filled milk) are the 
personal enterprise and the personal risk of such person.



Sec. 1065.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the Grade A 
inspection requirements of a duly constituted health authority and whose 
milk is received at a pool plant or by a handler described in 
Sec. 1065.9(c) or is diverted as producer milk pursuant to Sec. 1065.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1065.44(a)(8)(iii) and the corresponding step of Sec. 1065.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.



Sec. 1065.13  Producer milk.

    Producer milk of each handler means all skim milk and butterfat 
contained in milk from producers that is:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1065.9(c), excluding such milk that is diverted from 
another pool plant;
    (b) Received by a handler described in Sec. 1065.9(c) from producers 
in excess of the quantity delivered to pool plants;
    (c) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant. Milk delivered pursuant to 
this paragraph by a supply plant operator shall be limited

[[Page 529]]

to those producers who are located within 150 miles of the supply plant 
(as based on the post office address of the producer). Such milk shall 
be priced at the plant to which diverted; or
    (d) Diverted from a pool plant to a nonpool plant (other than a 
producer-handler plant) for the account of the handler operating such 
pool plant or for the account of a handler described in Sec. 1065.9(b), 
subject to the following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion 
unless during the month at least one day's production of milk of such 
dairy farmer is physically received at a pool plant;
    (2) The total quantity of milk diverted by a cooperative association 
during the month may not exceed 60 percent in the months of September 
through March, and 70 percent in other months, of the producer milk that 
the cooperative association causes to be delivered to or diverted from 
pool plants during the month;
    (3) The operator of a pool plant (other than a cooperative 
association) may divert for his account any milk that is not under the 
control of a cooperative association that diverts milk during the month 
pursuant to paragraph (d)(2) of this section. The total quantity so 
diverted during the month may not exceed 60 percent in the months of 
September through March, and 70 percent in other months, of the milk 
received at or diverted from such pool plant during the month that is 
eligible to be diverted by the plant operator;
    (4) The diversion limits of this paragraph may be increased or 
decreased up to 20 percentage points by the Director of the Dairy 
Division if that person finds such revision is necessary to obtain 
needed shipments or to prevent uneconomic shipments. Before making such 
a finding, the Director shall investigate the need for revision either 
at the Director's own initiative or at the request of interested 
persons. If the investigation shows that a revision might be 
appropriate, the Director shall issue a notice stating that the revision 
is being considered and invite data, views, and arguments;
    (5) Any milk diverted in excess of the limits prescribed in 
paragraphs (d) (2), (3), and (4) of this section shall not be producer 
milk. The diverting handler may designate the dairy farmers whose 
diverted milk will not be producer milk. Otherwise, the total milk 
diverted on the last day of the month, then the second-to-last day, and 
so on in daily allotments will be excluded until all of the over-
diverted milk is accounted for; and
    (6) Diverted milk shall be priced at the location of the plant to 
which diverted.
[46 FR 19814, Apr. 1, 1981, as amended at 54 FR 41241, Oct. 6, 1989]

    Effective Date Note: At 57 FR 45563, Oct. 2, 1992, in Sec. 1065.13, 
paragraph (d)(1) was suspended indefinitely, effective Sept. 1, 1992.



Sec. 1065.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1065.40(b)(1) from any source other than producers, handlers 
described in Sec. 1065.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1065.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1065.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1065.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1065.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added

[[Page 530]]

nonfat milk solids, sterilized, concentrated (to not more than 50 
percent total milk solids), or reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27849, May 11, 1993]



Sec. 1065.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27849, May 11, 1993]



Sec. 1065.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1065.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application of the 
association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) Has full authority in the sale of milk of its members and is 
engaged in making collective sales of, or marketing, milk or its 
products for its members; and
    (c) Has its entire activities under the control of its members.



Sec. 1065.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1065.13, 1065.41 and 1065.52.
[58 FR 27849, May 11, 1993]

                             Handler Reports



Sec. 1065.30  Reports of receipts and utilization.

    On or before the seventh day, excluding holidays, after the end of 
each month, each handler shall report for such month to the market 
administrator, in the detail and on the forms prescribed by the market 
administrator, as follows:
    (a) Each handler described in Sec. 1065.9 (a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), 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. 1065.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(a)(1) or

[[Page 531]]

(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. 1065.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (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.
[39 FR 16273, May 8, 1974, as amended at 60 FR 57152, Nov. 14, 1995]



Sec. 1065.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1065.9 (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 the 
information described in Sec. 1065.73(e).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1065.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
[39 FR 16273, May 8, 1974, as amended at 60 FR 57152, Nov. 14, 1995]



Sec. 1065.32  Other reports.

    In addition to the reports required pursuant to Secs. 1065.30 and 
1065.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.

                         Classification of Milk



Sec. 1065.40  Classes of utilization.

    Except as provided in Sec. 1065.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1065.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart

[[Page 532]]

containers or larger and intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1065.15 and the fluid 
cream product definition pursuant to Sec. 1065.16; and
    (7) In shrinkage assigned pursuant to Sec. 1065.41(a) to the 
receipts specified in Sec. 1065.41(a)(2) and in shrinkage specified in 
Sec. 1065.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27849, May 11, 1993, as amended at 58 FR 63288, Dec. 1, 1993]



Sec. 1065.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1065.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form

[[Page 533]]

of a bulk fluid milk product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1065.9 (c);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1065.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1065.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.
[39 FR 16273, May 8, 1974, as amended at 42 FR 38171, July 27, 1977; 46 
FR 19815, Apr. 1, 1981]



Sec. 1065.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless both handlers request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1065.44(a)(12) and the corresponding 
step of Sec. 1065.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1065.44(a)(7) 
or the corresponding step of Sec. 1065.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least

[[Page 534]]

possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1065.44(a) 
(11) or (12) or the corresponding step of Sec. 1065.44(b), the skim milk 
or butterfat so transferred or diverted, up to the total of the skim 
milk and butterfat, respectively, in such receipts of other source milk, 
shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to another order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1065.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk products; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set

[[Page 535]]

forth in paragraphs (d)(2)(ii) through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1065.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
[39 FR 16273, May 8, 1974, as amended at 46 FR 19815, Apr. 1, 1981; 58 
FR 27850, May 11, 1993]



Sec. 1065.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1065.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports

[[Page 536]]

filed pursuant to Sec. 1065.30 and shall compute separately for each 
pool plant and for each cooperative association with respect to milk for 
which it is the handler pursuant to Sec. 1065.9 (b) or (c) the pounds of 
skim milk and butterfat, respectively, in each class in accordance with 
Secs. 1065.40, 1065.41, and 1065.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1065.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1065.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1065.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[39 FR 16260, May 8, 1974, as amended at 58 FR 27850, May 11, 1993; 58 
FR 63289, Dec. 1, 1993]



Sec. 1065.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1065.9(a) for each of his pool plants separately and of each 
handler described in Sec. 1065.9 (b) and (c) by allocating the handler's 
receipts of skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1065.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1065.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the

[[Page 537]]

pounds of skim milk in products specified in Sec. 1065.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This subparagraph shall apply only 
if the pool plant was subject to the provisions of this subparagraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1065.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1065.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1065.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers and diversions between pool plants of the 
handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in

[[Page 538]]

receipts at all pool plants of the handler of producer milk, fluid milk 
products from pool plants of other handlers, and bulk fluid milk 
products from other order plants that were not subtracted pursuant to 
paragraph (a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1065.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers and diversions 
between pool plants of the handler), with the quantity prorated to Class 
II and Class III combined being subtracted first from Class III and then 
from Class II, the pounds of skim milk in receipts of fluid milk 
products from an unregulated supply plant that were not subtracted 
pursuant to paragraphs (a)(2)(i), (7)(v), and (8)(i) and (ii) of this 
section and that were not offset by transfers or diversions of fluid 
milk products to the same unregulated supply plant from which fluid milk 
products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in

[[Page 539]]

Class I and in Class II and Class III combined, with the quantity 
prorated to Class II and Class III combined being subtracted first from 
Class III and then from Class II, with respect to whichever of the 
following quantities represents the lower proportion of Class I milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1065.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers and 
diversions between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1065.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 16273, May 8, 1974, as amended at 42 FR 38171, July 27, 1977; 46 
FR 19815, Apr. 1, 1981; 58 FR 27850, May 11, 1993]



Sec. 1065.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order

[[Page 540]]

plants pursuant to Sec. 1065.44(a)(12) and the corresponding step of 
Sec. 1065.44(b), estimate and publicly announce the utilization (to the 
nearest whole percentage) in each class during the month of skim milk 
and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Secs. 1065.43(d) and 1065.44 on the 
basis of such report, (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests the class utilization of 
producer milk received by each handler from a cooperative association or 
from members of the association. For the purpose of this report, the 
milk caused to be so delivered by an association shall be prorated to 
each class in the proportion that the total receipts of milk received 
from producers by such handler were used in each class.
[39 FR 16273, May 8, 1974, as amended at 42 FR 38171, July 27, 1977; 58 
FR 27850, May 11, 1993]

                              Class Prices



Sec. 1065.50  Class and component prices.

    Subject to the provisions of Sec. 1065.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the component 
prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per hundredweight 
of milk containing 3.5 percent butterfat shall be the basic formula 
price for the second preceding month plus $1.75.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
    (e) Class I differential price. The Class I differential price shall 
be the difference between the current month's Class I and Class III 
prices (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 prices (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 and 
Class III-A prices (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 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.

[[Page 541]]

    (k) Other solids price. Other solids are herein defined as solids 
not fat other than protein. The other solids price per pound, rounded to 
the nearest one-hundredth cent, shall be the basic formula price at test 
less the average butterfat test of the basic formula price as reported 
by the Department times the butterfat price, less the average protein 
test of the basic formula price as reported by the Department for the 
month times the protein price, and dividing the resulting amount by the 
average other solids test of the basic formula price as reported by the 
Department. If the resulting price is less than zero, then the protein 
price will be reduced so that the other solids price equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in thousands) 
of the milk, multiplying the difference by the somatic cell adjustment 
rate, and rounding to the nearest full cent.
[39 FR 16273, May 8, 1974, as amended at 46 FR 43384, Aug. 28, 1981; 58 
FR 63289, Dec. 1, 1993; 60 FR 6610, Feb. 2, 1995; 60 FR 57152, Nov. 14, 
1995]



Sec. 1065.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1065.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.

[[Page 542]]

    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18967, Apr. 14, 1995]



Sec. 1065.52  Plant location adjustments for handlers.

    (a) The following zones are defined for the purpose of determining 
location adjustments:
    (1) Zone 1 shall include the Nebraska counties of Adams, Boone, 
Buffalo, Butler, Cass, Chase, Clay, Colfax, Custer, Dawson, Dodge, 
Douglas, Dundy, Fillmore, Franklin, Frontier, Furnas, Gage, Gosper, 
Greeley, Hall, Hamilton, Harlan, Hayes, Hitchcock, Howard, Jefferson, 
Johnson, Kearney, Keith, Lancaster, Lincoln, Madison, Merrick, Nance, 
Nemaha, Nuckolls, Otoe, Pawnee, Perkins, Phelps, Platte, Polk, Red 
Willow, Richardson, Saline, Sarpy, Saunders, Seward, Sherman, Stanton, 
Thayer, Valley, Webster, and York.
    (2) Zone 2 shall include the Nebraska counties of Banner, Box Butte, 
Cheyenne, Dawes, Deuel, Garden, Kimball, Morrill, Scotts Bluff, 
Sheridan, and Sioux.
    (b) For producer milk received at a pool plant (or diverted to a 
nonpool plant) and which is classified as Class I milk without movement 
in bulk form to a pool plant at which a higher Class I price applies, 
the Class I price specified in Sec. 1065.50(a) shall be adjusted for the 
location of the plant receiving the milk as follows:
    (1) In Zone 1, no adjustment;
    (2) In Zone 2, plus 15 cents;
    (3) At a plant located outside of Zones 1 and 2 and in the States of 
Nebraska, Iowa, Minnesota, North Dakota, South Dakota (east of State 
Highway 73 only), or Wisconsin, the price shall be reduced by 1.7 cents 
per 10 miles or fraction thereof (by shortest hard-surfaced highway and/
or all weather road distance as measured by the market administrator) 
that such plant is located from the nearer of the city halls in Norfolk 
or Omaha, Nebraska; and
    (4) At any other location, no adjustment.
    (c) The Class I price applicable to other source milk shall be 
adjusted by the amounts set forth in paragraph (b) of this section, 
except that the adjusted Class I price shall not be less than the Class 
III price.
    (d) For fluid milk products transferred in bulk from a pool plant to 
another pool plant at which a higher Class I price applies and which is 
classified as Class I, the price shall be the Class I price applicable 
at the location of the transferee-plant subject to a location adjustment 
credit for the transferor-plant determined by the market administrator 
as follows:
    (1) Subtract from the pounds of Class I remaining at the transferee-
plant after the computations pursuant to Sec. 1065.44(a)(12) and (b) 
plus the pounds of skim milk in receipts of concentrated fluid milk 
products from other pool plants that are assigned to Class I use, the 
pounds of packaged fluid milk products from other pool plants;
    (2) Multiply the remaining pounds of milk by 110 percent;
    (3) Subtract the pounds of bulk fluid milk products received at the 
transferee-plant from the following sources:

[[Page 543]]

    (i) Producers;
    (ii) Handlers described in Sec. 1065.9(c);
    (iii) Pool plants at which the same or a higher Class I price 
applies; and
    (iv) Receipts of diverted milk from pool plants;
    (4) Assign any pounds remaining to transferor-plants in sequence 
beginning with the plant at which the least adjustment would apply; and
    (5) Multiply the pounds so computed for each transferor-plant by the 
difference in the Class I prices applicable at the transferee-plant and 
transferor-plant.
[46 FR 19815, Apr. 1, 1981, as amended at 52 FR 3217, Feb. 3, 1987; 58 
FR 27851, May 11, 1993]



Sec. 1065.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (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 other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
[60 FR 57153, Nov. 14, 1995]



Sec. 1065.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                       Producer Price Differential



Sec. 1065.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for milk the 
market administrator shall determine for each month the value of milk of 
each handler described in Sec. 1065.9(a) with respect to each of its 
pool plants and each handler described in Sec. 1065.9 (b) and (c).
    (a) The handler's obligation for producer milk shall be computed as 
follows:
    (1) Multiply the total hundredweight of milk in Class I as 
determined pursuant to Sec. 1065.44(c) by the Class I differential price 
for the month;
    (2) Add an amount obtained by multiplying the total hundredweight of 
milk in Class II as determined pursuant to Sec. 1065.44(c) by the Class 
II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1065.44(a) by the skim 
milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1065.44(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;
    (5) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1065.44(a) by the 
average other solids content of producer skim milk received by the 
handler, and multiplying the resulting pounds of other solids by the 
other solids price;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1065.30(a)(1) by the 
percentage of the total producer milk allocated pursuant to 
Sec. 1065.44(c) that is allocated to Class II and Class III; and
    (7) 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;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1065.44(a)(14) and the 
corresponding step of Sec. 1065.44(b) by the respective

[[Page 544]]

class prices, as adjusted by the butter-fat differential specified in 
Sec. 1065.74, that are applicable at the location of the pool plant;
    (c) Add the following:
    (1) The amount obtained from multiplying the difference between the 
Class III price for the preceding month and the Class I price applicable 
at the location of the pool plant for the current month by the 
hundredweight of skim milk and butterfat subtracted from Class I 
pursuant to Sec. 1065.44(a)(9) and the corresponding step of 
Sec. 1065.44(b); and
    (2) The amount obtained from multiplying the difference between the 
Class III price for the preceding month and the Class II price for the 
current month by the lesser of:
    (i) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1065.44(a)(9) and the corresponding step of 
Sec. 1065.44(b) for the current month; or
    (ii) The hundredweight of skim milk and butterfat remaining in Class 
III after the computations pursuant to Sec. 1065.44(a)(12) and the 
corresponding step of Sec. 1065.44(b) for the preceding month, less the 
hundredweight of skim milk and butterfat specified in paragraph (c)(1) 
of this section;
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1065.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1065.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1065.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1065.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1065.44(b); and
    (f) Add the 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. 1065.43(d) and 
Sec. 1065.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1065.44(a)(11) and the 
corresponding steps of Sec. 1065.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1065.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1065.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk

[[Page 545]]

unconcentrated fluid milk products received at the plant during the 
prior month.
[39 FR 16260, May 8, 1974, as amended at 58 FR 27851, May 11, 1993; 60 
FR 57153, Nov. 14, 1995]



Sec. 1065.61  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. 1065.60 (a)(1), (a)(2), 
(a)(7) and (b) through (i) for all handlers; and
    (2) Add values computed pursuant to Sec. 1065.60 (a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of the somatic cell adjustment;
    (b) Subtract an amount equal to the total value of the plus location 
adjustments computed pursuant to Sec. 1065.75;
    (c) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1065.75;
    (d) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1065.60(f); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be the ``producer price differential.''
[44 FR 7654, Feb. 7, 1979, as amended at 49 FR 23033, June 4, 1984; 60 
FR 57153, Nov. 14, 1995]



Sec. 1065.62  Announcement of producer prices.

    On or before the 12th 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 other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
[60 FR 57154, Nov. 14, 1995]

                            Payments for Milk



Sec. 1065.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1065.71, 
1065.76, and 1065.77, and out of which he shall make all payments 
pursuant to Secs. 1065.72 and 1065.77.



Sec. 1065.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1065.60.
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk determined pursuant to Sec. 1065.44(c) by the producer 
price differential as adjusted pursuant to Sec. 1065.75;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk by the other solids price;
    (iv) The total value of the somatic cell adjustment to producer 
milk; and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1065.60(f) by 
the producer price differential as adjusted pursuant

[[Page 546]]

to Sec. 1065.52 for the location of the plant from which received.
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[39 FR 16273, May 8, 1974, as amended at 44 FR 7655, Feb. 7, 1979; 46 FR 
19816, Apr. 1, 1981; 60 FR 57154, Nov. 14, 1995]



Sec. 1065.72  Payments from the producer-settlement fund.

    On or before the 16th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1065.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1065.71(a)(1). The market administrator shall 
offset any payment due any handler against payments due from such 
handler.
[39 FR 16273, May 8, 1974, as amended at 46 FR 19816, Apr. 1, 1981]



Sec. 1065.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay for milk received from producers for 
which payment is not made to a cooperative association pursuant to 
paragraph (b) or (c) of this section as follows:
    (1) On or before the 27th day of the month, to each producer who has 
not discontinued shipping milk to such handler before the end of the 
month, for producer milk received during the first 15 days of the month 
at a rate per hundredweight not less than the statistical uniform price 
computed pursuant to Sec. 1065.62(g) for the preceding month, less 
proper deductions authorized in writing by such producer; and
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec. 1065.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vii) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer;
    (viii) Less deductions for marketing services pursuant to 1065.86 
and for advertising and promotion pursuant to Sec. 1065.107; and
    (ix) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1065.72 for such month, it may 
reduce pro rata its payment to producers by not more than the amount of 
such underpayment. Payment to producers shall be completed thereafter 
not later than the date for making payments pursuant to paragraph (a) of 
this section next following receipt of the balance due from the market 
administrator.
    (b) Each handler shall pay a cooperative association as follows for 
milk received from producers if the cooperative association has filed a 
written request for payment with the handler

[[Page 547]]

and if the market administrator has determined that such cooperative 
association is authorized to collect payment:
    (1) On or before the 26th day of the month, an amount not less than 
the sum of the individual payments otherwise payable to producers 
pursuant to paragraph (a)(1) of this section, less any deductions 
authorized in writing by such cooperative association; and
    (2) On or before the 17th day after the end of each month an amount 
not less than the sum of the individual payments otherwise payable to 
producers pursuant to paragraph (a)(2) of this section, less proper 
deductions authorized in writing by such cooperative association.
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described in Sec. 1065.9(c) as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 26th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1065.62(g) for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 17th day after the end of the 
month during which the milk was received as follows:
    (i) The hundredweight of milk received times the producer price 
differential applicable at the location of the receiving handler's 
plant;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for fluid milk 
products received by transfer or diversion from a pool plant operated by 
the cooperative association as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 26th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the Class III price for the preceding month; 
and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 17th day after 
the end of the month during which the milk was received as follows:
    (i) The hundredweight of Class I milk received times the Class I 
differential price for the month applicable at the transferee plant, 
plus the pounds of Class I skim milk times the skim milk price for the 
month;
    (ii) The hundredweight of Class II milk received times the Class II 
differential price for the month;
    (iii) The hundredweight of Class III-A milk received times the Class 
III-A differential price for the month;
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (d)(1) of this 
section.
    (e) In making payments for producer milk pursuant to paragraphs 
(a)(2) or (b)(2) of this section, each handler shall furnish each 
producer or cooperative association to whom such payment is made a 
supporting statement in such form that it may be retained by the 
recipient which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds for each producer;
    (3) The total pounds of butterfat contained in the producer's milk;
    (4) The total pounds of protein contained in the producer's milk;

[[Page 548]]

    (5) The total pounds of other solids contained in the producer's 
milk;
    (6) The somatic cell count of the producer's milk;
    (7) The minimum rate or rates which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
    (f) Nothing in this section shall abrogate the right of a 
cooperative association to make payments to its member producers in 
accordance with the payment plan of such cooperative association.
[46 FR 19816, Apr. 1, 1981, as amended at 49 FR 23033, June 4, 1984; 60 
FR 57154, Nov. 14, 1995]



Sec. 1065.74  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. 1065.51 (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.
[60 FR 57155, Nov. 14, 1995]



Sec. 1065.75  Plant location adjustments for producers and on nonpool milk.

    (a) The producer price differential for producer milk shall be 
adjusted according to the location of the plant of actual receipt at the 
rates set forth in Sec. 1065.52.
    (b) For purposes of computations pursuant to Secs. 1065.71 and 
1065.72, the producer price differential shall be adjusted at the rates 
set forth in Sec. 1065.52 applicable at the location of the nonpool 
plant from which the milk was received, except that the adjusted 
producer price differential shall not be less than zero.
[60 FR 57155, Nov. 14, 1995]



Sec. 1065.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1065.30(b) and 1065.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (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, with the difference to be not less than zero; and

[[Page 549]]

    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1065.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1065.60 
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 of reconstituted skim milk in filled milk shall be priced 
at the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1065.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1065.60(f) less the value of such other source milk 
specified in Sec. 1065.71(a)(2)(v), a value of milk determined pursuant 
to Sec. 1065.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1065.7(b), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1065.30(b) and 
1065.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1065.60 for such 
nonpool supply plant shall be determined in the

[[Page 550]]

same manner prescribed for computing the obligation of such partially 
regulated distributing plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1065.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1065.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1065.44(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 16273, May 8, 1974, as amended at 44 FR 7655, Feb. 7, 1979; 58 FR 
27851, May 11, 1993; 60 FR 57155, Nov. 14, 1995]



Sec. 1065.77  Adjustment of accounts.

    Adjustments of accounts shall be made as follows:
    (a) Whenever verification by the market administrator of reports or 
payments of any handler discloses errors made in payments to or from the 
producer-settlement fund pursuant to Secs. 1065.71 and 1065.72, the 
market administrator shall promptly bill such handler for any unpaid 
amount and such handler shall, within 5 days, make payment to the market 
administrator of the account so billed. Whenever verification discloses 
that payment is due from the market administrator to any handler, the 
market administrator shall, within 5 days, make such payment to such 
handler; and
    (b) Whenever verification by the market administrator of the 
payments by a handler to any producer or cooperative association, 
discloses payments of less than is required by Sec. 1065.73, the handler 
shall make up such payment to the producer or cooperative association 
not later than the time of making payments next following such 
disclosure.



Sec. 1065.78  Charges on overdue accounts.

    Any obligation of a handler pursuant to Secs. 1065.71, 1065.76, 
1065.77(a), 1065.85, and 1065.86, for which remittance has not been made 
(or, if mailed, postmarked) by the date specified for such payment, 
shall be increased one percent, and any remaining amount due shall be 
increased at the same rate on the corresponding day of each month 
thereafter until paid. The amounts payable pursuant to this section 
shall include unpaid charges previously made pursuant to this section. 
For the purpose of this section, any obligation that was determined at a 
date later than prescribed by the order because of a handler's failure 
to submit a report to the market administrator when due

[[Page 551]]

shall be considered to have been payable by the date it would have been 
due if the report had been filed when due.
[46 FR 19816, Apr. 1, 1981]

        Administrative Assessment and Marketing Service Deduction



Sec. 1065.85  Assessment for order administration.

    As his pro rata share of the expense of administering the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 3 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, with respect to:
    (a) Producer milk (including such handler's own production;
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1065.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1065.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1065.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1065.60(d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1065.76(a)(2).
[39 FR 16273, May 8, 1974, as amended at 42 FR 38171, July 27, 1977; 46 
FR 19817, Apr. 1, 1981; 58 FR 27851, May 11, 1993]



Sec. 1065.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to each producer pursuant to Sec. 1065.73 
shall deduct 6 cents per hundredweight, or such lesser amount as the 
Secretary may prescribe, with respect to producer milk received by such 
handler (except such handler's own farm production) during the month and 
shall pay such deductions to the market administrator not later than the 
15th day after the end of the month. Such money shall be used by the 
market administrator to verify or establish weights, samples, and tests 
of producer milk and to provide producers with market information. Such 
service shall be performed in whole or in part by the market 
administrator or by an agent engaged by and responsible to him; and
    (b) In the case of producers for whom a cooperative association is 
performing, as determined by the Secretary, the services set forth in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
as are authorized by such producers and on or before the 15th day after 
the end of each month, pay over such deductions to the association 
rendering such services.

                    Advertising and Promotion Program



Sec. 1065.105  Dairy research and promotion order.

    Dairy Research and Promotion Order means the order (7 CFR part 1150) 
established by the Secretary pursuant to title I, subtitle B, of the 
Dairy and Tobacco Adjustment Act of 1983, Pub. L. 98-180, 97 Stat. 1128, 
as approved November 29, 1983, and any amendments thereto.
[49 FR 23033, June 4, 1984]



Sec. 1065.106  Qualified program.

    Qualified program means a State or regional dairy product promotion, 
research or nutrition education program certified by the Secretary as a 
qualified program pursuant to Sec. 1150.153 of the Dairy Research and 
Promotion Order.
[49 FR 23033, June 4, 1984]



Sec. 1065.107  Deduction for advertising and promotion programs.

    On or before the 20th day after the end of the month, each handler 
described in Sec. 1065.9 (a), (b), or (c) shall remit to the market 
administrator as a deduction from payments to producers an amount equal 
to the rate per hundredweight specified in Sec. 1065.121(e) times the 
volume of milk pooled by each such producer for such month. When making 
such deductions from payments to producers, the handler shall credit any 
payments required under authority of State law applicable to such 
producers for an advertising

[[Page 552]]

and promotion program that is a qualified program. Such credit shall not 
exceed the amount of each producer's deduction computed pursuant to this 
section.
[49 FR 23033, June 4, 1984]



Sec. 1065.110  Agency.

    Agency means an agency organized by producers and producers' 
cooperative associations, in such form and with methods of operation 
specified in this part, which is authorized to expend funds made 
available pursuant to Sec. 1065.121(b)(1), on approval by the Secretary, 
for the purposes of establishing or providing for establishment of 
research and development projects, advertising (excluding brand 
advertising), sales promotion, educational, and other programs, designed 
to improve or promote the domestic marketing and consumption of milk and 
its products. Members of the Agency shall serve without compensation but 
shall be reimbursed for reasonable expenses incurred in the performance 
of duties as members of the Agency.



Sec. 1065.111  Composition of Agency.

    Subject to the conditions of paragraph (a) of this section, each 
cooperative association or combination of cooperative associations, as 
provided for under Sec. 1065.113(b), is authorized one agency 
representative for each full 5 percent of the participating member 
producers (producers who have not requested refunds for the most recent 
quarter) it represents. Cooperative associations with less than 5 
percent of the total participating producers that have elected not to 
combine pursuant to Sec. 1065.113(b), and participating producers who 
are not members of cooperatives, are authorized to select from such 
group of participating producers, in total, pursuant to 
Sec. 1065.113(c), one Agency representative for each full 5 percent that 
such producers constitute of the total participating producers. If such 
group of producers in total constitutes less than 5 percent but not less 
than 1 percent of the total participating producers it shall 
nevertheless be authorized to select from such group in total one agency 
representative. For the purpose of the agency's initial organization, 
all persons defined as producers shall be considered as participating 
producers.
    (a) If any cooperative association or combination of cooperative 
associations, as provided for under Sec. 1065.113(b), has a majority of 
the participating producers, representation from such cooperative or 
group of cooperatives, as the case may be, shall be limited to the 
minimum number of representatives necessary to constitute a majority of 
the agency representatives, but not less than five.



Sec. 1065.112  Term of office.

    The term of office of each member of the Agency shall be 1 year, or 
until a replacement is designated by the cooperative association or is 
otherwise appropriately elected.



Sec. 1065.113  Selection of Agency members.

    The selection of Agency members shall be made pursuant to paragraphs 
(a), (b), and (c) of this section. Each person selected shall qualify by 
filing with the market administrator a written acceptance promptly after 
being notified of such selection.
    (a) Each cooperative association authorized one or more 
representatives to the Agency shall notify the market administrator of 
the name and address of each representative who shall serve at the 
pleasure of the cooperative.
    (b) For purposes of this program, cooperative associations may elect 
to combine their participating memberships and, if the combined total of 
participating producers of such cooperatives is 5 percent or more of the 
total participating producers, such cooperatives shall be eligible to 
select a representative(s) to the Agency under the rules of 
Sec. 1065.111 and paragraph (a) of this section.
    (c) Selection of Agency members to represent participating nonmember 
producers and participating producer members of a cooperative 
association(s) having less than the required 5 percent of the producers 
participating in the advertising and promotion program and who have not 
elected to combine memberships as provided in paragraph (b) of this 
section, shall be supervised by the market administrator in the 
following manner:

[[Page 553]]

    (1) Promptly after the effective date of this amending order, and 
annually thereafter, the market administrator shall give notice to 
participating producer members of such cooperatives and participating 
nonmember producers of their opportunity to nominate one or more 
producers as Agency representatives, as the case may be, and also shall 
specify the number of representatives to be selected.
    (2) Following the closing date for nominations, the market 
administrator shall announce the nominees who are eligible for Agency 
membership and shall conduct a referendum among the individual 
participating producers eligible to vote. Election to membership shall 
be determined on the basis of the nominee (or nominees) receiving the 
largest number of eligible votes. If an elected representative 
subsequently discontinues producer status or is otherwise unable to 
complete his term of office, the market administrator shall appoint as 
his replacement the participating producer who received the next highest 
number of eligible votes.



Sec. 1065.114  Agency operating procedure.

    A majority of the Agency members shall constitute a quorum. Any 
action of the Agency shall require a majority of concurring votes of 
those present and voting, unless the Agency determines that more than a 
simple majority shall be required.



Sec. 1065.115  Powers of the Agency.

    The Agency is empowered to:
    (a) Administer the terms and provisions of the program within the 
scope of Agency authority pursuant to Sec. 1065.110;
    (b) Make rules and regulations to effectuate the purposes of Public 
Law 91-670;
    (c) Recommend amendments to the Secretary; and
    (d) With the approval of the Secretary, enter into contracts and 
agreements with persons or organizations as deemed necessary to carry 
out advertising and promotion programs and projects specified in 
Secs. 1065.110 and 1065.117.



Sec. 1065.116  Duties of the Agency.

    The Agency shall perform all duties necessary to carry out the terms 
and provisions of this program including, but not limited to, the 
following:
    (a) Meet, organize, and select from among its members a chairman and 
such other officers and committees as may be necessary, and adopt and 
make public such rules as may be necessary for the conduct of its 
business;
    (b) Develop programs and projects pursuant to Secs. 1065.110 and 
1065.117;
    (c) Keep minutes, books, and records and submit books and records 
for examination by the Secretary and furnish any information and reports 
requested by the Secretary;
    (d) Prepare and submit to the Secretary for approval prior to each 
quarterly period a budget showing the projected amounts to be collected 
during the quarter and how such funds are to be disbursed by the Agency;
    (e) When desirable, establish an advisory committee(s) of persons 
other than Agency members;
    (f) Employ and fix the compensation of any person deemed to be 
necessary to its exercise of powers and performance of duties;
    (g) Establish the rate of reimbursement to the members of the Agency 
for expenses in attending meetings, and pay the expenses of 
administering the Agency; and
    (h) Provide for the bonding of all persons handling Agency funds in 
an amount and with surety thereon satisfactory to the Secretary.



Sec. 1065.117  Advertising, research, education, and promotion program.

    The Agency shall develop and submit to the Secretary for approval 
all programs or projects undertaken under the authority of this part. 
Such programs or projects may provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate programs or projects for the advertising and promotion of 
milk and milk products on a nonbrand basis;
    (b) The utilization of the services of other organizations to carry 
out Agency programs and projects if the Agency finds that such 
activities will benefit producers under this part; and

[[Page 554]]

    (c) The establishment, support, and conduct of research and 
development projects and studies that the Agency finds will benefit all 
producers under this part.



Sec. 1065.118  Limitation of expenditures by the Agency.

    (a) Not more than 5 percent of the funds received by the Agency 
pursuant to Sec. 1065.121(b)(1) shall be utilized for administrative 
expense of the Agency.
    (b) Agency funds shall not, in any manner, be used for political 
activity or for the purpose of influencing governmental policy or 
action, except in recommending to the Secretary amendments to the 
advertising and promotion program provisions of this part.
    (c) Agency funds may not be expended to solicit producer 
participation.
    (d) Agency funds may be used only for programs and projects 
promoting the domestic marketing and consumption of milk and its 
products.



Sec. 1065.119  Personal liability.

    No member of the Agency shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever to any person 
for errors in judgment, mistakes, or other acts, either of commission or 
omission, of such member in performance of his duties, except for acts 
of willful misconduct, gross negligence, or those which are criminal in 
nature.



Sec. 1065.120  Procedure for requesting refunds.

    Any producer may apply for refund subject to the applicable 
conditions set forth in this section.
    (a) Refund shall be accomplished only through application filed 
with, and in the manner prescribed by, the market administrator and 
signed by the producer. Only that information necessary to identify the 
producer and the records relevant to the refund may be required of such 
producer. As long as the Dairy Research and Promotion Order is in 
effect, any producer who files a request for refund in accordance with 
this section may designate a qualified program to receive such refund.
    (b) Except as provided in paragraph (c) of this section, the request 
shall be submitted within the first 15 days of December, March, June, or 
September for milk to be marketed during the ensuing calendar quarter 
beginning on the first day of January, April, July, and October, 
respectively.
    (c) A dairy farmer who first acquires producer status under this 
part after the 15th day of December, March, June, or September, as the 
case may be, and prior to the end of the ensuing calendar quarter may, 
upon application filed with the market administrator pursuant to 
paragraph (a) of this section, be eligible for refund on all marketings 
against which an assessment is withheld during such calendar quarter 
pursuant to Sec. 1065.121(b). Such eligibility for refund shall not 
apply to a dairy farmer who during the first 15 days of such December, 
March, June, or September was a producer under another order with an 
advertising and promotion program if the refund notification period 
under the other order was the same as under this order and if the 
funding rate under the other order was at least equal to the funding 
rate under this order.
    (d) A dairy farmer who, with respect to any calendar quarter, has 
appropriately filed request for refund of program assessments on his 
marketings of milk under another order that provides for an advertising 
and promotion program will be eligible (on the basis of his request 
filed under the other order) for refunds with respect to his producer 
milk marketed under this order during such quarter for which deductions 
were made pursuant to Sec. 1065.121(b).
[39 FR 16273, May 8, 1974, as amended at 44 FR 7655, Feb. 4, 1979; 49 FR 
23033, June 4, 1984]



Sec. 1065.121  Duties of the market administrator.

    Except as specified in Sec. 1065.116, the market administrator, in 
addition to other duties specified by this part, shall perform all the 
duties necessary to administer the terms and provisions of the 
advertising and promotion program including, but not limited to, the 
following:
    (a) Within 30 days after the effective date of this amending order, 
and annually thereafter, conduct a referendum

[[Page 555]]

to determine representation on the Agency pursuant to Sec. 1065.113(c);
    (b) Each month deposit into an advertising and promotion fund, 
separately accounted for, an amount equal to the funds received from 
handlers pursuant to Sec. 1065.107. The amount deposited shall be 
disbursed as follows:
    (1) To the Agency each month, all such funds less any necessary 
amount held in reserve to cover refunds pursuant to paragraphs (b) (3) 
or (4) of this section, and payments to cover expenses of the market 
administrator incurred in the administration of the advertising and 
promotion program (including audit).
    (2) [Reserved]
    (3) As long as the Dairy Research and Promotion Order is in effect, 
paragraph (b)(4) of this section shall apply in lieu of this paragraph. 
After the end of each calender quarter, make a refund to each producer 
who has made application for such refund pursuant to Sec. 1065.120. Such 
refund shall be that amount which was obtained pursuant to Sec. 1065.107 
for each calendar quarter.
    (4) As long as the Dairy Research and Promotion Order is in effect, 
remit to any qualified programs any refunds designated by producers to 
be paid to such programs no later than the last day of the month 
following the month in which the milk was marketed. If a refund request 
does not designate a qualified program to receive such money, the refund 
shall be remitted to the National Dairy Promotion and Research Board, 
which is defined in the Dairy Research and Promotion Order.
    (c) Promptly after the effective date of this amending order, and 
thereafter with respect to new producers, forward to each producer a 
copy of the provisions of the advertising and promotion program 
(Secs. 1065.105 through 1065.122).
    (d) Make necessary audits to establish that all agency funds are 
used only for authorized purposes.
    (e) As soon as possible after the beginning of each year, compute 
the rate of withholding by multiplying the simple average of the monthly 
``uniform prices'' for the last quarter of the preceding year by 0.75 
percent and rounding the result to the nearest whole cent. This rate 
shall apply during the 12-month period beginning with April of the 
current year: Provided, That the rate shall be 10 cents per 
hundredweight as long as the Dairy Research and Promotion Order is in 
effect.
    (f) As soon as possible after the rate of withholding is computed, 
notify in writing each producer currently on the market and any new 
producer that subsequently enters the market of the withholding rate. 
This notification shall be repeated annually thereafter only if there is 
any change in the rate from the previous period.
[39 FR 16273, May 8, 1974, as amended at 44 FR 7655, Feb. 7, 1979; 49 FR 
23034, June 4, 1984]



Sec. 1065.122  Liquidation.

    In the event that the provisions of this advertising and promotion 
program are terminated, any remaining uncommitted funds applicable 
thereto shall revert to the producer-settlement fund of Sec. 1065.70.



PART 1068--MILK IN THE UPPER MIDWEST MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1068.1  General provisions.

                               Definitions

1068.2  Upper Midwest marketing area.
1068.3  Route disposition.
1068.4  Plant.
1068.7  Pool plant.
1068.8  Nonpool plant.
1068.9  Handler.
1068.10  Producer-handler.
1068.12  Producer.
1068.13  Producer milk.
1068.14  Other source milk.
1068.15  Fluid milk product.
1068.16  Fluid cream product.
1068.17  Filled milk.
1068.18  Cooperative association.
1068.19  Commercial food processing establishment.

                             Handler Reports

1068.30  Reports of receipts and utilization.
1068.31  Payroll reports.
1068.32  Other reports.

                         Classification of Milk

1068.40  Classes of utilization.
1068.41  Shrinkage.
1068.42  Classification of transfers and diversions.

[[Page 556]]

1068.43  General classification rules.
1068.44  Classification of producer milk.
1068.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1068.50  Class and component prices.
1068.51  Basic formula price.
1068.52  Plant location adjustments for handlers.
1068.53  Announcement of class and component prices.
1068.54  Equivalent price.

                       Producer Price Differential

1068.60  Handler's value of milk.
1068.61  Producer price differential.
1068.62  Announcement of producer prices.

                            Payments for Milk

1068.70  Producer-settlement fund.
1068.71  Payments to the producer-settlement fund.
1068.72  Payments from the producer-settlement fund.
1068.73  Payments to producers and to cooperative associations.
1068.74  Butterfat differential.
1068.75  Plant location adjustments for producers and on nonpool milk.
1068.76  Payments by handler operating a partially regulated 
          distributing plant.
1068.77  Adjustment of accounts.
1068.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1068.85  Assessment for order administration.
1068.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 41 FR 18057, Apr. 30, 1976, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1068.1  General Provisions

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1068.2  Upper Midwest marketing area.

    Upper Midwest marketing area (referred to in this part as the 
``marketing area'') means all territory within the boundaries listed 
below including all territory that is now, or in the future, occupied by 
government (municipal, State, or Federal) reservations, installations, 
institutions, or other similar establishments if any part of such 
territory is within the designated geographical limits of the marketing 
area:
    (a) The State of Minnesota, except the counties of Lincoln, Nobles, 
Pipestone, and Rock.
    (b) In the State of Wisconsin, the counties of:

Ashland, Barron, Bayfield, Buffalo, Burnett, Chippewa, Clark, Douglas, 
Dunn, Eau Claire, Pepin, Pierce, Polk, Price, Rusk, Sawyer, St. Croix, 
Taylor, Trempealeau, Washburn.

    (c) In the State of North Dakota, the counties of:

Barnes, Cass, Cavalier, Dickey, Grand Forks, Griggs, La Moure, Nelson, 
Pembina, Ramsey, Ransom, Richland, Sargent, Steele, Traill, Walsh.

    (d) In the State of South Dakota, the counties of:

Brown, Day, Edmunds, Grant, Marshall, McPherson, Roberts, Walworth.

    (e) In the State of Iowa, the counties of:

Howard, Kossuth, Mitchell (except the city of Osage), Winnebago, 
Winneshiek, Worth.



Sec. 1068.3  Route disposition.

    Route disposition means any delivery (including any delivery by a 
vendor or disposition at a plant store or through a vending machine) of 
a fluid milk product classified as Class I milk, other than a delivery 
to a plant.



Sec. 1068.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products (including filled milk) are received, processed, or 
packaged. Separate facilities used only as a distribution point for 
storing packaged fluid milk products in transit for route disposition or 
separate facilities used only as a reload point for transferring bulk 
milk from one tank truck to another shall not be a ``plant'' under this 
definition.

[[Page 557]]



Sec. 1068.7  Pool plant.

    Except as provided in paragraph (e) of this section, pool plant 
means:
    (a) Any plant (which, if qualified pursuant to this paragraph, shall 
be known as a ``pool distributing plant'') from which during the month:
    (1) The total route disposition (except filled milk) as a percent of 
the total Grade A fluid milk products received in bulk form at such 
plant or diverted therefrom by the plant operator is at least equal to 
the marketwide Class I utilization percentage for the same month of the 
preceding year; and
    (2) Not less than 15 percent of such receipts are disposed of as 
route disposition (except filled milk) in the marketing area.
    (3) A unit consisting of at least one pool distributing plant and 
one or more additional plants of a handler shall be considered as one 
plant for the purpose of meeting the requirements of this paragraph, 
subject to the following conditions:
    (i) For each plant within the unit which does not qualify as a pool 
distributing plant pursuant to paragraphs (a) (1) and (2) of this 
section, the combined disposition of skim milk and butterfat in products 
specified in Sec. 1068.40(a), Sec. 1068.40(b)(1) in packaged form, and 
Sec. 1068.40(b)(4)(i) is 50 percent or more of the total Grade A fluid 
milk products received in bulk form at such plant or diverted therefrom 
by the plant operator;
    (ii) All plants within the unit are located within the marketing 
area; and
    (iii) The operator of the unit has filed a written request with the 
market administrator prior to the first day of the month for which such 
status is desired to be effective. The unit shall continue from month-
to-month thereafter without further notification. The handler shall 
notify the market administrator in writing prior to the first day of any 
month for which termination or any change of the unit is desired.
    (b) Any plant (which, if qualified pursuant to this paragraph, shall 
be known as a ``pool supply plant'') that is approved by a duly 
constituted regulatory agency for the handling of Grade A milk, subject 
to the following conditions:
    (1) The volume of fluid milk products delivered to pool distributing 
plants as a percent of the total Grade A milk received at the plant from 
dairy farmers during the month (including milk delivered to the plant 
from dairy farms for the account of a cooperative association and milk 
diverted from the plant by the plant operator but excluding milk 
diverted to the plant from another pool plant) is not less than the 
marketwide Class I utilization percentage for the same month of the 
preceding year, subject to the following conditions:
    (i) These shipping percentages 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 
percentage 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 effective;
    (ii) A cooperative association that operates a supply plant may 
include as qualifying shipments its deliveries to pool distributing 
plants directly from farms of producers pursuant to Sec. 1068.9(c);
    (iii) A proprietary handler may include as qualifying shipments milk 
diverted to pool distributing plants pursuant to Sec. 1068.13(d);
    (2) In order to meet the requirements of this paragraph, two or more 
supply plants operated by one or more handler(s) may qualify for pooling 
as a unit during the following months of August through July by meeting 
the applicable percentage requirements of this paragraph in the same 
manner as a single plant, provided that:
    (i) The handler(s) file a request with the market administrator for 
such unit

[[Page 558]]

status no later than July 15 of each year. Such a request should specify 
the order in which plants would cease to be considered part of the unit 
if the unit fails to meet the applicable percentage requirements of this 
paragraph. Any plant that ceases to be part of a unit will not be 
eligible to rejoin a unit until the following August. No plant may 
become part of a unit after the unit is formed and the market 
administrator has been notified; and
    (ii) Each handler operating supply plant(s) for which the shipping 
percentages are met as part of a unit must ship at least 5 percent of 
the Grade A milk received at its plant(s) from dairy farmers during the 
month (including milk delivered to the handler's plant(s) from dairy 
farms for the account of a cooperative association pursuant to 
Sec. 1068.9(c) and milk diverted from the plant(s) by the plant operator 
but excluding milk diverted to the plant(s) from another pool plant) to 
pool distributing plant(s) in one of the months of August through 
December in order for the handler's plant(s) to be a supply plant(s) for 
the month of December; and
    (iii) Each plant in the unit is located in the marketing area, or 
was a pool plant pursuant to Sec. 1068.7(b) for each of the three months 
immediately preceding the effective date of this paragraph so long as it 
continues to maintain pool status.
    (3) The quantity of fluid milk products moved from a supply plant to 
a pool distributing plant or pool distributing plant unit that shall 
count toward meeting the shipping requirements of paragraphs (b)(1) and 
(b)(2) of this section shall be a net quantity which shall exclude the 
pounds by which the quantity specified in paragraph (b)(3)(i) of this 
section exceeds the quantity specified in paragraph (b)(3)(ii) of this 
section:
    (i) The pounds of bulk fluid milk products transferred from the pool 
distributing plant or pool distributing plant unit during the month that 
are not to another pool distributing plant or pool distributing plant 
unit or to a commercial food processing establishment pursuant to 
Sec. 1068.40(b)(3).
    (ii) 1,000,000 pounds.
    (c) Any plant that qualified as a pool plant in each of the 
immediately preceding three months on the basis of performance standards 
described in paragraphs (a) or (b) of this section.
    (d) Any plant (which, if qualified pursuant to this paragraph, shall 
be known as a ``pool reserve supply plant'') that is located in the 
marketing area and that is approved by a duly constituted regulatory 
agency for the handling of Grade A milk, subject to the following 
conditions:
    (1)--(2) [Reserved]
    (3) The operator of the plan has filed a request with the market 
administrator for pool reserve supply status no later than July 15 of 
each year. Once qualified as a pool plant pursuant to this paragraph, 
such status shall be effective for August and continue through the 
following July unless the operator requests nonpool status for the plant 
prior to the first day of the month for which nonpool status is 
requested, the plant subsequently fails to meet all of the conditions of 
this paragraph, or the plant qualifies as a pool plant under another 
order;
    (4) The volume of bulk fluid milk products shipped from the plant to 
pool distributing plants as a percent of the total Grade A milk received 
at the plant from dairy farmers during the month (including milk 
delivered to the plant from dairy farms for the account of a cooperative 
association pursuant to Sec. 1068.9(c) and milk diverted from the plant 
by the plant operator but excluding milk diverted to the plant from 
another pool plant) is not less than 10 percent for each of the months 
of January through June and, for each of the months of July through 
December, is not less than the marketwide Class I utilization percentage 
for the same month of the preceding year, subject to the following 
conditions:
    (i) These shipping percentages may be decreased by the market 
administrator on the basis that such revision is necessary 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 
persons. If the investigation shows that a revision of the shipping 
percentage

[[Page 559]]

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 
effective;
    (ii) A cooperative association that operates a reserve supply plant 
may include as qualifying shipments its deliveries to pool distributing 
plants directly from farms of producers pursuant to Sec. 1068.9(c);
    (iii) A proprietary handler may include as qualifying shipments milk 
diverted to pool distributing plants pursuant to Sec. 1068.13(d);
    (iv) Shipments from a reserve supply plant to a distributing plant 
regulated under another Federal order may count as if delivered to a 
pool distributing plant if the market administrator is notified of the 
amount of any such commitments to ship milk no later than the fifteenth 
day of the prior month. Total credit for shipments to plants regulated 
under other Federal orders shall be limited to the quantity of milk 
delivered from the plant to pool distributing plants during the month. 
Qualifying shipments to an other order plant may not be classified 
pursuant to Sec. 1068.42(b)(3).
    (5) The operator of the plant supplies fluid milk products to pool 
distributing plants located within an area designated by the market 
administrator as the ``call area'' in compliance with any announcement 
by the market administrator requesting a minimum level of shipments, as 
further provided below:
    (i) The market administrator may require such supplies of fluid milk 
products from operators of any pool reserve supply plants within the 
call area whenever he finds that milk supplies for Class I use at pool 
distributing plants within the call area are needed from plants 
qualifying under this paragraph. Before making such a finding, the 
market administrator shall investigate the need for such shipments 
either on his own initiative or at the request of interested persons. If 
his investigation shows that such shipments might be appropriate, he 
shall issue a notice stating that a shipping announcement is being 
considered and inviting data, views, and arguments with respect to the 
proposed shipping announcement;
    (ii) For the purpose of meeting any shipping requirement announced 
by the market administrator;
    (A) Qualifying shipments to pool distributing plants within the call 
area may originate from any plant or producer milk supplies of the 
handler provided that shipments from sources other than the plant(s) 
subject to the call and milk supplies for which a cooperative 
association is the handler pursuant to Sec. 1068.9(c) must be in 
addition to any shipments already being made by the handler and may not 
result from shifting milk supplies from a pool distributing plant 
outside the call area to one within the call area; and
    (B) Shipments from a reserve supply plant within the call area to a 
pool distributing plant outside the call area or to a comparable plant 
regulated under another Federal order may count as if delivered to a 
pool distributing plant within the call area if the market administrator 
is notified of the amount of any such commitments to ship milk prior to 
announcement of a shipping requirement pursuant to this paragraph. Total 
credit for shipments to plants regulated under other Federal orders 
shall be limited to the quantity of milk delivered from the plant to 
pool distributing plants during the month. Qualifying shipments to an 
other order plant may not be classified pursuant to Sec. 1068.42(b)(3); 
and
    (iii) Failure of a handler to comply with any announced shipping 
requirement pursuant to Sec. 1068.7(d)(5), including making any 
significant change in his marketing operations that the market 
administrator determines has the impact of evading or forcing such an 
announcement, shall result in immediate loss of pool status for the 
plant pursuant to Sec. 1068.7(d). A plant losing pool status in this 
manner or a plant that requests nonpool status may not again qualify as 
a pool plant pursuant to Sec. 1068.7(d) until the following August;
    (6) In order to meet the requirements of paragraphs (d)(4) and 
(d)(5) of this

[[Page 560]]

section, two or more reserve supply plants operated by one or more 
handler(s) may qualify for pooling as a unit during the following months 
of August through July by meeting the applicable percentage requirements 
of this paragraph in the same manner as a single plant, provided that:
    (i) The handler(s) file a request with the market administrator for 
such unit status no later than July 15 of each year. Such a request 
should specify the order in which the plants would cease to be 
considered part of the unit if the unit fails to meet the applicable 
percentage requirements of Sec. 1068.7(d) (4) and (5). Any plant that 
ceases to be part of a unit will not be eligible to rejoin a unit until 
the following August. No plant may become part of a unit after the unit 
is formed and the market administrator has been notified; and
    (ii) Each handler operating reserve supply plant(s) for which the 
shipping percentages in Sec. 1068.7(d)(4) are met as part of a unit 
described in Sec. 1068.7(d)(6) must ship at least 5 percent of the Grade 
A milk received at its plant(s) from dairy farmers during the month 
(including milk delivered to the handler's plant(s) from dairy farms for 
the account of a cooperative association pursuant to Sec. 1068.9(c) and 
milk diverted from the plant(s) by the plant operator but excluding milk 
diverted to the plant(s) from another pool plant) to pool distributing 
plants in one of the months of August through December in order for the 
handler's plant(s) to be a reserve supply plant(s) for the month of 
December.
    (7) The quantity of fluid milk products moved from the reserve 
supply plant to a pool distributing plant or pool distributing plant 
unit that shall count toward meeting the shipping requirements of 
paragraphs (d)(4), (d)(5), and (d)(6) of this section shall be a net 
quantity which shall exclude the pounds by which the quantity specified 
in paragraph (d)(7)(i) of this section exceeds the quantity specified in 
paragraph (d)(7)(ii) of this section.
    (i) The pounds of bulk fluid milk products transferred from the pool 
distributing plant or pool distributing plant unit during the month that 
were not to another pool distributing plant or pool distributing plant 
unit or to a commercial food processing establishment pursuant to 
Sec. 1068.40(b)(3).
    (ii) 1,000,000 pounds.
    (8) A plant must have been a pool plant under this order pursuant to 
Sec. 1068.7 (a), (b) or (d) during each of the preceding months of 
August through December to be a pool reserve supply plant during the 
following months of January through July.
    (e) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A governmental agency plant;
    (3) A plant qualified as a pool plant pursuant to this section if 
the conditions of paragraph (e)(3) (i) and (ii) of this section are met. 
Such plant shall be exempt from the provisions of this part except for 
reports that may be required pursuant to Sec. 1068.30(d) and 
verification of such reports by the market administrator in accordance 
with Sec. 1000.5 of this chapter:
    (i) The Secretary determines that a greater quantity of milk in 
fluid form is disposed of from such plant to a regulated marketing area 
as defined in another order issued pursuant to the Act either as route 
disposition, excluding filled milk, or to other order plants qualified 
on the basis of route disposition, than is disposed of from such plant 
in the Upper Midwest marketing area either as route disposition, 
excluding filled milk, or to pool plants qualified on the basis of route 
disposition; and
    (ii) Such milk would be subject to the class price and producer 
payment provisions of the other marketing agreement or order upon being 
made exempt from this part; and
    (4) That portion of a plant that is physically separated from the 
Grade A portion of such plant, is operated separately, and is not 
approved by any regulatory agency for the receiving, processing, or 
packaging of any fluid milk product for Grade A disposition.
[41 FR 18057, Apr. 30, 1976, as amended at 52 FR 36910, Oct. 2, 1987; 53 
FR 19745, May 31, 1988; 55 FR 26635, June 29, 1990]



Sec. 1068.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of

[[Page 561]]

nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which Grade A milk or filled milk is disposed of as route disposition in 
the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant, from which fluid milk 
products are shipped during the month to a pool plant.
    (e) Governmental agency plant means a plant owned and operated by a 
government institution which disposes of Class I milk in the marketing 
area. Such plant shall be exempt from all provisions of this part.



Sec. 1068.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk of a producer 
that is diverted for the account of the cooperative association from a 
pool plant in accordance with Sec. 1068.13;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant in a tank truck owned and operated by, or under the control 
of, such cooperative association, unless both the cooperative 
association and the operator of the pool plant notify the market 
administrator prior to the time that such milk is delivered to the pool 
plant that the plant operator will be the handler for such milk and will 
purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) Any person who is a producer-handler;
    (f) Any person in his capacity as the operator of an other order 
plant; and
    (g) Any person in his capacity as the operator of an unregulated 
supply plant.
[41 FR 18057, Apr. 30, 1976, as amended at 47 FR 16614, Apr. 19, 1982]



Sec. 1068.10  Producer-handler.

    Producer-handler means any person who meets all of the following 
conditions:
    (a) Operates a dairy farm and a distribution plant at which Grade A 
milk of his own production is processed and packaged, and from which 
there is route disposition in the marketing area;
    (b) Receives no milk or fluid milk products at his plant (or at any 
distribution facility, including routes, operated by him, an affiliate, 
or any person who controls or is controlled by him) from the farms of 
other dairy farmers nor from any other source, except receipts of not 
more than 50,000 pounds of fluid milk products during the month from 
pool plants of other handlers or from other order plants;
    (c) Receives no nonfluid milk products from any source for use in 
reconstituting fluid milk products; and
    (d) The maintenance, care, and management of the dairy animals and 
other resources necessary to produce such milk and the processing of 
such milk are the personal enterprise, and the personal risk, of such 
person.



Sec. 1068.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for disposition as Grade A milk and whose milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1068.9(c); or

[[Page 562]]

    (3) Diverted from a pool plant in accordance with Sec. 1068.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him that is diverted 
to a pool plant from an other order plant if the other order designates 
such person as a producer under that order and such milk is allocated to 
Class II or Class III utilization pursuant to Sec. 1068.44(a)(8)(iii) 
and the corresponding step of Sec. 1068.44(b);
    (3) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I under the provisions of such other 
order; and
    (4) Any government institution which produces milk in conjunction 
with the operation of a plant exempt from all provisions of this part 
pursuant to Sec. 1068.8(e).



Sec. 1068.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk of a 
producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1068.9(c);
    (c) Picked up from the producer's farm tank in a tank truck owned 
and operated by, or under the control of, the operator of a pool plant 
but which is not received at a plant until the following month. Such 
milk shall be considered as having been received by the handler during 
the month in which it is picked up at the producer's farm and shall be 
priced at the location of the plant where it is physically received in 
the following month. This paragraph shall apply in like manner to milk 
received by the operator of a pool plant who, in accordance with 
Sec. 1068.9(c), is the handler for such milk;
    (d) Diverted from the pool plant of a proprietary handler for the 
account of the handler operating such plant to another pool plant or 
diverted from a pool plant to a nonpool plant (other than a producer-
handler plant) for the account of the handler operating such pool plant 
or for the account of a handler described in Sec. 1068.9(b), subject to 
the following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion until 
milk of such dairy farmer is physically received as producer milk at a 
pool plant;
    (2) The total quantity of milk diverted by a cooperative association 
during the month as a percent of the producer milk that the cooperative 
association causes to be delivered to or diverted from pool plants 
during the month shall not exceed the market's combined Class II and III 
utilization percentage for the same month of the prior year;
    (3) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk pursuant to paragraph (d)(2) 
of this section. The total quantity of milk so diverted during the month 
as a percent of the producer milk physically received at or diverted 
from such pool plant during the month that is eligible to be diverted by 
the plant operator shall not exceed the market's combined Class II and 
III utilization percentage for the same month of the prior year;
    (4) The diversion limitations specified in paragraphs (d)(2) and 
(d)(3) of this section may be increased or decreased by the market 
administrator on the basis that such revision is necessary to prevent 
uneconomic handling or shipments of milk. 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 persons. If the investigation shows that a revision 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 diversion limitations 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 effective;
    (5) Any milk diverted in excess of the limits prescribed in 
paragraph (d) (2) and (3) of this section shall not be producer milk. 
The diverting handler may

[[Page 563]]

designate the dairy farmers whose diverted milk will not be producer 
milk, otherwise the milk last diverted--in lots of an entire day's 
production--shall be excluded first in determining which milk should not 
be producer milk; and
    (6) Diverted milk shall be priced at the location of the plant to 
which diverted.
[41 FR 18057, Apr. 30, 1976, as amended at 55 FR 26636, June 29, 1990]



Sec. 1068.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1068.40(b)(1) from any source other than producers, handlers 
described in Sec. 1068.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1068.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1068.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1068.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1068.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27852, May 11, 1993]



Sec. 1068.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27852, May 11, 1993]



Sec. 1068.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1068.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act;''
    (b) Has full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or its products 
for its members; and
    (c) Has its entire activities under the control of its members.

[[Page 564]]



Sec. 1068.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1068.13, 1068.41 and 1068.52.
[58 FR 27852, May 11, 1993]

                             Handler Reports



Sec. 1068.30  Reports of receipts and utilization.

    On or before the 10th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler described in Sec. 1068.9 (a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), 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. 1068.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(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. 1068.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (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.
[41 FR 18057, Apr. 30, 1976, as amended at 60 FR 57155, Nov. 14, 1995]



Sec. 1068.31  Payroll reports.

    (a) On or before the 22nd day of each month, each handler described 
in Sec. 1068.9 (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 the 
information described in Sec. 1068.73(f).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1068.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
[41 FR 18057, Apr. 30, 1976, as amended at 60 FR 57155, Nov. 14, 1995]



Sec. 1068.32  Other reports.

    In addition to the reports required pursuant to Secs. 1068.30 and 
1068.31, the following shall be reported to the market administrator:

[[Page 565]]

    (a) Each handler specified in Sec. 1068.9(g) who operates an 
unregulated supply plant shall report as required in Sec. 1068.30, 
except that the receipts of skim milk and butterfat in Grade A milk 
shall be reported in lieu of those in producer milk.
    (b) Each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.

                         Classification of Milk



Sec. 1068.40  Classes of utilization.

    Except as provided in Sec. 1068.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1068.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;

[[Page 566]]

    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1068.15 and the fluid 
cream product definition pursuant to Sec. 1068.16; and
    (7) In shrinkage assigned pursuant to Sec. 1068.41(a) to the 
receipts specified in Sec. 1068.41(a)(2) and in shrinkage specified in 
Sec. 1068.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27852, May 11, 1993, as amended at 58 FR 63289, Dec. 1, 1993]



Sec. 1068.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1068.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraph (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraph (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1068.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this subparagraph shall be 
2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk

[[Page 567]]

fluid milk products received from unregulated supply plants, excluding 
the quantity for which Class II or Class III classification is requested 
by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraph (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1068.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1068.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless both handlers request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1068.44(a)(12) and the corresponding 
step of Sec. 1068.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1068.44(a)(7) 
or the corresponding step of Sec. 1068.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1068.44(a)(11) or (12) of the corresponding steps of 
Sec. 1068.44(b), the skim milk or butterfat so transferred or diverted 
up to the total of the skim milk, shall not be classified as Class I 
milk to a greater extent than would be the case if the other source milk 
had been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other

[[Page 568]]

order is not available to the market administrator for the purpose of 
establishing classification under this paragraph, classification shall 
be as Class I, subject to adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1068.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraph (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraph (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1068.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:

[[Page 569]]

    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
    (e) Transfers by a handler described in Sec. 1068.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1068.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1068.44 pro rata with producer milk 
received at the transferee-handler's plant.
[41 FR 18057, Apr. 30, 1976, as amended at 58 FR 27853, May 11, 1993]



Sec. 1068.43  General classification rules.

    In determining the classification of producer milk, the following 
rules shall apply;
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1068.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1068.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1068.40, 1068.41, and 1068.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1068.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1068.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association; and
    (d) For classification purposes, pursuant to Secs. 1068.40 through 
1068.45, butterfat in skim milk either disposed of to others or used in 
the manufacture of milk products shall be accounted for at a butterfat 
content of 0.065 percent, unless the handler has adequate records of the 
actual butterfat content of such skim milk.
    (e) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to

[[Page 570]]

the reconstituted portion of labeled reconstituted fluid milk products, 
on a pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1068.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1068.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (f) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[41 FR 18057, Apr. 30, 1976, as amended at 58 FR 27853, May 11, 1993; 58 
FR 63289, Dec. 1, 1993]



Sec. 1068.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1068.9(a) for each of his separate pool plants 
the classification of producer milk and milk received from a handler 
described in Sec. 1068.9(c) by allocating the handler's receipts of skim 
milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1068.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1068.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1068.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This subparagraph shall apply only 
if the pool plant was subject to the provisions of this subparagraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1068.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1068.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form

[[Page 571]]

of an unconcentrated fluid milk product) and, if paragraph (a)(5) of 
this section applies, packaged inventory at the beginning of the month 
of products specified in Sec. 1068.40(b)(1) that was not subtracted 
pursuant to paragraphs (a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraph 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1068.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1068.40(b)(1) in inventory 
at the beginning of the

[[Page 572]]

month that were not subtracted pursuant to paragraphs (a)(2)(ii), (a)(5) 
and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraph (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraph (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1068.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;

[[Page 573]]

    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computation pursuant to paragraph (a)(12) (i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1068.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, and milk received from 
a handler described in Sec. 1068.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1068.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[41 FR 18057, Apr. 30, 1976, as amended at 58 FR 27853, May 11, 1993]



Sec. 1068.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1068.44(a)(12) and the corresponding 
step of Sec. 1068.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Secs. 1068.43(e) and 1068.44 on the 
basis of such report, (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the

[[Page 574]]

other order on the basis of the report by the receiving handler, and, as 
necessary, any changes in such allocation arising from the verification 
of such report.
[41 FR 18057, Apr. 30, 1976, as amended at 58 FR 27853, May 11, 1993]

                              Class Prices



Sec. 1068.50  Class and component prices.

    Subject to the provisions of Sec. 1068.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the component 
prices 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 $1.20.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
    (e) Class I differential price. The Class I differential price shall 
be the difference between the current month's Class I and Class III 
prices (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 prices (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 and 
Class III-A prices (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 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) Other solids price. Other solids are herein defined as solids-
not-fat other than protein. The other solids price per pound, rounded to 
the nearest one-hundredth cent, shall be the basic formula price at test 
less the average butterfat test of the basic formula price as reported 
by the Department times the butterfat price, less the average protein 
test of the basic formula price as reported by the Department for the 
month times the protein price, and dividing the resulting amount by the 
average other solids test of the basic formula price as reported by the 
Department. If the resulting price is less than zero, then the protein 
price will be reduced so that the other solids price equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment per hundredweight shall be 
determined by subtracting from 350 the somatic cell count (in thousands) 
of the milk, multiplying the difference by the somatic cell adjustment 
rate, and rounding to the nearest full cent.
[41 FR 18057, Apr. 30, 1976, as amended at 46 FR 43385, Aug. 28, 1981; 
58 FR 63289, Dec. 1, 1993; 60 FR 6610, Feb. 2, 1995; 60 FR 57155, Nov. 
14, 1995]



Sec. 1068.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1068.74 and rounded

[[Page 575]]

to the nearest cent, plus or minus the change in gross value yielded by 
the butter-nonfat dry milk and Cheddar cheese product price formula 
computed pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18968, Apr. 14, 1995]



Sec. 1068.52  Plant location adjustments for handlers.

    (a) The following zones are defined for the purpose of determining 
location adjustments:
    (1) Zone 1 shall include that territory, both inside and outside the 
marketing area, not included in Zones 2, 3, and 4.
    (2) Zone 2 shall include:

[[Page 576]]

    (i) The Minnesota counties of Aitkin, Anoka, Becker, Benton, Big 
Stone, Carlton, Carver, Cass, Chippewa, Chisago, Crow Wing, Dakota, 
Dodge, Douglas, Fillmore, Goodhue, Grant, Houston, Hubbard, Isanti, 
Kanabec, Kandiyohi, Le Sueur, McLeod, Meeker, Mille Lacs, Morrison, 
Nicollet, Otter Tail, Pine, Pope, Renville, Rice, Scott, Sibley, 
Sherburne, Stearns, Steele, Stevens, Swift, Todd, Traverse, Wabasha, 
Wadena, Waseca, Wilkin, Winona, and Wright;
    (ii) The Wisconsin counties of Burnett, Calumet, Columbia, Crawford, 
Douglas (except the city of Superior), Green Lake, Manitowoc, Pierce, 
Polk, Richland, St. Croix, Sauk, Vernon, and Winnebago;
    (iii) The Michigan counties of Dickinson, Gogebic, Iron, and 
Menominee; and
    (iv) The Iowa county of Allamakee.
    (3) Zone 3 shall include the Wisconsin counties of Adams, Ashland, 
Barron, Bayfield, Brown, Buffalo, Chippewa, Door, Dunn, Eau Claire, 
Florence, Forest, Iron, Juneau, La Crosse, Kewaunee, Marinette, 
Marquette, Monroe, Outagamie, Pepin, Rusk, Sawyer, Trempealeau, Vilas, 
Washburn, Waupaca, and Waushara.
    (4) Zone 4 shall include the Wisconsin counties of Clark, Jackson, 
Langlade, Lincoln, Marathon, Menominee, Oconto, Oneida, Portage, Price, 
Shawano, Taylor, and Wood.
    (b) For milk received at a plant from producers or a handler 
described in Sec. 1068.9(c) and which is classified as Class I milk, the 
price specified in Sec. 1068.50(a) shall be adjusted by the following 
amounts:

                                                                        
------------------------------------------------------------------------
                   Zone                     Adjustment per hundredweight
------------------------------------------------------------------------
1.........................................  No adjustment.              
2.........................................  Minus 6 cents.              
3.........................................  Minus 10 cents.             
4.........................................  Minus 16 cents.             
------------------------------------------------------------------------

    (c) The Class I price applicable to other source milk shall be 
adjusted by the amounts set forth in paragraph (b) of this section, 
except that the adjusted Class I price shall not be less than the Class 
III price.
[41 FR 18057, Apr. 30, 1976, as amended at 47 FR 16614, Apr. 19, 1982]



Sec. 1068.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (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 other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
[60 FR 57156, Nov. 14, 1995]



Sec. 1068.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                       Producer Price Differential



Sec. 1068.60  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 described in Sec. 1068.9 (a), (b), and (c).
    (a) The handler's obligation for producer milk shall be computed as 
follows:
    (1) Multiply the total hundredweight of producer milk in Class I as 
determined pursuant to Sec. 1068.43(a) and Sec. 1068.44(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. 1068.43(a) and 
Sec. 1068.44(c)

[[Page 577]]

by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1068.43(a) and 
Sec. 1068.44(a) by the skim milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1068.43(a) and 
Sec. 1068.44(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;
    (5) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1068.43(a) and 
Sec. 1068.44(a) by the average other solids content of producer skim 
milk received by the handler, and multiplying the resulting pounds of 
other solids by the other solids price;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1068.30(a)(1) by the 
percentage of the total producer milk assigned to Class II and Class III 
pursuant to Secs. 1068.43(a) and 1068.44(c); and
    (7) 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;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1068.44(a)(14) and the 
corresponding step of Sec. 1068.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1068.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1068.44(a)(9) and the corresponding step of Sec. 1068.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1068.43(e) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1068.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1068.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1068.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1068.44(b);
    (f) Add the 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. 1068.43(e) and 
Sec. 1068.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1068.44(a)(11) and the 
corresponding steps of Sec. 1068.44(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;
    (g) Subtract, for a handler described in Sec. 1068.9(c), the amount 
charged the preceding month for the skim milk and butterfat contained in 
inventory at the beginning of the month that was delivered to a pool 
plant during the month;
    (h) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the

[[Page 578]]

hundredweight of skim milk and butterfat contained in receipts of 
nonfluid milk products that are allocated to Class I use pursuant to 
Sec. 1068.43(e);
    (i) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1068.76 (a)(5) or (c); and
    (j) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[41 FR 18057, Apr. 30, 1976, as amended at 58 FR 27853, May 11, 1993; 60 
FR 57156, Nov. 14, 1995]



Sec. 1068.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight of milk as follows:
    (a) Combine into one total for all handlers:
    (1) The estimated values computed pursuant to Sec. 1068.60 (a)(1), 
(a)(2), (a)(7), and (b) through (j) for all handlers; and
    (2) Add the estimated values computed pursuant to Sec. 1068.60 
(a)(3), (a)(4), (a)(5), and (a)(6); and subtract the values obtained by 
multiplying the handlers' total pounds of protein and total pounds of 
other solids contained in such milk by their respective prices, and the 
total value of the somatic cell adjustment;
    (b) Add an amount equal to the estimated value of the producer 
location adjustments;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (d) Divide the resulting amount by:
    (1) The estimated hundredweight of producer milk; and
    (2) The estimated hundredweight of other source milk for which a 
value is computed pursuant to Sec. 1068.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (d) of this section. The result 
shall be the ``producer price differential'' for milk received from 
producers.
[41 FR 18057, Apr. 30, 1976, as amended at 60 FR 57156, Nov. 14, 1995]



Sec. 1068.62  Announcement of producer prices.

    On or before the 12th 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 other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
[60 FR 57157, Nov. 14, 1995]

                            Payments for Milk



Sec. 1068.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1068.71, 
1068.76, and 1068.77 and out of which he shall make all payments due 
handlers pursuant to Secs. 1068.72 and 1068.77: Provided, That the 
market administrator shall offset any payments due any handler against 
payments due from such handler.



Sec. 1068.71  Payments to the producer-settlement fund.

    (a) On or before the 16th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount

[[Page 579]]

specified in paragraph (a)(1) of this section exceeds the amount 
specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1068.60.
    (2) The sum of:
    (i) The value of such handler's receipts of producer milk and milk 
received from a handler described in Sec. 1068.9(c). In the case of a 
handler described in Sec. 1068.9(c), less the amount due from other 
handlers pursuant to Sec. 1068.73(d). The value of producer milk shall 
be computed as follows:
    (A) An amount obtained by multiplying the total hundredweight of 
producer milk by the producer price differential as adjusted pursuant to 
Sec. 1068.75;
    (B) An amount obtained by multiplying the total pounds of protein 
contained in producer milk by the protein price;
    (C) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk by the other solids price; and
    (D) The total value of the somatic cell adjustment to producer milk; 
and
    (ii) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1068.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1068.52 for 
the location of the plant from which received.
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[41 FR 18057, Apr. 30, 1976, as amended at 60 FR 57157, Nov. 14, 1995]



Sec. 1068.72  Payments from the producer-settlement fund.

    On or before the 17th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1068.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1068.71(a)(1): Provided, That if the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
necessary funds become available.



Sec. 1068.73  Payments to producers and to cooperative associations.

    Each handler shall pay for milk received from producers or 
cooperative associations as follows:
    (a) On or before the 25th day of the month, each handler shall pay 
for skim milk and butterfat received during the first 15 days of the 
month from a cooperative association:
    (1) That is a handler pursuant to Sec. 1068.9(a), at not less than 
the Class I price for the month at the location of the transferee or 
transferor plant, whichever is higher, adjusted by the butterfat 
differential for the preceding month;
    (2) That is a handler pursuant to Sec. 1068.9(c), at not less than 
the statistical uniform price at its plant location for the preceding 
month, adjusted by the butterfat differential for the preceding month; 
and
    (3) That is not a handler but which is authorized to collect payment 
on behalf of its member producers and has requested that payment be made 
to it in aggregate, at not less than the statistical uniform price at 
its plant location for the preceding month, adjusted

[[Page 580]]

by the butterfat differential for the preceding month.
    (b) On or before the 4th day after the end of the month, each 
handler shall pay for skim milk and butterfat received during the first 
15 days of the month from a producer for whom payment is not being made 
pursuant to paragraph (a) of this section and who has not discontinued 
shipping to such handler, at not less than the statistical uniform price 
at its plant location for the preceding month, adjusted by the butterfat 
differential for the preceding month.
    (c) On or before the 11th day after the end of the month, each 
handler shall pay for milk received and classified during the month from 
a cooperative association which is a handler pursuant to Sec. 1068.9(a) 
adjusted at the location of the transferee or transferor plant, 
whichever is higher, payment shall be determined as follows:
    (1) The hundredweight of Class I milk received times the Class I 
differential price for the month plus the pounds of Class I skim milk 
times the skim milk price for the month;
    (2) The hundredweight of Class II milk received times the Class II 
differential price for the month;
    (3) The hundredweight of Class III-A milk received times the Class 
III-A differential price for the month;
    (4) The pounds of butterfat received times the butterfat price for 
the month;
    (5) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (6) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (7) The hundredweight of Class II and Class III milk received times 
the somatic cell adjustment; and
    (8) Less any payment made pursuant to paragraph (a)(1) of this 
section.
    (d) On or before the 18th day after the end of the month, each 
handler shall make payment as described in paragraph (d)(4) of this 
section to:
    (1) A cooperative association that is a handler pursuant to 
Sec. 1068.9(c);
    (2) A cooperative association that is not a handler but which is 
authorized to collect payment on behalf of its member producers and has 
requested that payment be made to it in aggregate;
    (3) A producer for whom payment is not being made pursuant to 
paragraphs (d) (1) and (2) of this section; and
    (4) Payment shall be determined by:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec. 1068.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (a) or (b) of this 
section.
    (e) In making payments pursuant to paragraphs (a) (2) and (3), (b) 
and (d) of this section, deductions may be made for marketing services 
pursuant to Sec. 1068.86 and for any proper deductions authorized by the 
producer. In the event a handler has not received full payment from the 
market administrator pursuant to Sec. 1068.72 by the 18th day of the 
month, the handler may reduce pro rata its payments to producers 
pursuant to paragraph (d) of this section by not more than the amount of 
such underpayment. Following receipt of the balance due from the market 
administrator, the handler shall complete payments to producers not 
later than the next payment date provided under this section.
    (f) In making payment to individual producers as required by this 
section, each handler shall furnish each producer from whom it received 
milk a supporting statement, in such form that it may be retained by the 
producer, which shall show:
    (1) The month and the identity of the handler and producer;
    (2) The total pounds of milk received from the producer;
    (3) The total pounds of butterfat contained in the producer's milk;
    (4) The total pounds of protein contained in the producer's milk;

[[Page 581]]

    (5) The total pounds of other solids contained in the producer's 
milk;
    (6) The somatic cell count of the producer's milk;
    (7) The minimum rate or rates at which payment to the producer is 
required pursuant to this section;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, of each deduction claimed by the handler, including any 
deduction claimed under Sec. 1068.86, together with a description of the 
respective deductions; and
    (10) The net amount of the payment to the producer.
[60 FR 57157, Nov. 14, 1995]



Sec. 1068.74  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. 1068.51 (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.
[60 FR 57157, Nov. 14, 1995]



Sec. 1068.75  Plant location adjustments for producers and on nonpool milk.

    (a) The producer price differential for producer milk received at a 
pool plant or delivered to a nonpool plant shall be adjusted according 
to the location of the plant of actual receipt at the rates set forth in 
Sec. 1068.52.
    (b) The producer price differential applicable to other source milk 
shall be adjusted at the rates set forth in Sec. 1068.52, except that 
the adjusted producer price differential shall not be less than zero.
[60 FR 57157, Nov. 14, 1995]



Sec. 1068.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1068.30(b) and 1068.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (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, with the difference to be not less than zero; and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph

[[Page 582]]

(a)(3) of this section by the difference between the Class I price 
applicable at the location of the partially regulated distributing plant 
less $1.00 (but not to be less than the Class III price) and the Class 
III price. For any reconstituted milk that is not so labeled, the Class 
I price shall not be reduced by $1.00. Alternatively, for such 
disposition, payments may be made to the producer-settlement fund of the 
order regulating the producer milk used to produce the nonfluid milk 
ingredients at the difference between the Class I price applicable under 
the other order at the location of the plant where the nonfluid milk 
ingredients were processed (but not to be less than the Class III price) 
and the Class III price. This payment option shall apply only if a 
majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1068.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing 
plants from pool plants and other order plants that are classified in 
the corresponding class pursuant to paragraph (b)(1)(i) of this section. 
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. 1068.60 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 of reconstituted skim milk in filled milk 
shall be priced at the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1068.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1068.60(f) less the value of such other source milk 
specified in Sec. 1068.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1068.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1068.7(b), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1068.30(b) and 
1068.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1068.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and

[[Page 583]]

    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1068.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1068.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1068.43(e). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[41 FR 18057, Apr. 30, 1976, as amended at 58 FR 27854, May 11, 1993; 60 
FR 57158, Nov. 14, 1995]



Sec. 1068.77  Adjustment of accounts.

    (a) Whenever verification by the market administrator of reports or 
payments by any handler discloses errors in payments to the producer-
settlement fund pursuant to Sec. 1068.71, the market administrator shall 
promptly bill such handler for any unpaid amount and such handler shall, 
within 5 days of such billing, make payment to the market administrator 
of the amount so billed. Whenever verification discloses that payment is 
due from the market administrator to any handler, the market 
administrator shall, within 5 days, make payments to such handler.
    (b) Whenever verification by the market administrator of the 
payments by a handler to any producer or cooperative association 
discloses payment of less than is required by Sec. 1068.73, the handler 
shall pay the balance due such producer or cooperative association not 
later than the time for making payments next following such disclosure.



Sec. 1068.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1068.71, 
1068.76, and 1068.77(a), for which remittance has not been made by the 
close of business on the next day following the date specified for such 
payment shall be increased three-fourths of 1 percent for each month and 
any remaining amount due shall be increased at a similar rate on the 
corresponding day of each month thereafter until paid. The amounts 
payable pursuant to this section shall be computed monthly on each 
unpaid obligation, which shall include any unpaid charges previously 
made pursuant to this section; and for the purpose of this section any 
obligation that was determined at a date later than prescribed by the 
order because of a handler's failure to submit a report to the market 
administrator when due shall be considered to have been payable by the 
date it would have

[[Page 584]]

been due if the report had been filed when due.

        Administrative Assessment and Marketing Service Deduction



Sec. 1068.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 16th 
day after the end of the month 5 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than:
    (1) Receipts of producer milk by a handler described in 
Sec. 1068.9(c) that were delivered to pool plants of other handlers; and
    (2) Receipts of producer milk that were transferred to pool plants 
of other handlers by a cooperative association in its capacity as a 
handler pursuant to Sec. 1068.9(a);
    (b) Receipts from a handler described in Sec. 1068.9(c);
    (c) Receipts from a cooperative association in its capacity as a 
handler pursuant to Sec. 1068.9(a);
    (d) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1068.43(e) and other source milk allocated to Class 
I pursuant to Sec. 1068.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1068.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1068.60 (d) and (f); and
    (e) Route disposition from a partially regulated distributing plant 
in the marketing area that exceeds the skim milk and butterfat specified 
in Sec. 1068.76(a)(2).
[41 FR 18057, Apr. 30, 1976, as amended at 55 FR 26636, June 29, 1990; 
58 FR 27854, May 11, 1993; 60 FR 57158, Nov. 14, 1995]



Sec. 1068.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments directly to producers (other than himself) 
pursuant to Sec. 1068.73, shall deduct 5 cents per hundredweight, or 
such lesser amount as the Secretary may prescribe, with respect to all 
milk received from producers' farms during the month, and shall pay such 
deductions to the market administrator on or before the 16th day after 
the end of such month. Such moneys shall be expended by the market 
administrator to provide for market information and to verify the 
weights, samples, and tests of milk of producers who are not receiving 
such services from a cooperative association.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, each handler shall make, in lieu of the deduction specified in 
paragraph (a) of this section, such deductions from the payments to be 
made to such producers as may be authorized by the membership agreement 
or marketing contract between such cooperative association and such 
producers and on or before the 16th day after the end of each month 
shall pay such deductions to the cooperative association rendering such 
services, accompanied by a statement showing the quantity of milk for 
which a deduction was computed for each producer.
[41 FR 18057, Apr. 30, 1976, as amended at 60 FR 57158, Nov. 14, 1995]



PART 1076--MILK IN EASTERN SOUTH DAKOTA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1076.1  General provisions.

                               Definitions

1076.2  Eastern South Dakota marketing area.
1076.3  Route disposition.
1076.4  Plant.
1076.5  Distributing plant.
1076.6  Supply plant.
1076.7  Pool plant.
1076.8  Nonpool plant.
1076.9  Handler.
1076.10  Producer-handler.
1076.12  Producer.
1076.13  Producer milk.
1076.14  Other source milk.
1076.15  Fluid milk product.
1076.16  Fluid cream product.

[[Page 585]]

1076.17  Filled milk.
1076.18  Cooperative association.
1076.19  Commercial food processing establishment.

                             Handler Reports

1076.30  Reports of receipts and utilization.
1076.31  Payroll reports.
1076.32  Other reports.

                         Classification of Milk

1076.40  Classes of utilization.
1076.41  Shrinkage.
1076.42  Classification of transfers and diversions.
1076.43  General classification rules.
1076.44  Classification of producer milk.
1076.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1076.50  Class and component prices.
1076.51  Basic formula price.
1076.52  Plant location adjustments for handlers.
1076.53  Announcement of class and component prices.
1076.54  Equivalent price.

                       Producer Price Differential

1076.60  Handler's value of milk.
1076.61  Producer price differential.
1076.62  Announcement of producer prices.

                            Payments for Milk

1076.70  Producer-settlement fund.
1076.71  Payments to the producer-settlement fund.
1076.72  Payments from the producer-settlement fund.
1076.73  Payments to producers and to cooperative associations.
1076.74  Butterfat differential.
1076.75  Plant location adjustments for producers and on nonpool milk.
1076.76  Payments by handler operating a partially regulated 
          distributing plant.
1076.77  Adjustment of accounts.
1076.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1076.85  Assessment for order administration.
1076.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 39 FR 16312, May 8, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1076.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1076.2  Eastern South Dakota marketing area.

    Eastern South Dakota marketing area, hereinafter called the 
``marketing area,'' means all of the territory within the counties 
listed below, including all territory within such counties which is 
occupied by government (municipal, State or Federal) reservations, 
installations, institutions, or other establishments:

                               Iowa County

    Lyon.

                           Minnesota Counties

    Lincoln, Nobles, Pipestone, Rock.

                          South Dakota Counties

    Aurora, Beadle, Bon Homme, Brookings, Clark, Clay, Codington, 
Davison, Deuel, Douglas, Hamlin, Hanson, Hutchison, Jerauld, Kingsbury, 
Lake, Lincoln, McCook, Miner, Minnehaha, Moody, Sanborn, Spink, Turner, 
Union (except Jefferson Township and the city of North Sioux City and 
the unorganized territory adjacent thereto), Yankton.
[41 FR 18057, Apr. 30, 1976]



Sec. 1076.3  Route disposition.

    Route disposition means a delivery (including delivery by a vendor 
or a sale from a plant store, or distribution center) of any fluid milk 
product classified as Class I milk to retail or wholesale outlets, 
except a delivery in bulk form to a milk (including filled milk) 
processing plant. The route disposition of a handler shall be attributed 
to the processing and packaging plant from which the Class I milk is 
moved to retail or wholesale outlets

[[Page 586]]

without intermediate movement to another processing plant.



Sec. 1076.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products (including filled milk) are received, processed or 
packaged. Separate facilities used only as a distribution point for 
storing packaged fluid milk products in transit for route disposition or 
separate facilities used only as a reload point for transferring bulk 
milk from one tank truck to another shall not be a ``plant'' under this 
definition.
[46 FR 27905, May 22, 1981]



Sec. 1076.5  Distributing plant.

    Distributing plant means a plant which is approved by an appropriate 
health authority for the processing or packaging of Grade A milk and 
from which there is route disposition during the month in the marketing 
area.



Sec. 1076.6  Supply plant.

    Supply plant means a plant from which milk or skim milk acceptable 
to an appropriate health authority for distribution in the marketing 
area under a Grade A label, is shipped during the month to a pool plant 
qualified pursuant to Sec. 1076.7(a).



Sec. 1076.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which route disposition, except filled 
milk, equals not less than 35 percent of the Grade A milk received at 
such plant from dairy farmers, handlers described in Sec. 1076.9(c), and 
supply plants and not less than 15 percent of such receipts is disposed 
of as route disposition, except filled milk, in the marketing area.
    (b) A supply plant from which the volume of fluid milk products, 
except filled milk, transferred to pool distributing plants is not less 
than the applicable percentage, specified in paragraph (b)(1)(i), (ii) 
or (iii) of this section, of Grade A milk received at such supply plant 
from dairy farmers (including milk diverted therefrom by the plant 
operator) and handlers described in Sec. 1076.9(c).
    (1) The applicable percentage for the purpose of this paragraph 
shall be:
    (i) 35 percent for the current month;
    (ii) 35 percent for the 12-month period immediately preceding the 
current month; or
    (iii) One or more shipments in each of the months of March through 
July if shipments were not less than 50 percent during each of the 
immediately preceding months of September through November.
    (c) Any plant located in the marketing area or in any county 
adjacent to the marketing area that meets an applicable shipping 
standard described in paragraph (b) of this section, subject to the 
following conditions:
    (1) A cooperative association that operates a supply plant may 
include as qualifying shipments its deliveries to pool distributing 
plants directly from farms of producers pursuant to Sec. 1076.9(c).
    (2) A proprietary handler may include as qualifying shipments milk 
diverted pursuant to Sec. 1076.13 to pool distributing plants.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A plant qualified as a pool plant pursuant to this section:
    (i) From which a lesser volume of fluid milk products, except filled 
milk, is disposed of in the Eastern South Dakota marketing area either 
as route disposition or to pool plants qualified on the basis of route 
disposition than in the marketing area of another order issued pursuant 
to the Act or to other order plants qualified on the basis of route 
disposition; and
    (ii) Such milk would be subject to the class price and producer 
payment provisions of the other order upon being made exempt from this 
part;
    (3) For the period of March through July, inclusive, if the operator 
of a plant qualified pursuant to paragraph (b)(1)(iii) of this section 
submits a request to the market administrator in writing that such plant 
not be a pool plant, such nonpool status will be effective the first 
month following such notice and such plant shall thereafter

[[Page 587]]

be a nonpool plant until it again qualifies as a pool plant on the basis 
of the shipping requirements of 35 percent or more as set forth in this 
section;
    (4) That portion of a plant that is physically apart from the Grade 
A portion of such plant, is operated separately and is not approved by 
any health authority for receiving, processing, or packaging of any 
fluid milk product for Grade A disposition; and
    (5) A governmental agency plant.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27905, May 22, 1981]



Sec. 1076.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant, and from which fluid 
milk products are shipped during the month to a pool plant.
    (e) Governmental agency plant means a plant owned and operated by a 
government institution which disposes of Class I milk in the marketing 
area. Such plant shall be exempt from all provisions of this part.
[39 FR 16312, May 8, 1974, as amended at 41 FR 18057, Apr. 30, 1976]



Sec. 1076.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to the milk of 
producers diverted by the association for the account of such 
association pursuant to Sec. 1076.13;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer which is delivered 
to a pool plant in a tank truck owned and operated by, or under the 
control of, such cooperative association. If the milk is delivered to 
the pool plant of another handler, the plant operator may be the handler 
for such milk if both the cooperative association and the operator of 
the pool plant notify the market administrator prior to the time that 
such milk is delivered to the pool plant that the plant operator will 
purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler; and
    (f) Any person who operates an other order plant described in 
Sec. 1076.7(d).
[39 FR 16312, May 8, 1974, as amended at 46 FR 27905, May 22, 1981]



Sec. 1076.10  Producer-handler.

    Producer-handler means any person who is both a dairy farmer and the 
operator of a distributing plant, and who meets all of the following 
conditions:
    (a) Receipts of fluid milk products at his plant are solely milk of 
his own production and from pool plants of other handlers;
    (b) Receives no milk products other than fluid milk products from 
any source for use in reconstituting fluid milk products; and
    (c) The maintenance, care and management of the dairy animals and 
other resources necessary to produce the milk and the processing, 
packaging, and distribution of the milk (including filled milk) are the 
personal enterprise and the personal risk of such person.

[[Page 588]]



Sec. 1076.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the Grade A 
inspection requirements of a duly constituted health authority, and 
whose milk is (1) received at a pool plant, or (2) diverted as producer 
milk pursuant to Sec. 1076.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to Sec. 1076.44 
(a)(8)(iii) and the corresponding step of Sec. 1076.44 (b);
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order; and
    (4) Any government institution which produces milk in conjunction 
with the operation of a plant exempt from all provisions of this part 
pursuant to Sec. 1076.8(e).
[39 FR 16312, May 8, 1974, as amended at 41 FR 18057, Apr. 30, 1976]



Sec. 1076.13  Producer milk.

    Producer milk of each handler means the skim milk and butterfat in 
milk of a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1076.9(c); or
    (c) Diverted from a pool plant, for the account of the handler 
operating such plant or for the account of a handler described in 
Sec. 1076.9(b), to another plant (other than a producer-handler plant) 
subject to the following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion under 
this section unless during the month at least one day's production of 
milk of such dairy farmer is physically received at the pool plant from 
which diverted;
    (2)--(4) [Reserved]
    (5) Diverted milk shall be priced at the location of the plant to 
which diverted.
[46 FR 27905, May 22, 1981, as amended at 55 FR 35895, Sept. 4, 1990]



Sec. 1076.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1076.40(b)(1) from any source other than producers, handlers 
described in Sec. 1076.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1076.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1076.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1076.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1076.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and

[[Page 589]]

    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27865, May 11, 1993]



Sec. 1076.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27865, May 11, 1993]



Sec. 1076.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1076.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
which the Secretary determines, after application by the association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) Has full authority in the sale of milk of its members and to be 
engaged in making collective sales of or marketing milk or its products 
for its members; and
    (c) Has its entire activities under the control of its members.



Sec. 1076.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1076.13, 1076.41 and 1076.52.
[58 FR 27866, May 11, 1993]

                             Handler Reports



Sec. 1076.30  Reports of receipts and utilization.

    On or before the 8th day (excluding holidays) after the end of each 
month, each handler shall report for such month to the market 
administrator, in the detail and on the forms prescribed by the market 
administrator, as follows:
    (a) Each handler described in Sec. 1076.9(a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), 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. 1076.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(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. 1076.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell

[[Page 590]]

information, as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (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.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27906, May 22, 1981; 60 
FR 57158, Nov. 14, 1995]



Sec. 1076.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1076.9(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 the 
information described in Sec. 1076.73(e).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1076.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
[39 FR 16312, May 8, 1974, as amended at 60 FR 57158, Nov. 14, 1995]



Sec. 1076.32  Other reports.

    In addition to the reports requried pursuant to Secs. 1076.30 and 
1076.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.

                         Classification of Milk



Sec. 1076.40  Classes of utilization.

    Except as provided in Sec. 1076.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1076.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;

[[Page 591]]

    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1076.15 and the fluid 
cream product definition pursuant to Sec. 1076.16; and
    (7) In shrinkage assigned pursuant to Sec. 1076.41(a) to the 
receipts specified in Sec. 1076.41(a)(2) and in shrinkage specified in 
Sec. 1076.41(b) and (c).
[58 FR 27866, May 11, 1993]



Sec. 1076.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1076.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1076.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis

[[Page 592]]

of weights determined from its measurement at the farm and butterfat 
tests determined from farm bulk tank samples, the applicable percentage 
shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests, determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from other order plants, excluding 
milk received by diversion and the quantity for which Class II or Class 
III classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1076.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27906, May 22, 1981]



Sec. 1076.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless both handlers request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1076.44(a)(12) and the corresponding 
step of Sec. 1076.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1076.44(a)(7) 
or the corresponding step of Sec. 1076.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1076.44(a) 
(11) or (12) or the corresponding step of Sec. 1076.44(b), the skim milk 
or butterfat so transferred or diverted, up to the total of the skim 
milk and butterfat, respectively, in such receipts of other source milk, 
shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the transferee 
plant or divertee plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an

[[Page 593]]

other order plant shall be classified in the following manner. Such 
classification shall apply only to the skim milk or butterfat that is in 
excess of any receipts at the pool plant from the other order plant of 
skim milk and butterfat, respectively, in fluid milk products and bulk 
fluid cream products, respectively, that are in the same category as 
described in paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1076.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d) (2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1076.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to

[[Page 594]]

the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
    (e) Transfers by a handler described in Sec. 1076.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1076.9(c) to a pool plant shall be 
classified pursuant to Sec. 1076.44 pro rata with producer milk received 
at the transferee-handler's plant.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27906, May 22, 1981; 58 
FR 27866, May 11, 1993]



Sec. 1076.43  General classification rules.

    In determining the classification of producer milk, the following 
rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1076.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1076.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1076.40, 1076.41 and 1076.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1076.9 (b) or (c) shall be the 
classification of producer milk for such handler;

[[Page 595]]

    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1076.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1076.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1076.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27906, May 22, 1981; 58 
FR 27867, May 11, 1993]



Sec. 1076.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1076.9(a) for each of its separate pool plants 
the classification of producer milk and milk received from a handler 
described in Sec. 1076.9(c) by allocating the handler's receipts of skim 
milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1076.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1076.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1076.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an

[[Page 596]]

unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1076.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1076.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1076.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1076.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from

[[Page 597]]

an other order plant that are in excess of bulk fluid milk products 
transferred or diverted to such plant and that were not subtracted 
pursuant to paragraph (a)(7)(vi) of this section, if Class II or Class 
III classification is requested by the operator of the other order plant 
and the handler, but not in excess of the pounds of skim milk remaining 
in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1076.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8) (i) and (ii) of this section and that were 
not offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a) (7) (vi) and (8) (iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1076.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler

[[Page 598]]

(excluding any duplication of utilization in each class resulting from 
transfers between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1076.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceeds the pounds of skim milk in producer milk and milk received from 
a handler described in Sec. 1076.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1076.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 16312, May 8, 1974, as amended at 41 FR 18057, Apr. 30, 1976; 46 
FR 27906, May 22, 1981; 58 FR 27867, May 11, 1993]



Sec. 1076.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1076.44(a)(12) and the corresponding 
step of Sec. 1076.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and

[[Page 599]]

utilization for the month is received from a handler who has received 
fluid milk products or bulk fluid cream products from an other order 
plant, the class to which such receipts are allocated pursuant to 
Secs. 1076.43(d) and 1076.44 on the basis of such report, (including any 
reclassification of inventories of bulk concentrated fluid milk 
products), and thereafter, any change in such allocation required to 
correct errors disclosed in the verification of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association, which so requests, the percentage of the 
milk caused to be delivered by the cooperative association or its 
members to the pool plant(s) of each handler during the month, which was 
utilized in each class. For the purpose of this report, the milk so 
delivered shall be allocated to each class for each handler in the same 
ratio as all producer milk received by such handler during the month.
[39 FR 16312, May 8, 1974 as amended at 58 FR 27867, May 11, 1993]

                              Class Prices



Sec. 1076.50  Class and component prices.

    Subject to the provisions of Sec. 1076.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the component 
prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per hundredweight 
of milk containing 3.5 percent butterfat shall be the basic formula 
price for the second preceding month plus $1.50.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) [Reserved]
    (e) Class I differential price. The Class I differential price shall 
be the difference between the current month Class I and Class III prices 
(this price may be negative).
    (f) Class II differential price. The Class II differential price 
shall be the difference between the current month Class II and Class III 
prices (this price may be negative).
    (g) [Reserved]
    (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 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) Other solids price. Other solids are herein defined as solids-
not-fat other than protein. The other solids price per pound, rounded to 
the nearest one-hundredth cent, shall be the basic formula price at test 
less the average butterfat test of the basic formula price as reported 
by the Department times the butterfat price, less the average protein 
test of the basic formula price as reported by the Department for the 
month times the protein price, and dividing the resulting amount by the 
average other solids test of the basic formula price as reported by the 
Department. If the resulting price is less than zero, then the protein 
price will be reduced so that the other solids price equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly Cheddar cheese price as 
defined in paragraph (j) of this section; and

[[Page 600]]

    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in thousands) 
of the milk, multiplying the difference by the somatic cell adjustment 
rate, and rounding to the nearest full cent.
[39 FR 16312, May 8, 1974, as amended at 46 FR 43389, Aug. 28, 1981; 60 
FR 6610, Feb. 2, 1995; 60 FR 57158, Nov. 14, 1995]



Sec. 1076.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1076.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.37, to determine the quantity (in

[[Page 601]]

hundredweights) of milk used in the production of American cheese.
    (e) Compute a weighted average of the change in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18969, Apr. 14, 1995]



Sec. 1076.52  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or from a handler 
described in Sec. 1076.9(c) at a plant located in Minnesota, North 
Dakota, or that portion of South Dakota north of U.S. Highway 90, and 
which is classified as Class I milk without movement in bulk form to a 
pool plant at which a higher Class I price applies, the price specified 
in Sec. 1076.50(a) shall be reduced 1.5 cents for each 10 miles or 
fraction thereof (by shortest hard-surfaced highway distance as measured 
by the market administrator) that such plant is located from the nearer 
of the Post Offices of Mitchell or Sioux Falls, South Dakota.
    (b) For fluid milk products transferred in bulk from a pool plant to 
another pool plant at which a higher Class I price applies and which is 
classified as Class I, the price shall be the Class I price applicable 
at the location of the transferee-plant subject to a location adjustment 
credit for the transferor-plant determined by the market administrator 
as follows:
    (1) Subtract from the pounds of Class I remaining at the transferee-
plant after the computations pursuant to Sec. 1076.44(a)(12) and (b) 
plus the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products from other pool plants that are assigned to Class I 
use, the pounds of packaged fluid milk products from other pool plants;
    (2) Multiply the remaining pounds of milk by 110 percent;
    (3) Subtract the pounds of bulk fluid milk products physically 
received at the transferee-plant from the following sources:
    (i) Producers;
    (ii) Handlers described in Sec. 1076.9(c);
    (iii) Pool plants at which the same or a higher Class I price 
applies; and
    (iv) Receipts of diverted milk from pool plants;
    (4) Assign any pounds remaining pro rata to bulk receipts of fluid 
milk products from each transfer or plant at which a lower Class I price 
applies; and
    (5) Multiply the pounds computed for each transferor-plant in 
paragraph (b)(4) of this section by the difference in the Class I prices 
applicable at the transferee-plant and transferor-plant.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27906, May 22, 1981; 58 
FR 27867, May 11, 1993]



Sec. 1076.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (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) [Reserved];
    (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 other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
[60 FR 57159, Nov. 14, 1995]



Sec. 1076.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

[[Page 602]]

                       Producer Price Differential



Sec. 1076.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for milk, the 
market administrator shall determine for each month the value of milk of 
each handler described in Sec. 1076.9(a) with respect to each of its 
pool plants and each handler described in Sec. 1076.9 (b) and (c).
    (a) The handler's obligation for producer milk and milk received 
from a handler described in Sec. 1076.9(c) shall be computed as follows:
    (1) Multiply the total hundredweight of milk in Class I as 
determined pursuant to Sec. 1076.43(a) and Sec. 1076.44(c) by the Class 
I differential price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight of 
milk in Class II as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(c) by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(a) by the skim milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(a) by the average protein content of the skim milk received 
by the handler, and multiplying the resulting pounds of protein by the 
protein price;
    (5) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1076.43(a) and 
Sec. 1076.44(a) by the average other solids content of the skim milk 
received by the handler, and multiplying the resulting pounds of other 
solids by the other solids price; and
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1076.30(a)(1) by the 
percentage of the total producer milk assigned to Class II and Class III 
pursuant to Secs. 1076.43(a) and 1076.44(c);
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1076.44(a)(14) and the 
corresponding step of Sec. 1076.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1076.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1076.44(a)(9) and the corresponding step of Sec. 1076.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1076.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1076.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1076.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1076.44(a) (7) (v) and (vi) and 
the corresponding step of Sec. 1076.44(b); and
    (f) Add the 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. 1076.43(d) and 
Sec. 1076.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1076.44(a)(11) and the 
corresponding steps of Sec. 1076.44(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

[[Page 603]]

is classified and priced as Class I milk and is not used as an offset 
for any other payment obligation under any order;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1076.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1076.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27907, May 22, 1981; 58 
FR 27867, May 11, 1993; 60 FR 57159, Nov. 14, 1995]



Sec. 1076.61  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. 1076.60 (a)(1), (a)(2), and 
(b) through (i) for all handlers; and
    (2) Add values computed pursuant to Sec. 1076.60(a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of the somatic cell adjustment;
    (b) Add an amount equal to the total value of the location 
adjustments computed pursuant to Sec. 1076.75;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (d) Divide the aggregate value computed pursuant to paragraphs (a), 
(b), and (c) of this section by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1076.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (d) of this section. The result 
shall be the ``producer price differential.''
[39 FR 16312, May 8, 1974, as amended at 60 FR 57159, Nov. 14, 1995]



Sec. 1076.62  Announcement of producer prices.

    On or before the 12th 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 other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk and milk received from a handler described in 
Sec. 1076.9(c); and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
[60 FR 57160, Nov. 14, 1995]

                            Payments for Milk



Sec. 1076.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1076.71, 
1076.76, and 1076.77 and out of which he shall make all payments to 
handlers pursuant to Secs. 1076.72 and

[[Page 604]]

1076.77: Provided, That the market administrator shall offset the 
payment due to a handler against payments due from each handler.



Sec. 1076.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1076.60.
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk and milk received from a handler described in 
Sec. 1076.9(c) by the producer price differential as adjusted pursuant 
to Sec. 1076.75;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk and milk received from a handler described in 
Sec. 1076.9(c) by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk and milk received from a handler 
described in Sec. 1076.9(c) by the other solids price;
    (iv) The total value of the somatic cell adjustment to producer milk 
and milk received from handlers described in Sec. 1076.9(c); and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1076.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1076.52 for 
the location of the plant from which received.
    (b) On or before the 25th day after the end of the month each 
handler who operated an other order plant that was regulated during such 
month under an order providing for individual-handler pooling shall pay 
to the market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27907, May 22, 1981; 60 
FR 57160, Nov. 14, 1995]



Sec. 1076.72  Payments from the producer-settlement fund.

    On or before the 16th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1076.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1076.71(a)(1): Provided, That if the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section the market administrator shall reduce uniformly 
such payments and shall complete such payments as soon as the necessary 
funds are available.
[39 FR 16312, May 8, 1974, as amended at 46 FR 27907, May 22, 1981; 60 
FR 57160, Nov. 14, 1995]



Sec. 1076.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for milk received from 
producers for which payment is not made to a cooperative association 
pursuant to paragraph (b) or (c) of this section as follows:
    (1) On or before the last day of each month, for producer milk 
received during the first 15 days of the month at a rate per 
hundredweight not less than the Class III price for the preceding month; 
and
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:

[[Page 605]]

    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec. 1076.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vii) Less proper deductions authorized in writing by such producer 
and plus or minus adjustments for errors in previous payments made to 
such producer;
    (viii) Less deductions for marketing services pursuant to 
Sec. 1076.86; and
    (ix) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1076.72 for such month, it may 
reduce pro rata its payment to producers by not more than the amount of 
such underpayment. Payment to producers shall be completed thereafter 
not later than the date for making payments pursuant to paragraph (a) of 
this section next following receipt of the balance due from the market 
administrator.
    (b) Except as provided in paragraph (c) of this section each handler 
shall make payment to a cooperative association for producer milk which 
it caused to be delivered to such handler, if such cooperative 
association is authorized to collect such payments for its members and 
exercises such authority, an amount equal to the sum of the individual 
payments otherwise payable for such producer milk, as follows:
    (1) On or before the 28th day of each month an amount equal to not 
less than the sum of the individual payments otherwise payable to 
producers pursuant to paragraph (a)(1) of this section; and
    (2) On or before the 15th day after the end of each month, an amount 
equal to not less than the sum of the individual payments otherwise 
payable to producers pursuant to paragraph (a)(2) of this section.
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described in Sec. 1076.9(c) as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 28th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1076.62(g) for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 15th day after the end of the 
month during which the milk was received as follows:
    (i) The hundredweight of milk received times the producer price 
differential applicable at the location of the receiving handler's 
plant;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for fluid milk 
products received by transfer from pool plant(s) operated by the 
cooperative association as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the 28th day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1076.62(g) adjusted by the butterfat differential, both 
for the preceding month; and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 15th day after 
the end of the

[[Page 606]]

month during which the milk was received, as follows:
    (i) The hundredweight of Class I milk received times the Class I 
differential price for the month applicable at the transferee plant, 
plus the pounds of Class I skim milk times the skim milk price for the 
month;
    (ii) The hundredweight of Class II milk received times the Class II 
differential price for the month;
    (iii) [Reserved];
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (d)(1) of this 
section.
    (e) In making payments for producer milk pursuant to paragraphs 
(a)(2) or (b)(2) of this section, each handler shall furnish each 
producer or cooperative association to whom such payment is made a 
supporting statement in such form that it may be retained by the 
recipient which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds for each producer;
    (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 total pounds of other solids contained in the producer's 
milk;
    (6) The somatic cell count of the producer's milk;
    (7) The minimum rate or rates which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, or the rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
[46 FR 27907, May 22, 1981, as amended at 60 FR 57160, Nov. 14, 1995]



Sec. 1076.74  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. 1076.51 (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.
[60 FR 57161, Nov. 14, 1995]



Sec. 1076.75  Plant location adjustments for producers and on nonpool milk.

    (a) The producer price differential for producer milk shall be 
adjusted according to the location of the plant of actual receipt at the 
rates set forth in Sec. 1076.52; and
    (b) For the purpose of computations pursuant to Secs. 1076.71 and 
1076.72 the producer price differential shall be adjusted at the rates 
set forth in Sec. 1076.52 applicable at the location of the nonpool 
plant from which the milk was received, except that the adjusted 
producer price differential shall not be less than zero.
[60 FR 57161, Nov. 14, 1995]



Sec. 1076.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1076.30(b) and 1076.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:

[[Page 607]]

    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the amount by which the Class I 
differential price exceeds the producer price differential, both price 
to be applicable at the location of the partially regulated distributing 
plant, with the difference to be not less than zero; and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations;
    (1) Determine the value that would have been computed pursuant to 
Sec. 1070.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1076.60 
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

[[Page 608]]

transfers of reconstituted skim milk in filled milk shall be priced at 
the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1076.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1076.60(f) less the value of such other source milk 
specified in Sec. 1076.71(a)(2)(v), a value of milk determined pursuant 
to Sec. 1076.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1076.7(b), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1076.30(b) and 
1076.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1076.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1076.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1076.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1076.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 16312, May 8, 1974, as amended at 58 FR 27868, May 11, 1993; 60 
FR 57161, Nov. 14, 1995]



Sec. 1076.77  Adjustment of accounts.

    (a) Whenever verification by the market administrator of reports of 
payments of any handler discloses errors made in payments to or from the 
producer-settlement fund, the market administrator shall promptly bill 
such handler for any unpaid amount and such handler shall, within 15 
days of such billing make payments to the market administrator of the 
amount so billed and whenever verification discloses that payment is due 
from the market administrator to any handler, the market administrator 
shall, within

[[Page 609]]

15 days make such payment to such handler.
    (b) Whenever verification by the market administrator of the payment 
by a handler to any producer or cooperative association discloses 
payment of less than is required by Sec. 1076.73, the handler shall make 
up such payment to the producer or cooperative association not later 
than the time of making payment next following such disclosure.



Sec. 1076.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1076.71(a), 
1076.77(a), 1076.85 or 1076.86 shall be increased 1 percent beginning on 
the day after the due date, and on the same day of each succeeding month 
until such obligation is paid.
[46 FR 27908, May 22, 1981]

        Administrative Assessment and Marketing Service Deduction



Sec. 1076.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 5 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, with respect to:
    (a) Producer milk, including such handler's own production;
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1076.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1076.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1076.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1076.60(d) and (f); and
    (c) Route disposition from a partially regulated distributing plant 
in the marketing area that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1076.76(a)(2).
[39 FR 16312, May 8, 1974, as amended at 58 FR 27868, May 11, 1993]



Sec. 1076.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to each producer (other than himself) 
pursuant to Sec. 1076.73, shall deduct 6 cents per hundredweight, or 
such lesser amount as the Secretary may prescribe, with respect to all 
milk received from the producer's farm during the month, and shall pay 
such deductions to the market administrator on or before the 15th day 
after the end of such month. Such moneys shall be expended by the market 
administrator to provide for market information and to verify the 
weights, samples, and tests of milk of producers who are not receiving 
such services from a cooperative association.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, each handler shall make, in lieu of the deductions specified in 
paragraph (a) of this section, such deductions from the payments to be 
made to such producers as may be authorized by the membership agreement 
or marketing contract between such cooperative association and such 
producers and on or before the 15th day after the end of each month 
shall pay such deductions to the cooperative association rendering such 
services, accompanied by a statement showing the quantity of milk for 
which a deduction was computed for each producer.
[46 FR 27908, May 22, 1981]



PART 1079--MILK IN THE IOWA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1079.1  General provisions.

                               Definitions

1079.2  Iowa marketing area.
1079.3  Route disposition.
1079.4  Plant.
1079.7  Pool plant.
1079.8  Nonpool plant.
1079.9  Handler.
1079.10  Producer-handler.

[[Page 610]]

1079.12  Producer.
1079.13  Producer milk.
1079.14  Other source milk.
1079.15  Fluid milk product.
1079.16  Fluid cream product.
1079.17  Filled milk.
1079.18  Cooperative association.
1079.19  Commercial food processing establishment.

                             Handler Reports

1079.30  Reports of receipts and utilization.
1079.31  Payroll reports.
1079.32  Other reports.

                         Classification of Milk

1079.40  Classes of utilization.
1079.41  Shrinkage.
1079.42  Classification of transfers and diversions.
1079.43  General classification rules.
1079.44  Classification of producer milk.
1079.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1079.50  Class and component prices.
1079.51  Basic formula price.
1079.52  Plant location adjustments for handlers.
1079.53  Announcement of class and component prices.
1079.54  Equivalent price.

                       Producer Price Differential

1079.60  Handler's value of milk.
1079.61  Producer price differential.
1079.62  Announcement of producer prices.

                            Payments for Milk

1079.70  Producer-settlement fund.
1079.71  Payments to the producer-settlement fund.
1079.72  Payments from the producer-settlement fund.
1079.73  Payments to producers and to cooperative associations.
1079.74  Butterfat differential.
1079.75  Plant location adjustments for producers and on nonpool milk.
1079.76  Payments by handler operating a partially regulated 
          distributing plant.
1079.77  Adjustment of accounts.
1079.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1079.85  Assessment for order administration.
1079.86  Deduction for marketing services.

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

    Source: 42 FR 17423, Apr. 1, 1977, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1079.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and make a part of this order.

                               Definitions



Sec. 1079.2  Iowa marketing area.

    Iowa marketing area (referred to in this part as the ``marketing 
area'') are listed below, including all territory that is now, or in the 
future, occupied by government (municipal, State, or Federal) 
reservations, installations, institutions, or other similar 
establishments if any part of such territory is within the designated 
geographical limits of the marketing area:
    (a) The Iowa counties of: Adair, Adams, Allamakee, Appanoose, 
Audubon, Benton, Black Hawk, Boone, Bremer, Buchanan, Butler, Calhoun, 
Carroll, Cedar, Cerro Gordo, Chickasaw, Clarke, Clayton, Clinton, 
Dallas, Davis, Decatur, Delaware, Des Moines, Dubuque, Fayette, Floyd, 
Franklin, Greene, Grundy, Guthrie, Hamilton, Hancock, Hardin, Henry, 
Humboldt, Iowa, Jackson, Jasper, Jefferson, Johnson, Jones, Keokuk, 
Linn, Louisa, Lucas, Madison, Mahaska, Marion, Marshall, Monroe, 
Muscatine, Pocahontas, Polk, Poweshiek, Ringgold, Scott, Story, Tama, 
Taylor, Union, Van Buren, Wapello, Warren, Washington, Wayne, Webster, 
Wright, and the city of Osage in Mitchell County.
    (b) The Illinois counties of: Henderson, Henry, Mercer, Rock Island, 
and the city of East Dubuque in Jo Daviess County, and the townships of 
Fulton, Ustick, Clyde, Genesee, Mount Pleasant, Union Grove, Garden 
Plain, Lyndon, Fenton, Newton, Prophetstown, Portland, and Erie in 
Whiteside County.
    (c) The Missouri counties of: Grundy, Harrison, Mercer, Putnam, 
Schuyler.
    (d) The Wisconsin counties of: Crawford and Grant.
[42 FR 17423, Apr. 1, 1977, as amended at 54 FR 53527, Dec. 29, 1989]

[[Page 611]]



Sec. 1079.3  Route disposition.

    Route disposition means any delivery (including any delivery by a 
vendor or disposition at a plant store) of a fluid milk product 
classified as Class I milk, other than bulk fluid milk products 
transferred to other plants.



Sec. 1079.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products (including filled milk) are received, processed, or 
packaged. Separate facilities used only as a distribution point for 
storing packaged fluid milk products in transit or separate facilities 
at which milk is only reloaded from one tank truck to another for 
transshipment shall not be a ``plant'' under this definition.



Sec. 1079.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) Any plant (which, if qualified pursuant to this paragraph, shall 
be known as a ``pool distributing plant'') that is approved by a duly 
constituted regulatory agency for the processing or packaging of Grade A 
milk and from which during the month:
    (1) The total route disposition (excluding packaged fluid milk 
products received from other plants and filled milk) as a percent of the 
total Grade A fluid milk products received in bulk form at such plant or 
diverted therefrom by the plant operator is equal to 40 percent or more 
during each of the months of September through November and 35 percent 
or more during all other months;
    (2) Not less than 15 percent of such receipts are disposed of as 
route disposition (except filled milk) in the marketing area; and
    (3) A unit consisting of at least two plants operated by a handler 
shall be considered as one distributing plant for the purpose of meeting 
the requirements of this paragraph if:
    (i) Fluid milk products are processed and packaged at each plant;
    (ii) Each plant meets the requirements of paragraph (a)(2) of this 
section; and
    (iii) The handler notified the market administrator in writing 
before the first day of the month that the plants should be considered 
as a unit. The unit shall continue from month to month thereafter 
without further notification. To add plants to the unit, to drop them, 
or to discontinue the unit, the handler shall notify the market 
administrator in writing on or before the first day of the month such 
change is to be made.
    (b) Any plant (which, if qualified pursuant to this paragraph, shall 
be known as a ``pool supply plant'') that is approved by a duly 
constituted regulatory agency for the handling of Grade A milk and from 
which during the month the volume of bulk fluid milk products 
transferred to pool distributing plants during each of the months of 
September through November is 35 percent or more and during each of the 
months of December through August is 30 percent or more of the total 
Grade A milk received at the plant from dairy farmers and handlers 
described in Sec. 1079.9(c), including milk diverted therefrom by the 
plant operator pursuant to Sec. 1079.13, subject to the following 
conditions:
    (1) The shipping percentages of this paragraph may be increased or 
decreased up to 10 percentage points by the Director of the Dairy 
Division if he finds that such revision is necessary to result in needed 
shipments to pool distributing plants for Class I use, or to prevent 
uneconomic shipments, subject to the following conditions:
    (i) Before making such a finding, the Director shall investigate the 
need for revision either on his own initiative or at the request of 
interested persons. If the investigation shows that a revision of the 
shipping percentage might be appropriate, he shall issue a notice 
stating that the revision is being considered and invite data, views, 
and arguments; and
    (ii) No plant may qualify as a pool plant due to a reduction in the 
shipping percentage pursuant to this subparagraph unless it had been a 
pool supply plant during each of the immediately preceding three months.
    (2) For plants located within the States of Iowa, Minnesota, 
Wisconsin, or that portion of Illinois north of

[[Page 612]]

Interstate 80, the shipping requirements of this paragraph may also be 
met in the following ways:
    (i) A cooperative association that operates a supply plant may 
include as qualifying shipments its deliveries to pool distributing 
plants directly from farms of producers pursuant to Sec. 1079.9(c);
    (ii) A proprietary handler may include as qualifying shipments milk 
diverted pursuant to Sec. 1079.13(d) to pool distributing plants;
    (iii) The operator of a supply plant may include as qualifying 
shipments transfers of fluid milk products to distributing plants 
regulated under other Federal orders, except that credit for such 
transfers shall be limited to the amount of milk, including milk shipped 
directly from producers' farms, delivered to pool distributing plants 
under this order; and
    (iv) Two or more supply plants operated by the same handler or by 
one or more cooperative associations may qualify for pooling as a unit 
by meeting the applicable percentage requirements of this paragraph in 
the same manner as a single plant if the handler submits a written 
request to the market administrator prior to the first day of September 
requesting that such plants qualify as a unit for the period of 
September through August of the following year.

The request shall list the plants to be included in the unit in the 
sequence in which they shall qualify for pool plant status based on the 
minimum deliveries required. If the deliveries made are insufficient to 
qualify the entire unit for pooling, the plant last on the list shall be 
excluded from the unit, followed by the plant next-to-last on the list, 
and continuing in this sequence until remaining plants on the list have 
met the minimum shipping requirements. Each plant that qualifies as a 
pool plant within a unit shall continue each month as a plant in the 
unit through the following August unless the plant fails subsequently to 
qualify for pooling or the handler submits a written request to the 
market administrator prior to the first day of the month that the plant 
be deleted from the unit or that the unit be discontinued. Any plant 
that has been so deleted from the unit, or that has failed to qualify in 
any month, will not be part of the unit for the remaining months through 
August. No plant may be added in any subsequent month through the 
following August to a unit that qualifies in September.
    (c) Any plant, except a plant included in a unit, that qualified as 
a pool plant in each of the immediately preceding three months on the 
basis of performance standards described in paragraph (a) or (b) of this 
section.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A governmental agency plant;
    (3) A plant qualified as a pool plant pursuant to paragraph (a) in 
this section which also meets the pooling requirements of another 
Federal order and from which during the month a greater quantity of 
fluid milk products, except filled milk, was disposed of as route 
disposition, in such other marketing area and to pool plants qualified 
on the basis of route disposition in such other marketing area than was 
so disposed of from such plant in the Iowa marketing area as route 
disposition, or to pool plants qualified on the basis of route 
disposition, except that if such plant was subject to all the provisions 
of this part in the immediately preceding month, it shall continue to be 
subject to all the provisions of this part until the third consecutive 
month in which a greater proportion of its fluid milk products 
disposition, except filled milk, is made in the above described manner 
in such other marketing area, unless, notwithstanding the provisions of 
this paragraph, it is regulated by such other order;
    (4) A plant qualified as a pool plant pursuant to this section which 
also meets the pooling requirements of another Federal order and from 
which during the month a greater quantity of fluid milk products, except 
filled milk, was disposed of as route disposition in this marketing 
area, and to pool plants qualified on the basis of route disposition in 
this marketing area than was so disposed of in such other Federal order 
marketing area but which plant is, nevertheless, fully regulated under 
such other Federal order; and

[[Page 613]]

    (5) That portion of a plant that is physically separated from the 
Grade A portion of such plant, is operated separately, and is not 
approved by any regulatory agency for the receiving, processing, or 
packaging of any fluid milk product for Grade A disposition.
[42 FR 17423, Apr. 1, 1977, as amended at 44 FR 29429, May 21, 1979; 54 
FR 53527, Dec. 29, 1989; 61 FR 55733, Oct. 29, 1996; 62 FR 920, Jan. 7, 
1997]



Sec. 1079.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not an other order plant, a producer-handler plant, or a 
governmental agency plant, from which Grade A milk or filled milk is 
disposed of as route disposition in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant from which fluid milk 
products are shipped during the month to a pool plant.
    (e) Governmental agency plant means a plant that is operated by a 
governmental institution and from which fluid milk products are 
distributed in the marketing area. Such plant shall be exempt from all 
provisions of this part.



Sec. 1079.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk of a producer 
that is diverted for the account of the cooperative association from a 
pool plant in accordance with Sec. 1079.13;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant in a tank truck owned and operated by, or under the control 
of, such cooperative association. If the milk is delivered to the pool 
plant of another handler, the plant operator may be the handler for such 
milk if both the cooperative association and the operator of the pool 
plant notify the market administrator prior to the time that such milk 
is delivered to the pool plant that the plant operator will purchase 
such milk on the basis of weights determined from its measurements at 
the farm and butterfat tests determined from farm bulk tank samples. 
Milk for which the cooperative is the handler pursuant to this paragraph 
shall be deemed to have been received by the cooperative at the location 
of the pool plant to which such milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) Any person who is a producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1079.7(d); and
    (g) Any person who operates an unregulated supply plant.
[42 FR 17423, Apr. 1, 1977, as amended at 44 FR 29430, May 21, 1979]



Sec. 1079.10  Producer-handler.

    Producer-handler means any person who meets all of the following 
conditions:
    (a) Operates a dairy farm and a distributing plant at which Grade A 
milk of his own production is processed and packaged, and from which 
there is route disposition in the marketing area;
    (b) Receives no milk or fluid milk products at his plant (or at any 
distribution facility, including routes, operated by him, an affiliate, 
or any person who controls or is controlled by him) from the farms of 
other dairy farmers nor from any other source, except receipts of not 
more than 50,000 pounds of fluid milk products during the month from 
pool plants or from other order plants;

[[Page 614]]

    (c) Receives no nonfluid milk products from any source for use in 
reconstituting fluid milk products; and
    (d) Provides proof satisfactory to the market administrator that the 
care and management of the dairy animals and other resources necessary 
for his own farm production and the operation of the processing and 
packaging business are the personal enterprise and risk of such person.



Sec. 1079.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for disposition as Grade A milk and whose milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1079.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1079.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him that is diverted 
to a pool plant from an other order plant if the other order designates 
such person as a producer under that order and such milk is allocated to 
Class II or Class III utilization pursuant to Sec. 1079.44(a)(8)(iii) 
and the corresponding step of Sec. 1079.44(b);
    (3) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I under the provisions of such other 
order; and
    (4) Any government institution which produces milk in conjunction 
with the operation of a plant exempt from all provisions of this part 
pursuant to Sec. 1079.8(e).



Sec. 1079.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk of a 
producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1079.9(c);
    (c) Picked up from the producer's farm tank in a tank truck owned 
and operated by, or under the control of, the operator of a pool plant 
but which is not received at a plant until the following month. Such 
milk shall be considered as having been received by the handler during 
the month in which it is picked up at the producer's farm and shall be 
priced at the location of the plant where it is physically received in 
the following month. This paragraph shall apply in like manner to milk 
received by the operator of a pool plant who, in accordance with 
Sec. 1079.9(c), is the handler for such milk;
    (d) Diverted from the pool plant of a proprietary handler for the 
account of the handler operating such plant to another pool plant or 
diverted from a pool plant to a nonpool plant (other than a producer-
handler plant) for the account of the handler operating such pool plant 
or for the account of a handler described in Sec. 1079.9(b), subject to 
the following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion under 
this section unless during the month at least one day's production of 
milk of such dairy farmer is physically received as producer milk at a 
pool plant;
    (2) The total quantity of milk diverted by a cooperative association 
during the month may not exceed 50 percent in the months of September 
through November and 70 percent in other months, of the producer milk 
that the cooperative association causes to be delivered to or diverted 
from pool plants during the month.
    (3) The operator of a pool plant (other than a cooperative 
association) may divert for his account any milk that is not under the 
control of a cooperative association that diverts milk during the month 
pursuant to paragraph (d)(2) of this section. The total quantity so 
diverted during the month may not exceed 50 percent in the months of 
September through November, and 70 percent in other months, of the milk 
received at or diverted from such pool plant during the month that is 
eligible to be diverted by the plant operator;
    (4) Any milk diverted in excess of the limits prescribed in 
paragraph (d) (2)

[[Page 615]]

and (3) of this section shall not be producer milk. The diverting 
handler may designate the dairy farmers whose diverted milk will not be 
producer milk, otherwise the milk last diverted--in lots of an entire 
day's production--shall be excluded first in determining which milk 
should not be producer milk; and
    (5) Diverted milk shall be priced at the location of the plant to 
which diverted.
[42 FR 17423, Apr. 1, 1977]

    Effective Date Note: At 55 FR 41182, Oct. 10, 1990, 
Sec. 1079.13(d)(2) and (3), the words ``50 percent in the months of 
September through November and,'' and the words ``in other months,'' as 
they appear in each such paragraph are suspended for the months of 
September through November for an indefinite period.



Sec. 1079.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1079.40(b)(1) from any source other than producers, handlers 
described in Sec. 1079.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1079.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1079.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1079.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1079.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27868, May 11, 1993]



Sec. 1079.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27868, May 11, 1993]



Sec. 1079.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1079.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';

[[Page 616]]

    (b) Has full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or its products 
for its members; and
    (c) Has its entire activities under the control of its members.



Sec. 1079.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1079.13, 1079.41 and 1079.52.
[58 FR 27868, May 11, 1993]

                             Handler Reports



Sec. 1079.30  Reports of receipts and utilization.

    On or before the eighth day after the end of each month, each 
handler shall report for such month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler described in Sec. 1079.9 (a), (b), and (c) shall 
report for each of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, pounds 
of solids-not-fat other than protein (other solids), 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. 1079.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts by transfer or diversion of bulk fluid milk products 
from pool plants;
    (ii) Receipts of fluid milk products not included in paragraph 
(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. 1079.40(b)(1);
    (3) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to paragraph (a) of this 
section; and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, other nonfat solids, 
and somatic cell information, as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (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.
[42 FR 17423, Apr. 1, 1977, as amended at 60 FR 57161, Nov. 14, 1995]



Sec. 1079.31  Payroll reports.

    (a) On or before the 22nd day after the end of each month, each 
handler described in Sec. 1079.9 (a), (b), or (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 the 
information described in Sec. 1079.73(e).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1079.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in

[[Page 617]]

the same manner as prescribed for reports required by paragraph (a) of 
this section.
[42 FR 17423, Apr. 1, 1977, as amended at 60 FR 57161, Nov. 14, 1995]



Sec. 1079.32  Other reports.

    In addition to the reports required pursuant to Secs. 1079.30 and 
1079.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.

                         Classification of Milk



Sec. 1079.40  Classes of utilization.

    Except as provided in Sec. 1079.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1079.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;

[[Page 618]]

    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1079.15 and the fluid 
cream product definition pursuant to Sec. 1079.16; and
    (7) In shrinkage assigned pursuant to Sec. 1079.41(a) to the 
receipts specified in Sec. 1079.41(a)(2) and in shrinkage specified in 
Sec. 1079.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27868, May 11, 1993, as amended at 58 FR 63289, Dec. 1, 1993]



Sec. 1079.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1079.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1079.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that, if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the

[[Page 619]]

quantity for which Class II or Class III classification is requested by 
the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1079.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1079.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless both handlers request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1079.44(a)(12) and the corresponding 
step of Sec. 1079.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1079.44(a)(7) 
or the corresponding step of Sec. 1079.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1079.44(a) 
(11) or (12) or the corresponding step of Sec. 1079.44(b), the skim milk 
or butterfat so transferred or diverted, up to the total of the skim 
milk and butterfat, respectively, in such receipts of other source milk, 
shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the 
transferee-plant or divertee plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraphs (b) (1), (2) or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other

[[Page 620]]

order is not available to the market administrator for the purpose of 
establishing classification under this paragraph, classification shall 
be as Class I, subject to adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1079.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
governmental agency plants. Skim milk or butterfat transferred in the 
following forms from a pool plant to a producer-handler under this or 
any other Federal order shall be classified:
    (1) As Class I milk, if transferred or diverted in the form of a 
fluid milk product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1079.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition of fluid milk products in the marketing area 
of each Federal milk order from the nonpool plant and transfers of 
packaged fluid milk products from such nonpool plant to plants fully 
regulated thereunder shall be assigned to the extent possible in the 
following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to

[[Page 621]]

the extent possible in the following sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in paragraph (d)(2) of this 
section.
    (e) Transfers by a handler described in Sec. 1079.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1079.9(c) to a pool plant shall be 
classified pursuant to Sec. 1079.44 pro rata with producer milk received 
at the transferee-handler's plant.
[42 FR 17423, Apr. 1, 1977, as amended at 44 FR 29430, May 21, 1979; 58 
FR 27869, May 11, 1993]



Sec. 1079.43  General classification rules.

    In determining the classification of producer milk, the following 
rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1079.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1079.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1079.40, 1079.41, and 1079.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1079.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1079.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1079.44. Any remaining skim milk and butterfat in 
concentrated receipts shall

[[Page 622]]

be assigned to uses under Sec. 1079.44 on a pro rata basis, unless a 
specific use of such receipts is established by the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[42 FR 17423, Apr. 1, 1977, as amended at 58 FR 27869, May 11, 1993; 58 
FR 63289, Dec. 1, 1993]



Sec. 1079.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1079.9(a) for each of his separate pool plants 
the classification of producer milk and milk received from a handler 
described in Sec. 1079.9(c) by allocating the handler's receipts of skim 
milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1079.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1079.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) For a pool plant that was subject to Sec. 1079.40(b)(1) or 
comparable provisions of another Federal order in the immediately 
preceding month, subtract from the remaining pounds of skim milk in 
Class II the pounds of skim milk in products specified in 
Sec. 1079.40(b)(1) in packaged form and in bulk concentrated fluid milk 
products that were in inventory at the beginning of the month, but not 
in excess of the pounds of skim milk remaining in Class II.
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1079.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1079.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1079.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;

[[Page 623]]

    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraph 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1079.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1079.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraph (a)(11)(i) and (ii) of 
this section,

[[Page 624]]

subtract from the pounds of skim milk remaining in each class at the 
plant pro rata to the total pounds of skim milk remaining in Class I and 
in Class II and Class III combined at this allocation step at all pool 
plants of the handler (excluding any duplication of utilization in each 
class resulting from transfers between pool plants of the handler), with 
the quantity prorated to Class II and Class III combined being 
subtracted first from Class III and then from Class II, the pounds of 
skim milk in receipts of fluid milk products from an unregulated supply 
plant that were not subtracted pursuant to paragraph (a)(2)(i), (7)(v), 
and (8) (i) and (ii) of this section and that were not offset by 
transfers or diversions of fluid milk products to the same unregulated 
supply plant from which fluid milk products to be allocated at this step 
were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7) (vi) and (a)(8)(iii) of 
this section:
    (i) Subject to the provisions of paragraph (a) (12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1079.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim

[[Page 625]]

milk remaining in such classes, the pounds of skim milk in Class II and 
Class III combined shall be increased (increasing as necessary Class III 
and then Class II to the extent of available utilization in such classes 
at the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1079.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, and milk received from 
a handler described in Sec. 1079.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1079.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[42 FR 17423, Apr. 1, 1977, as amended at 58 FR 27869, May 11, 1993]



Sec. 1079.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1079.44(a)(12) and the corresponding 
step of Sec. 1079.44(b), estimate and publicly announce on or before the 
12th day of the month the Class I utilization (to the nearest whole 
percentage) during the previous month of skim milk and butterfat, 
respectively, in producer milk of all handlers. Such estimate shall be 
based upon the most current available data and shall be final for such 
purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Secs. 1079.43(d) and 1079.44 on the 
basis of such report, (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.

[[Page 626]]

    (d) On or before the 14th day after the end of each month, report to 
each cooperative association which so requests, the class utilization of 
producer milk received by each handler from a cooperative association or 
from members of the association. For the purpose of this report, the 
milk caused to be delivered by an association shall be prorated to each 
class in the proportion that the total receipts of milk received from 
producers by such handler were used in each class.
[42 FR 17423, Apr. 1, 1977, as amended at 58 FR 27870, May 11, 1993]

                              Class Prices



Sec. 1079.50  Class and component prices.

    Subject to the provisions of Sec. 1079.52, the class prices per 
hundredweight of milk containing 3.5 percent butterfat and the component 
prices for the month shall be as follows:
    (a) Class I price. The Class I price for the month per hundredweight 
of milk containing 3.5 percent butterfat shall be the basic formula 
price for the second preceding month plus $1.55.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
    (e) Class I differential price. The Class I differential price shall 
be the difference between the current month Class I and Class III prices 
(this price may be negative).
    (f) Class II differential price. The Class II differential price 
shall be the difference between the current month Class II and Class III 
prices (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 and 
Class III-A prices (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 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) Other solids price. Other solids are herein defined as solids 
not fat other than protein. The other solids price per pound, rounded to 
the nearest one-hundredth cent, shall be the basic formula price at test 
less the average butterfat test of the basic formula price as reported 
by the Department times the butterfat price, less the average protein 
test of the basic formula price as reported by the Department for the 
month times the protein price, and dividing the resulting amount by the 
average other solids test of the basic formula price as reported by the 
Department. If the resulting price is less than zero, then the protein 
price will be reduced so that the other solids price equals zero.
    (l) Somatic cell adjustment. (1) The somatic cell adjustment rate, 
per 1,000 somatic cells, rounded to five decimal places, shall be 
computed by multiplying .0005 times the monthly cheddar cheese price as 
defined in paragraph (j) of this section; and
    (2) The somatic cell adjustment, per hundredweight, shall be 
determined by subtracting from 350 the somatic cell count (in thousands) 
of the milk, multiplying the difference by the somatic cell adjustment 
rate, and rounding to the nearest full cent.
[42 FR 17423, Apr. 1, 1977, as amended at 46 FR 43390, Aug. 28, 1981; 51 
FR 12833, Apr. 16, 1986; 58 FR 63289, Dec. 1, 1993; 60 FR 6611, Feb. 2, 
1995; 60 FR 57161, Nov. 14, 1995]

[[Page 627]]



Sec. 1079.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1079.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18970, Apr. 14, 1995]

[[Page 628]]



Sec. 1079.52  Plant location adjustments for handlers.

    (a) The following zones are defined for the purpose of determining 
location adjustments:
    (1) Zone 1 shall include that territory both inside and outside the 
marketing area, not included in Zones 2 and 3.
    (2) Zone 2 shall include:
    (i) The Iowa counties of Benton, Cedar, Clinton, Iowa, Johnson, 
Jones, Keokuk, Linn, Louisa, Marshall, Muscatine, Poweshiek, Scott, 
Tama, and Washington; and
    (ii) The Illinois counties of Henry, Mercer, Rock Island, and the 
townships of Fulton, Ustick, Clyde, Genesee, Mount Pleasant, Union 
Grove, Garden Plain, Lyndon, Fenton, Newton, Prophetstown, Portland, and 
Erie in Whiteside County.
    (3) Zone 3 shall include:
    (i) The Iowa counties of Alamakee, Black Hawk, Bremer, Buchanan, 
Butler, Cerro Gordo, Chickasaw, Clay, Clayton, Delaware, Dickinson, 
Dubuque, Emmet, Fayette, Floyd, Franklin, Grundy, Hamilton, Hancock, 
Hardin, Howard, Humboldt, Jackson, Kossuth, Mitchell, Palo Alto, 
Pocahontas, Webster, Winnebago, Winneshiek, Worth and Wright; and
    (ii) The States of Minnesota and Wisconsin and that portion of 
Illinois that is north of Interstate 80.
    (b) For milk received at a plant from producers or from a handler 
described in Sec. 1079.9(c) and which is classified as Class I milk 
without movement in bulk form to a pool plant at which a higher Class I 
price applies, the price specified in Sec. 1079.50(a) shall be adjusted 
as follows:
    (1) In Zone 1, no adjustment;
    (2) In Zone 2, minus 7 cents; and
    (3) In Zone 3, the price shall be reduced by 7 cents and by an 
additional 1.7 cents for each 10 miles or fraction thereof (by shortest 
hard-surfaced highway distance as measured by the market administrator) 
that such plant is located from the nearer of the Post Offices of Ames, 
Marshalltown, or Cedar Rapids, Iowa.
    (c) The Class I price applicable to other source milk shall be 
adjusted by the amounts set forth in paragraph (b) of this section, 
except that the adjusted Class I price shall not be less than the Class 
III price.
    (d) For fluid milk products transferred in bulk from a pool plant to 
another pool plant at which a higher Class I price applies and which is 
classified as Class I, the price shall be the Class I price applicable 
at the location of the transferee-plant subject to a location adjustment 
credit for the transferor-plant determined by the market administrator 
as follows:
    (1) Subtract from the pounds of Class I remaining at the transferee-
plant after the computations pursuant to Sec. 1079.44 (a)(12) and (b) 
plus the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products from other pool plants that are assigned to Class I 
use, the pounds of packaged fluid milk products from other pool plants;
    (2) Multiply the remaining pounds of milk by 110 percent;
    (3) Subtract the pounds of bulk fluid milk products physically 
received at the transferee-plant from the following sources:
    (i) Producers;
    (ii) Handlers described in Sec. 1079.9(c);
    (iii) Pool plants at which the same or a higher Class I price 
applies; and
    (iv) Receipts of diverted milk from pool plants;
    (4) Assign any pounds remaining pro rata to bulk receipts of fluid 
milk products from each transferor-plant at which a lower Class I price 
applies; and
    (5) Multiply the pounds computed for each transferor-plant in 
paragraph (d)(4) of this section by the difference in the Class I prices 
applicable at the transferee-plant and transferor-plant.
[42 FR 17423, Apr. 1, 1977, as amended at 52 FR 3217, Feb. 3, 1987; 54 
FR 53528, Dec. 29, 1989; 58 FR 27870, May 11, 1993]



Sec. 1079.53  Announcement of class and component prices.

    On or before the 5th day of the month, the market administrator 
shall announce the following prices:
    (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;

[[Page 629]]

    (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 other solids price for the preceding month;
    (i) The somatic cell adjustment rate for the preceding month; and
    (j) The butterfat differential for the preceding month.
[60 FR 57162, Nov. 14, 1995]



Sec. 1079.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                       Producer Price Differential



Sec. 1079.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for milk the 
market administrator shall determine for each month the value of milk of 
each handler described in Sec. 1079.9(a) with respect to each of its 
pool plants, and each handler described in Sec. 1079.9 (b) and (c).
    (a) The handler's obligation for producer milk and milk received 
from a handler described in Sec. 1079.9(c) shall be computed as follows:
    (1) Multiply the total hundredweight of milk in Class I as 
determined pursuant to Sec. 1079.43(a) and Sec. 1079.44(c) by the Class 
I differential price for the month;
    (2) Add an amount obtained by multiplying the total hundredweight of 
milk in Class II as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(c) by the Class II differential price for the month;
    (3) Add an amount obtained by multiplying the hundredweight of skim 
milk in Class I as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(a) by the skim milk price;
    (4) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(a) by the average protein content of the skim milk received 
by the handler, and multiplying the resulting pounds of protein by the 
protein price;
    (5) Add an amount obtained by multiplying the pounds of skim milk in 
Class II and Class III as determined pursuant to Sec. 1079.43(a) and 
Sec. 1079.44(a) by the average other solids content of the skim milk 
received by the handler, and multiplying the resulting pounds of other 
solids by the other solids price;
    (6) Add an adjustment for somatic cell content determined by 
multiplying the value reported pursuant to Sec. 1079.30(a)(1) by the 
percentage of the total producer milk assigned to Class II and Class III 
pursuant to Secs. 1079.43(a) and 1079.44(c); and
    (7) 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;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1079.44(a)(14) and the 
corresponding step of Sec. 1079.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1079.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1079.44(a)(9) and the corresponding step of Sec. 1079.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1079.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1079.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1079.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and

[[Page 630]]

bulk concentrated fluid milk products from pool plants, other order 
plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1079.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1079.44(b); and
    (f) Add the 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. 1079.43(d) and 
Sec. 1079.44(a)(7)(i) and the pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1079.44(a)(11) and the 
corresponding steps of Sec. 1079.44(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;
    (g) Subtract for a handler described in Sec. 1079.9(c) the amount 
charged the preceding month for the skim milk and butterfat contained in 
inventory at the beginning of the month that was delivered to a pool 
plant during the month;
    (h) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1079.43(d);
    (i) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1079.76 (a)(5) or (c); and
    (j) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[42 FR 17423, Apr. 1, 1977, as amended at 44 FR 29430, May 21, 1979; 58 
FR 27870, May 11, 1993; 60 FR 57162, Nov. 14, 1995]



Sec. 1079.61  Producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight for Zone 1. If the unreserved cash 
balance in the producer settlement fund to be included in the 
computation is less than 2 cents per hundredweight of producer milk on 
all reports, the report of any handler who has not made the payments 
required pursuant to Sec. 1079.71 for the preceding month shall not be 
included in the computation of the producer price differential. The 
report of such handler shall not be included in the computation for 
succeeding months until the handler has made full payment of outstanding 
monthly obligations. Subject to the aforementioned conditions, the 
market administrator shall compute the producer price differential in 
the following manner:
    (a) Combine into one total for all handlers:
    (1) The values computed pursuant to Sec. 1079.60 (a)(1), (a)(2), 
(a)(7), and (b) through (j) for all handlers; and
    (2) Add values computed pursuant to Sec. 1079.60 (a)(3), (a)(4), 
(a)(5) and (a)(6); and subtract the values obtained by multiplying the 
handlers' total pounds of protein and total pounds of other solids 
contained in such milk by their respective prices, and the total value 
of somatic cell adjustments;

[[Page 631]]

    (b) Add an amount equal to the sum of the location adjustments 
computed pursuant to Sec. 1079.75;
    (c) Add an amount equal to not less than one-half of the unobligated 
cash balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1079.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (d) of this section. The result 
shall be known as the ``producer price differential.''
[42 FR 17423, Apr. 1, 1977, as amended at 60 FR 57162, Nov. 14, 1995]



Sec. 1079.62  Announcement of producer prices.

    On or before the 12th 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 other solids price;
    (d) The butterfat price;
    (e) The somatic cell adjustment rate;
    (f) The average butterfat, protein and other solids content of 
producer milk and milk received from a handler described in 
Sec. 1079.9(c); and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
[60 FR 57163, Nov. 14, 1995]

                            Payments for Milk



Sec. 1079.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
made by handlers pursuant to Secs. 1079.71, 1079.76, and 1079.77, and 
out of which he shall make all payments due handlers pursuant to 
Secs. 1079.72 and 1079.77: Provided, That the market administrator shall 
offset any payments due any handler against payments due from such 
handler.



Sec. 1079.71  Payments to the producer-settlement fund.

    (a) On or before the 15th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1079.60.
    (2) The sum of:
    (i) An amount obtained by multiplying the total hundredweight of 
producer milk and milk received from a handler described in 
Sec. 1079.9(c) by the producer price differential as adjusted by 
Sec. 1079.75. In the case of a handler described in Sec. 1079.9(c), less 
the amount due from handlers pursuant to Sec. 1079.73;
    (ii) An amount obtained by multiplying the total pounds of protein 
contained in producer milk and milk received from a handler described in 
Sec. 1079.9(c) by the protein price;
    (iii) An amount obtained by multiplying the total pounds of other 
solids contained in producer milk and milk received from a handler 
described in Sec. 1079.9(c) by the other solids price;
    (iv) The total value of the somatic cell adjustment to producer milk 
and milk received from handlers described in Sec. 1079.9(c); and
    (v) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec. 1079.60(f) by 
the producer price differential as adjusted pursuant to Sec. 1079.52 for 
the location of the plant from which received.
    (b) [Reserved]
[42 FR 17423, Apr. 1, 1977, as amended at 44 FR 29430, May 21, 1979; 60 
FR 57163, Nov. 14, 1995]



Sec. 1079.72  Payments from the producer-settlement fund.

    On or before the 17th day after the end of the month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1079.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1079.71(a)(1): Provided, That if the

[[Page 632]]

balance in the producer-settlement fund is insufficient to make all 
payments pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
necessary funds become available.



Sec. 1079.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay for milk received from producers for 
which payment is not made to a cooperative association pursuant to 
paragraph (b) or (c) of this section as follows:
    (1) On or before the last day of each month, to each producer who 
has not discontinued shipping milk to such handler before the end of the 
month, for producer milk received during the first 15 days of the month 
at a rate per hundredweight not less than the statistical uniform price 
computed pursuant to Sec. 1079.62(g) for the preceding month and 
adjusted pursuant to Sec. 1079.75, less proper deductions authorized in 
writing by such producer; and
    (2) On or before the 18th day after the end of the month, payment 
for producer milk received during such month shall not be less than the 
sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential adjusted pursuant to Sec. 1079.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month;
    (vi) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vii) Less proper authorized deductions authorized in writing by 
such producer and plus or minus adjustments for errors in previous 
payments made to such producer;
    (viii) Less deductions for marketing services pursuant to 
Sec. 1079.86; and
    (ix) If by such date the handler has not received full payment from 
the market administrator pursuant to Sec. 1079.72 for such month, it may 
reduce pro rata its payment to producers by not more than the amount of 
such underpayment. Payment to producers shall be completed thereafter 
not later than the date for making payments pursuant to paragraph (a) of 
this section next following receipt of the balance due from the market 
administrator.
    (b) Each handler shall pay a cooperative association as follows for 
milk received from producers if the cooperative association has filed a 
written request for payment with the handler and if the market 
administrator has determined that such cooperative association is 
authorized to collect payment:
    (1) On or before the last day of the month, an amount not less than 
the sum of the individual payments otherwise payable to producers 
pursuant to paragraph (a)(1) of this section, less any deductions 
authorized in writing by such cooperative association; and
    (2) On or before the 18th day after the end of each month an amount 
not less than the sum of the individual payments otherwise payable to 
producers pursuant to paragraph (a)(2) of this section, less proper 
deductions authorized in writing by such cooperative association.
    (c) Each handler shall pay a cooperative association for milk 
received by the handler from a cooperative association acting as a 
handler described in Sec. 1079.9(c) as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the last day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price computed 
pursuant to Sec. 1079.62(g), applicable at the location of the receiving 
handler's plant, for the preceding month; and
    (2) For milk received during the month the handler shall pay the 
cooperative association on or before the 18th day after the end of the 
month during which the milk was received as follows:
    (i) The hundredweight of milk received times the producer price 
differential applicable at the location of the receiving handler's 
plant;

[[Page 633]]

    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for the 
month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) The hundredweight of milk received times the somatic cell 
adjustment for the month; and
    (vi) Less any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler shall pay a cooperative association for fluid milk 
products received by transfer from pool plant(s) operated by a 
cooperative association as follows:
    (1) For milk received during the first 15 days of the month, the 
handler shall pay the cooperative association on or before the last day 
of the month during which the milk was received at a rate per 
hundredweight not less than the statistical uniform price applicable at 
the transferee plant as computed pursuant to Sec. 1079.62(g) and 
adjusted by the butterfat differential, both for the preceding month; 
and
    (2) For milk received and classified during the month the handler 
shall pay the cooperative association on or before the 18th day after 
the end of the month during which the milk was received, as follows:
    (i) The hundredweight of Class I milk received times the Class I 
differential price for the month applicable at the transferee plant, 
plus the pounds of Class I skim milk times the skim milk price for the 
month;
    (ii) The hundredweight of Class II milk received times the Class II 
differential price for the month;
    (iii) The hundredweight of Class III-A milk received times the Class 
III-A differential price for the month;
    (iv) The pounds of butterfat received times the butterfat price for 
the month;
    (v) The pounds of protein received in Class II and Class III milk 
times the protein price for the month;
    (vi) The pounds of other solids received in Class II and Class III 
milk times the other solids price for the month;
    (vii) The hundredweight of Class II and Class III milk received 
times the somatic cell adjustment; and
    (viii) Less any payment made pursuant to paragraph (d)(1) of this 
section.
    (e) In making payments for producer milk pursuant to paragraph 
(a)(2) or (b)(2) of this section, each handler shall furnish each 
producer or cooperative association to whom such payment is made a 
supporting statement in such form that it may be retained by the 
recipient which shall show:
    (1) The month and the identity of the producer;
    (2) The daily and total pounds for each producer;
    (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 total pounds of other solids contained in the producer's 
milk;
    (6) The somatic cell count of the producer's milk;
    (7) The minimum rate or rates at which payment to the producer is 
required pursuant to this order;
    (8) The rate that is used in making payment if such rate is other 
than the applicable minimum rate;
    (9) The amount, rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (10) The net amount of payment to such producer or cooperative.
[60 FR 57163, Nov. 14, 1995]



Sec. 1079.74  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. 1079.51 (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.
[60 FR 57164, Nov. 14, 1995]

[[Page 634]]



Sec. 1079.75  Plant location adjustments for producers and on nonpool milk.

    (a) The producer price differential for producer milk pursuant to 
Sec. 1079.61 received at a pool plant or diverted from a pool plant 
shall be reduced according to the location of the plant of actual 
receipt at the rates set forth in Sec. 1079.52.
    (b) For purposes of computations pursuant to Secs. 1079.71 and 
1079.72 the producer price differential shall be adjusted at the rates 
set forth in Sec. 1079.52 applicable at the location of the nonpool 
plant from which the milk was received, except that the adjusted 
producer price differential shall not be less than zero.
[60 FR 57164, Nov. 14, 1995]



Sec. 1079.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1079.30(b) and 1079.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition of fluid milk products 
in the marketing area from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (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, with the difference to be not less than zero; and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1079.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:

[[Page 635]]

    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1079.60 
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 of reconstituted skim milk in filled milk shall be priced 
at the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1079.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1079.60(f) less the value of such other source milk 
specified in Sec. 1079.71(a)(2)(v), a value of milk determined pursuant 
to Sec. 1079.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1079.7(b) 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1079.30(b) and 
1079.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1079.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1079.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1079.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1079.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the

[[Page 636]]

nonfluid milk ingredients at the difference between the Class I price 
applicable under the other order at the location of the plant where the 
nonfluid milk ingredients were processed (but not to be less than the 
Class III price) and the Class III price. This payment option shall 
apply only if a majority of the total milk received at the plant that 
processed the nonfluid milk ingredients is regulated under one or more 
Federal orders and payment may only be made to the producer-settlement 
fund of the order pricing a plurality of the milk used to produce the 
nonfluid milk ingredients. This payment option shall not apply if the 
source of the nonfluid ingredients used in reconstituted fluid milk 
products cannot be determined by the market administrator.
[42 FR 17423, Apr. 1, 1977, as amended at 58 FR 27870, May 11, 1993; 60 
FR 57164, Nov. 14, 1995]



Sec. 1079.77  Adjustment of accounts.

    (a) Whenever verification by the market administrator of reports or 
payments by any handler discloses errors in payments pursuant to 
Secs. 1079.71, 1079.85 and 1079.86, the market administrator shall 
promptly bill such handler for any unpaid amount and such handler shall, 
within 5 days of such billing, make payment to the market administrator 
of the amount so billed. Whenever verification discloses that payment is 
due from the market administrator to any handler, the market 
administrtor shall, within 5 days, make payments to such handler.
    (b) Whenever verification by the market administrator of the 
payments by a handler to any producer or cooperative association 
discloses payment of less than is required by Sec. 1079.73, the handler 
shall pay the balance due such producer or cooperative association not 
later than the time for making payments next following such disclosure.



Sec. 1079.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1079.71, 
1079.76, 1079.77(a), 1079.85, and 1079.86, for which remittance has not 
been made (or, if mailed, postmarked) by the date specified for such 
payment, shall be increased three-fourths of 1 percent, and any 
remaining amount due shall be increased at a similar rate on the 
corresponding day of each month thereafter until paid. The amounts 
payable pursuant to this section shall be computed monthly on each 
unpaid obligation, which shall include unpaid charges previously made 
pursuant to this section; and for the purpose of this section any 
obligation that was determined at a date later than prescribed by the 
order because of a handler's failure to submit a report to the market 
administrator when due shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.

        Administrative Assessment and Marketing Service Deduction



Sec. 1079.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than:
    (1) Receipts of producer milk by a handler described in 
Sec. 1079.9(c) that were delivered to pool plants of other handlers; and
    (2) Receipts of producer milk that were transferred to pool plants 
of other handlers by a cooperative association in its capacity as a 
handler pursuant to Sec. 1079.9(a);
    (b) Receipts from a handler described in Sec. 1079.9(c);
    (c) Receipts from a cooperative association in its capacity as a 
handler pursuant to Sec. 1079.9(a);
    (d) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1079.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1079.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1079.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1079.60 (d) and (f); and

[[Page 637]]

    (e) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
specified in Sec. 1079.76(a)(2).
[42 FR 17423, Apr. 1, 1977, as amended at 58 FR 27871, May 11, 1993]



Sec. 1079.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to each producer (other than himself) 
pursuant to Sec. 1079.73, shall deduct 6 cents per hundredweight, or 
such lesser amount as the Secretary may prescribe with respect to all 
milk received from the producers' farms during the month, and shall pay 
such deductions to the market administrator on or before the 15th day 
after the end of such month. Such moneys shall be expended by the market 
administrator to provide for market information and to verify the 
weights, samples, and tests of milk of producers who are not receiving 
such services from a cooperative association.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, each handler shall make, in lieu of the deduction specified in 
pargrah (a) of this section, such deductions from the payments to be 
made to such producers as may be authorized by the membership agreement 
or marketing contract between such cooperative association and such 
producers and on or before the 15th day after the end of each month 
shall pay such deductions to the cooperative association rendering such 
services, accompanied by a statement showing the quantity of milk for 
which a deduction was computed for each producer.



PARTS 1093-1097 [RESERVED]






PART 1106--MILK IN THE SOUTHWEST PLAINS MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1106.1  General provisions.

                               Definitions

1106.2  Southwest Plains marketing area.
1106.3  Route disposition.
1106.4  Plant.
1106.5  Distributing plant.
1106.6  Supply plant.
1106.7  Pool plant.
1106.8  Nonpool plant.
1106.9  Handler.
1106.10  Producer-handler.
1106.11  [Reserved]
1106.12  Producer.
1106.13  Producer milk.
1106.14  Other source milk.
1106.15  Fluid milk product.
1106.16  Fluid cream product.
1106.17  Filled milk.
1106.18  Cooperative association.
1106.19  Commercial food processing establishment.

                             Handler Reports

1106.30  Reports of receipts and utilization.
1106.31  Payroll reports.
1106.32  Other reports.

                         Classification of Milk

1106.40  Classes of utilization.
1106.41  Shrinkage.
1106.42  Classification of transfers and diversions.
1106.43  General classification rules.
1106.44  Classification of producer milk.
1106.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1106.50  Class prices.
1106.51  Basic formula price.
1106.52  Plant location adjustments for handlers.
1106.53  Announcement of class prices.
1106.54  Equivalent price.

                              Uniform Price

1106.60  Handler's value of milk for computing uniform price.
1106.61  Computation of uniform price.
1106.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1106.70  Producer-settlement fund.
1106.71  Payments to the producer-settlement fund.
1106.72  Payments from the producer-settlement fund.
1106.73  Payments to producers and to cooperative associations.
1106.74  Butterfat differential.
1106.75  Plant location adjustments for producers and on nonpool milk.
1106.76  Payments by a handler operating a partially regulated 
          distributing plant.

[[Page 638]]

1106.77  Adjustment of accounts.
1106.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1106.85  Assessment for order administration.
1106.86  Deduction for marketing services.

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

    Source: 47 FR 53694, Nov. 29, 1982, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1106.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1106.2  Southwest Plains marketing area.

    The Southwest Plains marketing area, hereinafter called the 
``marketing area'', means all territory within the boundaries of the 
following counties, and all territory occupied by government (Municipal, 
State or Federal) reservations, installations, institutions, or other 
similar establishments if any part thereof is within any of the listed 
counties:

                    Zone I--In the State of Oklahoma

Caddo
Canadian
Cleveland
Coal
Garvin
Grady
Haskell
Hughes
Latimer
LeFlore
Lincoln
McClain
McIntosh
Okfuskee
Oklahoma
Pittsburg
Pontotoc
Pottawatomie
Seminole
Sequoyah

                        In the State of Arkansas

Crawford
Franklin
Logan
Scott
  
Sebastian

                    Zone II--in the State of Oklahoma

Atoka
Bryan
Carter
Choctaw
Comanche
Cotton
Greer
Harmon
Jackson
Jefferson
Johnston
Kiowa
Love
Marshall
McCurtain
Murray
Pushmataha
Stephens
Tillman

                   Zone III--in the State of Oklahoma

Adair
Alfalfa
Beaver
Beckham
Blaine
Cherokee
Cimarron
Craig
Creek
Custer
Delaware
Dewey
Ellis
Garfield
Grant
Harper
Kay
Kingfisher
Logan
Major
Mayes
Muskogee
Noble
Nowata
Okmulgee
Osage
Ottawa
Pawnee
Payne
Roger Mills
Rogers
Texas
Tulsa
Wagoner
Washita
Washington
Woods
Woodward

                     Zone IV--in the State of Kansas

Allen
Barber
Barton
Bourbon
Butler
Chautauqua
Cherokee
Comanche
Cowley
Crawford
Edwards
Ellis
Harper
Harvey
Kingman
Kiowa
Labette
Marion
McPherson
Montgomery
Neosho
Pawnee
Pratt
Reno
Rice
Rush
Russell
Sedgwick
Stafford
Sumner
Wilson

                        In the State of Missouri

Barton
Jasper
Newton
Vernon

                     Zone V--in the State of Kansas

Clark
Finney
Ford
Gove
Grant
Gray
Greeley
Hamilton
Haskell
Hodgeman
Kearney
Lane
Meade
Morton
Ness
Scott
Seward
Stanton
Stevens
Trego
Wichita

[[Page 639]]



                    Zone VI--In the State of Arkansas

Benton
Boone
Carroll
Madison
Marion
Washington

                   Zone VII--In the State of Missouri

Barry
Cedar
Christian
Dade
Dallas
Douglas
Greene
Howell
Laclede
Lawrence
McDonald
Ozark
Polk
Pulaski (Fort Leonard Wood
  Military Reservation, only)
Stone
Taney
Texas
Webster
Wright
[51 FR 44591, Dec. 11, 1986, as amended at 52 FR 6318, Mar. 3, 1987]



Sec. 1106.3  Route disposition.

    Route disposition means any delivery to a retail or wholesale outlet 
(except to a plant) either direct or through any distribution facility 
(including disposition from a plant store, vendor or vending machine) of 
any fluid milk product classified as Class I milk.

    Effective Date Note: At 59 FR 1274, Jan. 10, 1994, Sec. 1106.3 was 
amended by suspending indefinitely the phrase ``(except to a plant)''.



Sec. 1106.4  Plant.

    Plant means the land, buildings, facilities and equipment 
constituting a single operating unit or establishment at which milk or 
milk products (including filled milk) are received, processed, or 
packaged. Separate facilities used only as a reload point for 
transferring bulk milk from one tank truck to another or separate 
facilities used only as a distribution point for storing packaged fluid 
milk products in transit for route disposition shall not be a plant 
under this definition.



Sec. 1106.5  Distributing plant.

    Distributing plant means any plant:
    (a) Approved by a duly consitituted regulatory agency for the 
handling of milk approved for fluid consumption;
    (b) In which fluid milk products are processed or packaged; and
    (c) From which there is route disposition in the marketing area 
during the month, except that this requirement shall not apply to a 
distributing plant described in Sec. 1106.7(e).
[47 FR 53694, Nov. 29, 1982, as amended at 53 FR 15796, May 4, 1988]



Sec. 1106.6  Supply plant.

    Supply plant means a plant approved by a duly constituted regulatory 
agency for the handling of milk approved for fluid consumption from 
which fluid milk products are transferred or diverted to a distributing 
plant(s) during the month.

    Effective Date Note: At 58 FR 60543, Nov. 17, 1993, Sec. 1106.6 was 
amended by temporarily suspending in part the words``during the month'', 
effective Oct. 1, 1993 through Jan. 30, 1994. At 59 FR 11182, Mar. 10, 
1994, the same words were suspended, effective Feb. 1, 1994 through Aug. 
21, 1996. At 61 FR 35596, July 8, 1996, in Sec. 1106.6, the same words 
were further suspended, effective Sept. 1, 1996, through Aug. 31, 1998.



Sec. 1106.7  Pool plant.

    Except as provided in paragraph (f) of this section, pool plant 
means:
    (a) A distributing plant (other than one described in paragraph (e) 
of this section), from which during the month there is:
    (1) Total route disposition (except filled milk) in an amount not 
less than 50 percent of the total quantity of fluid milk products 
(except filled milk) received at such plant, including producer milk 
diverted from the plant; and
    (2) Route disposition (except filled milk) in the marketing area in 
an amount not less than 10 percent of such receipts.
    (b) A supply plant from which during the month not less than 50 
percent of the total quantity of milk that is received from dairy 
farmers (including producer milk diverted from the plant pursuant to 
Sec. 1106.13, but excluding milk diverted to such plant) and handlers 
described in Sec. 1106.9(c) is transferred or diverted pursuant to 
paragraph (b)(2) of this section to plants described in paragraph (a) or 
(e) of this section, subject to the following:
    (1) A supply plant that has qualified as a pool plant during each of 
the immediately preceding months of September through January shall 
continue to so qualify in each of the following

[[Page 640]]

months of February through August until any month of such period in 
which less than 20 percent of the milk received or diverted as 
previously specified, is shipped to plants described in paragraph (a) or 
(e) of this section. A plant not meeting such 20 percent requirement in 
any month of such February-August period shall be qualified in any 
remaining month of such period only if transfers and deversions pursuant 
to paragraph (b)(2) of this section to plants described in paragraph (a) 
or (e) of this section are not less than 50 percent of receipts or 
diversions, as previously specified.
    (2) The operator of a supply plant that is located in the marketing 
area or in a county adjacent to the marketing area may include milk 
diverted pursuant to Sec. 1106.13(c) from such plant to plants described 
in paragraph (a) or (e) of this section as qualifying shipments in 
meeting the supply plant's monthly shipping percentages. The diverted 
milk used in meeting such qualifying shipments shall be limited to the 
milk of dairy farmers from whom at least one day's production is 
physically received during the month at such supply plant. Diversions in 
excess of three-fifths of the shipping requirement shall not be included 
as qualifying shipments.
    (c) Any plant located in the marketing area or in a county adjacent 
to the marketing area that is operated by a cooperative association if 
pool plant status under this paragraph is requested by the cooperative 
association and during the month, or the 12-month period ending with the 
immediately preceding month, 35 percent or more of the producer milk of 
members of the cooperative association (and any producer milk of 
nonmembers and members of another cooperative association which may be 
marketed by the cooperative association) is physically received in the 
form of bulk fluid milk products at plants specified in paragraph (a) or 
(e) of this section either directly from farms or by transfer from 
supply plants operated by the cooperative association and from plants of 
the cooperative association for which pool plant status has been 
requested under this paragraph subject to the following conditions:
    (1) The plant does not qualify as a pool plant under paragraph (a), 
(b) or (e) of this section or under comparable provisions of another 
Federal order; and
    (2) The plant is approved by a duly constituted regulatory agency 
for the handling of milk approved for fluid consumption in the marketing 
area.
    (d) The shipping standards in paragraphs (b) and (c) of this section 
may be increased or decreased temporarily up to 10 percentage points by 
the Director of the Dairy Division if the Director finds such revision 
is necessary to obtain needed shipments or to prevent uneconomic 
shipments. Before making such a finding the Director shall investigate 
the need for revision, either at the Director's initiative or at the 
request of interested persons. If the investigation shows that a 
revision might be appropriate, the Director shall issue a notice stating 
that revision is being considered and inviting data, views, and 
arguments. If a plant which would not otherwise qualify as a pool plant 
during the month qualifies as a pool plant because of a reduction in 
shipping standards pursuant to this paragraph, such plant shall be a 
nonpool plant for such month if the operator files a written request for 
nonpool plant status with the market administrator at the time the 
report is filed for such plant pursuant to Sec. 1106.30.
    (e) A distributing plant that meets the following conditions:
    (1) The plant is located in the marketing area;
    (2) The plant has route disposition (except filled milk) during the 
month in an amount not less than 50 percent of the total quantity of 
fluid milk products (except filled milk) received at such plant, 
including producer milk diverted from such plant; and
    (3) The principal activity of such plant is the processing and 
distribution of aseptically processed fluid milk products.
    (f) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant or governmental agency plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section

[[Page 641]]

which also meets the pooling requirements of another Federal order and 
from which there is a greater quantity of route disposition, except 
filled milk, during the month in such other Federal order marketing area 
than in this marketing area, except that if such plant was subject to 
all the provisions of this part in the immediately preceding month, it 
shall continue to be subject to all the provisions of this part until 
the third consecutive month in which a greater proportion of its route 
disposition, except filled milk, is made in such other marketing area 
unless, notwithstanding the provisions of this paragraph, it is 
regulated under such other order. On the basis of a written application 
made by the plant operator at least 15 days prior to the date for which 
a determination of the Secretary is to be effective, the Secretary may 
determine that the route disposition in the respective marketing areas 
to be used for purposes of this paragraph shall exclude (for a specified 
period of time) route disposition made under limited term contracts to 
governmental bases and institutions;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order and from which there is a greater quantity of route disposition, 
except filled milk, during the month in this marketing area than in such 
other Federal order marketing area but which plant is, nevertheless, 
fully regulated under such other Federal order;
    (4) A supply plant qualified pursuant to paragraph (b) of this 
section which also meets the pooling requirements of another Federal 
order and from which greater qualifying shipments are made during the 
month to plants regulated under such other order than are made to plants 
regulated under this part;
    (5) A plant qualified pursuant to paragraph (b) of this section 
which has automatic pooling status under another Federal order; or
    (6) That portion of a plant that is not approved by a duly 
constituted regulatory agency for the receiving, processing or packaging 
of any fluid milk product for fluid disposition and is physically 
separated from the portion of the plant having such approval.
[53 FR 15796, May 4, 1988, as amended at 57 FR 48939, Oct. 29, 1992]

    Effective Date Note: At 58 FR 60543, Nov. 17, 1993, in Sec. 1106.7, 
paragragh (b)(1) was amended by temporarily suspending in part the words 
beginning with ``of February through August'' and continuing through to 
the end of the paragraph, effective Oct. 1, 1993, through Jan. 30, 1994. 
At 59 FR 11182, Mar. 10, 1964, the same words were suspended, effective 
Feb. 1, 1994, through Aug. 31, 1996. At 61 FR 35597, July 8, 1996, the 
same words were again suspended, effective Sept. 1, 1996, through Aug. 
31, 1998.



Sec. 1106.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a distributing 
plant that does not qualify as pool plant and is not an other order 
plant, a governmental agency plant, or a producer-handler plant.
    (d) Unregulated supply plant means a nonpool plant, except an other 
order plant, a governmental agency plant, or a producer handler plant, 
from which fluid milk products are moved during the month to a pool 
plant qualified pursuant to Sec. 1106.7.
    (e) Governmental agency plant means a plant owned and operated by a 
governmental agency or establishment which processes or packages milk or 
filled milk that is distributed in the marketing area. Such plant shall 
be exempt from all provisions of this part.



Sec. 1106.9  Handler.

    Handler means:
    (a) Any person who operates one or more pool plants;
    (b) Any cooperative association with respect to the milk of 
producers which it causes to be diverted pursuant to

[[Page 642]]

Sec. 1106.13 for the account of such cooperative association;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler for such milk 
and will purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered.
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) Any person who is a producer-handler; and
    (f) Any person who operates an other order plant described in 
Sec. 1106.7(f).
[47 FR 53694, Nov. 29, 1982, as amended at 56 FR 52447, Oct. 21, 1991]



Sec. 1106.10  Producer-handler.

    Producer-handler means any person:
    (a) Who operates a dairy farm and a processing plant from which 
there is route distribution in the marketing area;
    (b) Who receives no fluid milk products from sources other than his 
own farm production, pool plants, and other order plants;
    (c) Who disposes of no other source milk as Class I milk except 
receipts from other order plants and by increasing the nonfat milk 
solids content of the fluid milk products received from his own farm 
production, pool plants, or other order plants; and
    (d) Who provides proof satisfactory to the market administrator that 
the care and management of the dairy farm and other resources necessary 
for his own farm production of milk and the management and operation of 
the processing plant are the personal enterprise and risk of such 
person.



Sec. 1106.11  [Reserved]



Sec. 1106.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved for fluid consumption by a 
duly constituted regulatory agency and whose milk is:
    (1) Received at a pool plant or by a handler described in 
Sec. 1106.9(c); or
    (2) Diverted pursuant to Sec. 1106.13 by a handler for his account.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) A governmental agency that operates a plant exempt pursuant to 
Sec. 1106.8(e);
    (3) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1106.44(a)(8)(iii) and the corresponding step of Sec. 1106.44(b);
    (4) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.
[47 FR 53694, Nov. 29, 1982, as amended at, 55 FR 11000, Mar. 26, 1990]



Sec. 1106.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk from a 
producer that is:
    (a) Received by the operator of a pool plant directly from such 
producer. Any milk picked up from the producer's farm tank in a tank 
truck owned and operated by, or under the control of, the operator of a 
pool plant but which is not received at a plant until the following 
month, shall be considered as having been received by the handler during 
the month in which it is picked up at the producer's farm and shall be 
priced at the location of the plant where it is physically received in 
the following month. The paragraph shall apply in like manner to milk 
received by the operator of a pool plant who, in

[[Page 643]]

accordance with Sec. 1106.9(c), is the handler for such milk.
    (b) Received by a handler described in Sec. 1106.9(c).
    (c) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant, without limit in any month. 
Such milk shall be priced at the location of the plant to which 
diverted.
    (d) Diverted by the operator of a pool plant or by a cooperative 
association from a pool plant to a nonpool plant (other than a producer-
handler plant), subject to the following conditions:
    (1) In any month, milk of a producer shall not be eligible for 
diversion from a pool plant under this section unless at least one day's 
production from such producer is physically received at a pool plant 
during the month;
    (2) The total quantity of milk diverted by a cooperative association 
in any month shall not exceed the total quantity of producer milk that 
the cooperative association caused to be delivered to and was physically 
received at pool plants during the month;
    (3) The operator of a pool plant other than a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that is diverting milk during the month pursuant 
to paragraph (d)(2) of this section. The total quantity of milk so 
diverted in any month shall not exceed the total quantity of milk that 
was physically received at pool plant(s) as producer milk for which the 
plant operator is the handler;
    (4) Any milk diverted in excess of the limits prescribed in 
paragraphs (d) (2) and (3) of this section shall not be producer milk. 
In such event, the diverting handler may designate the dairy farmer 
deliveries that shall not be producer milk. If the handler fails to so 
designate, milk diverted on the last day of the month, then the second-
to-last-day of the month, and so on, shall be excluded until all 
diversions in excess of the prescribed limits are accounted for;
    (5) The quantity of milk diverted for the account of a cooperative 
association from a pool plant of another handler that would cause the 
pool plant to become a nonpool plant shall not be producer milk. In such 
event, the diverting handler may designate the dairy farmer deliveries 
that shall not be producer milk. If the handler fails to so designate, 
milk diverted on the last day of the month, then the second-to-last-day 
of the month, and so on, shall be excluded until all diversions in 
excess of the prescribed limit are accounted for;
    (6) If a dairy farmer loses his producer status under this order 
(except as a result of temporary loss of approval from a duly 
constituted regulatory agency for the production of milk for fluid 
consumption), his milk shall not be eligible for diversion until milk of 
such dairy farmer has been physically received as producer milk at a 
pool plant; and
    (7) Diverted milk shall be priced at the location of the plant to 
which diverted.

    Effective Date Note: At 61 FR 35597, July 8, 1996, 
Sec. 1131.13(d)(1) was suspended, effective Sept. 1, 1996 through Aug. 
31, 1998.



Sec. 1106.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1106.40(b)(1) from any source other than producers, handlers 
described in Sec. 1106.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1106.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1106.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1106.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1106.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to

[[Page 644]]

be used as beverages. Such products include, but are not limited to: 
Milk, skim milk, lowfat milk, milk drinks, buttermilk, and filled milk, 
including any such beverage products that are flavored, cultured, 
modified with added nonfat milk solids, sterilized, concentrated (to not 
more than 50 percent total milk solids), or reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27879, May 11, 1993]



Sec. 1106.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27880, May 11, 1993]



Sec. 1106.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1106.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members; and
    (c) To be engaged in making collective sales or marketing milk or 
milk products for its members.



Sec. 1106.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1106.13, 1106.41 and 1106.52.
[58 FR 27880, May 11, 1993]

                             Handler Reports



Sec. 1106.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1106.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1106.40(b)(1); and

[[Page 645]]

    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1106.9 (b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report for each of the handler's plants with respect to 
its receipts and utilization of milk, filled milk, and milk products in 
such manner as the market administrator may prescribe.



Sec. 1106.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1106.9 (a), (b) and (c) who pays producers 
pursuant to Sec. 1106.73 shall report to the market administrator the 
following information with respect to the handler's partial and final 
payments for producer milk received during such month;
    (1) The name and address of each producer;
    (2) The amount paid each producer; and
    (3) The dates such payments were made.
    (b) On or before the 20th day after the end of the month, each 
handler operating a partially regulated distributing plant who elects to 
make payment pursuant to Sec. 1106.76(b) shall report to the market 
administrator with respect to milk received from each dairy farmer who 
would have been a producer if the plant had been fully regulated the 
following information for such month;
    (1) The name and address of each dairy farmer;
    (2) The total pounds of milk received from each dairy farmer;
    (3) The average butterfat content of such milk;
    (4) The amount and nature of any deductions, as authorized in 
writing by the dairy farmer, from the payment for such milk; and
    (5) The rate of payment per hundredweight and the net amount paid 
each dairy farmer.



Sec. 1106.32  Other reports.

    (a) On or before the 21st day of each month, each handler described 
in Sec. 1106.9(a) who is required pursuant to Sec. 1106.71(c) to make 
payments to the market administrator for milk received from producers 
and cooperative associations shall report to the market administrator 
the following information with respect to its receipts of milk during 
the first 15 days of the month;
    (1) The name and address of each producer from whom milk was 
received;
    (2) The total pounds of milk received from such producer;
    (3) The amount and nature of any deductions, as authorized in 
writing by the producer, to be made from the partial payment for such 
milk;
    (4) The total pounds of milk received from a handler described in 
Sec. 1106.9(c); and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (b) On or before the 7th day after the end of each month, each 
handler described in Sec. 1106.9(a), (b), and (c) shall report to the 
market administrator the following information with respect to its 
receipts of milk during such month.
    (1) The name and address of each producer from whom milk was 
received;
    (2) The total pounds of producer milk received from such producer, 
its average butterfat content and the total pounds of milk diverted to 
each plant that is not a pool plant;
    (3) Except in the case of producer milk for which a cooperative 
association is collecting payments, the amount and nature of any 
deductions,

[[Page 646]]

as authorized in writing by the producer, to be made from the final 
payment for such milk;
    (4) The total pounds of skim and butterfat received from a handler 
described in Sec. 1106.9(c); and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (c) On or before the reporting dates specified in paragraphs (a) and 
(b) of this section, each cooperative association that operates a pool 
plant from which bulk fluid milk products were transferred to pool 
plants of other handlers within the time periods described in paragraphs 
(a) and (b) of this section shall report to each such pool plant 
operator and to the market administrator the name and location of the 
transferor-plant and the total pounds and butterfat content of the bulk 
fluid milk products transferred from the plant.
    (d) In addition to the reports required pursuant to paragraphs (a) 
through (c) of this section and Sec. 1106.30 and 1106.31, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.
    (e) Each handler who causes milk to be diverted shall, prior to such 
diversion, report to the market administrator his intention to divert 
such milk, the proposed date or dates of such diversion, and the plant 
to which such milk is to be diverted.

                         Classification of Milk



Sec. 1106.40  Classes of utilization.

    Except as provided in Sec. 1106.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1106.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:

[[Page 647]]

    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1106.15 and the fluid 
cream product definition pursuant to Sec. 1106.16; and
    (7) In shrinkage assigned pursuant to Sec. 1106.41(a) to the 
receipts specified in Sec. 1106.41(a)(2) and in shrinkage specified in 
Sec. 1106.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27880, May 11, 1993, as amended at 58 FR 63290, Dec. 1, 1993]



Sec. 1106.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1106.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat;
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1106.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurements at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this subparagraph shall be 
2 percent;

[[Page 648]]

    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1106.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1106.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1106.44(a)(12) and the corresponding 
step of Sec. 1106.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1106.44(a)(7) 
or the corresponding step of Sec. 1106.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1106.44(a) 
(11) or (12) or the corresponding steps of Sec. 1106.44(b), the skim 
milk or butterfat so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as

[[Page 649]]

described in paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1106.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
governmental agency plants. Skim milk or butterfat transferred in the 
following forms from a pool plant to a producer-handler under this or 
any other Federal order or transferred or diverted from a pool plant to 
a governmental agency plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or a governmental agency plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1106.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;

[[Page 650]]

    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plants from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
    (e) Transfers by a handler described in Sec. 1106.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1106.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1106.44 pro rata with producer milk 
received at the transferee-handler's plant and the value thereof at the 
class prices shall be included in the pool plant handler's value of milk 
pursuant to Sec. 1106.60.
[47 FR 53694, Nov. 29, 1982, as amended at 58 FR 27881, May 11, 1993]



Sec. 1106.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1106.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1106.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1106.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1106.40, 1106.41, and 1106.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1106.9 (b) or (c) shall be such 
handler's classification of producer milk;

[[Page 651]]

    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1106.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1106.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1106.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[47 FR 53694, Nov. 29, 1982, as amended at 56 FR 52447, Oct. 21, 1991; 
58 FR 27881, May 11, 1993; 58 FR 63291, Dec. 1, 1993]



Sec. 1106.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1106.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1106.9(c), by allocating the handler's 
receipts of skim milk and butterfat to [the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1106.41(b).;
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1106.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1106.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was

[[Page 652]]

subject to the provisions of this paragraph or comparable provisions of 
another Federal milk order in the immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1106.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1106.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1106.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant; 
and
    (vii) Receipts of fluid milk products from a person described in 
Sec. 1106.12(b)(5);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1106.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not

[[Page 653]]

subtracted pursuant to paragraph (a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1106.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a) (7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then

[[Page 654]]

from Class II, with respect to whichever of the following quantities 
represents the lower proportion of Class I milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1106.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1106.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1106.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1106.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[47 FR 53694, Nov. 29, 1982, as amended at 56 FR 52447, Oct. 21, 1991; 
58 FR 27881, May 11, 1993]



Sec. 1106.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1106.44(a)(12) and the corresponding 
step of Sec. 1106.44(b),

[[Page 655]]

estimate and publicly announce the utilization (to the nearest whole 
percentage) in each class during the month of skim milk and butterfat, 
respectively, in producer milk of all handlers. Such estimate shall be 
based upon the most current available data and shall be final for such 
purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1106.43(d) and Sec. 1106.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests, the amount and class 
utilization of milk received by each handler from producers whose milk 
is being marketed by such cooperative association. For the purpose of 
this report, the milk caused to be so delivered by a cooperative 
association shall be prorated to each class in the proportion that the 
total receipts of producer milk by such handler were used in each class.
[47 FR 53694, Nov. 29, 1982, as amended at 58 FR 27881, May 11, 1993]

                              Class Prices



Sec. 1106.50  Class prices.

    Subject to the provisions of Sec. 1106.52, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $2.77.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
[47 FR 53694, Nov. 29, 1982, as amended at 51 FR 12833, Apr. 16, 1986; 
58 FR 63291, Dec. 1, 1993; 60 FR 6611, Feb. 2, 1995]



Sec. 1106.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1106.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.

[[Page 656]]

    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18974, Apr. 14, 1995]



Sec. 1106.52  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or a handler 
described in Sec. 1106.9(c) and which is classified as Class I milk 
without movement in bulk form to a pool distributing plant at which a 
higher Class I price applies, the price specified in Sec. 1106.50(a) 
shall be adjusted by the amount stated in paragraphs (a) (1) through (7) 
of this section for the location of such plant:
    (1) For a plant located within one of the zones set forth in 
Sec. 1106.2, the adjustment shall be as follows:

                                                                        
------------------------------------------------------------------------
                                            Adjustment per hundredweight
------------------------------------------------------------------------
Zone I....................................  No Adjustment.              
Zone II...................................  Plus 23 cents.              
Zone III..................................  Minus 18 cents.             
Zone IV...................................  Minus 47 cents.             
Zone V....................................  Minus 27 cents.             
Zone VI...................................  Minus 22 cents.             
Zone VII..................................  Minus 58 cents.             
------------------------------------------------------------------------

    (2) For a plant located in any of the following Kansas counties, the 
adjustment shall be as follows:
    (i) Minus 85 cents. Anderson, Atchison, Brown, Chase, Clay, Cloud, 
Coffey, Dickinson, Doniphan, Douglas, Franklin, Geary, Jackson, 
Jefferson, Johnson, Leavenworth, Linn, Lyon, Marshall, Miami, Morris, 
Nemaha, Osage, Ottawa, Pottawatomie, Republic, Riley, Saline, Shawnee,

[[Page 657]]

Wabaunsee, Washington and Wyandotte.
    (ii) Minus 47 cents. Elk, Greenwood and Woodson.
    (iii) Minus 27 cents. Cheyenne, Decatur, Ellsworth, Graham, Jewell, 
Lincoln, Logan, Mitchell, Norton, Osborne, Phillips, Rawlings, Rooks, 
Sheridan, Sherman, Smith, Thomas and Wallace.
    (3) For a plant located in the State of Missouri, the adjustment 
shall be as follows:
    (i) Minus 58 cents. In the county of Butler, Carter, Crawford, Dent, 
Dunklin, Gasconade, Iron, Madison, Maries, Mississippi, New Madrid, 
Oregon, Pemiscot, Phelps, Pulaski (except Fort Leonard Wood Military 
Reservation), Reynolds, Ripley, Scott, Shannon, Stoddard, or Wayne.
    (ii) Minus 76 cents. In the county of Jefferson, St. Charles, or St. 
Louis or in the city of St. Louis.
    (iii) Minus 85 cents. In any other county that is outside the 
marketing area and also outside the designated pricing area described in 
paragraph (a)(3)(i) or (a)(3)(ii) of this section.
    (4) For a plant located in the State of Arkansas but outside the 
marketing area, the adjustment shall be the difference (plus or minus) 
between the applicable Class I price effective at such plant location 
under the Central Arkansas order (Part 1108) and the Class I price 
specified in Sec. 1106.50(a).
    (5) For a plant located in the State of Louisiana, the plus 
adjustment shall be the difference between the applicable Class I price 
effective at such plant location under the Greater Louisiana order (part 
1096) and the Class I price specified in Sec. 1106.50(a).
    (6) For a plant located in any of the following territory in the 
States of Texas, New Mexico and Colorado, the adjustments shall be as 
follows:
    (i) In the Texas marketing area, the plus adjustment shall be the 
difference between the applicable Class I price effective at such plant 
location under the Texas order (7 CFR part 1126) and the Class I price 
specified in Sec. 1106.50(a).
    (ii) In Bowie or Cass Counties, Texas, the adjustment shall be plus 
31 cents.
    (iii) In any other Texas territory that is outside the marketing 
area of any Federal order, the adjustment shall be plus 2.25 cents per 
hundredweight for each 10 miles or fraction thereof that such plant is 
from the City Hall in Oklahoma City, Oklahoma, (based on the shortest 
hard-surfaced highway distance as determined by the Market 
Administrator.)
    (iv) In the New Mexico-West Texas marketing area, the minus 
adjustment shall be the difference between the applicable Class I price 
effective at such plant location under the New Mexico-West Texas order 
(Part 1138) and the Class I price specified in Sec. 1106.50(a).
    (v) In the Eastern Colorado marketing area or in the Colorado 
counties of Baca, Bent or Powers, the adjustment shall be the difference 
(plus or minus) between the applicable Class I price effective at such 
plant location under the Eastern Colorado order (7 CFR part 1137) and 
the Class I price specified in Sec. 1106.50(a).
    (vi) In any other Colorado territory that is outside the designated 
pricing areas described in paragraphs (a)(6) (iv) and (v), the 
adjustment shall be minus 77 cents.
    (7) For a plant located outside the designated pricing areas 
described in paragraphs (a) (1) through (6) of this section, the 
adjustment shall be minus 18 cents plus an additional reduction of 2.25 
cents per hundredweight for each 10 miles or fraction thereof that such 
plant is located from the nearer of the City Hall in Tulsa or Ponca 
City, Oklahoma (based on the shortest hard-surfaced highway distance as 
determined by the Market Administrator.)
    (b) For fluid milk products transferred in bulk from a pool plant to 
a pool distributing plant at which a higher Class I price applies and 
which are classified as Class I milk, the Class I price shall be the 
Class I price applicable at the location of the transferee-plant subject 
to a location adjustment credit for the transferor-plant which shall be 
determined by the market administrator for skim milk and butterfat, 
respectively, as follows:
    (1) Subtract from the pounds of skim milk remaining in Class I at 
the transferee-plant after the computations pursuant to 
Sec. 1106.44(a)(12) plus the pounds of skim milk in receipts of 
concentrated fluid milk products from other pool plants that are 
assigned to Class I use, the pounds of skim milk in

[[Page 658]]

receipts of packaged fluid milk products from other pool plants;
    (2) Multiply the remaining pounds of skim milk in Class I by 105 
percent;
    (3) Subtract the pounds of skim milk in receipts of milk at the 
transferee-plant from producers, handlers described in Sec. 1106.9(c), 
and diverted milk from other pool plants;
    (4) Assign any remaining pounds of skim milk in Class I at the 
transferee-plant to the skim milk in receipts of bulk fluid milk 
products from other pool plants, first to the transferor-plants at which 
the highest Class I price applies and then to other plants in sequence 
beginning with the plant at which the next highest Class I price 
applies;
    (5) Compute the total amount of location adjustment credits to be 
assigned to transferor-plants by multiplying the hundredweight of skim 
milk assigned pursuant to paragraph (b)(4) of this section to each 
transferor-plant at which the Class I price is lower than the Class I 
price at the transferee-plant by the difference in Class I prices 
applicable at the transferor-plant and transferee-plant, and add the 
resulting amounts;
    (6) Assign the total amount of location adjustment credits computed 
pursuant to paragraph (b)(5) of this section to those transferor-plants 
that transferred fluid milk products containing skim milk classified as 
Class I milk pursuant to Sec. 1106.42(a) and at which the applicable 
Class I price is less than the Class I price at the transferee-plant, in 
sequence beginning with the plant at which the highest Class I price 
applies. Subject to the availability of such credits, the credit 
assigned to each plant shall be equal to the hundredweight of such Class 
I skim milk multiplied by the applicable adjustment rate determined 
pursuant to paragraph (b)(5) of this section for such plant. If the 
aggregate of this computation for all plants having the same adjustment 
rate as determined pursuant to paragraph (b)(5) of this section exceeds 
the credits that are available to those plants, such credits shall be 
prorated to the volume of skim milk in Class I transfers from such 
plants; and
    (7) Location adjustment credit for butterfat shall be determined in 
accordance with the procedure outlined for skim milk in paragraphs (b) 
(1) through (6) of this section.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.
[47 FR 53694, Nov. 29, 1982, as amended at 51 FR 44591, Dec. 11, 1986; 
52 FR 6318, Mar. 3, 1987; 56 FR 52447, Oct 21, 1991; 58 FR 27881, May 
11, 1993]



Sec. 1106.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6611, Feb. 2, 1995]



Sec. 1106.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                              Uniform Price



Sec. 1106.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1106.9 (b) and (c) with respect to milk that was not 
received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1106.9(c) that were classified in each class 
pursuant to Secs. 1106.43 (a) and 1106.44 (c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1106.44(a)(14) and the 
corresponding step of Sec. 1106.44(b) by the respective

[[Page 659]]

class prices, as adjusted by the butterfat differential specified in 
Sec. 1106.74, that are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1106.44(a)(9) and the corresponding step of Sec. 1106.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1106.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1106.44(a)(7) (i) through (iv) and (vii), and the corresponding 
step of Sec. 1106.44(b), excluding receipts of bulk fluid cream products 
from an other order plant and bulk concentrated fluid milk products from 
pool plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1106.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1106.44(b);
    (f) Add the amount obtained from multiplying the Class I 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 Secs. 1106.43(d) and 1106.44(a)(7)(i) and the pounds 
of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1106.44(a)(11) and the corresponding steps of Sec. 1106.44(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;
    (g) Subtract for a handler described in Sec. 1106.9(c) the amount 
obtained from multiplying the Class III price for the preceding month by 
the hundredweight of skim milk and butterfat contained in inventory at 
the beginning of the month that was delivered to another handler's pool 
plant during the month;
    (h) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1106.43(d);
    (i) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1106.76 (a)(5) or (c); and
    (j) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[47 FR 53694, Nov. 29, 1982, as amended at 58 FR 27881, May 11, 1993]



Sec. 1106.61  Computation of uniform price.

    The market administrator shall compute for each month the uniform 
price per hundredweight for milk of 3.5 percent butterfat content as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1106.60 for all

[[Page 660]]

handlers who filed the reports prescribed in Sec. 1106.30 for the month 
and who made the payments pursuant to Sec. 1106.71 for the preceding 
month;
    (b) Add not less than one-half of the unobligated balance in the 
producer-settlement fund;
    (c) Add the aggregate of all minus location adjustments and subtract 
the aggregate of all plus location adjustments computed pursuant to 
Sec. 1106.75;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1106.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents. The result 
shall be the ``uniform price'' for milk received from producers.



Sec. 1106.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of each month the applicable uniform 
price pursuant to Sec. 1106.61 for such month.

                            Payments for Milk



Sec. 1106.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1106.71, 
1106.76, and 1106.77, and from which he shall make all payments pursuant 
to Secs. 1106.72 and 1106.77, except that payments to a cooperative 
association pursuant to Sec. 1106.72 shall be offset by any payments due 
from such cooperative association pursuant to Sec. 1106.71 that have not 
been received by the market administrator.



Sec. 1106.71  Payments to the producer-settlement fund.

    (a) Subject to paragraph (d) of this section, each handler shall pay 
to the market administrator on or before the 14th day after the end of 
the month the amount, if any, by which the amount specified in paragraph 
(a)(1) of this section exceeds the amount specified in paragraph (a)(2) 
of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1106.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1106.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1106.9(c). In the case of a 
cooperative association which is a handler, less the amount due from 
other handlers pursuant to Sec. 1106.73(d), exclusive of differential 
butterfat values; and
    (ii) The value at the uniform price applicable at the location of 
the plant from which received of other source milk for which a value is 
computed pursuant to Sec. 1106.60(f).
    (b) Subject to paragraph (d) of this section, each person who 
operated a plant that was regulated during such month under an order 
providing for individual-handler pooling shall pay to the market 
administrator on or before the 25th day after the end of each month an 
amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
    (c) Any handler who the market administrator determines was more 
than 3 days late in making any payment obligation under part 1106 shall 
pay to the market administrator the amount the handler would have 
otherwise been

[[Page 661]]

required to pay to producers and cooperative associations pursuant to 
Sec. 1106.73. Payment shall be made to the market administrator on or 
before the day prior to the dates specified in Sec. 1106.73 and such 
payments shall continue until the handler has met all payment 
obligations for 3 consecutive months.
    (d) The following conditions shall apply with respect to payments 
prescribed in paragraphs (a), (b) and (c) of this section:
    (1) Payments to the market administrator shall be deemed not to have 
been made until such payments have been received by the market 
administrator.
    (2) If the date by which payments must be received by the market 
administrator falls on a Saturday or Sunday or any day that is a 
national holiday, payments shall not be due until the next day on which 
the market administrator's office is open for public business.
    (3) Payments due the market administrator from a cooperative 
association handler may be offset by payments determined by the market 
administrator to be due the cooperative association pursuant to 
Sec. 1106.73 (b) and (d).



Sec. 1106.72  Payments from the producer-settlement fund.

    (a) On or before the 15th day after the end of each month the market 
administrator shall pay to each handler except one making payment 
pursuant to Sec. 1106.71(c) the amount, if any, by which the amount 
computed pursuant to Sec. 1106.71(a)(2) exceeds the amount computed 
pursuant to Sec. 1106.71(a)(1).
    (b) If the market administrator received payment from a handler(s) 
pursuant to Sec. 1106.71(c), he shall distribute such amount plus any 
amount due such handler(s) pursuant to paragraph (a) of this section to 
producers and to cooperative associations in the same manner as provided 
in Sec. 1106.73. In the event the handler fails to transmit the total 
amount due, the market administrator shall reduce uniformly the payments 
due to producers of such handler and complete such payments when the 
remaining amount is received.
    (c) If at any time the balance in the producer-settlement fund is 
insufficient to make all payments pursuant to paragraph (a) of this 
section, the market administrator shall reduce uniformly such payments 
and shall complete such payments as soon as the appropriate funds are 
available.



Sec. 1106.73  Payments to producers and to cooperative associations.

    (a) Except as provided in Sec. 1106.71(c) and paragraphs (b), (d) 
and (f) of this section, each handler shall make payment to each 
producer from whom milk is received during the month as follows:
    (1)(i) On or before the last day of each month of March through July 
to each producer who did not discontinue shipping milk to such handler 
before the 25th day of the month, an amount equal to not less than the 
previous month's Class III price multiplied by the hundredweight of milk 
received from such producer during the first 15 days of the month, less 
proper deductions authorized in writing by the producer, provided that 
the deductions do not exceed the value of the milk received during the 
partial payment period and the handler has paid such deductions to 
assignees by the date payment is otherwise due the producer.
    (ii) On or before the last day of each month of August through 
February to each producer who did not discontinue shipping milk to such 
handler before the 25th day of the month, an amount equal to not less 
than the previous month's Class III price plus $1.00, and further 
adjusted by the zone or location adjustment applicable at the receiving 
plant multiplied by the hundredweight of milk received from such 
producer during the first 15 days of the month, less proper deductions 
authorized in writing by the producer from whom the handler received 
milk, except that the amount deducted shall not exceed the value of the 
milk received during the partial payment period and provided that the 
handler has paid such deductions to assignees by the date payment is 
otherwise due the producer.
    (2) On or before the 17th day of the following month, an amount 
equal to not less than the appropriate uniform price adjusted by the 
butterfat differential and location adjustments to

[[Page 662]]

producers multiplied by the hundredweight of milk received from such 
producer during the month, subject to the following adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1106.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producer; and
    (iv) Less proper deductions authorized in writing by such producer, 
provided that the deductions do not exceed the value of the milk 
received during the final payment period and the handler has paid such 
deductions to assignees by the date payment is otherwise due to the 
producer: Provided, That if by such date such handler has not received 
full payment from the market administrator pursuant to Sec. 1106.72(a) 
for such month, he may reduce pro rata his payments to producers by not 
more than the amount of such underpayment. Payments to producers shall 
be completed thereafter not later than the date for making payments 
pursuant to this paragraph next following after the receipt of the 
balance due from the market administrator.
    (b) Except as provided in paragraph (f) of this section, in the case 
of a cooperative association which the market administrator determines 
is authorized by those producers for whom it markets milk to collect 
payment for their milk and which has so requested any handler in 
writing, such handler other than one specified in Sec. 1106.71(c) shall 
on or before the 2nd day prior to the date on which payments are due 
individual producers pay the cooperative association for milk received 
during the month from those producers for whom it markets milk as 
determined by the market administrator an amount equal to not less than 
the amount due such producers as determined pursuant to paragraph (a) of 
this section.
    (c) In making payments to producers pursuant to paragraph (a) of 
this section, or to a cooperative association pursuant to paragraph (b) 
of this section, each handler shall furnish such producer or cooperative 
association with respect to each of the producers for whom it markets 
milk and from whom the handler received milk during the month, a written 
statement showing:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds, and, with respect to final payments, the 
average butterfat content of the milk for which payment is being made;
    (3) The minimum rate of payment required by the order and the rate 
of payment used if such rate is other than the applicable minimum rate;
    (4) The amount and nature of any deductions from the amount 
otherwise due the producer; and
    (5) The net amount of payment to the producer.
    (d) Except as provided in Sec. 1106.71(c) and paragraph (f) of this 
section, each handler pursuant to Sec. 1106.9(a) who receives milk from 
a cooperative association as a handler pursuant to Sec. 1106.9(c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payment for their milk, shall pay 
such cooperative for such milk as follows:
    (1) On or before the 2nd day prior to the last day of the month for 
milk received during the first 15 days of the month, not less than the 
applicable partial payment rate specified for such month in paragraph 
(a)(1) of this section; and
    (2) On or before the 15th day of the following month for milk 
received during the month, not less than the uniform price as adjusted 
pursuant to Secs. 1106.74 and 1106.75, less any payments made pursuant 
to paragraph (a)(1) of this section.
    (e) Except as provided in Sec. 1106.71(c), each handler who received 
bulk fluid milk or bulk fluid cream products from a pool plant operated 
by a cooperative association shall pay the following amounts for such 
products to the cooperative association:
    (1) On or before the 2nd day prior to the last day of each month, an 
amount determined by multiplying such receipts during the first 15 days 
of the month by the applicable partial payment rate specified for such 
month in

[[Page 663]]

paragraph (a)(1) of this section. If the handler so elects, such price 
may be adjusted by the butterfat differential specified in Sec. 1106.74 
for the preceding month.
    (2) On or before the 15th day after the end of each month, an amount 
determined by multiplying the quantity of such receipts during the month 
that was classified in each class pursuant to Sec. 1106.42(a) by the 
applicable class price, as adjusted by the butterfat differential 
specified in Sec. 1106.74, less any payments made by the handler 
pursuant to paragraph (e)(1) of this section for such month. For the 
purpose of such computation, the applicable Class I price shall be the 
Class I price applicable at the transferee plant including the 
applicable administrative assessment rate.
    (f) If the application of Sec. 1106.71(d)(2) results in a delay in 
payment by the market administrator to handlers, the payments prescribed 
in paragraphs (a), (b) and (d) of this section may be delayed by the 
same number of days.
    (g) If the market administrator does not receive the full payment 
required of a handler pursuant to Sec. 1106.71(c), he shall reduce 
uniformly per hundredweight the payments due producers and cooperative 
associations for their milk received by such handler by a total amount 
not in excess of the amount due from such handler. The market 
administrator shall complete such payments on or before the next date 
for making payments pursuant to this section following the date on which 
the remaining payment is received from such handler.



Sec. 1106.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1106.51 (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.
[60 FR 18974, Apr. 14, 1995]



Sec. 1106.75  Plant location adjustments for producers and on nonpool milk.

    (a) In making payments required pursuant to Sec. 1106.73, the 
uniform price computed pursuant to Sec. 1106.61 shall be adjusted by the 
amounts set forth in Sec. 1106.52 according to the location of the plant 
where the milk being priced was received.
    (b) For the purpose of computations pursuant to Secs. 1106.71 and 
1106.72, the uniform price shall be adjusted by the amount set forth in 
Sec. 1106.52 that is applicable at the location of the nonpool plant 
from which the milk was received (except that the adjusted uniform price 
shall not be less than the Class III price).



Sec. 1106.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Sec. 1106.30(b) and Sec. 1106.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and

[[Page 664]]

    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the uniform price, both prices to be applicable at the 
location of the partially regulated distributing plant (except that the 
Class I price and uniform price shall not be less than the Class III 
price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1106.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1106.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1106.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1106.60(f) less the value of such other source milk 
specified in Sec. 1106.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1106.60 for each

[[Page 665]]

nonpool plant that is not an other order plant which serves as a supply 
plant for such partially regulated distributing plant by making 
shipments to the partially regulated distributing plant during the month 
equivalent to the requirements of Sec. 1106.7(b) subject to the 
following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1106.30(b) and 
1106.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1106.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1106.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1106.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1106.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[47 FR 53694, Nov. 29, 1982, as amended at 58 FR 27882, May 11, 1993]



Sec. 1106.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made, for any 
reason, which results in monies due the market administrator from such 
handler, the market administrator shall promptly notify such handler of 
any such amount due, and payment thereof shall be made on or before the 
next date for making payment set forth in the provision under which the 
error occurred. Any monies found to be due a handler from the market 
administrator shall be paid promptly to such handler, except that the 
market administrator shall offset any monies due a handler against 
monies due from such handler. Whenever verification by the market 
administrator of the payment by a handler to any producer or cooperative 
association for milk received by such handler discloses payment of less 
than is required pursuant to Sec. 1106.73, the handler shall pay such 
balance due such producer or cooperative association not later than the 
time of making payment to producers or cooperative associations next 
following such disclosure.

[[Page 666]]



Sec. 1106.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1106.71, 
1106.73,

1106.76, 1106.77, 1106.85, or 1106.86 shall be increased 1 percent 
beginning on the first day after the due date, and on the same day of 
each subsequent month until such obligation is paid, subject to the 
following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section; and
    (b) For the purpose of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.

        Administrative Assessment and Marketing Service Deduction



Sec. 1106.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 6 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1106.9(c) that were delivered to pool plants of other handlers or 
held in inventory at the end of the month;
    (b) Receipts from a handler described in Sec. 1106.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1106.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1106.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1106.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1106.60 (d) and (f); and
    (d) Route disposition from a partially regulated distributing plant 
in the marketing area that exceeds the skim milk and butterfat specified 
in Sec. 1106.76(a)(2).
[47 FR 53694, Nov. 29, 1982, as amended at 58 FR 27882, May 11, 1993]



Sec. 1106.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments to producers pursuant to Sec. 1106.73, shall 
deduct 7 cents per hundredweight, or such lesser amount as the Secretary 
may prescribe, with respect to the milk of such producer (except a 
handler's own farm production) for whom the marketing services set forth 
in this paragraph are not being performed by a cooperative association 
as determined by the Secretary. Each handler making such deductions 
shall pay the deductions to the market administrator on or before the 
15th day after the end of the month. The monies shall be used by the 
market administrator to verify or establish weights, samples and tests 
of producer milk and provide producers with market information. The 
services shall be performed by the market administrator or an agent 
engaged by and responsible to him.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, each handler shall make, in lieu of the deduction specified in 
paragraph (a) of this section, such deductions from the payments to be 
made to such producers as may be authorized by the membership agreement 
or marketing contract between such cooperative association and such 
producers, and on or before the 15th day after the end of each month, 
pay such deduction to the cooperative association rendering such 
services accompanied by a statement showing the quantity of milk for 
which such deduction was computed for each such producer.

[[Page 667]]



PARTS 1108-1120 [RESERVED]






PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1124.1  General provisions.

                               Definitions

1124.2  Pacific Northwest marketing area.
1124.3  Route disposition.
1124.4  Plant.
1124.5  Distributing plant.
1124.6  Supply plant.
1124.7  Pool plant.
1124.8  Nonpool plant.
1124.9  Handler.
1124.10  Producer-handler.
1124.11  Cooperative reserve supply unit.
1124.12  Producer.
1124.13  Producer milk.
1124.14  Other source milk.
1124.15  Fluid milk product.
1124.16  Fluid cream product.
1124.17  Filled milk.
1124.18  Cooperative association.
1124.19  [Reserved]
1124.20  Commercial food processing establishment.

                             Handler Reports

1124.30  Reports of receipts and utilization.
1124.31  Payroll reports.
1124.32  Other reports.

                         Classification of Milk

1124.40  Classes of utilization.
1124.41  Shrinkage.
1124.42  Classification of transfers and diversions.
1124.43  General classification rules.
1124.44  Classification of producer milk.
1124.45  Market administrator's reports and announcements concerning 
          classification.

                       Class and Component Prices

1124.50  Class and component prices.
1124.51  Basic formula price.
1124.52  Plant location adjustments for handlers.
1124.53  Announcement of class and component prices.
1124.54  Equivalent price.

                       Producer Price Differential

1124.60  Handlers' value of milk.
1124.61  Producer price differential.
1124.62  Announcement of the producer price differential and a 
          statistical uniform price.

                            Payments for Milk

1124.70  Producer-settlement fund.
1124.71  Payments to the producer-settlement fund.
1124.72  Payments from the producer-settlement fund.
1124.73  Payments to producers and to cooperative associations.
1124.74  Plant location adjustments for producers and on nonpool milk.
1124.75  Payments by a handler operating a partially regulated 
          distributing plant.
1124.76  Adjustment of accounts.
1124.77  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1124.85  Assessment for order administration.
1124.86  Deduction for marketing services.

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

    Source: 53 FR 52976, Dec. 30, 1988, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1124.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby referenced and made a part of this order.

                               Definitions



Sec. 1124.2  Pacific Northwest marketing area.

    Pacific Northwest Marketing Area (hereinafter called the ``Marketing 
Area'') means all territory geographically within the places listed 
below, including all territory fully or partly therein occupied by 
government (municipal, state or federal) reservations, facilities, 
installations, or institutions:


Idaho Counties:
    Benewah, Bonner, Boundary, Kootenai, Latah, and Shoshone.
    Washington counties:
    Adams, Asotin, Benton, Chelan, Clallam, Clark, Columbia, Cowlitz, 
Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, 
Jefferson, King, Kitsap, Kittitas, Klickitat, Lewis, Lincoln, Mason, 
Okanogan, Pacific, Pend Oreille, Pierce, San Juan, Skagit, Skamania, 
Snohomish, Spokane, Stevens, Thurston, Wahkiakum,

[[Page 668]]

Walla Walla, Whatcom, Whitman and Yakima.

Oregon Counties:
    Benton, Clackamas, Clatsop, Columbia, Coos, Crook, Deschutes, 
Douglas, Gilliam, Hood River, Jackson, Jefferson, Josephine, Klamath, 
Lake, Lane, Lincoln, Linn, Marion, Morrow, Multnomah, Polk, Sherman, 
Tillamook, Umatilla, Wasco, Washington, Wheeler, and Yamhill.
[53 FR 52976, Dec. 30, 1988; 54 FR 3557, Jan. 24, 1989; as amended at 62 
FR 2, Jan. 2, 1997]



Sec. 1124.3  Route disposition.

    Route disposition means any delivery of a fluid milk product 
classified as Class I milk from a plant to a retail or wholesale outlet 
(including any delivery through a distribution point as provided by this 
section, by a vendor, from a plant store or through a vending machine). 
The term ``route disposition'' does not include:
    (a) A delivery to a plant. However, packaged fluid milk products 
that are transferred to a pool distributing plant from another pool 
distributing plant, and classified as Class I under Sec. 1124.42(a), 
shall be considered route disposition from the transferor-plant for the 
sole purpose of qualifying it as a pool distributing plant under 
Sec. 1124.7(a), and the transferor-plant shall be assigned in-area 
dispositions but not in excess of the in-area dispositions of the 
transferee plant;
    (b) A delivery in bulk to a commercial food processing establishment 
pursuant to Sec. 1124.40(b)(3); or
    (c) A delivery to a military or other ocean transport vessel leaving 
the marketing area, of fluid milk products which originated at a plant 
located outside the marketing area and were not received or processed at 
any pool plant.



Sec. 1124.4  Plant.

    Plant means the buildings, facilities and equipment, whether owned 
or operated by one or more persons, constituting a single operating unit 
or establishment, which is maintained and operated primarily for the 
receiving, handling and/or processing of milk or milk products 
(including filled milk). Separate facilities used only as a distribution 
point for storing packaged fluid milk products in transit for route 
disposition or separate facilities used only as a reload point for 
transferring bulk milk from one tank truck to another shall not be a 
``plant'' under this definition.



Sec. 1124.5  Distributing plant.

    Distributing plant means a plant in which a fluid milk product 
approved by a duly constituted regulatory agency for fluid consumption, 
or filled milk, is processed or packaged and that has route disposition 
in the marketing area during the month.



Sec. 1124.6  Supply plant.

    Supply plant means a plant from which a fluid milk product approved 
by a duly constituted regulatory agency for fluid consumption or filled 
milk, is transferred during the month to a pool distributing plant.



Sec. 1124.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which there is route disposition 
(except filled milk) in the marketing area during the month equal to not 
less than 10 percent of receipts of Grade A milk at such plant 
(exclusive of transfers of packaged fluid milk products from plants 
qualifying as pool plants pursuant to this paragraph, filled milk, and 
milk received at such plant as diverted milk from another plant, which 
milk is classified in Class III under this order and is subject to the 
pricing and pooling provisions of this or another order issued pursuant 
to the Act) or diverted therefrom pursuant to Sec. 1124.13;
    (b) A supply plant from which during any month not less than 20 
percent of the total quantity of milk that is physically received at 
such plant from dairy farmers eligible to be producers pursuant to 
Sec. 1124.12 (excluding milk received at such plant as diverted milk 
from another plant, which milk is classified in Class III under this 
order and is subject to the pricing and pooling provisions of this or 
another order issued pursuant to the Act) or diverted as producer milk 
to another plant pursuant to Sec. 1124.13, is shipped in the form of a 
fluid milk product (except as filled

[[Page 669]]

milk) to a pool distributing plant or is a route disposition in the 
marketing area of fluid milk products (except filled milk) processed and 
packaged at such plant; Provided, That:
    (1) With respect to a supply plant operated by a cooperative 
association, the producer milk of its members which it caused to be 
delivered directly from their farms to pool distributing plants, shall 
for the purpose of this paragraph, be considered as a receipt at the 
cooperative's supply plant and a shipment from the supply plant to pool 
distributing plants;
    (2) A plant which qualified as a pool plant pursuant to this 
paragraph in each month of September through February shall be a pool 
plant in each of the following months of March through August unless a 
written application is filed with the Market Administrator prior to the 
first day of any such month requesting that the plant be designated a 
nonpool plant for such month and each subsequent month through August 
during which it would not otherwise qualify as a pool plant; and
    (3) For the purpose of this paragraph, the operations of two or more 
supply plants may be combined and considered as the operation of one 
plant if so requested in writing to the Market Administrator by the 
handler(s) operating such plants prior to the first day of the month for 
which such consideration is requested.
    (c) The Director of the Dairy Division may reduce or increase up to 
10 percentage points from the levels set forth therein the pool plant 
performance standards in paragraphs (a) or (b) of this section, if the 
Director finds such revision is necessary to obtain needed shipments or 
to prevent uneconomic shipments. Before making such a finding, the 
Director shall investigate the need for revision either at the 
Director's own initiative or at the request of interested persons. If 
the investigation shows that a revision might be appropriate, the 
Director shall issue a notice stating that the revision is being 
considered and invite data, views, and arguments.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A plant qualified pursuant to paragraph (a) of this section 
which also meets the pooling requirements of another Federal Order and 
from which, the Secretary determines, there is a greater quantity of 
route disposition during the month in such other Federal Order marketing 
area than in this marketing area, except that if such plant was subject 
to all the provisions of this part in the immediately preceding month it 
shall continue to be subject to all the provisions of this part until 
the fourth consecutive month in which a greater proportion of its route 
disposition is made in such other marketing area unless, notwithstanding 
the provisions of this paragraph, it is regulated under such other 
order;
    (3) A plant qualified pursuant to paragraph (a) of this section 
which also meets the pooling requirements of another Federal Order on 
the basis of route disposition in such other marketing area and from 
which, the Secretary determines, there is a greater quantity of route 
disposition in this marketing area than in such other marketing area but 
which plant maintains pooling status for the month under such other 
Federal Order;
    (4) A plant qualified pursuant to paragraph (b) of this section 
which also meets the pool plant requirements of another Federal Order 
and from which greater shipments are made during the month to plants 
regulated under such other order than are made to plants regulated under 
this order;
    (5) A distributing plant from which total route disposition (except 
filled milk) in the marketing area during the month averages 300 pounds 
or less per day; or
    (6) That portion of a plant that is physically separated from the 
Grade A portion of such plant, is operated separately, and is not 
approved by any regulatory agency for the receiving, processing, or 
packaging of any fluid milk products for Grade A disposition.
[53 FR 52976, Dec. 30, 1988; 54 FR 3557, Jan. 24, 1989; 59 FR 15319, 
Apr. 1, 1994]



Sec. 1124.8  Nonpool plant.

    Nonpool plant means any plant other than a pool plant. The following 
categories of nonpool plants are further defined as follows:

[[Page 670]]

    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which during the month an average of more than 300 pounds daily of fluid 
milk products is disposed of as route disposition in the marketing area.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant, from which fluid milk 
products are moved to a pool plant during the month.
    (e) Exempt distributing plant means a plant, other than a pool 
supply plant or a regulated plant under another Federal Order that meets 
all the requirements for status as a pool distributing plant except that 
its route disposition (exclusive of filled milk) in the marketing area 
in the month does not exceed an average of 300 pounds daily. For 
purposes of this paragraph, route disposition shall not include receipts 
from a transferor-plant pursuant to the proviso of Sec. 1124.3(a).



Sec. 1124.9  Handler.

    Handler means:
    (a) The operator of one or more pool plants;
    (b) Any cooperative association with respect to producer milk which 
it caused to be diverted for the account of such cooperative association 
to another plant or pursuant to Sec. 1124.40(b)(3);
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler for such milk 
and will purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat and nonfat milk solids tests 
determined from farm bulk tank samples. Milk for which the cooperative 
association is the handler pursuant to this paragraph shall be deemed to 
have been received by the cooperative association at the location of the 
pool plant to which such milk is delivered;
    (d) Any person who operates a plant defined in Sec. 1124.8 (a) 
through (e).
[53 FR 52976, Dec. 30, 1988, as amended at 59 FR 15319, Apr. 1, 1994]



Sec. 1124.10  Producer-handler.

    Producer-handler means a person who is engaged in the production of 
milk and also operates a plant from which during the month an average of 
more than 300 pounds daily of fluid milk products, except filled milk, 
is disposed of as route disposition within the marketing area and who 
has been so designated by the market administrator upon determination 
that all of the requirements of this section have been met, and that 
none of the conditions therein for cancellation of such designation 
exists. All designations shall remain in effect until canceled pursuant 
to paragraph (c) of this section. Any state institution shall be a 
producer-handler exempt from the provisions of this section and 
Secs. 1124.30 and 1124.32 with respect to milk of its own production and 
receipts from pool plants processed or received for consumption in State 
institutions and with respect to movements of milk to or from a pool 
plant.
    (a) Requirements for designation. (1) The producer-handler has and 
exercises (in its capacity as a handler) complete and exclusive control 
over the operation and management of a plant at which it handles and 
processes milk received from its milk production resources and 
facilities (designated as such pursuant to paragraph (b)(1) of this 
section), the operation and management of which are under the complete 
and exclusive control of the producer-handler (in its capacity as a 
dairy farmer).

[[Page 671]]

    (2) The producer-handler neither receives at its designated milk 
production resources and facilities nor receives, handles, processes or 
distributes at or through any of its milk handling, processing or 
distributing resources and facilities (designated as such pursuant to 
paragraph (b)(2) of this section) milk products for reconstitution into 
fluid milk products, or fluid milk products derived from any source 
other than (i) its designated milk production resources and facilities, 
(ii) pool plants within the limitation specified in paragraph (c)(2) of 
this section, or (iii) nonfat milk solids which are used to fortify 
fluid milk products.
    (3) The producer-handler is neither directly nor indirectly 
associated with the business control or management of, nor has a 
financial interest in, another handler's operation; nor is any other 
handler so associated with the producer-handler's operation.
    (4) Designation of any person as a producer-handler following a 
cancellation of its prior designation shall be preceded by performance 
in accordance with paragraph (a) (1), (2), and (3) of this section for a 
period of 1 month.
    (b) Resources and facilities. Designation of a person as a producer-
handler shall include the determination and designation of the milk 
production, handling, processing and distributing resources and 
facilities, all of which shall be deemed to constitute an integrated 
operation, as follows:
    (1) As milk production resources and facilities: All resources and 
facilities (milking herd(s), buildings housing such herd(s), and the 
land on which such buildings are located) used for the production of 
milk:
    (i) Which are directly, indirectly or partially owned, operated or 
controlled by the producer-handler;
    (ii) In which the producer-handler in any way has an interest 
including any contractual arrangement; and
    (iii) Which are directly, indirectly or partially owned, operated or 
controlled by any partner or stockholder of the producer-handler. 
However, for purposes of this paragraph any such milk production 
resources and facilities which the producer-handler proves to the 
satisfaction of the market administrator do not constitute an actual or 
potential source of milk supply for the producer-handler's operation as 
such shall not be considered a part of the producer-handler's milk 
production resources and facilities; and
    (2) As milk handling, processing and distributing resources and 
facilities: All resources and facilities (including store outlets) used 
for handling, processing and distributing any fluid milk product:
    (i) Which are directly, indirectly or partially owned, operated or 
controlled by the producer-handler; or
    (ii) In which the producer-handler in any way has an interest, 
including any contractual arrangement, or with respect to which the 
producer-handler directly or indirectly exercises any degree of 
management or control.
    (c) Cancellation. The designation as a producer-handler shall be 
canceled under any of the conditions set forth in paragraph (c) (1) and 
(2) of this section or upon determination by the market administrator 
that any of the requirements of paragraph (a) (1), (2), and (3) of this 
section are not continuing to be met, such cancellation to be effective 
on the first day of the month following the month in which the 
requirements were not met, or the conditions for cancellation occurred.
    (1) Milk from the designated milk production resources and 
facilities of the producer-handler is delivered in the name of another 
person as producer milk to another handler.
    (2) The producer-handler handles fluid milk products from sources 
other than the milk production facilities and resources specified in 
paragraph (b) of this section, except as specified as follows:
    (i) A producer-handler, other than a State institution, may receive 
fluid milk products from pool plants if such receipts do not exceed a 
daily average of 100 pounds during the month; and
    (ii) A State institution that otherwise qualifies as a producer-
handler, but which processes or receives milk for consumption outside of 
a State institution, may receive fluid milk products from pool plants if 
such receipts do not exceed a daily average of 1,000 pounds per day 
during the month.
    (d) Public announcement. The market administrator shall publicly 
announce

[[Page 672]]

the name, plant location and farm location(s) of persons designated as 
producer-handlers, of those whose designations have been canceled and 
the effective dates of producer-handler status or loss of producer-
handler status for each. Such announcements shall be controlling with 
respect to the accounting at plants of other handlers for fluid milk 
products received from any producer-handler.
    (e) Burden of establishing and maintaining producer-handler status. 
The burden rests upon the handler who is designated as a producer-
handler to establish through records required pursuant to Sec. 1000.5 of 
this chapter that the requirements set forth in paragraph (a) of this 
section have been and are continuing to be met, and that the conditions 
set forth in paragraph (c) of this section for cancellation of 
designation do not exist.
[53 FR 52976, Dec. 30, 1988, as amended at 59 FR 15319, Apr. 1, 1994]



Sec. 1124.11  Cooperative reserve supply unit.

    Cooperative reserve supply unit means any cooperative association or 
its agent that is a handler pursuant to Sec. 1124.9 (b) or (c) that does 
not own or operate a plant, if such cooperative has been qualified to 
receive payments pursuant to Sec. 1124.73 and has been a handler of 
producer milk under this or its predecessor order(s) during each of the 
12 previous months, and if a majority of the cooperative's member 
producers are located within 125 miles of a pool distributing plant. A 
cooperative reserve supply unit shall be subject to the following 
conditions:
    (a) The cooperative shall file a request with the market 
administrator for cooperative reserve supply unit status at least 15 
days prior to the first day of the month in which such status is desired 
to be effective. Once qualified as a cooperative reserve supply unit 
pursuant to this paragraph, such status shall continue to be effective 
unless the cooperative requests termination prior to the first day of 
the month that change of status is requested, or the cooperative fails 
to meet all of the conditions of this section;
    (b) The cooperative reserve supply unit supplies fluid milk products 
to pool distributing plants located within 125 miles of a majority of 
the cooperative's member producers in compliance with any announcement 
by the market administrator requesting a minimum level of shipments as 
further provided below:
    (1) The market administrator may require such supplies of bulk fluid 
milk from cooperative reserve supply units whenever the market 
administrator finds that milk supplies for Class I use at pool 
distributing plants are needed for plants defined in Sec. 1124.7(a). 
Before making such a finding, the market administrator shall investigate 
the need for such shipments either on the market administrator's own 
initiative or at the request of interested persons. If the market 
administrator's investigation shows that such shipments might be 
appropriate, the market administrator shall issue a notice stating that 
a shipping announcement is being considered and inviting data, views and 
arguments with respect to the proposed shipping announcement.
    (2) Failure of a cooperative reserve supply unit to comply with any 
announced shipping requirements, including making any significant change 
in the unit's marketing operation that the market administrator 
determines has the impact of evading or forcing such an announcement, 
shall result in immediate loss of cooperative reserve supply unit status 
until such time as the unit has been a handler pursuant to Sec. 1124.9 
(b) and (c) for at least 12 consecutive months.



Sec. 1124.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for disposition as Grade A milk and whose milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1124.9(c); or
    (3) Diverted in accordance with Sec. 1124.13;
    (b) ``Producer'' shall not include:

[[Page 673]]

    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by such person that is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1124.44(a)(9)(iii) and the corresponding step of Sec. 1124.44(b);
    (3) Any person with respect to milk produced by such person that is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such order;
    (4) Any person who during the month has disposed of as route 
disposition or to consumers at the farm an average of more than 110 
pounds daily of fluid milk or fluid cream products; and
    (5) Any person (known as a dairy farmer for other markets) whose 
milk was received at a nonpool plant or a commercial food processing 
establishment during the month as other than producer milk under this or 
any other Federal milk order.



Sec. 1124.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk of a 
producer that is:
    (a) Received or diverted by a handler defined in Sec. 1124.9(a) 
under one of the following conditions:
    (1) Received at such handler's pool plant directly from the farm of 
such producer;
    (2) Received at such handler's plant from a handler defined in 
Sec. 1124.9(c) for all purposes other than those specified in paragraph 
(b)(2)(i) of this section; and
    (3) Diverted for the account of the operator of the pool plant, 
subject to the conditions set forth in paragraph (c) of this section.
    (b) Received or diverted by a cooperative defined in Sec. 1124.9 (b) 
or (c) under one of the following conditions:
    (1) Milk diverted for the account of the cooperative association. 
Except for milk moved by a cooperative reserve supply unit defined in 
Sec. 1124.11, such diversions shall be subject to the conditions set 
forth in paragraph (c) of this section;
    (2) Milk for which the cooperative association is a handler pursuant 
to Sec. 1124.9(c) to the following extent:
    (i) For purposes of reporting pursuant to Secs. 1124.30(c) and 
1124.31(a) and making payments to producers pursuant to Sec. 1124.73(a); 
and
    (ii) For all purposes, with respect to any such milk which is not 
delivered to the pool plant of another handler.
    (c) The following conditions shall apply to diverted producer milk:
    (1) A cooperative association or its agent may divert for its 
account the milk of any producer. The total quantity of milk diverted 
may not exceed 80 percent during the months of September through April 
of the total quantity of producer milk which the association or its 
agent causes to be delivered to pool distributing plants or diverted. No 
percentage limit shall apply during the months of May through August. 
The percentage limits on diversions specified in this paragraph shall 
not apply to a cooperative reserve supply unit defined in Sec. 1124.11;
    (2) A handler other than a cooperative association that operates a 
pool plant may divert milk for its account to other plants or pursuant 
to Sec. 1124.40(b)(3). The total quantity of milk so diverted may not 
exceed 80 percent during the months of September through April of the 
milk received at such handler's pool plant or diverted by such handler 
from any producer other than a member of a cooperative association which 
markets milk under paragraph (c)(1) of this section and for which the 
operator of such plant is the handler during the month. No percentage 
limit shall apply during the months of May through August;
    (3) Milk diverted in excess of the limits specified shall not be 
considered producer milk, except for milk diverted by a cooperative 
reserve supply unit. The diverting handler shall specify the producers 
whose milk is ineligible as producer milk. If a handler fails to 
designate such producers, producer milk status shall be forfeited with 
respect to all milk diverted by the handler during the month;

[[Page 674]]

    (4) Two or more cooperative associations may have their allowable 
diversions computed on the basis of their combined deliveries of 
producer milk which the associations cause to be delivered to pool 
plants or diverted during the month if each association has filed a 
request in writing with the market administrator on or before the first 
day of the month the agreement is to be effective. This request shall 
specify the basis for assigning overdiverted milk to the producer 
deliveries of each cooperative according to a method approved by the 
market administrator;
    (5) Diverted milk shall be priced at the location of the plant or 
commercial food processing establishment to which diverted; and
    (d) In the case of any bulk tank load of milk originating at farms 
and subsequently divided among plants, the proportion of the load 
received at each plant shall be prorated among the individual producers 
involved on the basis of their respective percentage of the total load.



Sec. 1124.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1124.40(b)(1) from any source other than producers, handlers 
described in Sec. 1124.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1124.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1124.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1124.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1124.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27885, May 11, 1993]



Sec. 1124.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27885, May 11, 1993]



Sec. 1124.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers, or flavoring) resembles milk or any 
other fluid milk product; and contains less than 6 percent nonmilk fat 
(or oil).
[53 FR 52976, Dec. 30, 1988; 54 FR 3557, Jan. 24, 1989]



Sec. 1124.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of

[[Page 675]]

producers, which the Secretary determines, after application by the 
cooperative association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act'', and any 
amendments thereto;
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales of or marketing milk for its 
members; and
    (c) To have its entire activities under the control of its members.



Sec. 1124.19  [Reserved]



Sec. 1124.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1124.13, 1124.41 and 1124.52.
[58 FR 27885, May 11, 1993]

                             Handler Reports



Sec. 1124.30  Reports of receipts and utilization.

    On or before the 9th day of each month each handler shall report to 
the market administrator, in the detail and on forms prescribed by the 
market administrator, the following information for the preceding month:
    (a) Each handler operating a pool plant(s) shall report separately 
for each pool plant:
    (1) The quantities of skim milk and butterfat contained in:
    (i) Milk received directly from producers (including such handler's 
own production), and the pounds of protein and pounds of solids-not-fat 
other than protein (other solids) contained therein;
    (ii) Milk received from a cooperative association pursuant to 
Sec. 1124.9(c), and the pounds of protein and pounds of solids-not-fat 
other than protein (other solids) contained therein;
    (iii) Fluid milk products and bulk fluid cream products received 
from other pool plants showing filled milk separately;
    (iv) Other source milk showing filled milk separately; and
    (v) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1124.40(b)(1).
    (2) The utilization of all skim milk and butterfat required to be 
reported, including separate statements of quantities in route 
disposition inside and outside the marketing area.
    (b) Each producer-handler shall report:
    (1) The quantities of skim milk and butterfat contained in:
    (i) Milk of own-farm production;
    (ii) Receipts of fluid milk products and fluid cream products from 
pool plants, showing separately receipts in packaged form and in bulk; 
and
    (iii) Other source milk, showing separately any receipts from 
another dairy farmer.
    (2) As specified in paragraph (a)(2) of this section.
    (c) Each cooperative association shall report with respect to milk 
for which it is the handler pursuant to either Sec. 1124.9(b) or (c):
    (1) The pounds of skim milk, butterfat, protein and solids-not-fat 
other than protein (other solids) received from producers;
    (2) The utilization of skim milk, butterfat, protein and solids-not-
fat other than protein (other solids) for which it is the handler 
pursuant to Sec. 1124.9(b); and
    (3) The quantities of skim milk, butterfat, protein and solids-not-
fat other than protein (other solids) delivered to each pool plant 
pursuant to Sec. 1124.9(c).
    (d) Each handler who operates a partially regulated distributing 
plant shall report as specified in paragraph (a)(1) and (2) of this 
section except that receipts from dairy farmers in Grade A milk shall be 
reported in lieu of those in producer milk. Such report shall include 
separate statements, respectively, showing the respective amounts

[[Page 676]]

of skim milk and butterfat disposed of as route disposition in the 
marketing area as Class I milk and the quantity of reconstituted skim 
milk in fluid milk products disposed of as route disposition in the 
marketing area.
    (e) Each handler who operates an other order plant with route 
disposition of fluid milk products in the marketing area shall report 
the quantities of skim milk and butterfat in such disposition.
    (f) Each handler who operates an exempt plant or an unregulated 
supply plant shall report as specified in paragraph (a)(1) and (2) of 
this section except that receipts from dairy farmers in Grade A milk 
shall be reported in lieu of those in producer milk.
[53 FR 52976, Dec. 30, 1988, as amended at 59 FR 15319, Apr. 1, 1994; 62 
FR 2, Jan. 2, 1997]



Sec. 1124.31  Payroll reports.

    On or before the 22nd day of each month handlers shall report to the 
market administrator as follows:
    (a) Each handler with respect to each of its pool plants and each 
cooperative association which is a handler pursuant to Sec. 1124.9(b) or 
(c) shall submit its producer payroll for deliveries (other than own-
farm production) in the preceding month which shall show:
    (1) The total pounds of milk received from each producer, the pounds 
of butterfat, protein and solids-not-fat other than protein (other 
solids) contained in such milk, and the number of days on which milk was 
delivered by the producer during the month;
    (2) The amount of payment to each producer and cooperative 
association; and
    (3) The nature and amount of any deductions or charges involved in 
such payments; and
    (b) Each handler operating a partially regulated distributing plant 
who wishes computations pursuant to Sec. 1124.75(a) to be considered in 
the computation of its obligation pursuant to Sec. 1124.75 shall submit 
its payroll for deliveries of Grade A milk by dairy farmers which shall 
show:
    (1) The total pounds of milk received from each producer and the 
pounds of butterfat, protein and solids-not-fat other than protein 
(other solids) contained in such milk;
    (2) The amount of payment to each dairy farmer (or to a cooperative 
association on behalf of such dairy farmer); and
    (3) The nature and amount of any deductions or charges involved in 
such payments.
[53 FR 52976, Dec. 30, 1988, as amended at 59 FR 15320, Apr. 1, 1994; 62 
FR 2, Jan. 2, 1997]



Sec. 1124.32  Other reports.

    In addition to the reports required pursuant to Sec. Sec. 1124.30 
and 1124.31, each handler shall report such other information as the 
market administrator deems necessary to verify or establish such 
handler's obligations under the order.
[59 FR 15320, Apr. 1, 1994]

                         Classification of Milk



Sec. 1124.40  Classes of utilization.

    Except as provided in Sec. 1124.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1124.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the

[[Page 677]]

commercial food processing establishment for the purpose of 
verification. Otherwise, such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1124.15 and the fluid 
cream product definition pursuant to Sec. 1124.16; and
    (7) In shrinkage assigned pursuant to Sec. 1124.41(a) to the 
receipts specified in Sec. 1124.41(a)(2) and in shrinkage specified in 
Sec. 1124.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[53 FR 52976, Dec. 30, 1988; 54 FR 5587, Feb. 6, 1989; 57 FR 175, Jan. 
3, 1992; 58 FR 27886, May 11, 1993]



Sec. 1124.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a

[[Page 678]]

handler pursuant to Sec. 1124.30, the market administrator shall 
determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraph (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraph (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant or pursuant to Sec. 1124.40(b)(3) and milk received from a handler 
described in Sec. 1124.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1124.9(c) and in milk 
diverted to such plant by the operator of another pool plant, except 
that if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph shall be 2 
percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted by the plant operator to another plant or 
pursuant to Sec. 1124.40(b)(3), except that if the operator of the plant 
or establishment to which the milk is delivered purchases such milk on 
the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operator of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraph (b) (1), (2), (4), (5), and (6) of 
this section.
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1124.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of a plant or a commercial food processing establishment 
pursuant to Sec. 1124.20 purchases such milk on the basis of weights 
determined from its measurement at the farm, and butterfat tests and 
nonfat milk solids determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.
[53 FR 52976, Dec. 30, 1988, as amended at 59 FR 15320, Apr. 1, 1994]



Sec. 1124.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. The classification of such 
transfers and diversions shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to

[[Page 679]]

the amount of skim milk and butterfat, respectively, remaining in such 
class at the receiving handler's plant after the computation pursuant to 
Sec. 1124.44(a)(13) and the corresponding step of Sec. 1124.44(b). The 
amount of skim milk or butterfat classified in each class shall include 
the assigned utilization of skim milk or butterfat in transfers of 
concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1124.44(a)(8) 
or the corresponding step of Sec. 1124.44(b), the skim milk or butterfat 
so transferred shall be classified so as to allocate the least possible 
Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1124.44(a) 
(12) or (13) or the corresponding steps of Sec. 1124.44(b), the skim 
milk or butterfat so transferred or diverted up to the total of the skim 
milk and butterfat, respectively, in such receipts of other source milk, 
shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustments when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1124.40.
    (c) Transferor and diversions to producer-handlers. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a producer-handler under this or any other Federal order shall 
be classified:
    (1) As Class I milk if transferred or diverted in the form of a 
fluid milk product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to the transferee's receipts of skim 
milk and butterfat, respectively, in bulk fluid cream products, pro rata 
to each source.

[[Page 680]]

    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraph (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraph (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1124.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and

[[Page 681]]

    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[53 FR 52976, Dec. 30, 1988, as amended at 58 FR 27886, May 11, 1993]



Sec. 1124.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1124.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1124.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1124.9 (b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1124.40, 
1124.41, and 1124.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1124.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association; and
    (d) For classification purposes, pursuant to Secs. 1124.40 through 
1124.45, butterfat in skim milk, either disposed of to others or used in 
the manufacture of milk products shall be accounted for at a butterfat 
content of 0.060 percent unless the handler has adequate records of the 
actual butterfat content of such skim milk.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III use at the plant.
    (f) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1124.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1124.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[53 FR 52976, Dec. 30, 1988; 54 FR 3557, Jan. 24, 1989, as amended at 57 
FR 175, Jan. 3, 1992; 58 FR 27886, May 11, 1993]



Sec. 1124.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1124.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1124.9 (b) or (c) by allocating the 
handler's receipts of skim milk and butterfat to its utilization as 
follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1124.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in receipts of packaged fluid milk products from an 
unregulated supply plant to the extent that an equivalent amount of skim 
milk 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;
    (3) Subtract from the pounds of skim milk remaining in each class 
the

[[Page 682]]

pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(8)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the remaining pounds of skim milk in Class I the 
pounds of skim milk in packaged fluid milk products in inventory at the 
beginning of the month. This paragraph shall apply only if the pool 
plant was subject to the provisions of this paragraph or comparable 
provisions of another Federal milk order in the immediately preceding 
month;
    (5) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1124.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1124.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (7) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1124.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1124.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(6) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1124.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(5), (a)(6) and (a)(7) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products received or acquired for 
distribution from a producer-handler as defined under this or any other 
Federal Order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant; 
and
    (vii) Receipts of fluid milk products from a person described in 
Sec. 1124.12(b)(5);
    (9) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a)(2) and (8)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a)(2), (8)(v), and (9)(i) of this section which are in excess 
of the pounds of skim milk determined pursuant to paragraph (a)(9)(ii) 
(A) through (C) of this section. Should the pounds of skim milk to be 
subtracted from Class II and

[[Page 683]]

Class III combined exceed the pounds of skim milk remaining in such 
classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(8)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentages 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant are of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(8)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler but not in excess of the pounds of skim milk 
remaining in Class II and Class III combined;
    (10) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1124.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(4), (a)(6) and (a)(8)(i) of this section;
    (11) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (12) Subject to the provisions of paragraph (a)(12) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity pro rated, to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2), (8)(v), (9) (i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received;
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this paragraph exceed the pounds of 
skim milk remaining in such classes, the pounds of skim milk in Class II 
and Class III combined shall be increased (increasing as necessary Class 
III and then Class II to the extent of available utilization in such 
classes at the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of

[[Page 684]]

skim milk remaining in such class, the pounds of skim milk in Class I 
shall be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (13) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(8)(vi) and (9)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(13) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportions of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1124.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the hander);
    (ii) Should the proration pursuant to paragraph (a)(13)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(13)(ii) of this section, 
should the computations pursuant to paragraph (a)(13) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceed the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plant(s) shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(13)(ii) of this section, 
should the computations pursuant to paragraph (a)(13) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (14) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1124.42(a); and
    (15) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds

[[Page 685]]

of skim milk remaining in each class in series beginning with Class III. 
Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(15) of this section and the 
corresponding step of paragraph (b) of this section.
[53 FR 52976, Dec. 30, 1988; 54 FR 3557, Jan. 24, 1989; 54 FR 5587, Feb. 
6, 1989; 58 FR 27887, May 11, 1993]



Sec. 1124.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1124.44(a)(13) and the corresponding 
step of Sec. 1124.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1124.43(f) and Sec. 1124.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 14th day after the end of each month, report to 
each cooperative association which so requests the amount and class 
utilization of producer milk delivered by members of such cooperative 
association to each handler receiving such milk. For the purpose of this 
report the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.
[53 FR 52976, Dec. 30, 1988, as amended at 58 FR 27887, May 11, 1993]

                       Class and Component Prices



Sec. 1124.50  Class and component prices.

    The class and component prices for the month, per hundredweight or 
per pound, shall be as follows:
    (a) The Class I price, subject to the provisions of Sec. 1124.52, 
shall be the basic formula price defined in Sec. 1124.51 for the second 
preceding month plus $1.90.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) The Class III price shall be the basic formula price for the 
month.
    (d) The Class III-A price for the month shall be the average Western 
States nonfat dry milk price for the month, as reported by the 
Department, less 12.5 cents, times an amount computed by subtracting 
from 9 an amount calculated by dividing .4 by such nonfat dry milk 
price, plus the butterfat differential times 35 and rounded to the 
nearest cent.
    (e) The skim milk price per hundredweight shall be the basic formula 
price for the month pursuant to Sec. 1124.51(a) less an amount computed 
by multiplying the butterfat differential computed pursuant to paragraph 
(f)(3) of this section by 35.
    (f) The butterfat price per pound, rounded to the nearest one-
hundredth cent, shall be the total of:
    (1) The skim price computed in paragraph (e) of this section divided 
by 100; and

[[Page 686]]

    (2) The butterfat differential computed pursuant to paragraph (f)(3) 
of this section multiplied by 10.
    (3) Compute a butterfat differential rounded to the nearest one-
tenth cent, by multiplying the current month's butter price by 0.138, 
and subtract from the result an amount determined by multiplying 0.0028 
by 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. 1124.51 (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.
    (g) 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.
    (h) The other solids price per pound, rounded to the nearest one-
hundredth cent, shall be the basic formula price at test less the 
average butterfat test of the basic formula price as reported by the 
Department times the butterfat price, less the average protein test of 
the basic formula price as reported by the Department for the month 
times the protein price, and dividing the resulting amount by the 
average other solids test of producer milk pooled under Part 1124 for 
the month, as determined by the Market Administrator. If the resulting 
price is less than zero, then the protein price will be reduced so that 
the other solids price equals zero.
[59 FR 15320, Apr. 1, 1994, as amended at 60 FR 6611, Feb. 2, 1995; 60 
FR 18975, Apr. 14, 1995; 62 FR 3, Jan. 2, 1997]



Sec. 1124.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1124.50(f)(3) and rounded to 
the nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade AA butter 
price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile

[[Page 687]]

Exchange Grade A butter price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18975, Apr. 14, 1995]



Sec. 1124.52  Plant location adjustments for handlers.

    (a) The following zones are defined for the purpose of determining 
location adjustments:
    (1) Zone 1 shall include:
    (i) The Idaho counties of Benewah, Bonner, Boundary, Kootenai, 
Latah, and Shoshone;
    (ii) The Oregon counties of Benton, Clackamas, Clatsop, Columbia, 
Douglas, Hood River, Lane, Lincoln, Linn, Marion, Multnomah, Polk, 
Tillamook, Washington, and Yamhill;
    (iii) The Washington counties of Clark, Cowlitz, Ferry, Grays 
Harbor, Island, King, Kitsap, Lewis, Lincoln, Mason, Pacific, Pend 
Oreille, Pierce, Skagit, Snohomish, Skamania, Spokane, Stevens, 
Thurston, Wahkiakum, and Whitman.
    (2) Zone 2 shall include: the Washington county of Whatcom;
    (3) Zone 3 shall include: the Oregon counties of Coos, Jackson, and 
Josephine;
    (4) Zone 4 shall include:
    (i) The Idaho counties of Lewis and Nez Perce;
    (ii) The Oregon counties of Crook, Deschutes, Gilliam, Jefferson, 
Klamath, Lake, Morrow, Sherman, Umatilla, Wallowa, Wasco and Wheeler;
    (iii) The Washington counties of Adams, Asotin, Benton, Chelan, 
Clallam, Columbia, Douglas, Franklin, Garfield, Grant, Jefferson, 
Kittitas, Klickitat, Okanogan, San Juan, Walla Walla and Yakima.
    (b) For milk received at a plant from producers and which is 
classified as Class I milk, the price specified in Sec. 1124.50(a) shall 
be adjused by the amount stated in paragraphs (b) (1) and (2) of this 
section for the location of such plant:
    (1) For a plant located within one of the zones described in 
paragraphs (a) (1) through (4) of this section, the adjustment shall be 
as follows:

                                                                        
------------------------------------------------------------------------
                                           Adjustment per Hundredweight 
------------------------------------------------------------------------
Zone 1.................................  No adjustment.                 
Zone 2.................................  Minus 6 cents.                 
Zone 3.................................  Minus 8 cents.                 
Zone 4.................................  Minus 15 cents.                
------------------------------------------------------------------------

    (2) For a plant located outside of one of the zones described in 
paragraphs (a) (1) through (4) of this section, the adjustment shall be 
minus 1.5 cents per hundredweight for each 10 miles or fraction thereof 
by shortest hard-surfaced highway distance that the plant is located 
from the nearer of the county courthouse in Spokane, Washington, the 
Multnomah County Courthouse in Portland, Oregon, or the city hall in 
Eugene, Oregon;

[[Page 688]]

    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (b) of this section, except 
that the price when adjusted for location shall not be less than the 
Class III price.
    (d) For fluid milk products transferred in bulk from a pool plant to 
another pool plant at which a higher Class I price applies and which is 
classified as Class I, the price shall be the Class I price applicable 
at the location of the transferee-plant subject to a location adjustment 
credit for the transferor-plant determined by the market administrator 
as follows:
    (1) Subtract from the pounds of Class I remaining at the transferee-
plant after the computations pursuant to Sec. 1124.44(a)(13) and (b) 
plus the pounds of skim milk and butterfat in receipts of concentrated 
fluid milk products from other pool plants that are assigned to Class I 
use, the pounds of packaged fluid milk products from other pool plants;
    (2) Subtract the pounds of bulk fluid milk products received at the 
transferee-plant from the following sources:
    (i) Producers;
    (ii) Handlers described in Sec. 1124.9(c); and
    (iii) Pool plants at which the same or a higher Class I price 
applies.
    (3) Assign any pounds remaining to transferor-plants in sequence 
beginning with the plant at which the least adjustment would apply; and
    (4) Multiply the pounds so computed for each transferor-plant by the 
difference in the Class I prices applicable at the transferee-plant and 
transferor-plant.
[53 FR 52976, Dec. 30, 1988; 54 FR 3557, Jan. 24, 1989; 58 FR 27887, May 
11, 1993]



Sec. 1124.53  Announcement of class and component prices.

    On or before the 5th day of each month, the market administrator 
shall announce publicly the following prices:
    (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 other solids price for the preceding month; and
    (i) The butterfat differential for the preceding month.
[62 FR 3, Jan. 2, 1997]



Sec. 1124.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the pricing constituent that is required.

                       Producer Price Differential



Sec. 1124.60  Handlers' value of milk.

    The market administrator shall compute each month for each handler 
defined in Sec. 1124.9(a) with respect to each of the handler's pool 
plants, and for each handler described in Sec. 1124.9 (b) and (c), an 
obligation to the pool by combining the amounts computed as follows:
    (a) Multiply the pounds of producer milk in Class I pursuant to 
Sec. 1124.44 by the difference between the Class I price, adjusted 
pursuant to Sec. 1124.52, and the Class III price;
    (b) Multiply the pounds of producer milk in Class II pursuant to 
Sec. 1124.44 by the difference between the Class II price and Class III 
price;
    (c) Add or subtract, as appropriate, the amount that results from 
multiplying the pounds of producer milk in Class III-A by the amount 
that the Class III-A price is more or less, respectively, than the Class 
III price;
    (d) Multiply the pounds of skim milk in Class I producer milk 
pursuant to Sec. 1124.44 by the skim milk price for the month;
    (e) Multiply the protein price for the month by the pounds of 
protein associated with the pounds of producer skim milk in Class II and 
Class III during the month. The pounds of protein shall

[[Page 689]]

be computed by multiplying the producer skim milk pounds so assigned by 
the percentage of protein in the handler's receipts of producer skim 
milk during the month for each report filed separately;
    (f) Multiply the other solids price for the month by the pounds of 
other solids associated with the pounds of producer skim milk in Class 
II and Class III during the month. The pounds of other solids shall be 
computed by multiplying the producer skim milk pounds so assigned by the 
percentage of other solids in the handler's receipts of producer skim 
milk during the month for each report filed separately;
    (g) With respect to skim milk and butterfat overages assigned 
pursuant to Sec. 1124.44(a)(15), (b) and paragraph (g)(6) of this 
section:
    (1) Multiply the total pounds of butterfat by the butterfat price;
    (2) Multiply the skim milk pounds assigned to Class I by the skim 
milk price;
    (3) Multiply the pounds of protein and other solids associated with 
the skim milk pounds assigned to Class II and III by the protein and 
other solids prices, respectively;
    (4) Multiply the combined skim milk and butterfat pounds assigned to 
Class I by the difference between the Class I price, adjusted for 
location, and the Class III price;
    (5) Multiply the combined skim milk and butterfat pounds assigned to 
Class II by the difference between the Class II price and the Class III 
price; and
    (6) Overage at a nonpool plant that is located on the same premises 
as a pool plant shall be prorated between the quantity of skim and 
butterfat received by transfer from the pool plant and other source milk 
received at the nonpool plant. The pool plant operator's obligation to 
the pool with respect to such overage will be computed by adding the 
prorated pounds of skim milk and butterfat to the amounts assigned 
pursuant to Sec. 1124.44(a)(15) and (b);
    (h) With respect to skim milk and butterfat assigned to inventory 
pursuant to Sec. 1124.44(a)(10) and (b):
    (1) Multiply the total pounds of butterfat by the butterfat price;
    (2) Multiply the skim milk pounds assigned to Class I by the skim 
milk price;
    (3) Multiply the pounds of protein and other solids associated with 
the skim milk pounds assigned to Class II and III by the protein and 
other solids prices, respectively;
    (4) Multiply the combined skim milk and butterfat pounds assigned to 
Class I by the difference between the Class I price, adjusted for 
location, and the Class III price;
    (5) Multiply the combined skim milk and butterfat pounds assigned to 
Class II by the difference between the Class II price and the Class III 
price; and
    (6) Subtract the Class III value of the milk at the previous month's 
protein, other milk solids, and butterfat prices;
    (i) Multiply the difference between the Class I price, adjusted for 
the location of the pool plant, and the Class III price by the combined 
pounds of skim milk and butterfat assigned to Class I pursuant to 
Sec. 1124.43(f) and subtracted from Class I pursuant to 
Sec. 1124.44(a)(8) (i) through (iv), (vii), and Sec. 1124.44(b), 
excluding:
    (1) Receipts of bulk fluid cream products from an other order plant;
    (2) Receipts of bulk concentrated fluid milk products from pool 
plants, other order plants, and unregulated supply plants; and
    (3) Receipts of nonfluid milk products that are distributed as 
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another order under Sec. 1124.75(b)(4) or (c);
    (j) Multiply the combined pounds of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1124.44(a)(8) (v) and (vi) and 
Sec. 1124.44(b) by the difference between the Class I price at the 
transferor plant and the Class III price;
    (k) Multiply the difference between the Class I and Class III 
prices, applicable at the location of the nearest nonpool plant(s) from 
which an equivalent volume was received, with respect to skim milk and 
butterfat in receipts of concentrated fluid milk products assigned to 
Class I pursuant to Sec. 1124.43(f) and Sec. 1124.44(a)(8)(v) and the 
combined pounds of skim milk and butterfat in receipts from an 
unregulated supply plant assigned pursuant to

[[Page 690]]

Sec. 1124.44(a)(12) and (b), excluding such skim milk or butterfat in 
receipts of bulk fluid milk products from an unregulated supply plant to 
the extent that an equivalent quantity disposed of to such plant by 
handlers fully regulated by any Federal order is classified and priced 
as Class I milk and is not used as an offset for any other payment 
obligation under any order;
    (l) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the combined pounds of 
skim milk and butterfat contained in receipts of nonfluid milk products 
that are allocated to Class I use pursuant to Sec. 1124.43(f);
    (m) Add or subtract, as appropriate, the amount necessary to correct 
errors disclosed by the verification of the handler's receipts and 
utilization of skim milk and butterfat as reported for previous months; 
and
    (n) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any applicable class price change shall be applied to the plant that 
used the concentrated milk in the event that the concentrated fluid milk 
products were made from bulk unconcentrated fluid milk products received 
at the plant during the prior month.
[59 FR 15321, Apr. 1, 1994, as amended at 62 FR 3, Jan. 2, 1997]



Sec. 1124.61  Producer price differential.

    A producer price differential per hundredweight of milk for each 
month shall be computed by the market administrator as follows:
    (a) Combine into one total for all handlers:
    (1) The values computed pursuant to Sec. 1124.60 (a) through (c) and 
(g) through (n) for all handlers who filed the reports prescribed by 
Sec. 1124.30 for the month and who made the payments pursuant to 
Sec. 1124.71 for the preceding month; and
    (2) Add the values computed pursuant to Sec. 1124.60 (d), (e) and 
(f); and subtract the values obtained by multiplying the handlers'' 
total pounds of protein and total pounds of other solids contained in 
such milk by their respective prices;
    (b) Add an amount equal to the total value of the location 
adjustments computed pursuant to Sec. 1124.74;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer settlement fund;
    (d) Divide the resulting amount by the sum, for all handlers, of the 
total hundredweight of producer milk and the total hundredweight for 
which a value is computed pursuant to Sec. 1124.60(k); and
    (e) Subtract not less than 4 cents per hundredweight nor more than 5 
cents per hundredweight. The result shall be the producer price 
differential.
[59 FR 15322, Apr. 1, 1994, as amended at 62 FR 3, Jan. 2, 1997]



Sec. 1124.62  Announcement of the producer price differential and a statistical uniform price.

    On or before the 14th 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 other solids price;
    (d) The butterfat price;
    (e) The average protein and other solids 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.
[62 FR 3, Jan. 2, 1997]

                            Payments for Milk



Sec. 1124.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement'' fund into which shall be 
deposited all payments made by handlers pursuant to Secs. 1124.71 and 
1124.75 and out of which shall be made all payments to handlers pursuant 
to Sec. 1124.72. Payments due a handler from the fund shall be offset

[[Page 691]]

against payments due from such handler.
[59 FR 15322, Apr. 1, 1994]



Sec. 1124.71  Payments to the producer-settlement fund.

    On or before the 16th day after the end of the month, each handler 
shall pay to the market administrator the amount, if any, which results 
from subtracting the sum computed pursuant to paragraph (a) of this 
section from the sum computed pursuant to paragraph (b) of this section:
    (a) The sum of:
    (1) The total handler's value of milk for such month as determined 
pursuant to Sec. 1124.60; and
    (2) For a cooperative association handler, the amount due from other 
handlers pursuant to Sec. 1124.73(d).
    (b) The sum of:
    (1) The value of milk received by the handler from producers at the 
applicable prices pursuant to Sec. 1124.73(a)(2)(ii) through (iv);
    (2) The amount to be paid by the handler to cooperative associations 
pursuant to Sec. 1124.73(d); and
    (3) The value at the producer price differential adjusted for the 
location of the plant(s) from which received (not to be less than zero) 
with respect to the total hundredweight of skim milk and butterfat in 
other source milk for which a value was computed or such handler 
pursuant to Sec. 1124.60(k).
    (c) On or before the 25th day after the end of the month, each 
handler operating a plant specified in Sec. 1124.7(d) (2) and (3), if 
such plant is subject to the classification and pricing provisions of 
another order which provides for individual handler pooling, shall pay 
to the market administrator for the producer-settlement fund an amount 
computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route disposition 
in the marketing areas regulated by two or more market pool orders, the 
reconstituted skim milk assigned to Class I shall be prorated according 
to such disposition in each area.
    (2) Compute the value of the quantity assigned in paragraph (c)(1) 
of this section to Class I disposition in this area, at the Class I 
price under this part applicable at the location of the other order 
plant (but not to be less than the Class III price) and subtract its 
value at the Class III price.
[59 FR 15322, Apr. 1, 1994, as amended at 62 FR 3, Jan. 2, 1997]



Sec. 1124.72  Payments from the producer-settlement fund.

    On or before the 18th day after the end of the month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1124.71(b) exceeds the amount computed 
pursuant to Sec. 1124.71(a), less any unpaid obligations of such handler 
to the market administrator pursuant to Secs. 1124.71, 1124.75, 1124.85, 
and 1124.86. However, if the balance in the producer-settlement fund is 
insufficient to make all payments pursuant to this section, the market 
administrator shall reduce uniformly such payments and shall complete 
such payments as soon as the necessary funds are available.
[59 FR 15323, Apr. 1, 1994]



Sec. 1124.73  Payments to producers and to cooperative associations.

    (a) Each handler shall make payment pursuant to this paragraph or 
paragraph (b) of this section to each producer from whom milk is 
received during the month:
    (1) On or before the last day of the month, to each producer who did 
not discontinue shipping milk to such handler before the 18th day of the 
month at not less than the Class III price for the preceding month per 
hundredweight of milk received from the producer during the first 15 
days of the month, subject to adjustment for proper deductions 
authorized in writing by the producer;
    (2) On or before the 19th day after the end of each month, an amount 
computed as follows:

[[Page 692]]

    (i) Multiply the butterfat price for the month by the total pounds 
of butterfat in milk received from the producer;
    (ii) Add the amount that results from multiplying the protein price 
for the month by the total pounds of protein in the milk received from 
the producer;
    (iii) Add the amount that results from multiplying the other solids 
price for the month by the total pounds of other solids in the milk 
received from the producer;
    (iv) Add the amount that results from multiplying the total 
hundredweight of milk received from the producer by the producer price 
differential for the month as adjusted pursuant to Sec. 1124.74(a);
    (v) Subtract payments made to the producer pursuant to paragraph 
(a)(1) of this section;
    (vi) Subtract proper deductions authorized in writing by the 
producer; and
    (vii) Subtract any deduction required pursuant to Sec. 1124.86 or by 
statute; and
    (3) If by the 19th day after the end of the month a handler has not 
received full payment from the market administrator pursuant to 
Sec. 1124.72, the payments to producers required pursuant to paragraph 
(a)(2) of this section may be reduced uniformly as a percentage of the 
amount due each producer by a total sum not in excess of the remainder 
due from the market administrator. The handler shall pay the balance due 
producers on or before the date for making payments pursuant to such 
paragraph next following receipt of the full payment from the market 
administrator.
    (b) The payments required in paragraph (a) of this section shall, 
upon the request of a cooperative association qualified under 
Sec. 1124.18, be made to the association or its duly authorized agent 
for milk received from each producer who has given such association 
authorization by contract or other written instrument to collect the 
proceeds from the sale of the producer's milk. All payments required 
pursuant to this paragraph shall be made on or before the second day 
prior to the dates specified for such payment in paragraph (a)(2) of 
this section.
    (c) Each handler shall pay to each cooperative association which 
operates a pool plant, or to the cooperative's duly authorized agent, 
for butterfat, protein and other solids received from such plant in the 
form of fluid milk products as follows:
    (1) On or before the second day prior to the date specified in 
paragraph (a)(1) of this section, for butterfat, protein, and other milk 
solids received during the first 15 days of the month at not less than 
the butterfat, protein, and other milk solids prices, respectively, for 
the preceding month; and
    (2) On or before the 15th day after the end of the month, an amount 
of money determined in accordance with computations made on the same 
basis as those specified in paragraphs (a)(2(i) through (iv) of this 
section, minus any payment made pursuant to paragraph (c)(1) of this 
section.
    (d) Each handler pursuant to Sec. 1124.9(a) that received milk from 
a cooperative association that was a handler pursuant to Sec. 1124.9(c) 
shall pay the cooperative association for such milk as follows:
    (1) On or before the second day prior to the date specified in 
paragraph (a)(1) of this section, for milk received during the first 15 
days of the month at not less than the Class III price for the preceding 
month; and
    (2) On or before the 17th day after the end of each month, for milk 
received during the month an amount of money determined in accordance 
with the computations specified in paragraphs (a)(2)(i) through (iv) of 
this section, minus any payment made pursuant to paragraph (d)(1) of 
this section.
    (e) None of the provisions of this section shall be construed to 
restrict any cooperative association qualified under section 8c(5)(F) of 
the Act from making payment for milk to its producers in accordance with 
such provision of the Act.
    (f) In making payments to producers pursuant to this section, each 
handler shall provide each producer, on or before the 19th day of each 
month, with a supporting statement for milk received from the producer 
during the previous month in such form that it may be retained by the 
producer, which shall show:

[[Page 693]]

    (1) The identity of the handler and the producer;
    (2) The total pounds of milk delivered by the producer, the pounds 
of butterfat, protein and other solids contained therein, and, unless 
previously provided, the pounds of milk in each delivery;
    (3) The minimum rates at which payment to the producer is required 
under the provisions of this section;
    (4) The rate and amount of any premiums or of payments made in 
excess of the minimums required under this order;
    (5) The amount or rate of each deduction claimed by the handler, 
together with an explanation of each such deduction; and
    (6) The net amount of payment to the producer.
    (g) In making payments to a cooperative association in aggregate 
pursuant to this section, each handler shall, upon request, provide the 
cooperative association, with respect to each producer for whom such 
payment is made, any or all of the information specified in paragraph 
(f) of this section.
[59 FR 15323, Apr. 1, 1994, as amended at 62 FR 4, Jan. 2, 1997]



Sec. 1124.74  Plant location adjustments for producers and on nonpool milk.

    (a) In making payment to producers pursuant to Sec. 1124.73(a) 
subject to the application of Sec. 1124.13(c)(5) appropriate adjustments 
shall be made per hundredweight of milk received from producers at 
respective plant locations at the same rate as specified for Class I 
milk set forth in Sec. 1124.52.
    (b) In making payments to a cooperative association pursuant to 
Sec. 1124.73(d) appropriate adjustments shall be made at the rates 
specified for Class I milk in Sec. 1124.52 for the location of the plant 
at which the milk was received from the cooperative association.
    (c) For purposes of the computations pursuant to Secs. 1124.71(a) 
and 1124.72, the producer price differential for all milk shall be 
adjusted at the rates set forth in Sec. 1124.52 for Class I milk 
applicable at the location of the nonpool plant from which the milk or 
filled milk was received, except that the adjusted producer price 
differential shall not be less than zero.
[53 FR 52976, Dec. 30, 1988. Redesignated and amended at 59 FR 15324, 
Apr. 1, 1994; 62 FR 4, Jan. 2, 1997]



Sec. 1124.75  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1124.30(d) and 1124.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, the handler shall pay 
the amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1)(i) The obligation that would have been computed pursuant to 
Sec. 1124.60 at such plant shall be determined as though such plant were 
a pool plant. For purposes of such computation, receipts at such nonpool 
plant from a pool plant or an other order plant shall be assigned to the 
utilization at which classified at the pool plant or other order plant 
and transfers from such nonpool plant to a pool plant or an other order 
plant shall be classified as Class II or Class III milk if allocated to 
such class at the pool plant or other order plant and be valued at the 
uniform price or estimated uniform price or statistical uniform price of 
the respective order if so allocated to Class I milk, except that 
reconstituted skim milk in filled milk shall be valued at the Class III 
price. No obligation shall apply to Class I milk transferred to a pool 
plant or another order plant if such Class I utilization is assigned to 
receipts at the partially regulated distributing plant from pool plants 
and other order plants at which an equivalent amount of milk was 
classified and priced as Class I milk. There shall be included in the 
obligation so computed a charge in the amount specified in 
Sec. 1124.60(j) and a credit in the amount specified in 
Sec. 1124.71(b)(3) with respect to receipts from an unregulated supply

[[Page 694]]

plant, except that the credit for receipts of reconstituted skim milk in 
filled milk shall be at the Class III price, unless an obligation with 
respect to such plant is computed as specified in paragraph (a)(1)(ii) 
of this section; and
    (ii) If the operator of the partially regulated distributing plant 
so requests, and provides with reports filed pursuant to 
Secs. 1124.30(d) and 1124.31(b) similar reports with respect to the 
operations of any other nonpool plant which serves as a supply plant for 
such partially regulated distributing plant by shipments to such plant 
during the month equivalent to the requirements of Sec. 1124.7(b), with 
agreement of the operator of such plant that the market administrator 
may examine the books and records of such plant for purposes of 
verification of such reports, there will be added the amount of the 
obligation computed at such nonpool supply plant in the same manner and 
subject to the same conditions as for the partially regulated 
distributing plant.
    (2) From this obligation there will be deducted the sum of:
    (i) The gross payments made by such handler for Grade A milk 
received during the month from dairy farmers at such plant adjusted to a 
3.5 percent butterfat basis by the butterfat differential pursuant to 
Sec. 1124.50(f)(3), and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section; and
    (ii) Any payments to the producer-settlement fund of an other order 
under which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as route disposition of Class I milk within the marketing 
area;
    (2) Deduct the respective amount of skim milk and butterfat received 
at the plant:
    (i) As Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) From a nonpool plant that is not an other order plant to the 
extent that an equivalent amount of skim milk or butterfat disposed of 
to such nonpool plant by handlers fully regulated under this or any 
other order issued pursuant to the Act is classified and priced as Class 
I milk and is not used as an offset on any payment obligation under this 
or any other order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant, subtract its value at the statistical 
uniform price applicable at such location (not to be less than the Class 
III price), and add the amount obtained from multiplying the pounds of 
labeled reconstituted milk included in paragraph (b)(3) of this section 
by the difference between the Class I price applicable at the location 
of the partially regulated distributing plant less $1.00 (but not to be 
less than the Class III price) and the Class III price. For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1124.43(f). Payments

[[Page 695]]

may be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[53 FR 52976, Dec. 30, 1988, as amended at 58 FR 27887, May 11, 1993. 
Redesignated and amended at 59 FR 15324, Apr. 1, 1994; 60 FR 6612, Feb. 
2, 1995; 60 FR 18976, Apr. 14, 1995; 62 FR 4, Jan. 2, 1997]



Sec. 1124.76  Adjustment of accounts.

    Whenever verification by the market administrator of reports or 
payments of any handler discloses errors resulting in money due:
    (a) The market administrator from such handler;
    (b) Such handler from the market administrator; or
    (c) Any producer or cooperative association from such handler, the 
market administrator shall promptly notify such handler of any amount so 
due and payment thereof shall be made on or before the next date for 
making payments set forth in the provisions under which such error 
occurred following the 5th day after such notice.
[53 FR 52976, Dec. 30, 1988. Redesignated at 59 FR 15324, Apr. 1, 1994]



Sec. 1124.77  Charges on overdue accounts.

    (a) Any unpaid obligation of a handler pursuant to Secs. 1124.71, 
1124.76, 1124.75, 1124.85 or 1124.86 shall be increased 1 percent 
beginning on the first day after the due date, and on each date of 
subsequent months following the day on which such type of obligation is 
normally due, subject to the following conditions:
    (1) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
overdue charges previously computed pursuant to this section; and
    (2) For the purpose of this section, any obligation that was 
determined at a date later than that prescribed by the order because of 
a handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.
    (b) All charges on overdue accounts shall be paid to the fund to 
which the account was due immediately after the charge has been 
collected.
[53 FR 52976, Dec. 30, 1988. Redesignated and amended at 59 FR 15324, 
Apr. 1, 1994]

        Administrative Assessment and Marketing Service Deduction



Sec. 1124.85  Assessment for order administration.

    A pro rata share of the expense of administration of the order shall 
be paid to the market administrator by each handler on or before the 
16th day after the end of the month 4 cents per hundredweight, or such 
lesser amount as the Secretary may prescribe, with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1124.43(f) and other source milk allocated to Class 
I pursuant to Sec. 1124.44 (a)(8) and (a)(12) and the corresponding 
steps of Sec. 1124.44(b), except such other source milk on which no 
handler obligation applies pursuant to Sec. 1124.60(i) and (k); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the Class I milk:
    (1) Received during the month at such plant from pool plants and 
other

[[Page 696]]

order plants that is not used as an offset under a similar provision of 
another order issued pursuant to the Act; and
    (2) Specified in Sec. 1124.75(b)(2)(ii).
[53 FR 52976, Dec. 30, 1988, as amended at 58 FR 27888, May 11, 1993; 59 
FR 15324, Apr. 1, 1994; 62 FR 4, Jan. 2, 1997]



Sec. 1124.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments to producers (other than with respect to 
milk of such handler's own production) pursuant to Sec. 1124.73(a)(2), 
shall make a deduction of 5 cents per hundredweight of milk or such 
amount not exceeding 5 cents per hundredweight as the Secretary may 
prescribe, with respect to the following:
    (1) All milk received from producers at a plant not operated by a 
cooperative association.
    (2) All milk received at a plant operated by a cooperative 
association from producers for whom the marketing services set forth 
below in this paragraph are not being performed by the cooperative 
association as determined by the market administrator. Such deduction 
shall be paid by the handler to the market administrator on or before 
the 16th day after the end of the month. Such moneys shall be expended 
by the market administrator for the verification of weights, sampling 
and testing of milk received from producers, and in providing for market 
information to producers. Such services are to be performed in whole or 
in part by the market administrator or by an agent engaged by and 
responsible to him.
    (b) In the case of each producer;
    (1) Who is a member of, or who has given written authorization for 
the rendering of marketing services and the taking of deductions 
therefore to, a cooperative association;
    (2) Whose milk is received at a plant not operated by such 
association; and
    (3) For whom the market administrator determines that such 
association is performing the services described in paragraph (a) of 
this section, each handler shall deduct, in lieu of the deduction 
specified under paragraph (a) of this section, from the payments made 
pursuant to Sec. 1124.73(a)(2) the amount per hundredweight on milk 
authorized by such producer and shall pay, on or before the 18th day 
after the end of the month, such deduction to the association entitled 
to receive it under this paragraph.



PART1125--[RESERVED]






PART 1126--MILK IN THE TEXAS MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1126.1  General provisions.

                               Definitions

1126.2  Texas marketing area.
1126.3  Route disposition.
1126.4  Plant.
1126.5--1126.6  [Reserved]
1126.7  Pool plant.
1126.8  Nonpool plant.
1126.9  Handler.
1126.10  Producer-handler.
1126.11  [Reserved]
1126.12  Producer.
1126.13  Producer milk.
1126.14  Other source milk.
1126.15  Fluid milk product.
1126.16  Fluid cream product.
1126.17  Filled milk.
1126.18  Cooperative association.
1126.19  Current marketing period.
1126.20  [Reserved]
1126.21  Commercial food processing establishment.

                             Handler Reports

1126.30  Reports of receipts and utilization.
1126.31  Payroll reports.
1126.32  Other reports.

                         Classification of Milk

1126.40  Classes of utilization.
1126.41  Shrinkage.
1126.42  Classification of transfers and diversions.
1126.43  General classification rules.
1126.44  Classification of producer milk.
1126.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1126.50  Class prices.
1126.51  Basic formula price.
1126.52  Plant location adjustments for handlers.

[[Page 697]]

1126.53  Announcement of class prices.
1126.54  Equivalent price.
1126.55  Credits to handlers for transporting surplus milk.

                              Uniform Price

1126.60  Handler's value of milk for computing uniform price.
1126.61  Computation of uniform price (including weighted average 
          price).
1126.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1126.70  Producer-settlement fund.
1126.71  Payments to the producer-settlement fund.
1126.72  [Reserved]
1126.73  Payments to producers and to cooperative associations.
1126.74  Butterfat differential.
1126.75  Plant location adjustments for producers and on nonpool milk.
1126.76  Payments by handler operating a partially regulated 
          distributing plant.
1126.77  Adjustment of accounts.
1126.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1126.85  Assessment for order administration.
1126.86  Deduction for marketing services.

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

    Source: 40 FR 23438, May 30, 1975, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1126.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1126.2  Texas marketing area.

    The Texas marketing area, hereinafter called the ``marketing area,'' 
means all territory within the boundaries of the following Texas 
counties, including all piers, docks, and wharves connected therewith 
and all craft moored thereat, and all territory occupied by government 
(municipal, State, or Federal) reservations, installations, 
institutions, or other similar establishments if any part thereof is 
within any of the listed counties:

                                 Zone 1

    Camp, Collin, Cooke, Dallas, Delta, Denton, Ellis, Fannin, Franklin, 
Grayson, Hill (Blum and Itasca divisions only), Hood, Hopkins, Hunt, 
Johnson, Kaufman, Lamar, Morris, Parker, Rains, Red River, Rockwall, 
Somervell, Tarrant, Titus, Upshur, Van Zandt, Wise, Wood.

                                Zone 1-A

    Archer, Baylor, Clay, Hardeman, Montague, Wichita and Wilbarger.

                                 Zone 2

    Gregg, Harrison, Marion, Panola, Rusk, Smith.

                                 Zone 3

    Anderson, Bell, Bosque, Cherokee, Comanche, Coryell, Erath, Falls, 
Freestone, Hamilton, Henderson, Hill (except Blum and Itasca divisions), 
Lampasas, Limestone, McLennan, Mills, Navarro.

                                 Zone 4

    Angelina, Houston, Jasper, Leon, Nacogdoches, Newton, Polk, Sabine, 
San Augustine, Shelby, Trinity, Tyler.

                                 Zone 5

    Brazos, Robertson, Burleson, Grimes, Madison, Milam, Walker.

                                 Zone 6

    Andrews, Borden, Brown, Callahan, Coke, Coleman, Dawson, Eastland, 
Ector, Fisher, Foard, Glasscock, Haskell, Howard, Jack, Jones, Kent, 
King, Knox, Martin, Midland, Mitchell, Nolan, Palo Pinto, Runnels, 
Scurry, Shackelford, Stephens, Sterling, Stonewall, Taylor, 
Throckmorton, Tom Green, Young.

                                 Zone 7

    Bastrop, Burnet, Lee, Travis, Williamson.

                                 Zone 8

    Austin, Brazoria, Chambers, Colorado, Fayette, Fort Bend, Galveston, 
Hardin, Harris, Jefferson, Liberty, Montgomery, Orange, San Jacinto, 
Waller, Washington.

                                 Zone 9

    Bexar, Caldwell, Comal, De Witt, Gonzales, Guadalupe, Hays, Jackson, 
Lavaca, Matagorda, Wharton, Wilson.

                                 Zone 10

    Aransas, Bee, Calhoun, Goliad, Karnes, Live Oak, Refugio, Victoria.

[[Page 698]]

                                 Zone 11

    Brooks, Duval, Jim Wells, Kenedy, Kleberg, Nueces, San Patricio.

                                 Zone 12

    Cameron, Hidalgo, Willacy.
[40 FR 23438, May 30, 1975, as amended at 47 FR 54422, Dec. 3, 1982]



Sec. 1126.3  Route disposition.

    Route disposition means any delivery (including any delivery by a 
vendor or disposition at a plant store) of a fluid milk product 
classified as Class I milk, other than a delivery to a plant.



Sec. 1126.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products (including filled milk) are received, processed, or 
packaged. Separate facilities without stationary storage tanks which are 
used only as a reload point for transferring bulk milk from one tank 
truck to another or separate facilities used only as a distribution 
point for storing packaged fluid milk products in transit for route 
disposition shall not be a plant under this definition.



Secs. 1126.5--1126.6  [Reserved]



Sec. 1126.7  Pool plant.

    Except as provided in paragraph (f) of this section, pool plant 
means:
    (a) Any plant that is approved by a duly constituted regulatory 
agency for the processing or packaging of Grade A milk and from which 
during the month there is:
    (1) Route disposition, except filled milk, in the marketing area 
equal to 10 percent or more of the receipts of Grade A fluid milk 
products at such plant, including producer milk diverted from the plant; 
and
    (2) Total route disposition, except filled milk, equal to 50 percent 
or more of the receipts of Grade A fluid milk products at such plant, 
including producer milk diverted from the plant. If two plants operated 
by the same handler each meet the performance requirement of paragraph 
(a)(1) of this section and such handler requests that the two plants be 
considered together for the purpose of meeting the total route 
disposition requirement, each such plant shall be deemed to have met the 
total disposition requirement of this paragraph if the combined route 
disposition, except filled milk, of such plants is 50 percent or more of 
the combined receipts of Grade A fluid milk products at such plants, 
including producer milk diverted from the plants.
    (b) Any plant, other than a plant described in paragraph (a) of this 
section, that is approved by a duly constituted regulatory agency for 
the disposition of Grade A milk in the marketing area and from which 
during the month 50 percent or more of the receipts at such plant of 
Grade A milk from dairy farmers (including producer milk diverted from 
the plant but excluding milk received as diverted milk) and handlers 
described in Sec. 1126.9(c) is transferred in the form of a bulk fluid 
milk product, except filled milk, to pool plants described in paragraph 
(a) of this section, except that such percentage shall be 15 percent for 
the months of:
    (1) August, if the plant was a pool plant under this paragraph or 
paragraph (d) of this section during the immediately preceding month of 
July; and
    (2) December, if the plant was a pool plant under this paragraph 
during the immediately preceding month of November.
    (c) Any plant, other than a plant described in paragraph (a) or (b) 
of this section or that qualifies as a pool plant under another Federal 
order, from which during the month 50 percent or more of the receipts at 
such plant of Grade A milk from dairy farmers (including milk diverted 
from the plant but excluding milk received as diverted milk) and 
handlers described in Sec. 1126.9(c) is transferred in the form of a 
bulk fluid milk product, except filled milk, to pool plants described in 
paragraph (a) of this section and distributing plants fully regulated 
under other Federal orders, if the total quality so transferred to pool 
plants exceeds in the case of each other order the total quantity so 
transferred to other order distributing plants, except that:
    (1) For the following months, such percentage shall be 15 percent 
and shall apply only to transfers to pool plants

[[Page 699]]

described in paragraph (a) of this section:
    (i) August, if the plant was a pool plant under this paragraph or 
paragraph (d) of this section during the immediately preceding month of 
July; and
    (ii) December, if the plant was a pool plant under this paragraph 
during the immediately preceding month of November; and
    (2) Such plant shall not be a pool plant under this paragraph in any 
of the months of February through July unless it was a pool plant under 
this paragraph in three or more of the immediately preceding months of 
September through January.
    (d) Any plant during the months of February through July, other than 
a plant described in paragraph (a) of this section, that was a pool 
plant under paragraph (b) or (c) of this section during each of the 
immediately preceding months of September through January and is 
approved by a duly constituted regulatory agency for the disposition of 
Grade A milk in the marketing area, subject to the following conditions:
    (1) For the months of February through July 1975, the required 
qualification under paragraph (b) of this section in prior months shall 
be deemed to have been met if the plant was a pool supply plant under 
the Austin-Waco, West Texas, Corpus Christi, North Texas, San Antonio, 
or South Texas orders (or any combination thereof) during the months of 
September, October, and November 1974; and
    (2) If the plant operator files with the market administrator prior 
to any of the months of February through July a written request for 
nonpool status, a plant shall not be a pool plant under this paragraph 
during any of such remaining months through July.
    (e) Any plant located in the marketing area that is operated by a 
cooperative association if pool plant status under this paragraph is 
requested for such plant by the cooperative association 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, subject 
to the following conditions:
    (1) The plant does not qualify as a pool plant under paragraph (a), 
(b), (c) or (d) of this section or under the provisions of another 
Federal order applicable to a distributing plant or a supply plant; and
    (2) The plant is approved by a duly constituted regulatory agency 
for the disposition of Grade A milk in the marketing area.
    (f) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A governmental agency plant;
    (3) A plant qualified pursuant to paragraph (a) of this section 
which also meets the pooling requirements of another Federal order and 
from which there is a greater quantity of route disposition, except 
filled milk, during the month in such other Federal order marketing area 
than in this marketing area, except that if such plant was subject to 
all the provisions of this part in the immediately preceding month, it 
shall continue to be subject to all the provisions of this part until 
the third consecutive month in which a greater proportion of its route 
disposition, except filled milk, is made in such other marketing area;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which also meets the pooling requirements of another Federal order on 
the basis of route disposition in such other marketing area and from 
which there is a greater quantity of route disposition, except filled 
milk, in this marketing area than in such other marketing area but which 
plant is, nevertheless, fully regulated under such other Federal order; 
and
    (5) A plant qualified pursuant to paragraph (b) or (c) of this 
section which has automatic pooling status under another Federal order.

    Effective Date Note:  1. At 62 FR 41812, Aug. 4, 1997, in 
Sec. 1126.7, paragraph (d) introductory text, the words ``during the 
months of February through July'' and the words

[[Page 700]]

``under paragraph (b) or (c) of this section'', were suspended; and in 
paragraph (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'' were suspended, 
effective Aug. 1, 1997, through July 31, 1999.



Sec. 1126.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not an other order plant, a governmental agency plant, or a 
producer-handler plant and from which there is route disposition in 
consumer-type packages or dispenser units in the marketing area during 
the month.
    (d) Unregulated supply plant means a nonpool plant from which fluid 
milk products are moved to a pool plant during the month but which is 
not an other order plant, a governmental agency plant, or a producer-
handler plant.
    (e) Governmental agency plant means a plant operated by a 
governmental agency from which fluid milk products are distributed in 
the marketing area. Such plant shall be exempt from all provisions of 
this part.



Sec. 1126.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk of a producer 
that is diverted for the account of the cooperative association from a 
pool plant of another handler in accordance with Sec. 1126.13;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler for such milk 
and will purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) Any person who is a producer-handler; and
    (f) Any person in his capacity as the operator of an other order 
plant described in Sec. 1126.7(f).



Sec. 1126.10  Producer-handler.

    Producer-handler means any person:
    (a) Who operates a dairy farm and a processing plant from which 
there is route disposition in the marketing area;
    (b) Who receives no fluid milk products from sources other than his 
own farm production and pool plants;
    (c) Whose receipts of fluid milk products (including such products 
which he obtains at a location other than his processing plant for 
distribution on his routes) during the month from pool plants do not 
exceed the lesser of 5 percent of his Class I disposition during the 
month or 10,000 pounds;
    (d) Who disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from his own farm production or pool plants; and

[[Page 701]]

    (e) Who provides proof satisfactory to the market administrator that 
the care and management of the dairy farm and other resources necessary 
for his own farm production of milk and the management and operation of 
the processing plant are the personal enterprise and risk of such 
person.
[40 FR 23438, May 30, 1975, as amended at 44 FR 5868, Jan. 30, 1979]



Sec. 1126.11  [Reserved]



Sec. 1126.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for disposition in the marketing area as Grade A milk 
and whose milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1126.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1126.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) A governmental agency that operates a plant exempt pursuant to 
Sec. 1126.8(e);
    (3) Any person with respect to milk produced by him that is diverted 
to a pool plant from an other order plant if the other order designates 
such person as a producer under that order and such milk is allocated to 
Class II or Class III utilization pursuant to Sec. 1126.44(a)(8)(iii) 
and the corresponding step of Sec. 1126.44(b);
    (4) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I under the provisions of such other 
order; or
    (5) Any person with respect to milk produced by him during the 
months of February through July that is caused to be delivered to a pool 
plant by a cooperative association or a pool plant operator if during 
any of the immediately preceding months of September through November 
more than one-third of the milk from the same farm was caused by such 
cooperative association or pool plant operator to be delivered to plants 
as other than producer milk (except milk that is not producer milk as a 
result of a temporary loss of grade A approval or the application of 
Sec. 1126.13(e) (4) and (5)), unless such pool plant was a nonpool plant 
during any of such immediately preceding months.
[40 FR 23438, May 30, 1975, as amended at 43 FR 44825, Sept. 29, 1978]

    Effective Date Note: At 59 FR 26737, May 24, 1994, Sec. 1126.12 
paragraph (b)(5) was suspended effective May 24, 1994.



Sec. 1126.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1126.9(c);
    (c) Picked up from the producer's farm tank in a tank truck owned 
and operated by, or under the control of, the operator of a pool plant 
but which is not received at a plant until the following month. Such 
milk shall be considered as having been received by the handler during 
the month in which it is picked up at the producer's farm and shall be 
priced at the location of the plant where it is physically received in 
the following month. This paragraph shall apply in like manner to milk 
received by the operator of a pool plant who, in accordance with 
Sec. 1126.9(c), is the handler for such milk;
    (d) Diverted from a pool plant described in Sec. 1126.7(a) for the 
account of the handler operating such plant to another pool plant, 
except that milk diverted to a plant operated by a cooperative 
association may not be milk of the cooperative association's members. 
Milk so diverted shall be priced at the plant to which diverted; or
    (e) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant for the account of the handler operating such 
pool plant or a handler described in Sec. 1126.9(b), subject to the 
following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion 
during any month unless milk of such dairy farmer was physically 
received as producer milk at a pool plant and the dairy farmer has 
continuously retained producer status

[[Page 702]]

since that time 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. If a 
dairy farmer loses his producer status under this order (except as a 
result of a temporary loss of Grade A approval), his milk shall not be 
eligible for diversion until milk of such dairy farmer has been 
physically received as producer milk at a pool plant;
    (2) The total quantity of milk so diverted during the month by a 
cooperative association shall not exceed one-third of the producer milk 
that the cooperative association causes to be delivered during the month 
to pool plants described in Sec. 1126.7(a), (b), (c), and (d) and that 
is physically received thereat;
    (3) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (e)(2) of this section. 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;
    (4) Any milk diverted in excess of the limits prescribed in 
paragraphs (e) (2) and (3) of this section shall not be producer milk. 
If the diverting handler fails to designate the dairy farmers' 
deliveries that are not to be producer milk, no milk diverted by the 
handler during the month to a nonpool plant shall be producer milk;
    (5) The quantity of milk diverted for the account of a cooperative 
association from a pool plant of another handler that would cause the 
pool plant to become a nonpool plant shall not be producer milk; and
    (6) Diverted milk shall be priced at the location of the plant to 
which diverted.
[40 FR 23438, May 30, 1975, as amended at 43 FR 44825, Sept. 29, 1978; 
44 FR 5868, Jan. 30, 1979; 44 FR 50323, Aug. 28, 1979]

    Effective Date Note: 1. At 62 FR 41812, Aug. 4, 1997, in 
Sec. 1126.13, paragraph (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'', were suspended; entire paragraph (e)(2) was suspended; and 
in paragraph (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;'' was suspended, 
effective Aug. 1, 1997, through July 31, 1999.



Sec. 1126.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1126.40(b)(1) from any source other than producers, handlers 
described in Sec. 1126.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1126.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1126.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1126.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1126.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk

[[Page 703]]

or skim milk, formulas especially prepared for infant feeding or dietary 
use that are packaged in hermetically sealed containers, any product 
that contains by weight less than 6.5 percent nonfat milk solids, and 
whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27888, May 11, 1993]



Sec. 1126.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27888, May 11, 1993]



Sec. 1126.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1126.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) To be qualified under the provisions of the act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales or marketing milk or its products 
for its members.



Sec. 1126.19  Current marketing period.

    For the purpose of terminating this order under Sec. 608c(16)(B) of 
the Act, the term current marketing period shall mean the first month 
following the date on which the Secretary publicly announces his finding 
that the termination of the order is favored by such majority of 
producers under the order as is prescribed by the Act.



Sec. 1126.20  [Reserved]



Sec. 1126.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1126.13, 1126.41 and 1126.52.
[58 FR 27888, May 11, 1993]

                             Handler Reports



Sec. 1126.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1126.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1126.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products

[[Page 704]]

required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1126.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of producer milk; and
    (2) The utilization or disposition of such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.



Sec. 1126.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler who elects pursuant to Sec. 1126.73(d) to pay producers shall 
report to the market administrator the following information with 
respect to the handler's partial and final payments for producer milk 
received during such month:
    (1) The name and address of each producer;
    (2) The amounts paid each producer; and
    (3) The dates such payments were made.
    (b) On or before the 20th day after the end of the month, each 
handler operating a partially regulated distributing plant who elects to 
make payment pursuant to Sec. 1126.76(b) shall report to the market 
administrator with respect to milk received from each dairy farmer who 
would have been a producer if the plant had been fully regulated the 
following information for such month:
    (1) The name and address of each dairy farmer;
    (2) The total pounds of milk received from each dairy farmer;
    (3) The average butterfat content of such milk;
    (4) The amount and nature of any deductions, as authorized in 
writing by the dairy farmer, from the payment for such milk; and
    (5) The rate of payment per hundred-weight and the net amount paid 
each dairy farmer.



Sec. 1126.32  Other reports.

    (a) On or before the 24th day of each month, each handler described 
in Sec. 1126.9(a), (b), and (c), except a cooperative association with 
respect to producer milk for which it elects to collect payments, shall 
report to the market administrator the following information with 
respect to its receipts of milk during the first 18 days of the month:
    (1) The name and address of each producer from whom milk was 
received;
    (2) The total pounds of producer milk received from such producer;
    (3) The amount and nature of any deductions, as authorized in 
writing by the producer, to be made from the partial payment for such 
milk;
    (4) The total pounds of milk received from a handler described in 
Sec. 1126.9(c); and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (b) On or before the 6th day after the end of each month, each 
handler described in Sec. 1126.9(a), (b), and (c) shall report to the 
market administrator the following information with respect to its 
receipts of milk during such month:
    (1) The name and address of each producer from whom milk was 
received;
    (2) The total pounds of producer milk received from such producer 
and its average butterfat content;
    (3) Except in the case of producer milk for which a cooperative 
association is collecting payments, the amount and nature of any 
deductions, as authorized in writing by the producer, to be made from 
the final payment for such milk;
    (4) The total pounds of skim milk and butterfat received from a 
handler described in Sec. 1126.9(c); and

[[Page 705]]

    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (c) On or before the second day prior to the reporting dates 
specified in paragraphs (a) and (b) of this section, each cooperative 
association that operates a pool plant from which bulk fluid milk 
products were transferred to pool plants of other handlers within the 
time periods described in paragraphs (a) and (b) of this section shall 
report to each such pool plant operator the name and location of the 
transferor-plant and the total pounds and butterfat content of the bulk 
fluid milk products transferred from the plant.
    (d) In addition to the reports required pursuant to paragraphs (a) 
through (c) of this section and Secs. 1126.30 and 1126.31, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.

                         Classification of Milk



Sec. 1126.40  Classes of utilization.

    Except as provided in Sec. 1126.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1126.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and

[[Page 706]]

    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1126.15 and the fluid 
cream product definition pursuant to Sec. 1126.16; and
    (7) In shrinkage assigned pursuant to Sec. 1126.41(a) to the 
receipts specified in Sec. 1126.41(a)(2) and in shrinkage specified in 
Sec. 1126.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27888, May 11, 1993, as amended at 58 FR 63291, Dec. 1, 1993]



Sec. 1126.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1126.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1126.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
face, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph shall be 2 
percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;

[[Page 707]]

    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1126.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1126.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless both handlers request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1126.44(a)(12) and the corresponding 
step of Sec. 1126.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1126.44(a)(7) 
or the corresponding step of Sec. 1126.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1126.44(a)(11) or (12) or the corresponding steps of 
Sec. 1126.44(b), the skim milk or butterfat so transferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk 
to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective

[[Page 708]]

market administrators, transfers or diversions in bulk form shall be 
classified as Class II or Class III milk to the extent of such 
utilization available for such classification pursuant to the allocation 
provisions of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1126.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
governmental agency plants. Skim milk or butterfat transferred in the 
following forms from a pool plant to a producer-handler under this or 
any other Federal order or transferred or diverted from a pool plant to 
a governmental agency plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or a governmental agency plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1126.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence;
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at

[[Page 709]]

such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this paragraph.
    (e) Transfers by a handler described in Sec. 1126.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1126.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1126.44 pro rata with producer milk 
received at the transferee-handler's plant.
[40 FR 23438, May 30, 1975, as amended at 58 FR 27889, May 11, 1993]



Sec. 1126.43  General classification rules.

    In determining the classification of producer milk, the following 
rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1120.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1126.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1126.40, 1126.41, and 1126.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1126.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1126.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products

[[Page 710]]

that are reconstituted for fluid use shall be assigned to Class I use, 
up to the reconstituted portion of labeled reconstituted fluid milk 
products, on a pro rata basis (except for any Class I use of specific 
concentrated receipts that is established by the handler) prior to any 
assignments under Sec. 1126.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1126.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[40 FR 23438, May 30, 1975, as amended at 58 FR 27889, May 11, 1993; 58 
FR 63291, Dec. 1, 1993]



Sec. 1126.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1126.9(a) for each of his pool plants 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1126.9(c), by allocating the handler's 
receipts of skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1126.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1126.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1126.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1126.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1126.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:

[[Page 711]]

    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1126.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant; 
and
    (vii) Receipts of fluid milk products from a person described in 
Sec. 1126.12(b)(5);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a) (2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a) (2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1126.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of

[[Page 712]]

skim milk in fluid milk products and products specified in 
Sec. 1126.40(b)(1) in inventory at the beginning of the month that were 
not subtracted pursuant to paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) 
of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a) (2)(i), (7)(v), and (8) (i) and (ii) of this section and that were 
not offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a) (7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1126.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in

[[Page 713]]

Class I after such proration at the pool plants at which such other 
source milk was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk, remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1126.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1126.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1126.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[40 FR 23438, May 30, 1975, as amended at 58 FR 27889, May 11, 1993]



Sec. 1126.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1126.44(a)(12) and the corresponding 
step of Sec. 1126.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1126.43(d) and Sec. 1126.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products

[[Page 714]]

to an other order plant the class to which such shipments were allocated 
by the market administrator of the other order on the basis of the 
report by the receiving handler, and, as necessary, any changes in such 
allocation arising from the verification of such report.
    (d) On or before the 14th day after the end of each month, report to 
each cooperative association which so requests the amount and class 
utilization of milk received by each handler from producers who are 
members of such cooperative association. For the purpose of this report 
the milk so received shall be prorated to each class in the proportion 
that the total receipts of milk from producers by such handler were used 
in each class.
[40 FR 23438, May 30, 1975, as amended at 58 FR 27890, May 11, 1993]

                              Class Prices



Sec. 1126.50  Class prices.

    Subject to the provisions of Sec. 1126.52, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus $3.16.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
[40 FR 23438, May 30, 1975, as amended at 46 FR 43402, Aug. 28, 1981; 56 
FR 52447, Oct. 21, 1991; 58 FR 63291, Dec. 1, 1993; 60 FR 6612, Feb. 2, 
1995]



Sec. 1126.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1126.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar

[[Page 715]]

cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18976, Apr. 14, 1995]



Sec. 1126.52  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or a handler 
described in Sec. 1126.9(c) and which is classified as Class I milk 
without movement in bulk form to a pool distributing plant at which a 
higher Class I price applies, the price specified in Sec. 1126.50(a) 
shall be adjusted by the amount stated in paragraphs (a) (1) through (8) 
of this section for the location of such plant;
    (1) For a plant located within one of the zones set forth in 
Sec. 1126.2, the adjustment shall be as follows:

                                                                        
------------------------------------------------------------------------
                                           Adjustment per hundredweight 
------------------------------------------------------------------------
Zone 1.................................  No adjustment.                 
Zone 1A................................  Minus 25 cents.                
Zone 2.................................  No adjustment.                 
Zone 3.................................  Plus 15 cents.                 
Zone 4.................................  Plus 18 cents.                 
Zone 5.................................  Plus 20 cents.                 
Zone 6.................................  Minus 21 cents.                
Zone 7.................................  Plus 30 cents.                 
Zone 8.................................  Plus 54 cents.                 
Zone 9.................................  Plus 42 cents.                 
Zone 10................................  Plus 53 cents.                 
Zone 11................................  Plus 66 cents.                 
Zone 12................................  Plus 75 cents.                 
------------------------------------------------------------------------

    (2) For a plant located in the New Mexico-West Texas marketing area, 
the minus adjustment shall be the difference between the applicable 
Class I price effective at such plant location under the New Mexico-West 
Texas order (7 CFR part 1138) and the Class I price specified in 
Sec. 1126.50(a).
    (3) For a plant located in Bowie or Cass County, Texas, the 
adjustment shall be minus 8 cents.
    (4) For a plant located in the State of Texas that is outside the 
designated pricing areas described in paragraphs (a) (1) through (3) of 
this section, the adjustment shall be the adjustment applicable at the 
nearer of Corpus Christi, San Angelo, or San Antonio, Texas, except that 
for a plant located in the Texas counties of Brewster, Crane, Crockett, 
Culberson, Hudspeth, Irion, Jeff Davis, Loving, Pecos, Presidio, Reagan, 
Reeves, Terrell, Upton, Ward, and Winkler, the adjustment shall be minus 
2.2 cents per hundredweight for each 10 miles or fraction thereof that 
such plant is located from the City Hall in San Angelo, Texas (based on 
the shortest hard-surfaced highway distance as determined by the Market 
Administrator.)

[[Page 716]]

    (5) For a plant located in the Southwest Plains marketing area or in 
Pulaski County, Missouri, the minus adjustment shall be the difference 
between the applicable Class I price effective under the Southwest 
Plains order (7 CFR part 1106) and the Class I price specified in 
Sec. 1126.50(a).
    (6) For a plant located in the State of Arkansas, the minus 
adjustment shall be the difference between the applicable Class I price 
effective at such plant location under the Central Arkansas order (7 CFR 
part 1108) and the Class I price specified in Sec. 1126.50(a).
    (7) For a plant located in the State of Louisiana, the plus 
adjustment shall be the difference between the applicable Class I price 
effective at such plant location under the Greater Louisiana order (7 
CFR part 1096) and Class I price specified in Sec. 1126.50(a).
    (8) For a plant located outside the designated pricing areas 
described in paragraphs (a) (1) through (7) of this section, the 
adjustment shall be minus 2.2 cents per hundredweight for each 10 miles 
or fraction thereof that such plant is located from the City Hall in 
Dallas, Texas, (based on the shortest hard-surfaced highway distance as 
determined by the Market Administrator.)
    (b) For fluid milk products transferred in bulk from a pool plant to 
a pool distributing plant at which a higher Class I price applies and 
which are classified as Class I milk, the Class I price shall be the 
Class I price applicable at the location of the transferee-plant subject 
to a location adjustment credit for the transferor-plant which shall be 
determined by the market administrator for skim milk and butterfat, 
respectively, as follows:
    (1) Subtract from the pounds of skim milk remaining in Class I at 
the transferee-plant after the computations pursuant to 
Sec. 1126.44(a)(12) plus the pounds of skim milk in receipts of 
concentrated fluid milk products from other pool plants that are 
assigned to Class I use, an amount equal to:
    (i) 95 percent of the pounds of skim milk in receipts of milk at the 
transferee-plant from producers and handlers described in 
Sec. 1126.9(c); and
    (ii) The pounds of skim milk in receipts of packaged fluid milk 
products from other pool plants;
    (2) Assign any remaining pounds of skim milk in Class I at the 
transferee-plant to the skim milk in receipts of bulk fluid milk 
products from other pool plants, first to the transferor-plants at which 
the highest Class I price applies and then to other plants in sequence 
beginning with the plant at which the next highest Class I price 
applies;
    (3) Compute the total amount of location adjustment credits to be 
assigned to transferor-plants by multiplying the hundredweight of skim 
milk assigned pursuant to paragraph (b)(2) of this section to each 
transferor-plant at which the Class I price is lower than the Class I 
price at the transferee-plant by the difference in Class I prices 
applicable at the transferor-plant and transferee-plant, and add the 
resulting amounts;
    (4) Assign the total amount of location adjustment credits computed 
pursuant to paragraph (b)(3) of this section to those transferor-plants 
that transferred fluid milk products containing skim milk classified as 
Class I milk pursuant to Sec. 1126.42(a) and at which the applicable 
Class I price is less than the Class I price at the transferee-plant, in 
sequence beginning with the plant at which the highest Class I price 
applies. Subject to the availability of such credits, the credit 
assigned to each plant shall be equal to the hundredweight of such Class 
I skim milk multiplied by the applicable adjustment rate determined 
pursuant to paragraph (b)(3) of this section for such plant. If the 
aggregate of this computation for all plants having the same adjustment 
rate as determined pursuant to paragraph (b)(3) of this section exceeds 
the credits that are available to those plants, such credits shall be 
prorated to the volume of skim milk in Class I transfers from such 
plants; and
    (5) Location adjustment credit for butterfat shall be determined in 
accordance with the procedure outlined for skim milk in paragraphs (b) 
(1) through (4) of this section.
    (c) The Class I price applicable to other source milk shall be 
adjusted by the amounts set forth in paragraph (a)

[[Page 717]]

of this section, except that the adjusted Class I price shall not be 
less than the Class III price.
[40 FR 23438, May 30, 1975, as amended at 47 FR 54422, Dec. 3, 1982; 56 
FR 52447, Oct. 21, 1991; 58 FR 27890, May 11, 1993]



Sec. 1126.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6612, Feb. 2, 1995]



Sec. 1126.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constitutent that is required.



Sec. 1126.55  Credits to handlers for transporting surplus milk.

    For each of the months of March through June and December 16-31, a 
transportation credit shall be computed for each handler on the amount 
of producer milk that is classified as Class II or Class III pursuant to 
Sec. 1126.42 (b)(3) or (d)(2) that such handler transfers or diverts to 
nonpool plants located outside the State of Texas. Credits established 
pursuant to paragraphs (a) and (b) of this section shall be computed at 
the rate of 2.4 cents per hundredweight for each 10 miles, or fraction 
thereof, for the shortest hard-surfaced highway distance, as determined 
by the market administrator. The amount of milk eligible for a 
transportation credit and the amount of such credit shall be established 
in accordance with paragraphs (a), (b), and (c) of this section subject 
to the limitations specified in paragraph (d) of this section.
    (a) A transfer credit shall apply to bulk fluid milk products 
transferred by a handler from a pool plant located in Zone 1 of the 
marketing area for the distance between the transferor pool plant and 
the transferee nonpool plant.
    (b) A credit for diverted milk shall apply to milk produced in Zone 
1, 1-A, or 3 of the marketing area or the Oklahoma counties of Atoka, 
Bryan, Carter, Choctaw, Comanche, Cotton, Greer, Harmon, Jackson, 
Jefferson, Johnston, Kiowa, Love, Marshall, McCurtain, Murray, 
Pushmataha, Stephens, or Tillman that is diverted to a nonpool plant for 
the distance in excess of 100 miles between the nonpool plant and the 
nearer of the city hall in Dallas, Texas, the pool plant of last receipt 
for the major portion of the milk on the route, or the courthouse of the 
county where the major portion of the milk on the load was produced.
    (c) A credit for diverted milk produced in the area specified in 
paragraph (b) of this section shall also include an amount per 
hundredweight equal to the difference between the location adjustment 
(excluding any plus adjustment) applicable in the area where the milk 
was produced and any greater minus location adjustment applicable at the 
location of the nonpool plant where the milk was received.
    (d) No credit shall apply to the total quantity of milk moved to a 
given nonpool plant by a handler during each of the credit periods if 
any portion of the milk is assigned to Class I. Also, the amount of milk 
to which a credit would be applicable during each of the credit periods 
pursuant to paragraphs (a), (b), and (c) of this section shall be offset 
by the amount of milk that a handler or any affiliate of the handler 
causes to be received at plants located in the marketing area from 
outside the State of Texas during each of the credit periods, with such 
offset to be applied in sequence beginning with the nonpool plant at 
which the greatest credit would apply.
[53 FR 39445, Oct. 7, 1988]

                              Uniform Price



Sec. 1126.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of

[[Page 718]]

each handler described in Sec. 1126.9(b) and (c) with respect to milk 
that was not received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1126.9(c) that were classified in each class 
pursuant to Secs. 1126.43(a) and 1126.44(c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1126.44(a)(14) and the 
corresponding step of Sec. 1126.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1126.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1126.44(a)(9) and the corresponding step of Sec. 1126.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1126.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1126.44(a)(7) (i) through (iv) and (vii), and the corresponding 
step of Sec. 1126.44(b), excluding receipts of bulk fluid cream products 
from an other order plant and bulk concentrated fluid milk products from 
pool plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1126.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1126.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1126.43(d) and Sec. 1126.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1126.44(a)(11) and the corresponding steps of Sec. 1126.44(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;
    (g) Subtract for a handler described in Sec. 1126.9(c) the amount 
obtained from multiplying the Class III price for the preceding month, 
as adjusted by the butterfat differential specified in Sec. 1126.74, by 
the hundredweight of skim milk and butterfat contained in inventory at 
the beginning of the month that was delivered to another handler's pool 
plant during the month;
    (h) Deduct any credit applicable pursuant to Sec. 1126.55;
    (i) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1126.43(d);
    (j) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1126.76(a)(5) or (c); and
    (k) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price

[[Page 719]]

change shall be applied to the plant that used the concentrated milk in 
the event that the concentrated fluid milk products were made from bulk 
unconcentrated fluid milk products received at the plant during the 
prior month.
[40 FR 23438, May 30, 1975, as amended at 53 FR 39445, Oct. 7, 1988; 58 
FR 27890, May 11, 1993]



Sec. 1126.61  Computation of uniform price (including weighted average price).

    For each month the market administrator shall compute the ``uniform 
price'' (and ``weighted average price'') per hundredweight for milk of 
3.5 percent butterfat content at pool plants at which no location 
adjustment applies as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1126.60 for all handlers who filed the reports prescribed in 
Sec. 1126.30 for the month and who made the payments pursuant to 
Sec. 1126.71 for the preceding month;
    (b) Add not less than one-fourth of the unobligated balance in the 
producer-settlement fund;
    (c) Add the aggregate of all minus location adjustments and subtract 
the aggregate of all plus location adjustments pursuant to Sec. 1126.75;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1126.60(f); and
    (e) Subtract not more than 5 cents per hundredweight. The result 
shall be the ``weighted average price.''
    (f) The weighted average price shall be the ``uniform price'' for 
milk received from producers.
[44 FR 18939, Mar. 30, 1979, as amended at 44 FR 53721, Sept. 17, 1979; 
50 FR 12766, Apr. 1, 1985]



Sec. 1126.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The 5th day after the end of each month the butterfat 
differential for such month; and
    (b) The 13th day after the end of each month the uniform price for 
such month.

                            Payments for Milk



Sec. 1126.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund,'' into which he shall 
deposit the payments made by handlers pursuant to Secs. 1126.71, 
1126.76, and 1126.77 and from which he shall make all payments pursuant 
to Secs. 1126.73 (a) through (f) and 1126.77, except that payments to a 
cooperative association pursuant to Sec. 1126.73(c) shall be offset by 
any payments due from such cooperative association pursuant to 
Sec. 1126.1 that have not been received by the market administrator.



Sec. 1126.71  Payments to the producer-settlement fund.

    (a) Subject to paragraphs (c) and (d) of this section, each handler 
shall pay to the market administrator on or before the 26th day of each 
month an amount determined by multiplying the handlers receipts during 
the first 18 days of such month of producer milk (excluding, in the case 
of a handler described in Sec. 1126.9(c), producer milk delivered to a 
pool plant) and milk from a handler described in Sec. 1126.9(c) by the 
Class III price for the preceding month, less:
    (1) Payments made by the handler on or before such date to producers 
for milk received during the 18-day period; and
    (2) Proper deductions authorized in writing by producers from whom 
the handler received milk, except that the amount deducted for each 
producer shall not exceed the value (at the Class III price) of the milk 
received from the producer during the 18-day period.
    (b) Subject to paragraphs (c) and (d) of this section, each handler 
shall pay to the market administrator on or before the 16th day after 
the end of each month an amount equal to such handler's value of milk 
for such month determined pursuant to Sec. 1126.60(a), as adjusted by 
the butterfat differential specified in Sec. 1126.74, and pursuant to 
Sec. 1126.60(b) through (g), less:

[[Page 720]]

    (1) Payments made by the handler pursuant to paragraph (a) of this 
section for such month;
    (2) Payments, other than those specified in Sec. 1126.73(d), that 
were made by the handler on or before such date to producers for milk 
received during such month;
    (3) Proper deductions for the month that were authorized in writing 
by producers from whom the handler received milk, except that the amount 
deducted for each producer shall not exceed the value of the milk 
received from the producer during the month; and
    (4) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value was computed pursuant to Sec. 1126.60(f).
    (c) The following conditions shall apply with respect to the 
payments prescribed in paragraphs (a) and (b) of this section:
    (1) Payments to the market administrator shall be deemed not to have 
been made until such payments have been received by the market 
administrator; and
    (2) If the date by which payments must be received by the market 
administrator falls on a Saturday or Sunday or on any Monday that is a 
national holiday, payments shall not be due until the next day on which 
the market administrator's office is open for public business.
    (d) Payments due the market administrator from a cooperative 
association handler may be offset by payments determined by the market 
administrator to be due the cooperative association pursuant to 
Sec. 1126.73(c).
    (e) On or before the 25th day after the end of the month, each 
person who operated an other order plant that was regulated during such 
month under an order providing for individual-handler pooling shall pay 
to the market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (e)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
[40 FR 23438, May 30, 1975, as amended at 44 FR 18939, Mar. 30, 1979]



Sec. 1126.72  [Reserved]



Sec. 1126.73  Payments to producers and to cooperative associations.

    (a) Subject to paragraphs (c) through (f) of this section, the 
market administrator shall pay each producer on or before the 28th day 
of each month for milk for which payment pursuant to Sec. 1126.71(a) has 
been received by the market administrator. Such payment shall be at a 
rate per hundredweight equal to the Class III price for the preceding 
month less the amounts specified in Sec. 1126.71(a)(1) and (2).
    (b) Subject to paragraphs (c) through (f) of this section, the 
market administrator shall pay each producer on or before the 18th day 
after the end of each month for milk for which payment pursuant to 
Sec. 1126.71(b) has been received by the market administrator or offset 
pursuant to Sec. 1126.71(d). Such payment shall be at the uniform price 
computed pursuant to Sec. 1126.61 for the month, subject to the 
following adjustments:
    (1) Any applicable adjustments pursuant to Secs. 1126.74 and 
1126.75;
    (2) Less the payments described in Sec. 1126.71(b)(2) and paragraph 
(a) of this section;
    (3) Less deductions for marketing services pursuant to Sec. 1126.86;
    (4) Less the authorized deductions specified in Sec. 1126.71(b)(3); 
and
    (5) Any adjustments for errors in calculating payments to an 
individual producer for past months.
    (c) In making payments to producers pursuant to paragraphs (a) and 
(b) of this section, the market administrator,

[[Page 721]]

on or before the day prior to the dates specified in such paragraphs, 
shall pay to each cooperative association that so requests with respect 
to those producers for whom it markets milk and who are certified to the 
market administrator by the cooperative association as having authorized 
the cooperative association to receive such payment an amount equal to 
the sum of the individual payments otherwise due such producers pursuant 
to paragraphs (a) and (b) of this section.
    (d) In making payments to producers pursuant to paragraphs (a) and 
(b) of this section, the market administrator, on or before the day 
prior to the dates specified in such paragraphs, shall pay to each 
handler who so requests for milk received by the handler from producers 
for whom a cooperative association is not collecting payments pursuant 
to paragraph (c) of this section an amount equal to the sum of the 
individual payments otherwise due such producers pursuant to paragraphs 
(a) and (b) of this section. The handler then shall pay the individual 
producers the amounts due them by the respective dates specified in 
paragraphs (a) and (b) of this section. Any handler who the market 
administrator determines is or was delinquent with respect to any 
payment obligation under this order shall not be eligible to participate 
in this payment arrangement until the handler has met all prescribed 
payment obligations for three consecutive months. In making payments to 
producers pursuant to this paragraph, the handler shall furnish each 
producer the following information:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds and, with respect to final payments, the 
average butterfat content of the milk for which payment is being made;
    (3) The minimum rate of payment required by the order and the rate 
of payment used if such rate is other than the applicable minimum rate;
    (4) The amount and nature of any deductions from the amount 
otherwise due the producer; and
    (5) The net amount of payment to the producer.
    (e) The following conditions shall apply with respect to the 
payments prescribed in paragraphs (a) through (d) of this section:
    (1) If the date by which such payments are to be made falls on a 
Saturday or Sunday or on any Monday that is a national holiday, such 
payments need not be made until the next day on which the market 
administrator's office is open for public business; and
    (2) If the application of Sec. 1126.71(c)(2) or paragraph (e)(1) of 
this section results in a delay in the partial or final payments by 
handlers to the market administrator or by the market administrator to 
handlers, the corresponding partial or final payments prescribed in 
paragraphs (a) through (d) of this section may be delayed by the same 
number of days.
    (f) If the market administrator does not receive the full payment 
required of a handler pursuant to Sec. 1126.71, he shall reduce 
uniformly per hundredweight the payments due producers for their milk 
received by such handler by a total amount not in excess of the amount 
due from such handler. The market administrator shall complete such 
payments on or before the next date for making payments pursuant to this 
section following the date on which the remaining payment is received 
from such handler.
    (g) Subject to Sec. 1126.71(c)(1) and (2), each handler who receives 
bulk fluid milk products from a pool plant operated by a cooperative 
association shall pay the following amounts for such milk to the market 
administrator, who in turn shall transmit such money to the cooperative 
association:
    (1) On or before the 26th day of each month, an amount determined by 
multiplying such receipts during the first 18 days of the month by the 
Class III price for the preceding month. If the handler so elects, such 
price may be adjusted by the butterfat differential specified in 
Sec. 1126.74 for the preceding month; and
    (2) On or before the 16th day after the end of each month, an amount 
determined by multiplying the quantity of such receipts during the month 
that was classified in each class pursuant to Sec. 1126.42(a) by the 
applicable class price,

[[Page 722]]

as adjusted by the butterfat differential specified in Sec. 1126.74, 
less any payment made by the handler pursuant to paragraph (g)(1) of 
this section for such month. For the purpose of such computation, the 
applicable Class I price shall be the higher of the Class I prices 
applicable at the transferee-plant and the transferor-plant.
[40 FR 23438, May 30, 1975, as amended at 44 FR 5868, Jan. 30, 1979]



Sec. 1126.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1126.51 (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.
[60 FR 18976, Apr. 14, 1995]



Sec. 1126.75  Plant location adjustments for producers and on nonpool milk.

    (a) In making the payments required pursuant to Sec. 1126.73, the 
uniform price computed pursuant to Sec. 1126.61 for the month shall be 
adjusted by the amounts set forth in Sec. 1126.52 according to the 
location of the plant where the milk being priced was received.
    (b) For purposes of computing the value of other source milk 
pursuant to Sec. 1126.71, the weighted average price shall be adjusted 
by the amount set forth in Sec. 1126.52 that is applicable at the 
location of the nonpool plant from which the milk was received, except 
that the adjusted weighted average price shall not be less than the 
Class III price.
[40 FR 23438, May 30, 1975, as amended at 44 FR 18939, Mar. 30, 1979]



Sec. 1126.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1126.30(b) and 1126.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and the weighted average price shall not 
be less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference

[[Page 723]]

between the Class I price applicable at the location of the partially 
regulated distributing plant less $1.00 (but not to be less than the 
Class III price) and the Class III price. For any reconstituted milk 
that is not so labeled, the Class I price shall not be reduced by $1.00. 
Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1126.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1126.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1126.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1126.60(f) less the value of such other source milk 
specified in Sec. 1126.71(b)(4), a value of milk determined pursuant to 
Sec. 1126.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distibuting plant 
during the month equivalent to the requirements of Sec. 1126.7(b) and 
the corresponding provisions of Sec. 1126.7(d), subject to the following 
conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1126.30(b) and 
1126.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1126.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and

[[Page 724]]

    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1126.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1126.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1126.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[40 FR 23438, May 30, 1975, as amended at 44 FR 18939, Mar. 30, 1979; 58 
FR 27890, May 11, 1993]



Sec. 1126.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made, for any 
reason, which result in monies due the market administrator from such 
handler, the market administrator shall promptly notify such handler of 
any such amount due, and payment thereof shall be made on or before the 
next day for making payment set forth in the provision under which such 
error occurred. Any monies found to be due a handler from the market 
administrator shall be paid promptly to such handler, except that the 
market administrator shall offset any monies due a handler against 
monies due from such handler.



Sec. 1126.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1126.71, 
1126.73(g), 1126.76, 1126.77, or 1126.85 shall be increased three-
fourths of 1 percent per month beginning on the first day after the due 
date, and on each date of subsequent months following the day on which 
such type of obligation is normally due, subject to the following 
conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
interest charges previously computed pursuant to this section; and
    (b) For the purpose of this section, any obligation that was 
determined at a date later than that prescribed by the order because of 
a handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.

[[Page 725]]

        Administrative Assessment and Marketing Service Deduction



Sec. 1126.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 16th 
day after the end of the month 4 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe, with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1126.9(c) that were delivered to pool plants of other handlers or 
held in inventory at the end of the month;
    (b) Receipts from a handler described in Sec. 1126.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1126.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1126.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1126.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1126.60 (d) and (f); and
    (d) Route disposition from a partially regulated distributing plant 
in the marketing area that exceeds the skim milk and butterfat specified 
in Sec. 1126.76(a)(2).
[40 FR 23438, May 30, 1975, as amended at 58 FR 27891, May 11, 1993]



Sec. 1126.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, the market 
administrator, in making payments to producers pursuant to Sec. 1126.73, 
shall deduct 5 cents per hundredweight, or such lesser amount as the 
Secretary may prescribe, with respect to the milk of such producer 
(except a handler's own farm production) for whom the marketing services 
set forth in this paragraph are not being performed by a cooperative 
association as determined by the Secretary. The monies shall be used by 
the market administrator to verify or establish weights, samples, and 
tests of producer milk and to provide producers with market information. 
The services shall be performed by the market administrator or an agent 
engaged by and responsible to him.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, the market administrator shall make, in lieu of the deduction 
specified in paragraph (a) of this section, such deductions from the 
payments to be made to such producers as may be authorized by the 
membership agreement or marketing contract between such cooperative 
association and such producers and on or before the 18th day after the 
end of each month shall pay such deductions to the cooperative 
association rendering such services, accompanied by a statement showing 
the quantity of milk for which a deduction was computed for each such 
producer.



PART 1131--MILK IN CENTRAL ARIZONA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1131.1  General provisions.

                               Definitions

1131.2  Central Arizona marketing area.
1131.3  Route disposition.
1131.4--1131.6  [Reserved]
1131.7  Pool plant.
1131.8  Nonpool plant.
1131.9  Handler.
1131.10  Producer-handler.
1131.11  [Reserved]
1131.12  Producer.
1131.13  Producer milk.
1131.14  Other source milk.
1131.15  Fluid milk product.
1131.16  Fluid cream product.
1131.17  Filled milk.
1131.18  Cooperative association.
1131.19  Commercial food processing establishment.
1131.20  [Reserved]

                             Handler Reports

1131.30  Reports of receipts and utilization.
1131.31  Payroll reports.
1131.32  Other reports.

                         Classification of Milk

1131.40  Classes of utilization.
1131.41  Shrinkage.

[[Page 726]]

1131.42  Classification of transfers and diversions.
1131.43  General classification rules.
1131.44  Classification of producer milk.
1131.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1131.50  Class prices.
1131.51  Basic formula price.
1131.52  Plant location adjustments for handlers.
1131.53  Announcement of class prices.
1131.54  Equivalent price.

                              Uniform Price

1131.60  Handler's value of milk for computing uniform price.
1131.61  Computation of uniform price.
1131.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1131.70  Producer-settlement fund.
1131.71  Payments to the producer-settlement fund.
1131.72  Payments from the producer-settlement fund.
1131.73  Payments to producers and to cooperative associations.
1131.74  Butterfat differential.
1131.75  Plant location adjustments for producers and on nonpool milk.
1131.76  Payments by handler operating a partially regulated 
          distributing plant.
1131.77  Adjustment of accounts.
1131.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1131.85  Assessment for order administration.
1131.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 39 FR 16084, May 7, 1974, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1131.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1131.2  Central Arizona marketing area.

    Central Arizona marketing area, hereinafter called the ``marketing 
area'', means all territory within the counties of Cochise, Graham, 
Greenlee, Maricopa, Pima, and Pinal, and that part of Yuma County south 
of 33 degrees latitude (North from the Equator), all in the State of 
Arizona.



Sec. 1131.3  Route disposition.

    Route disposition means any delivery to retail or wholesale outlets 
(including delivery by a vendor or a sale from a plant or a plant store) 
of a fluid milk product classified as Class I milk other than a delivery 
to a plant described in Sec. 1131.7(a).



Secs. 1131.4--1131.6  [Reserved]



Sec. 1131.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) Any plant approved by a duly constituted regulatory agency for 
the receipt or processing of Grade A milk or which supplies processed 
milk to an agency of the U.S. Government located within the marketing 
area, from which during the month:
    (1) There is route disposition, except filled milk, equal to at 
least 50 percent of the total receipts at the plant (i) of milk 
qualified by inspection to become producer milk pursuant to 
Sec. 1131.13(a), and (ii) from other milk plants and handlers described 
in Sec. 1131.9(c) in the form of fluid milk products, except filled 
milk, qualified for fluid consumption; and
    (2) There is route disposition, except filled milk, in the marketing 
area in a volume not less than 25 percent of such receipts and also 
greater than an average of 600 pounds per day.
    (b) Any plant which ships fluid milk products except filled milk, 
approved by a duly constituted regulatory agency having jurisdiction in 
the marketing area as eligible for distribution under a Grade A label in 
a volume not less than 50 percent of its receipts of milk (from dairy 
farmers who would be producers if this plant qualifies as a

[[Page 727]]

pool plant) in the current month during the period of July through 
October or 20 percent in the current month during the period of November 
through June to a plant specified in paragraph (a) of this section. If a 
plant qualifies in each of the months of July through October in the 
manner prescribed in this section, such plant shall upon written 
application to the market administrator on or before October 31 
following such compliance be designated as a pool plant until the end of 
the following June.
    (c) A milk manufacturing plant located within the marketing area at 
which milk may be received from the farms of dairy farmers holding 
permits or authorization issued by a duly constituted regulatory agency 
having jurisdiction in the marketing area and which is operated by a 
cooperative association qualified under Sec. 1131.18 which has 50 
percent or more of its member producer milk (including the skim milk and 
butterfat in fluid milk products transferred from its own plant pursuant 
to this paragraph that is not in excess of the skim milk and butterfat 
contained in member producer milk actually received at such plant) 
received at the pool plants of other handlers during the current month 
or the previous 12-month period ending with the current month. Milk 
received by such cooperative, in a truck owned or under contract to the 
cooperative, from a pool plant and transferred in such truck to another 
pool plant for the account of the cooperative shall be considered a 
receipt at the cooperative's plant and a transfer from such plant.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) Any plant qualified pursuant to paragraph (a) of this section 
which disposes of a lesser volume of Class I milk, except filled milk, 
in the Central Arizona marketing area than in a marketing area where the 
handling of milk is regulated pursuant to another order issued pursuant 
to the Act, and which is subject to the classification and pricing 
provisions of such other order; and
    (3) Any plant qualified pursuant to paragraph (b) of this section 
for any portion of the period November through June, inclusive, that the 
milk of producers at such plant is subject to the classification and 
pricing provisions of an other order issued pursuant to the Act and the 
Secretary determines that such plant should be exempted from this part.
[39 FR 16084, May 7, 1974, as amended at 40 FR 31234, July 25, 1975; 48 
FR 52430, Nov. 18, 1983]

    Effective Date Note: At 62 FR 26736, May 15, 1997, in 
Sec. 1131.7(c), the words ``50 percent or more of'', ``(including the 
skim milk and butterfat in fluid milk products transferred from its own 
plant pursuant to this paragraph that is not in excess of the skim milk 
and butterfat contained in member producer milk actually received at 
such plant)'' and ``or the previous 12-month period ending with the 
current month'' were suspended, effective Apr. 1, 1997, through Mar. 31, 
1999.



Sec. 1131.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages in the 
marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant from which fluid 
milk products are moved during the month to a pool plant and which is 
not an other order plant nor a producer-handler plant.



Sec. 1131.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) A cooperative association with respect to milk of any producer 
which such cooperative association causes to

[[Page 728]]

be diverted pursuant to Sec. 1131.13 for the account of such 
association;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under contract to, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator in writing prior to the first day of the month in 
which such milk is delivered to the pool plant that the plant operator 
will be the handler for such milk and will purchase such milk on the 
basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler; and
    (f) Any person in his capacity as the operator of an other order 
plant described in Sec. 1131.7(d).
[39 FR 16084, May 7, 1974, as amended at 40 FR 31234, July 25, 1975]



Sec. 1131.10  Producer-handler.

    Producer-handler means:
    (a) Any person who is both a dairy farmer and the operator of a 
plant from which fluid milk products are disposed of as route 
disposition in the marketing area and who:
    (1) Receives at his plant, or acquires for route disposition fluid 
milk products only from:
    (i) His own farm production; and
    (ii) Fluid milk products obtained by transfer or diversion from pool 
plants, other order plants, or from a handler described in 
Sec. 1131.9(b), in an amount not to exceed 5 percent of its fluid milk 
product disposition for the month or 5,000 pounds, whichever is less;
    (2) Does not reprocess or convert milk products into a fluid milk 
product except to increase the nonfat milk solids content above that of 
the fluid milk product received;
    (3) Does not distribute fluid milk products to a wholesale customer 
who also is serviced by a handler described in Sec. 1131.9 (a) or (d) 
that supplied the same product in the same-sized package with a similar 
label to the wholesale customer during the month; and
    (4) Furnishes proof satisfactory to the market administrator that:
    (i) The maintenance, care, and management of all the dairy animals 
and other resources necessary to produce the entire amount of milk 
handled (other than that received from regulated plants) is the personal 
enterprise of and at the personal risk of such person in his capacity as 
a producer; and
    (ii) The operation of such plant is the personal enterprise of and 
at the personal risk of such person in his capacity as a handler.
    (b) The governmental agency that operates a milk plant, except that 
a plant operated by such agency shall be a pool plant if bulk milk is 
delivered during the month by such governmental agency to another plant 
that is a pool plant and a written request is filed by the agency with 
the market administrator asking that its plant be considered a pool 
plant. If such a plant is made a pool plant at the request of the 
governmental agency for 1 month and thereafter resumes the status of a 
nonpool plant, it shall not be eligible for pool plant status again 
until it has been a nonpool plant for 12 consecutive months.
[39 FR 16084, May 7, 1974, as amended at 60 FR 55990, Nov. 6, 1995]



Sec. 1131.11  [Reserved]



Sec. 1131.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk pursuant to the requirements 
specified in paragraph (a)(1) or (2) of this section, and whose milk is 
received directly from the farm at a pool plant or is diverted as 
producer milk pursuant to Sec. 1131.13.
    (1) Produces milk on a dairy farm subject to the regular inspection 
by a duly constituted regulatory agency under a dairy farm permit or 
rating issued by such agency for the production of milk to be disposed 
of for fluid consumption.
    (2) Produces milk which is acceptable to an agency of the Federal 
Government for fluid consumption in its institutions or bases.
    (b) ``Producer'' shall not include:

[[Page 729]]

    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1131.44(a)(8)(iii) and the corresponding step of Sec. 1131.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.
    (4) Any person whose milk is received at a nonpool plant (except an 
other order plant) other than as a diversion by a handler from a pool 
plant, unless 50 percent or more of the milk production from the same 
farm is producer milk under this part during the current month and each 
of the 2 immediately preceding months (or would have been producer milk 
in each of the 2 immediately preceding months except for the operation 
of this provision); Provided, That this provision shall not be 
applicable until the third month following the effective date of this 
amended order.
[39 FR 16084, May 7, 1974, as amended at 40 FR 31234, July 25, 1975; 48 
FR 52430, Nov. 18, 1983]



Sec. 1131.13  Producer milk.

    Producer milk of each handler means all skim milk and butterfat 
produced by producers:
    (a) With respect to receipts at a pool plant:
    (1) Received directly from such producers; and
    (2) Diverted from such pool plant to a nonpool plant for the account 
of the operator of the pool plant, subject to the limitations and 
conditions of paragraph (c) of this section;
    (b) With respect to additional receipts of a cooperative 
association:
    (1) Diverted from a pool plant to a nonpool plant, subject to the 
limitations and conditions of paragraph (c) of this section; and
    (2) For which the cooperative association is the handler pursuant to 
Sec. 1131.9(c); and
    (c) With respect to diversions to nonpool plants pursuant to 
paragraphs (a)(2) and (b)(1) of this section:
    (1) Such diversions may be without limit during the months of 
December through April, but shall not be for more than 8 days' 
production of any producer during any other month, otherwise only milk 
of such producer received at a pool plant shall be producer milk; and
    (2) For purposes of location adjustments pursuant to Secs. 1131.52 
and 1131.75, milk so diverted shall be priced at the location of the 
plant to which diverted.
[39 FR 16084, May 7, 1974, as amended at 60 FR 55990, Nov. 6, 1995]



Sec. 1131.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1131.40(b)(1) from any source other than producers, handlers 
described in Sec. 1131.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1131.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1131.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1131.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1131.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are

[[Page 730]]

flavored, cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27891, May 11, 1993]



Sec. 1131.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27891, May 11, 1993]



Sec. 1131.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1131.18  Cooperative association.

    Cooperative association means any cooperative association of 
producers which the Secretary determines:
    (a) To be qualified under the provisions of the act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have and to be exercising full authority in the sale of milk 
for its members.



Sec. 1131.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk or associated 
producer milk diverted to commercial food processing establishments 
shall be subject to the same provisions relating to diversions to 
plants, including but not limited to, provisions in Secs. 1131.12, 
1131.13, 1131.22, 1131.41 and 1131.52.
[58 FR 27891, May 11, 1993]



Sec. 1131.20  [Reserved]

                             Handler Reports



Sec. 1131.30  Reports of receipts and utilization.

    On or before the seventh day after the end of each month, each 
handler shall report for such month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1131.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1131.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for

[[Page 731]]

reports required by paragraph (a) of this section. Receipts of milk that 
would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1131.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler described in Sec. 1131.10 shall report:
    (1) The pounds of milk received from each of the handler's own-farm 
production units, showing separately the production of each farm unit 
and the number of dairy cows in production at each farm unit;
    (2) Fluid milk products and bulk fluid cream products received at 
its plant or acquired for route disposition from pool plants, other 
order plants, and handlers described in Sec. 1131.9(b);
    (3) Receipts of other source milk not reported pursuant to paragraph 
(d)(2) of this section;
    (4) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1131.40(b)(1); and
    (5) The utilization or disposition of all milk and milk products 
required to be reported pursuant to this paragraph.
    (e) Each handler not specified in paragraphs (a) through (d) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.
[39 FR 16084, May 7, 1974, as amended at 60 FR 55990, Nov. 6, 1995]



Sec. 1131.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1131.9(a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1131.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1131.32  Other reports.

    (a) Each handler, except a producer-handler or a handler making 
payment pursuant to Sec. 1131.76(a), shall report to the market 
administrator in the detail and on forms prescribed by the market 
administrator:
    (1) On or before the 20th day after the end of the month, the 
payments made to a cooperative association pursuant to Sec. 1131.73(d);
    (2) On or before the first day other source milk is received in the 
form of a fluid milk product at his pool plant(s), his intention to 
receive such product, and on or before the last day such product is 
received, his intention to discontinue receipt of such product; and
    (3) On or before the day prior to diverting producer milk pursuant 
to Sec. 1131.13 his intention to divert such milk, the date or dates of 
such diversion and the nonpool plant to which such milk is to be 
diverted.
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Secs. 1131.30 and 1131.31, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish such handler's obligation under the order.

                         Classification of Milk



Sec. 1131.40  Classes of utilization.

    Except as provided in Sec. 1131.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1131.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:

[[Page 732]]

    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence

[[Page 733]]

beyond the handler's control, to the extent that the quantities 
destroyed or lost can be verified from records satisfactory to the 
market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1131.15 and the fluid 
cream product definition pursuant to Sec. 1131.16; and
    (7) In shrinkage assigned pursuant to Sec. 1131.41(a) to the 
receipts specified in Sec. 1131.41(a)(2) and in shrinkage specified in 
Sec. 1131.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27891, May 11, 1993, as amended by 58 FR 63292, Dec. 1, 1993]



Sec. 1131.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1131.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1131.9(c), except 
that, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this paragraph shall be 2 
percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6), 
of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1131.9(b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.

[[Page 734]]



Sec. 1131.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant or by a handler described in 
Sec. 1131.9(c) to another handler's pool plant shall be classified as 
Class I milk unless both handlers request the same classification in 
another class. In either case, the classification of such transfers 
shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1131.44(a)(12) and the corresponding step of 
Sec. 1131.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1131.44(a)(7) or the corresponding 
step of Sec. 1131.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk;
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1131.44(a)(11) or (12) or the 
corresponding steps of Sec. 1131.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant; and
    (4) Unless a different utilization is claimed by both handlers, skim 
milk and butterfat transferred to the pool plant of another handler by a 
cooperative association in its capacity as a handler pursuant to 
Sec. 1131.9(c) or as the operator of a pool plant described in 
Sec. 1131.7(c) shall be classified pro rata to the respective quantities 
of skim milk and butterfat remaining in each class for such month at the 
pool plant(s) of the receiving handler after the computations pursuant 
to Sec. 1131.44(a)(13)(i) and the corresponding step of Sec. 1131.44(b).
    (b) Transfers or diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to another order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3), of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and

[[Page 735]]

    (6) If the form in which any fluid milk product that is transferred 
to another order plant is not defined as a fluid milk product under such 
other order, classification under this paragraph shall be in accordance 
with the provisions of Sec. 1131.40.
    (c) Transfers and diversions to producer-handlers. Skim milk or 
butterfat transferred or diverted from a pool plant or diverted from a 
handler described in Sec. 1131.9(b) to a producer-handler under this or 
any other order shall be classified:
    (1) As Class I milk, if transferred or diverted in the form of a 
fluid milk product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the producer-handler's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not another order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1131.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:

[[Page 736]]

    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[39 FR 16084, May 7, 1974, as amended at 48 FR 52431, Nov. 18, 1983; 58 
FR 27892, May 11, 1993; 60 FR 55990, Nov. 6, 1995]



Sec. 1131.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1131.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1131.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1131.9(b) or (c) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1131.40, 
1131.41, and 1131.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1131.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1131.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1131.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[46 FR 28612, May 28, 1981, as amended at 58 FR 27892, May 11, 1993; 58 
FR 63292, Dec. 1, 1993]



Sec. 1131.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1131.9(a) for each of his pool plants separately and of each 
handler described in Sec. 1131.9(b) and (c) by allocating the handler's 
receipts of

[[Page 737]]

skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1131.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from another order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1131.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1131.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month.
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1131.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1131.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1131.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from another 
order plant that is regulated under any Federal milk order providing for 
individual-handler pooling, to the extent that reconstituted skim milk 
is allocated to Class I at the transferor-plant;
    (vii) Receipts of milk from a dairy farmer pursuant to 
Sec. 1131.12(b)(4);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:

[[Page 738]]

    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a) (2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraph (a) (2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1131.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1131.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk poducts from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this paragraph exceed the pounds of 
skim milk

[[Page 739]]

remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a) (7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1131.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraphs (a)(12) (i) and (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraphs (a)(12) (i) and (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk

[[Page 740]]

in Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract in the following order from the pounds of skim milk 
remaining in each class the pounds of skim milk in receipts of fluid 
milk products and bulk fluid cream products from:
    (i) Another pool plant or a handler described in Sec. 1131.9(c) 
according to the classification of such products pursuant to 
Sec. 1131.42(a); and
    (ii) A cooperative association in its capacity as a handler pursuant 
to Sec. 1131.9(c) or as the operator of a pool plant described in 
Sec. 1131.7(c) according to the classification of such products pursuant 
to Sec. 1131.42(a)(4); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[39 FR 16084, May 7, 1974, as amended at 48 FR 52431, Nov. 18, 1983; 58 
FR 27892, May 11, 1993; 60 FR 55990, Nov. 6, 1995]



Sec. 1131.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1131.44(a)(12) and the corresponding 
step of Sec. 1131.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1131.43(d) and Sec. 1131.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to another order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests the percentage of 
producer milk delivered by members of such association which was used in 
each class by each handler receiving such milk. For the purpose of this 
report the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.
[39 FR 16084, May 7, 1974, as amended at 58 FR 27892, May 11, 1993]

                              Class Prices



Sec. 1131.50  Class prices.

    Subject to the provisions of Sec. 1131.52, the class prices for the 
months per hundredweight of milk containing 3.5 percent butterfat shall 
be as follows:
    (a) The Class I price shall be the basic formula price for the 
second preceding month plus $2.52.

[[Page 741]]

    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Western nonfat dry milk price for the month, as reported by 
the Department, less 12.5 cents, times an amount computed by subtracting 
from 9 an amount calculated by dividing .4 by such nonfat dry milk 
price, plus the butterfat differential times 35 and rounded to the 
nearest cent.
[39 FR 16084, May 7, 1974, as amended at 40 FR 6321, Feb. 11, 1975; 45 
FR 65514, Oct. 3, 1980; 46 FR 43403, Aug. 28, 1981; 58 FR 63292, Dec. 1, 
1993; 60 FR 6612, Feb. 2, 1995; 60 FR 55990, Nov. 6, 1995]



Sec. 1131.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1131.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual

[[Page 742]]

yield factor for nonfat dry milk, 8.07, to determine the quantity (in 
hundredweights) of milk used in the production of butter-nonfat dry 
milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18976, Apr. 14, 1995]



Sec. 1131.52  Plant location adjustments for handlers.

    (a) For milk received from producers at a pool plant located outside 
Pima County and more than 30 miles by shortest highway distance as 
measured by the market administrator, from the nearer of the Courthouses 
in Maricopa and Graham Counties, Ariz., and classified as Class I milk 
or assigned Class I location adjustment credit pursuant to paragraph (b) 
of this section, the price computed pursuant to Sec. 1131.50(a) shall be 
reduced by 10 cents if such plant is located not more than 130 miles 
from the nearer courthouse and by an additional cent for each 10 miles 
or fraction thereof that such distance exceeds 130 miles.
    (b) For purposes of calculating such adjustment, transfers between 
pool plants shall be assigned to Class I disposition at the transferee-
plant, in excess of the sum of receipts at such plant from producers and 
handlers described in Sec. 1131.9(c), plus the pounds assigned as Class 
I to receipts from other order plants and unregulated supply plants. 
Such assignment is to be made first to transferor-plants at which no 
location adjustment credit is applicable and then in sequence beginning 
with the plant at which the least location adjustment would apply.
    (c) For other source milk to which a location adjustment is 
applicable and for milk received from producers at a plant located in 
Pima County, Ariz., and which is classified as Class I milk, the price 
computed under Sec. 1131.50(a) shall be increased 12 cents.
    (d) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraphs (a) and (c) of this 
section, except that the adjusted Class I price shall not be less than 
the Class III price.



Sec. 1131.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A prices for the 
preceding month.
[60 FR 6612, Feb. 2, 1995]



Sec. 1131.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                              Uniform Price



Sec. 1131.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1131.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1131.44 by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1131.44(a)(14) and the 
corresponding step of Sec. 1131.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1131.74, that 
are applicable at the location of the pool plant;
    (c) Add the following:

[[Page 743]]

    (1) The amount obtained from multiplying the difference between the 
Class III price for the preceding month and the Class I price applicable 
at the location of the pool plant for the current month by the 
hundredweight of skim milk and butterfat subtracted from Class I 
pursuant to Sec. 1131.44(a)(9) and the corresponding step of 
Sec. 1131.44(b); and
    (2) The amount obtained from multiplying the difference between the 
Class III price for the preceding month and the Class II price for the 
current month by the lesser of:
    (i) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1131.44(a)(9) and the corresponding step of 
Sec. 1131.44(b) for the current month; or
    (ii) The hundred weight of skim milk and butterfat remaining in 
Class III after the computations pursuant to Sec. 1131.44(a)(12) and the 
corresponding step of Sec. 1131.44(b) for the preceding month, less the 
hundredweight of skim milk and butterfat specified in paragraph (c)(1) 
of this section:
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1131.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1131.44(a)(7) (i) through (iv) and (vii), and the corresponding 
step of Sec. 1131.44(b), excluding receipts of bulk fluid cream products 
from an other order plant and bulk concentrated fluid milk products from 
pool plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1131.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1131.44(b); and
    (f) Add the amount obtained from multiplying the Class I 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. 1131.43(d) and Sec. 1131.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1131.44(a)(11) and the corresponding steps of Sec. 1131.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1131.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1131.76 (a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[39 FR 16084, May 7, 1974, as amended at 48 FR 52431, Nov. 18, 1983; 58 
FR 27893, May 11, 1993]

[[Page 744]]



Sec. 1131.61  Computation of uniform price.

    For each month the market administrator shall compute the uniform 
price per hundredweight of milk of 3.5 percent butterfat content 
received from producers as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1131.60 for all handlers who filed the reports prescribed by 
Sec. 1131.30 for the month and who made the payments pursuant to 
Secs. 1131.71 and 1131.73 for the preceding month;
    (b) Add an amount equal to the total value of the minus location 
adjustments and subtract an amount equal to the plus location 
adjustments computed pursuant to Sec. 1131.75;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1131.60(f).
    (e) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``uniform price'' for milk 
received from producers.
[39 FR 16084, May 7, 1974, as amended at 60 FR 55990, Nov. 6, 1995]



Sec. 1131.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of each month the uniform price for 
such month.

                            Payments for Milk



Sec. 1131.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1131.71 and 
1131.76 and out of which he shall make all payments pursuant to 
Sec. 1131.72: Provided, That payments due to any handler shall be offset 
by any payments due from such handler.



Sec. 1131.71  Payments to the producer-settlement fund.

    (a) On or before the 13th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1131.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1131.75, of such handler's receipts of producer milk; and
    (ii) The value at the uniform price applicable at the location of 
the plant from which received of other source milk for which a value is 
computed pursuant to Sec. 1131.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.

[[Page 745]]



Sec. 1131.72  Payments from the producer-settlement fund.

    (a) On or before the 14th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1131.71(a)(2) exceeds and amount 
computed to Sec. 1131.71(a)(1).
    (b) If the balance in the producer-settlement fund is insufficient 
to make all payments pursuant to paragraph (a) of this section the 
market administrator shall reduce uniformly such payments and shall 
complete such payments as soon as the appropriate funds are available.
[39 FR 16084, May 7, 1974, as amended at 60 FR 55991, Nov. 6, 1995]



Sec. 1131.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (b) of this section, each 
handler shall make payment to each producer from whom milk is received 
during the month as follows:
    (1) On or before the 27th day of each month to each producer who did 
not discontinue shipping milk to such handler before the 25th day of the 
month, an amount not less than 1.3 times the Class III price for the 
preceding month multiplied by the hundredweight of milk received from 
such producer during the first 15 days of the month, less proper 
deductions authorized by such producer to be made from payments due 
pursuant to this paragraph; and
    (2) On or before the 15th day of the following month, an amount 
equal to not less than the appropriate uniform price as adjusted 
pursuant to Secs. 1131.74 and 1131.75, multiplied by the hundredweight 
of milk received from such producer during the month, subject to the 
following adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section, (ii) less deductions made for marketing services 
pursuant to Sec. 1131.86, (iii) plus or minus adjustments for errors 
made in previous payments made to such producer, and (iv) less proper 
deductions authorized in writing by such producer: Provided, That if by 
such date such handler has not received full payment from the market 
administrator pursuant to Sec. 1131.72 for such month, he may reduce pro 
rata his payments to producers by not more than the amount of such 
underpayment. Payments to producers shall be completed thereafter not 
later than the date for making payments pursuant to this paragraph next 
following after the receipt of the balance due from the market 
administrator;
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its members to collect payment 
for their milk and which has so requested any handler in writing, such 
handler shall on or before the second day prior to the date on which 
payments are due individual producers, pay the cooperative association 
for milk received during the month from the producer-members of such 
association as determined by the market administrator an amount equal to 
not less than the total due such producer-members as determined pursuant 
to paragraph (a) of this section;
    (c) Each handler who receives milk during the month from producers 
for which payment is to be made to a cooperative association pursuant to 
paragraph (b) of this section shall report to such cooperative 
association or to the market administrator for transmittal to such 
cooperative association for each such producer as follows:
    (1) On or before the 25th day of the month, the total pounds of milk 
received during the first 15 days of such month; and
    (2) On or before the seventh day of the following month (i) the 
pounds of milk received each day and the total for the month, together 
with the butterfat content of such milk, (ii) the amount or rate and 
nature of any authorized deductions to be made from payments, and (iii) 
the amount and nature of payments due pursuant to Sec. 1131.77; and
    (d) Each handler who receives milk from a cooperative association in 
its capacity as a handler pursuant to Sec. 1131.9(c) or as the operator 
of a pool plant shall, on or before the second day prior to the date 
payments are due individual producers, pay such cooperative association 
for such milk as follows:

[[Page 746]]

    (1) A partial payment for milk received from such cooperative 
association during the first 15 days of the month at not less than 1.3 
times the Class III price for the preceding month; and
    (2) In final settlement, the value of such milk as classified 
pursuant to Sec. 1131.44 at the class prices, as adjusted by the 
butterfat differential specified in Sec. 1131.74, that are applicable at 
the location of the receiving handler's pool plant, less payment made 
pursuant to paragraph (d)(1) of this section.



Sec. 1131.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1131.51 (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.
[60 FR 18977, Apr. 14, 1995]



Sec. 1131.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a pool plant 
shall be adjusted according to the location of the pool plant, at the 
rates set forth in Sec. 1131.52; and
    (b) The uniform price applicable to other source milk shall be 
subject to the same adjustments applicable to the uniform price under 
paragraph (a) of this section, except that the adjusted uniform price 
shall not be less than the Class III price.



Sec. 1131.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1131.30(b) and 1131.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the uniform price, 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
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I

[[Page 747]]

price shall not be reduced by $1.00. Alternatively, for such 
disposition, payments may be made to the producer-settlement fund of the 
order regulating the producer milk used to produce the nonfluid milk 
ingredients at the difference between the Class I price applicable under 
the other order at the location of the plant where the nonfluid milk 
ingredients were processed (but not to be less than the Class III price) 
and the Class III price. This payment option shall apply only if a 
majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1131.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1131.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1131.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1131.60(f) less the value of such other source milk 
specified in Sec. 1131.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1131.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1131.7(b), 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1131.30(b) and 
1131.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1131.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent

[[Page 748]]

butterfat basis by the butterfat differential specified in Sec. 1131.74, 
for milk received at the plant during the month that would have been 
producer milk if the plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1131.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payment by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1131.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[39 FR 16084, May 7, 1974, as amended at 58 FR 27893, May 11, 1993]



Sec. 1131.77  Adjustment of accounts.

    Whenever audit by the market administrator of any reports, books, 
records, or accounts or other verification discloses errors resulting in 
monies due (a) the market administrator from a handler, (b) a handler 
from the market administrator, or (c) any producer or cooperative 
association from a handler, the market administrator shall promptly 
notify such handler of any amount so due and payment thereof shall be 
made on or before the next date for making payments set forth in the 
provisions under which such error occurred.
[39 FR 16084, May 7, 1974, as amended at 60 FR 55991, Nov. 6, 1995]



Sec. 1131.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1131.71 or 
Sec. 1131.77 relative to payments to the producer-settlement fund shall 
be increased one-half of 1 percent on the second day following the due 
date of such obligation and on the 15th day of each month thereafter 
until such obligation is paid.

        Administrative Assessment and Marketing Service Deduction



Sec. 1131.85  Assessment for order administration.

    (a) As his pro rata share of the expense of administration of the 
order, each handler shall pay to the market administrator on or before 
the 15th day after the end of the month 4 cents per hundredweight, or 
such lesser amount as the Secretary may prescribe, with respect to:
    (1) Producer milk (including such handler's own production);
    (2) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1131.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1131.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1131.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1131.60 (d) and (f); and
    (3) Class I milk disposed of from a partially regulated distributing 
plant as route disposition in the marketing area that exceeds the skim 
milk and butterfat subtracted pursuant to Sec. 1131.76(a)(2).

[[Page 749]]

    (b) [Reserved]
[48 FR 52431, Nov. 18, 1983, as amended at 58 FR 27893, May 11, 1993; 60 
FR 55991, Nov. 6, 1995]



Sec. 1131.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments to producers for milk (other than milk of 
his own production) pursuant to Sec. 1131.73, shall deduct 5 cents per 
hundredweight, or such amount not exceeding 5 cents per hundredweight as 
may be prescribed by the Secretary, and shall pay such deductions to the 
market administrator on or before the 15th day after the end of the 
month. Such money shall be used by the market administrator to provide 
market information and to check the accuracy of the testing and weighing 
of their milk for producers who are not receiving such service from a 
cooperative association; and
    (b) In the case of producers who are members of a cooperative 
association which the Secretary has determined is actually performing 
the services set forth in paragraph (a) of this section, each handler 
shall (in lieu of the deduction specified in paragraph (a) of this 
section), make such deductions from the payments to be made to such 
producers as may be authorized by the membership agreement or marketing 
contract between such cooperative association and such producers, and on 
or before the 13th day after the end of each month, pay such deductions 
to the cooperative association of which such producers are members, 
furnishing a statement showing the amount of such deductions and the 
amount of milk for which such deduction was computed for each producer.



PART 1132--[RESERVED]






PART 1134--MILK IN THE WESTERN COLORADO MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1134.1  General provisions.

                               Definitions

1134.2  Western Colorado marketing area.
1134.3  Route disposition.
1134.4  [Reserved]
1134.5  Distributing plant.
1134.6  Supply plant.
1134.7  Pool plant.
1134.8  Nonpool plant.
1134.9  Handler.
1134.10  Producer-handler.
1134.11  [Reserved]
1134.12  Producer.
1134.13  Producer milk.
1134.14  Other source milk.
1134.15  Fluid milk product.
1134.16  Fluid cream product.
1134.17  Filled milk.
1134.18  Cooperative association.
1134.19  [Reserved]
1134.20  Commercial food processing establishment.

                             Handler Reports

1134.30  Reports of receipts and utilization.
1134.31  Payroll reports.
1134.32  Other reports.

                         Classification of Milk

1134.40  Classes of utilization.
1134.41  Shrinkage.
1134.42  Classification of transfers and diversions.
1134.43  General classification rules.
1134.44  Classification of producer milk.
1134.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1134.50  Class prices.
1134.51  Basic formula price.
1134.52  Plant location adjustments for handlers.
1134.53  Announcement of class prices.
1134.54  Equivalent price.

                              Uniform Price

1134.60  Handler's value of milk for computing uniform price.
1134.61  Computation of uniform price.
1134.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1134.70  Producer-settlement fund.
1134.71  Payments to the producer-settlement fund.
1134.72  Payments from the producer-settlement fund.
1134.73  Payments to producers and to cooperative associations.
1134.74  Butterfat differential.
1134.75  Plant location adjustments for producers and on nonpool milk.
1134.76  Payments by a handler operating a

[[Page 750]]

          partially regulated distributing plant.
1134.77  Adjustment of accounts.
1134.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1134.85  Assessment for order administration.
1134.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; (7 U.S.C. 601-674).

    Source: 47 FR 42991, Sept. 30, 1982, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1134.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1134.2  Western Colorado marketing area.

    Western Colorado marketing area, hereinafter called the ``marketing 
area'', means all the territory within the outer boundaries of the 
following counties in the State of Colorado:
    Delta, Garfield, Mesa, Montrose.



Sec. 1134.3  Route disposition.

    Route disposition means any delivery to retail or wholesale outlets 
(including a delivery by a vendor or a sale from a plant or plant store) 
of any fluid milk product classified as Class I milk, other than a 
delivery to a pool plant or a delivery in bulk to a nonpool plant.



Sec. 1134.4  [Reserved]



Sec. 1134.5  Distributing plant.

    Distributing plant means any plant at which fluid milk products are 
pasteurized or packaged and from which there is route disposition of 
Grade A fluid milk products in the marketing area.



Sec. 1134.6  Supply plant.

    Supply plant means any plant at which Grade A milk is received from 
dairy farmers and from which fluid milk products are moved to a pool 
distributing plant.



Sec. 1134.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) Any plant, hereinafter referred to as a ``distributing pool 
plant'', in which during the month fluid milk products are processed or 
packaged and from which:
    (1) An amount equal to 50 percent or more of the total receipts of 
Grade A milk (except receipts from distributing pool plants) is disposed 
of as route disposition, except filled milk; and
    (2) Ten percent or more of such receipts, or 2,000 pounds per day, 
whichever is less, are disposed of as route disposition, except filled 
milk, in the marketing area.
    (b) Any plant, hereinafter referred to as a ``supply pool plant'' 
from which during the month 50 percent of its dairy farm supply of Grade 
A milk is moved in the form of fluid milk products, except filled milk, 
to distributing pool plants. Any supply plant which has qualified as a 
pool plant in each of the months of September through February shall be 
a pool plant in each of the following months of March through August, 
unless written request for nonpool status for any such month(s) is 
furnished in advance to the market administrator. A plant withdrawn from 
supply pool plant status may not be reinstated for any of the following 
months of March through August unless it fulfills the shipping 
requirements of this paragraph for such month(s).
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) Any distributing plant which would be subject to the 
classification and pricing provisions of another order issued pursuant 
to the Act, unless such plant is qualified as a pool plant pursuant to 
paragraph (a) of this section and there is more route disposition 
(except filled milk) in this marketing area than in the marketing area 
defined under such other order;
    (3) Any plant qualified pursuant to paragraph (b) of this section 
for any portion of March through August, inclusive, that the milk at 
such plant is subject to the classification and pricing provisions of 
another order issued pursuant to the Act; and

[[Page 751]]

    (4) Any distributing plant from which there is less than an average 
of 200 pounds of route disposition per day, except filled milk, in the 
marketing area during the month.



Sec. 1134.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, manufacturing 
or processing plant other than a pool plant. The following categories of 
nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant from which fluid milk 
products are moved during the month to a pool plant.



Sec. 1134.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) A cooperative association with respect to the milk of its member 
producers which it causes to be diverted for its account pursuant to 
Sec. 1134.12;
    (c) A cooperative association with respect to milk of its member 
producers which is delivered from the farm to the pool plant of another 
handler in a tank truck owned and operated by the association or by a 
hauler under contract to the association;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1134.7(c); and
    (g) A vendor (any person who does not operate a plant described in 
paragraph (a), (d), (e) or (f) of this section but who engages in the 
business of receiving fluid milk products for resale and distributes to 
retail and wholesale outlets, via a mobile delivery vehicle, packaged 
fluid milk products received from such a plant).



Sec. 1134.10  Producer-handler.

    Producer-handler means any person who is an individual, partnership 
or corporation and who meets all the following conditions:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by him in accordance with the conditions 
set forth in paragraph (b) of this section, and provides proof 
satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
his sole risk and under his complete and exclusive management and 
control;
    (2) Each such farm is owned or operated by him, at his sole risk, 
and under his complete and exclusive management and control; and
    (3) Only he and no other person (except a member of his immediate 
family, or a stockholder in the case of a corporate farm) employed on 
such farm(s) own, fully or partially, either the cows producing the milk 
on the farm or the farm on which it is produced;
    (b) Operates a plant in which milk approved by a duly constituted 
health authority for fluid consumption is processed or packaged and from 
which the is route disposition during the month in the marketing area: 
Provided, That:
    (1) No fluid milk products are received at such plant or by him at 
any other location except:
    (i) From dairy farm(s) as specified in paragraph (a) of this 
section; and
    (ii) From pool plants or other order plants in an amount that is not 
in excess of the lesser of 5,000 pounds or 5 percent of his Class I 
sales during the month;
    (2) Such plant is operated under his complete and exclusive 
management and control and at his sole risk, and is not used during the 
month to process, package, receive or otherwise handle fluid milk 
products for any other person; and

[[Page 752]]

    (3) For the purpose of this section, all fluid milk products 
disposed of as route disposition or at stores operated by him or by any 
person (including the operator of a plant, or a vendor) who controls or 
is controlled by him (e.g., as an interlocking stockholder) or in which 
he (including, in the case of a corporation, any stockholder therein) 
has a financial interest, shall be considered as having been received at 
his plant; and the utilization for such plant shall include all such 
route and store dispositions; and
    (c) Disposes of no other source milk (except that represented by 
nonfat solids used in the fortification of fluid milk products) as Class 
I milk.



Sec. 1134.11  [Reserved]



Sec. 1134.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the inspection 
requirements for fluid consumption of a duly constituted health 
authority, whose milk is received at a pool plant or diverted to a 
nonpool plant that is not a producer-handler plant within the limits set 
forth in paragraphs (a) (1) and (2) of this section:
    (1) A cooperative association may divert for its account the milk of 
any member-producer from whom not less than 3 days' production was 
received during the month at a distributing pool plant. The total 
quantity of milk so diverted may not exceed 60 percent in the months of 
March, April, May, June, July, and August and 30 percent in other months 
of its member-producer milk received at pool plants during the month. 
Diversions in excess of such percentages shall not be considered 
producer milk, and the diverting cooperative shall specify the dairy 
farmers whose milk is ineligible as producer milk. Two or more 
cooperative associations may have their allowable diversions computed on 
the basis of the combined deliveries of milk by their member producers 
if each association has filed a request in writing with the market 
administrator on or before the first day of the month the agreement is 
effective. Such request shall specify the basis for assigning 
overdiverted milk to the producer-members of each cooperative 
association, at a time and in a manner approved by the market 
administrator.
    (2) A handler may divert for his account the milk of any producer, 
other than a member of a cooperative association which has diverted milk 
pursuant to paragraph (a)(1) of this section, from whom not less than 3 
days' production was received during the month at the pool plant. The 
total quantity of milk so diverted may not exceed 60 percent in the 
months of March, April, May, June, July, and August and 30 percent in 
other months of the milk received at such distributing pool plant during 
the month from producers who are not members of a cooperative 
association which has diverted milk pursuant to paragraph (a)(1) of this 
section. Diversions in excess of such percentages shall not be 
considered producer milk, and the diverting handler, at a time and in a 
manner approved by the market administrator, shall specify the dairy 
farmers whose milk is ineligible as producer milk.
    (3) For the purpose of the requirements of Sec. 1134.7, milk 
diverted for the account of the operator of a distributing pool plant, 
except an operator who is also a cooperative association diverting milk 
in the same month pursuant to paragraph (a)(1) of this section, shall be 
included in the receipts of the pool plant from which diverted.
    (4) For purpose of location adjustments pursuant to Secs. 1134.52 
and 1134.75, milk diverted to a nonpool plant shall be considered to 
have been received at the location of the pool plant from which 
diverted.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1134.44(a)(8)(iii) and the corresponding step of Sec. 1134.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any

[[Page 753]]

portion of such person's milk so moved is assigned to Class I under the 
provisions of such other order.



Sec. 1134.13  Producer milk.

    Producer milk means all skim milk and butterfat in milk produced by 
a producer.
    (a) With respect to receipts at a pool plant for which the handler 
operating such plant is to be responsible pursuant to Sec. 1134.60:
    (1) Received directly from such producer; and
    (2) Diverted from such pool plant to a nonpool plant for the account 
of the operator of the pool plant, subject to the limitations and 
conditions provided in Sec. 1134.12;
    (b) With respect to the additional receipts of a cooperative 
association:
    (1) For which the cooperative association is the handler pursuant to 
Sec. 1134.9(b), subject to the limitations and conditions provided in 
Sec. 1134.12; and
    (2) For which the cooperative association is the handler pursuant to 
Sec. 1134.9(c). If the milk received at a pool plant from a handler 
described in Sec. 1134.9(c) is purchased on a basis other than farm 
weights, the amount by which the total farm weights of such milk exceed 
the weights on which the pool plant's purchases are based shall be 
producer milk received by the handler described in Sec. 1134.9(c) at the 
location of the pool plant.



Sec. 1134.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1134.40(b)(1) from any source other than producers, handlers 
described in Sec. 1134.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1134.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1134.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1134.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1134.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27893, May 11, 1993]



Sec. 1134.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27894, May 11, 1993]



Sec. 1134.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat,

[[Page 754]]

so that the product (including stabilizers, emulsifiers, or flavoring) 
resembles milk or any other fluid milk product, and contains less than 6 
percent nonmilk fat (or oil).



Sec. 1134.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales of, or marketing milk or its 
products for its members; and (c) Has its entire activities under the 
control of its members.



Sec. 1134.19  [Reserved]



Sec. 1134.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1134.12, 1134.13, 1134.41 and 1134.52.
[58 FR 27894, May 11, 1993]

                             Handler Reports



Sec. 1134.30  Reports of receipts and utilization.

    On or before the seventh day after the end of each month, each 
handler shall report for the month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1134.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1134.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1134.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.



Sec. 1134.31  Payroll reports.

    (a) On or before the 23rd day after the end of each month, each 
handler described in Sec. 1134.9(a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and

[[Page 755]]

    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1134.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1134.32  Other reports.

    (a) On or before the seventh day after the end of each month, each 
handler described in Sec. 1134.9(a) and (b) who diverted milk to nonpool 
plants shall report for the month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (1) The name of the plant to which diverted;
    (2) The name of the individual dairy farmers so diverted;
    (3) The pounds of skim milk and butterfat from each dairy farmer 
contained in the milk so diverted; and
    (4) The number of days milk of the dairy farmer was received at a 
pool plant of the diverting order.
    (b) In addition to the reports required pursuant to Secs. 1134.30 
and 1134.31 and paragraph (a) of this section, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish such handler's obligation under the order.

                         Classification of Milk



Sec. 1134.40  Classes of utilization.

    Except as provided in Sec. 1134.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1134.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:

[[Page 756]]

    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1134.15 and the fluid 
cream product definition pursuant to Sec. 1134.16; and
    (7) In shrinkage assigned pursuant to Sec. 1134.41(a) to the 
receipts specified in Sec. 1134.41(a)(2) and in shrinkage specified in 
Sec. 1134.41 (b) and (c).
[58 FR 27894, May 11, 1993]



Sec. 1134.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1134.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section, the maximum pounds computed pursuant to such paragraph 
divided by 0.02; and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, that is 
not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1134.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this subparagraph shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined

[[Page 757]]

from farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1134.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determine from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1134.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Except as provided in paragraph (e) of 
this section, skim milk or butterfat transferred in the form of a fluid 
milk product or a bulk fluid cream product from a pool plant to another 
pool plant shall be classified as Class I milk unless both handlers 
request the same classification in another class. In either case, the 
classification of such transfers shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1134.44(a)(12) and the corresponding step of 
Sec. 1134.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1134.44(a)(7) or the corresponding 
step of Sec. 1134.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1134.44(a) (11) or (12) or the 
corresponding steps of Sec. 1134.44(b), the skim milk or butterfat so 
transferred up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set

[[Page 758]]

forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1134.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1134.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts

[[Page 759]]

of packaged fluid milk products at such nonpool plant from pool plants 
and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this paragraph.
    (e) Transfers by a cooperative association to pool plants. Skim milk 
and butterfat transferred in the form of bulk milk by a handler 
described in Sec. 1134.9(c) and from a pool plant operated by a 
cooperative association to another handler's pool plant shall be 
classified pursuant to Sec. 1134.44 pro rata with producer milk received 
at the transferee-plant and the value thereof at the class prices shall 
be included in his value of milk pursuant to Sec. 1134.60.
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27894, May 11, 1993]



Sec. 1134.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1134.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1134.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1134.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1134.40, 1134.41, and 1134.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1134.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1134.9 (b) or (c) shall be 
determined separately from the operations of any pool

[[Page 760]]

plant operated by such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1134.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1134.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27895, May 11, 1993]



Sec. 1134.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1134.9(a) for each of his pool plants 
separately the classification of producer milk and milk subject to the 
provisions of Sec. 1134.42(e) by allocating the handler's receipts of 
skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1134.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1134.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1134.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1134.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1134.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the

[[Page 761]]

beginning of the month of products specified in Sec. 1134.40(b)(1) that 
was not subtracted pursuant to paragraphs (a)(4), (a)(5) and (a)(6) of 
this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk subject to the provisions of Sec. 1134.42(e), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from another order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1134.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of

[[Page 762]]

skim milk subtracted pursuant to paragraph (a)(1) of this section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1134.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in

[[Page 763]]

a quantity of skim milk to be subtracted from Class II and Class III 
combined that exceeds the pounds of skim milk remaining in such classes, 
the pounds of skim milk in Class II and Class III combined shall be 
increased (increasing as necessary Class III and then Class II to the 
extent of available utilization in such classes at the nearest other 
pool plant of the handler, and then at each successively more distant 
pool plant of the handler) by an amount equal to such excess quantity to 
be subtracted, and the pounds of skim milk in Class I shall be decreased 
by a like amount. In such case, the pounds of skim milk remaining in 
each class at this allocation step at the handler's other pool plants 
shall be adjusted in the reverse direction by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1134.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk subject to the 
provisions of Sec. 1134.42(e), subtract such excess from the pounds of 
skim milk remaining in each class in series beginning with Class III. 
Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk subject to the provisions 
of Sec. 1134.42(e) in each class shall be the combined pounds of skim 
milk and butterfat remaining in each class after the computations 
pursuant to paragraph (a)(14) of this section and the corresponding step 
of paragraph (b) of this section.
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27895, May 11, 1993]



Sec. 1134.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1134.44(a)(12) and the corresponding 
step of Sec. 1134.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1134.43(d) and Sec. 1134.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order 
plant, the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report of the 
receiving handler, and, as necessary, any changes in such allocation

[[Page 764]]

arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests the amount and class 
utilization of producer milk delivered by members of such association to 
each handler receiving such milk. For the purpose of this report, the 
milk so received shall be prorated to each class in accordance with the 
total utilization of producer milk by such handler.
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27895, May 11, 1993]

                              Class Prices



Sec. 1134.50  Class prices.

    Subject to the provisions of Sec. 1134.52, the class prices per 
hundredweight for the month shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $2.00.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[47 FR 42991, Sept. 30, 1982, as amended at 51 FR 12834, Apr. 16, 1986; 
60 FR 6612, Feb. 2, 1995]



Sec. 1134.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1134.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.

[[Page 765]]

    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18977, Apr. 14, 1995]



Sec. 1134.52  Plant location adjustments for handlers.

    (a) For milk received from producers and from handlers described in 
Sec. 1134.9(c) at a pool plant, located more than 100 miles by shortest 
highway distance as measured by the market administrator, from the 
courthouse in Grand Junction, Colorado, and which is classified as Class 
I milk or assigned Class I location adjustment credit under paragraph 
(b) of this section, the price computed pursuant to Sec. 1134.50(a) 
shall be reduced by 15 cents if such plant is located more than 100 
miles but not more than 110 miles from such courthouse, and by an 
additional 1.5 cents for each 10 miles or fraction thereof that such 
distance exceeds 110 miles.
    (b) For purposes of calculating such adjustment, transfers between 
pool plants shall be assigned to Class I disposition at the transferee 
plant, in excess of the sum of receipts at such plant from producers and 
handlers described in Sec. 1134.9(c), and the pounds assigned as Class I 
to receipts from other order plants and unregulated supply plants. Such 
assignment is to be made first to transferor plants at which no location 
adjustment credit is applicable and then in sequence beginning with the 
plant at which the least location adjustment would apply.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.



Sec. 1134.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6612, Feb. 2, 1995]



Sec. 1134.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                              Uniform Price



Sec. 1134.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1134.9 (b) and (c) with respect to milk that was not 
received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk subject to the 
provisions of Sec. 1134.42(e) that were classified in each class 
pursuant to Secs. 1134.43(a) and 1134.44(c) by the applicable class 
prices, and add the resulting amounts;

[[Page 766]]

    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1134.44(a)(14) and the 
corresponding step of Sec. 1134.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1134.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1134.44(a)(9) and the corresponding step of Sec. 1134.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1134.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1134.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1134.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1134.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1134.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1134.43(d) and Sec. 1134.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1134.44(a)(11) and the corresponding steps of Sec. 1134.44(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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1134.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1134.76 (a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27895, May 11, 1993]



Sec. 1134.61  Computation of uniform price.

    For each month the market administrator shall compute the uniform 
price per hundredweight for milk of 3.5 percent butterfat content 
received from producers as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1134.60 for all handlers who filed the reports prescribed in 
Sec. 1134.30 for the month and who made the payments pursuant to

[[Page 767]]

Sec. Sec. 1134.71 and 1134.73 for the preceding month;
    (b) Add an amount equal to the sum of the deductions to be made for 
location adjustments pursuant to Sec. 1134.75;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1134.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``uniform price'' for milk 
received from producers.



Sec. 1134.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 12th day after the end of each month the uniform price for 
such month.

                            Payments for Milk



Sec. 1134.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1134.71, 
1134.76, and 1134.77, subject to the provision of Sec. 1134.78 and out 
of which he shall make all payments pursuant to Secs. 1134.72 and 
1134.77: Provided, That any payments due to any handler shall be offset 
by any payments due from such handler.



Sec. 1134.71  Payments to the producer-settlement fund.

    (a) On or before the 13th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amount specified in paragraph (a)(1) of this section 
exceeds the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1134.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1134.75, of such handler's receipts of producer milk and milk 
subject to the provisions of Sec. 1134.42(e). In the case of a 
cooperative association which is a handler, less the amount due from 
other handlers pursuant to Sec. 1134.73(a), exclusive of differential 
butterfat values; and
    (ii) The value at the uniform price applicable at the location of 
the plant from which received (not to be less than the Class III price) 
of other source milk for which a value is computed pursuant to 
Sec. 1134.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an order plant that was regulated during such month under 
an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable to the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
    (c) Each vendor shall pay the market administrator on or before the 
25th day after the end of the month at the difference between the value 
of the skim milk and butterfat in fluid milk products received from a 
producer-handler during the month at the Class I price applicable at the 
location of the producer-handler's plant (but not less than the Class 
III price) and its value at the

[[Page 768]]

Class III price subject to the following conditions:
    (1) The quantities of skim and butterfat milk products on which 
payment shall be made pursuant to this section shall not exceed the 
vendor's Class I disposition in the marketing during the month; and
    (2) This section shall not apply to a vendor whose total Class I 
disposition is obtained from a producer-handler, or whose total receipts 
and disposition of fluid milk products are considered as a part of the 
receipts and disposition of the producer-handler pursuant to 
Sec. 1134.10(b)(3).



Sec. 1134.72  Payments from the producer-settlement fund.

    On or before the 14th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1134.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1134.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as 
funds are available.



Sec. 1134.73  Payments to producers and to cooperative associations.

    Except as provided in paragraph (c) of this section, each handler 
shall make payment to each producer from whom milk is received as 
follows:
    (a) Not later than the last day of the month, to each producer from 
whom he received milk during the first 18 days of the month, a partial 
payment for the milk received during the first 15 days of the month, at 
the Class III price for the preceding month.
    (b) Not later than the 16th day of the month, for milk received 
during the preceding month, an amount computed at not less than the 
uniform price, per hundredweight, pursuant to Sec. 1134.61, as adjusted 
by the butterfat differential specified in Sec. 1134.74, location 
adjustment specified in Sec. 1134.75 and adjustments for errors made in 
previous payments minus:
    (1) Payments made pursuant to paragraph (a) of this section;
    (2) Deductions for marketing services pursuant to Sec. 1134.86; and
    (3) Deductions approved by the market administrator and authorized 
in writing by the producer. If the handler has not received full payment 
for the delivery period from the market administrator pursuant to 
Sec. 1134.72, he may reduce his total payments to all producers 
uniformly by the amount owing to him by the market administrator. The 
handler shall, however, complete all payments not later than the 16th 
day of the month following receipt of the balance from the market 
administrator.
    (c)(1) Upon receipt of a written request from a cooperative 
association which the market administrator determines is authorized by 
its members to collect payment for their milk, and receipt of a written 
promise to reimburse the handler the amount of any actual loss incurred 
by him because of any improper claim by the cooperative association, 
each handler shall pay to the cooperative association on or before the 
second day preceding the dates set out in paragraphs (a) and (b) of this 
section an amount equal to the sum of the individual payments otherwise 
payable to the producer members of such organization. This payment shall 
be made for all milk of such producer certified by the cooperative 
association as a member, beginning the first day of the month following 
receipt of the certification and ending the last day of the month next 
preceding the date on which a written notice from the cooperative 
association terminating the membership was received.
    (2) A copy of the request for payment, promise to reimburse, and 
certified list of members, shall be filed simultaneously with the market 
administrator. He may verify the information by auditing the records of 
the cooperative association. Exceptions to the accuracy of the 
membership certification, by a producer or by a handler, shall be made 
in writing to the market administrator for his determination.
    (d) In making the payments to producers under paragraphs (b) and (c) 
of this section, each handler shall furnish each producer or cooperative 
association from whom he has received milk,

[[Page 769]]

a supporting statement which shall show for each month;
    (1) The month and the identity of the handler and of the producer;
    (2) The total pounds and the average butterfat content of milk 
received from such producer;
    (3) The minimum rate or rates at which payment to such producer is 
required under this part;
    (4) The rate which is used in making the payment if such rate is 
other than the applicable minimum rate;
    (5) The amount or the rate per hundredweight and nature of each 
deduction claimed by the handler; and
    (6) The net amount of payment to such producer.
    (e) For milk received from a pool plant operated by a cooperative 
association or from a handler described in Sec. 1134.9(c), each handler 
shall on or before the second day prior to the date payments are due 
individual producers, pay such cooperative association for milk as 
follows:
    (1) A partial payment for milk received during the first 15 days of 
the month at not less than the Class III price for the preceding month; 
and
    (2) A final settlement equal to the value of such milk at the 
uniform price, as adjusted pursuant to Secs. 1134.74 and 1134.75, less 
payment made pursuant to paragraph (e)(1) of this section.



Sec. 1134.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1134.51 (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.
[60 FR 18978, Apr. 14, 1995]



Sec. 1134.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price to be paid for milk received at a pool plant 
from producers, in bulk from a pool plant operated by a cooperative 
association, and from a handler described in Sec. 1134.9(c) may be 
reduced by the amount of the location adjustment applicable at the 
location of the pool plant at which such milk was first physically 
received from producers, and the uniform price for producer milk 
diverted to a nonpool plant shall be reduced according to the location 
of the pool plant from which diverted, each at the rates set forth in 
Sec. 1134.52; and
    (b) For purposes of computations pursuant to Secs. 1134.71 and 
1134.72 the uniform price shall be adjusted at the rates set forth in 
Sec. 1134.52 applicable at the location of the nonpool plant from which 
the milk was received (but not to be less than the Class III price).



Sec. 1134.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1134.30(b) and 1134.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid

[[Page 770]]

milk products disposed of to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the uniform price, both prices to be applicable at the 
location of the partially regulated distributing plant (except that the 
Class I price and the uniform price shall not be less than the Class III 
price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1134.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1134.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1134.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1134.60(f) less the value of such other source milk 
specified in Sec. 1134.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1134.60 for each nonpool plant that is not an other order plant 
which serves as a supply

[[Page 771]]

plant for such partially regulated distributing plant by making 
shipments to the partially regulated distributing plant during the month 
equivalent to the requirements of Sec. 1134.7(b) subject to the 
following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1134.30(b) and 
1134.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1134.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1134.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1134.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1134.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27896, May 11, 1993]



Sec. 1134.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts, or other verification discloses errors 
resulting in moneys due a producer or the market administrator from such 
handler or due such handler from the market administrator, the market 
administrator shall promptly notify such handler of any amount so due 
and payment thereof shall be made on or before the next date for making 
payments as set forth in the provisions under which such error occurred.



Sec. 1134.78  Charges on overdue accounts.

    The unpaid obligation of a handler pursuant to Secs. 1134.71, 
1134.76, 1134.77, 1134.85 and 1134.86 shall be increased 1 percent for 
each month or portion thereof beginning with the third day following the 
date by which such obligation was payable: Provided, That:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
interest charges previously made pursuant to this section; and
    (b) For the purpose of this section, any obligation that was 
determined at

[[Page 772]]

a date later than that prescribed by the order because of a handler's 
failure to submit a report to the market administrator when due shall be 
considered to have been payable by the date it would have been due if 
the report had been filed when due.

        Administrative Assessment and Marketing Service Deduction



Sec. 1134.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 13th 
day after the end of the month 5 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Producer milk (including milk subject to the provisions of 
Sec. 1134.42(e) but excluding such milk in the case of a cooperative 
association which is a handler of milk subject to the provisions of 
Sec. 1134.42(e)) and such handler's own production;
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1134.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1134.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1134.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1134.60 (d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant during the month that exceeds the skim milk 
and butterfat subtracted pursuant to Sec. 1134.76(a)(2).
[47 FR 42991, Sept. 30, 1982, as amended at 58 FR 27896, May 11, 1993]



Sec. 1134.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to producers for milk (other than milk of his 
own production) pursuant to Sec. 1134.73, shall deduct 6 cents per 
hundredweight, or such lesser amount as may be prescribed by the 
Secretary, and shall pay such deductions to the market administrator on 
or before the 13th day after the end of the month. Such money shall be 
used by the market administrator to provide market information and to 
check the accuracy of the testing and weighing of their milk for 
producers who are not receiving such services from a cooperative 
association.
    (b) For producers who are members of a cooperative association which 
the Secretary has determined is actually performing the services set 
forth in paragraph (a) of this section, each handler shall make, in lieu 
of the deduction specified in paragraph (a) of this section, such 
deductions from the payments to be made to producers as may be 
authorized by the membership agreement or marketing contract between the 
cooperative association and its members, and on or before the 14th day 
after the end of each month, the handler shall pay the aggregate amount 
of such deductions to the cooperative association, furnishing a 
statement showing the amount of the deductions and the quantity of milk 
on which the deductions from each producer was computed.



PART 1135--MILK IN THE SOUTHWESTERN IDAHO-EASTERN OREGON MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1135.1  General provisions.

                               Definitions

1135.2  Southwestern Idaho-Eastern Oregon marketing area.
1135.3  Route disposition.
1135.4  Plant.
1135.5  Distributing plant.
1135.6  Supply plant.
1135.7  Pool plant.
1135.8  Nonpool plant.
1135.9  Handler.
1135.10  Producer-handler.
1135.11  [Reserved]
1135.12  Producer.
1135.13  Producer milk.
1135.14  Other source milk.
1135.15  Fluid milk product.
1135.16  Fluid cream product.
1135.17  Filled milk.
1135.18  Cooperative association.
1135.19  [Reserved]
1135.20  Commercial food processing establishment.

[[Page 773]]

                             Handler Reports

1135.30  Reports of receipts and utilization.
1135.31  Payroll reports.
1135.32  Other reports.

                         Classification of Milk

1135.40  Classes of utilization.
1135.41  Shrinkage.
1135.42  Classification of transfers and diversions.
1135.43  General classification rules.
1135.44  Classification of producer milk.
1135.45  Market administrator's reports and announcements concerning 
          classification.

                       Class and Component Prices

1135.50  Class and component prices.
1135.51  Basic formula price.
1135.52  [Reserved]
1135.53  Announcement of class and component prices.
1135.54  Equivalent price.

                Differential Pool and Handler Obligations

1135.60  Computation of handlers' obligations to pool.
1135.61  Computation of weighted average differential price.
1135.62  Computation of producer protein price.
1135.63  Announcement of the weighted average differential price, the 
          producer protein price, and an estimated uniform price.

                            Payments for Milk

1135.70  Producer-settlement fund.
1135.71  Payments to the producer-settlement fund.
1135.72  Payments from the producer-settlement fund.
1135.73  Payments to producers and to cooperative associations.
1135.74  Payments by a handler operating a partially regulated 
          distributing plant.
1135.75  Adjustments of accounts.
1135.76  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1135.85  Assessment for order administration.
1135.86  Deduction for marketing services.

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

    Source: 46 FR 28612, May 28, 1981, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1135.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1135.2  Southwestern Idaho-Eastern Oregon marketing area.

    Southwestern Idaho-Eastern Oregon marketing area, hereinafter called 
the ``marketing area,'' means all territory within the boundaries of the 
following Idaho and Oregon counties, including all reservations, 
installations, institutions, or other similar establishments if any part 
thereof is within any of the listed counties:

                                  Idaho

Ada
Adams
Blaine
Boise
Camas
Canyon
Cassia
Elmore
Gem
Gooding
Jerome
Lincoln
Minidoka
Owyhee
Payette
Twin Falls
Valley
Washington

                                 Oregon

Baker
Grant
Harney
Malheur
Union
  



Sec. 1135.3  Route disposition.

    Route disposition means any delivery of a fluid milk product 
classified as Class I milk from a plant to a retail or wholesale outlet 
(including any delivery through a distribution point or a vender and 
disposition from a plant store or through a vending machine) except a 
delivery to another plant.



Sec. 1135.4  Plant.

    Plant means the buildings, facilities, and equipment constituting a 
single operating unit or establishment at which milk or milk products 
(including filled milk) are received, processed, or packaged. Separate 
facilities used only as a distribution point for storing

[[Page 774]]

packaged fluid milk products in transit or used only for reloading milk 
from one tank truck to another for transshipment shall not be a 
``plant'' under this definition.



Sec. 1135.5  Distributing plant.

    Distributing plant means a plant that is approved by a duly 
constituted regulatory agency for the handling of Grade A milk and at 
which fluid milk products are processed or packaged and from which there 
is route disposition in the marketing area during the month.



Sec. 1135.6  Supply plant.

    Supply plant means a plant that is approved by a duly constituted 
regulatory agency for the handling of Grade A milk and from which fluid 
milk products are transferred during the month to a pool distributing 
plant.



Sec. 1135.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) A distributing plant from which there is:
    (1) Route disposition (except filled milk) in the marketing area 
during the month equal to not less than 10 percent of the Grade A fluid 
milk products received at such plant (including milk diverted from such 
plant by the plant operator pursuant to Sec. 1135.13); and
    (2) Total route disposition (except filled milk) during the month 
equal to not less than 25 percent of such receipts. A unit consisting of 
two or more distributing plants operated by a handler shall be 
considered as one distributing plant for the purpose of meeting this 
requirement if the handler notifies the market administrator in writing 
before the first day of the month that the plants should be considered 
as a unit. The unit shall continue from month to month thereafter 
without further notification. If, however, there is any change in the 
composition of the unit, the handler shall notify the market 
administrator in writing on or before the first day of the month such 
change is to be made.
    (b) A supply plant from which during the month the volume of fluid 
milk products, except filled milk, transferred to pool distributing 
plants is 25 percent or more of the Grade A milk received at the plant 
from dairy farmers (including producer milk diverted from the plant by 
the plant operator but excluding producer milk diverted to the plant 
pursuant to Sec. 1135.13), subject to the following conditions:
    (1) Any supply plant that has qualified as a pool plant in each of 
the immediately preceding months of September through February shall be 
a pool plant in each of the following months of March through August 
unless written request for nonpool status for any such month is filed by 
the plant operator with the market administrator prior to the first day 
of any such month. In such case, nonpool status will be effective until 
the plant again qualifies as a pool plant by meeting the transfer 
requirements; and
    (2) The volume of fluid milk products included as qualifying 
shipments to a distributing plant pursuant to this paragraph shall be 
reduced by the volume of any fluid milk products transferred or diverted 
by such pool distributing plant operator to the supply plant or to any 
other plant under the control of the supply plant operator.
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section that also meets the pool plant requirements of another Federal 
order and from which, the Secretary determines, a greater quantity of 
Class I milk, except filled milk, was disposed of as route disposition 
during the month in such other Federal marketing area than was disposed 
of as route disposition in this marketing area, and which is fully 
subject to the classification and pricing provisions of such other 
order;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section that also meets the pool plant requirements of another Federal 
order on the basis of route disposition in such other marketing area, 
and from which, the Secretary determines, a greater quantity of Class I 
milk, except filled milk, is disposed of during the month as route 
disposition in this marketing area than is disposed of in such other 
marketing area but which plant is,

[[Page 775]]

nevertheless, fully regulated under such other Federal order;
    (4) A supply plant qualified pursuant to paragraph (b) of this 
section that also meets the pool plant requirements of another Federal 
order and from which greater qualifying transfers are made during the 
month to plants regulated under such other order than are made to plants 
regulated under this order, unless during the months of March through 
August the transfers to the other order plant are classified as Class II 
or Class III milk and the operator of the supply plant elects to retain 
automatic pooling under this part;
    (5) A distributing plant from which less than an average of 300 
pounds of Class I milk per day, except filled milk, is disposed of in 
the marketing area during the month; or
    (6) Milk receiving and storage facilities that are on the same 
premises as a pool plant and are not approved by any regulatory agency 
for the receiving, processing or packaging of any fluid milk product for 
Grade A disposition.
[46 FR 28612, May 28, 1981, as amended at 46 FR 62811, Dec. 29, 1981; 51 
FR 12835, Apr. 16, 1986]



Sec. 1135.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a distributing 
plant that does not qualify as a pool plant and is not an other order 
plant, a producer-handler plant, or an exempt distributing plant.
    (d) Unregulated supply plant means a supply plant that does not 
qualify as a pool supply plant and is not an other order plant, a 
producer-handler plant, or an exempt distributing plant.
    (e) Exempt distributing plant means a distributing plant defined in 
Sec. 1135.7(c)(5).



Sec. 1135.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of a pool plant;
    (b) Any cooperative association with respect to milk of a producer 
that is diverted pursuant to Sec. 1135.13 for the account of the 
cooperative association;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler for such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat and protein tests determined from farm bulk tank samples;
    (d) Any person, except a cooperative association, with respect to 
milk that it receives for its account from the farm of a producer in a 
tank truck owned and operated by, or under the control of, such person 
and which is delivered during the month for the account of such person 
to the pool plant of another handler or diverted pursuant to 
Sec. 1135.13, subject to the following conditions:
    (1) Such person (who, if qualified pursuant to this paragraph, shall 
be known as a ``proprietary bulk tank handler'') must operate a plant 
located in the marketing area at which milk is processed only into Class 
II or Class III products; and
    (2) Prior to operating as a handler pursuant to this paragraph, such 
person must submit to the market administrator a statement signed by the 
applicant and the operator of the pool plant to which the milk will be 
delivered specifying that the applicant will be the responsible handler 
for the milk;
    (e) Any person in his capacity as the operator of a partially 
regulated distributing plant;

[[Page 776]]

    (f) Any person defined as a producer-handler;
    (g) Any person in his capacity as the operator of another order 
plant described in Sec. 1135.7(c) (2) and (3);
    (h) Any person in his capacity as the operator of an unregulated 
supply plant; and
    (i) Any person in his capacity as the operator of an exempt 
distributing plant.
[46 FR 28612, May 28, 1981, as amended at 59 FR 15324, Apr. 1, 1994]



Sec. 1135.10  Producer-handler.

    Producer-handler means any person who meets all of the following 
conditions:
    (a) Operates a dairy farm and a distributing plant at which Grade A 
milk of his own production is processed and packaged, and from which 
there is route disposition in the marketing area;
    (b) Receives no milk or fluid milk products from any source other 
than pool plants, other order plants, and bulk tank handlers described 
in Sec. 1135.9 (b) and (d);
    (c) Such receipts do not exceed the lesser of 5 percent of his Class 
I utilization during the month or 5,000 pounds;
    (d) Does not reconstitute or convert milk products into fluid milk 
products except to increase by the addition of nonfat dry milk the 
nonfat milk solids content of its own farm production or of fluid milk 
products received from other sources; and
    (e) Provides proof satisfactory to the market administrator that the 
care and management of the dairy animals and other resources necessary 
for his own farm production and the operation of the processing and 
packaging business are the personal enterprise and risk of such person.



Sec. 1135.11  [Reserved]



Sec. 1135.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for disposition as Grade A milk and whose milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1135.9 (b), (c) or (d); 
or
    (3) Diverted from a pool plant in accordance with Sec. 1135.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person who produces milk that is diverted to a pool plant 
from an other order plant if the other order designates such person as a 
producer under that order and such milk is allocated to Class II or 
Class III utilization pursuant to Sec. 1135.44(a)(8)(iii) and the 
corresponding step of Sec. 1135.44(b); or
    (3) Any person who produces milk that is reported as diverted to an 
other order plant if any portion of such person's milk so moved is 
assigned to Class I under the provisions of such other order or the 
other order designates such person as a producer under such order.



Sec. 1135.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk of a 
producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received at a pool plant from a handler described in 
Sec. 1135.9(c);
    (c) Received by a handler described in Sec. 1135.9(c) in excess of 
the quantity delivered to pool plants;
    (d) Received by a handler described in Sec. 1135.9(d) that is not 
diverted pursuant to paragraph (f) of this section;
    (e) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant; or
    (f) Diverted from a pool plant to a nonpool plant by a pool plant 
operator or a handler described in Sec. 1135.9 (b) or (d), subject to 
the following conditions:
    (1) Milk of a dairy farmer who was not a ``producer'' in the 
preceding two months shall not be eligible for diversion until one day's 
production of milk is physically received at a pool plant;
    (2) During each of a dairy farmer's first three months as a 
``producer'' under this order, and after any period of two months or 
longer that a dairy farmer is not a ``producer'' under this order, milk 
of the dairy farmer shall

[[Page 777]]

not be eligible for diversion unless during the month one day's 
production of milk of such dairy farmer is physically received as 
producer milk at a pool plant;
    (3) The total quantity of milk diverted by a cooperative association 
during any month may not exceed 80 percent of the producer milk that the 
cooperative association causes to be delivered to or diverted from pool 
plants during the month. Two or more cooperative associations may have 
their allowable diversions computed on the basis of the combined 
deliveries of the producer milk which the associations cause to be 
delivered to pool plants or diverted from pool plants during the month 
if each association has filed a request in writing with the market 
administrator on or before the first day of the month the agreement is 
to be effective. This request shall specify the basis for assigning 
over-diverted milk to the producer deliveries of each cooperative 
according to a method approved by the market administrator;
    (4) The total quantity of milk diverted during the month by a 
proprietary bulk tank handler described in Sec. 1135.9(d) may not exceed 
80 percent of the producer milk that the handler causes to be delivered 
to or diverted from pool plants during the month;
    (5) The operator of a pool plant may divert for its account any milk 
that is not under the control of a cooperative association or a 
proprietary bulk tank handler that diverts milk during the month 
pursuant to paragraphs (f)(3) and (4) of this section. The total 
quantity so diverted during any month may not exceed 80 percent of the 
producer milk received at or diverted from such pool plant during the 
month that is eligible to be diverted by the plant operator; and
    (6) Any milk diverted in excess of the limits prescribed in 
paragraphs (f) (3), (4), and (5) of this section shall not be producer 
milk. The diverting handler may designate the dairy farmers whose 
diverted milk will not be producer milk. Otherwise, the total milk 
diverted by the handler on the last day of the month, then the second-
to-last day, and so on in daily allotments will be excluded until all of 
the over-diverted milk is accounted for.
[46 FR 28612, May 28, 1981, as amended at 46 FR 62811, Dec. 29, 1981; 50 
FR 36044, Sept. 5, 1985; 51 FR 12835, Apr. 16, 1986]



Sec. 1135.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source other than producers, handlers described in Sec. 1135.9 
(c) and (d), pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1135.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1135.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1135.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1135.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and

[[Page 778]]

    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27896, May 11, 1993]



Sec. 1135.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27896, May 11, 1993]



Sec. 1135.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milkfat, so that the product 
(including stabilizers, emulsifiers or flavoring) resembles milk or any 
other fluid milk product, and contains less than 6 percent nonmilk fat 
(or oil).



Sec. 1135.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
cooperative association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales of or marketing milk for its 
members; and
    (c) To have its entire activities under the control of its members.



Sec. 1135.19  [Reserved]



Sec. 1135.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1135.13, and 1135.41.
[58 FR 27896, May 11, 1993]

                             Handler Reports



Sec. 1135.30  Reports of receipts and utilization.

    On or before the 9th day after the end of the month, each handler 
shall report to the market administrator, in the detail and on forms 
prescribed by the market administrator, the following information for 
such month:
    (a) Each handler qualified pursuant to Sec. 1135.9(a) shall report 
for each pool plant operated by the handler the quantities of skim milk 
and butterfat contained in or represented by:
    (1) Producer milk received at such plants or diverted by the handler 
to other plants, and the protein content of such milk;
    (2) Producer milk received at such plants from handlers qualified 
pursuant to Sec. 1135.9 (c) and (d), and the protein content of such 
milk; and
    (3) Fluid milk products and bulk fluid cream products from other 
pool plants and other source milk received at such plants.
    (b) Each handler qualified pursuant to Sec. 1135.9 (b), (c), or (d) 
shall report the quantities of producer milk received and the butterfat 
and protein contained therein.
    (c) Each handler submitting reports pursuant to paragraphs (a) and 
(b) of this section shall report the utilization or disposition of all 
milk, filled milk, and milk products required to be reported, and 
inventories on hand at the beginning and end of each month in the form 
of fluid milk products and products specified in Sec. 1135.40(b)(1).
    (d) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that

[[Page 779]]

would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (e) Each handler not specified in paragraphs (a) through (c) 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.
[46 FR 28612, May 28, 1981, as amended at 59 FR 15324, Apr. 1, 1994]



Sec. 1135.31  Payroll reports.

    (a) On or before the 22nd day after the end of each month, each 
handler described in Sec. 1135.9 (a), (b), (c), and (d) shall report to 
the market administrator, in the detail prescribed by the market 
administrator, the following information showing for each producer for 
such month:
    (1) His/her name and address;
    (2) The number of days on which milk was received from such 
producer;
    (3) The total pounds of milk received from such producer;
    (4) The average butterfat and protein content of his/her milk;
    (5) In the case of cooperative associations, the identity of 
producers for whom the cooperative association is authorized to collect 
payment pursuant to Sec. 1135.73; and
    (6) The amount and nature of any deductions authorized in writing by 
the producer to be made from payments due such producer for milk 
delivered.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payments pursuant to Sec. 1135.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.
[46 FR 28612, May 28, 1981, as amended at 59 FR 15324, Apr. 1, 1994]



Sec. 1135.32  Other reports.

    In addition to the reports required pursuant to Secs. 1135.30 and 
1135.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligation under the order.

                         Classification of Milk



Sec. 1135.40  Classes of utilization.

    Except as provided in Sec. 1135.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1135.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk

[[Page 780]]

items, yogurt and any other semi-solid product resembling a Class II 
product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1135.15 and the fluid 
cream product definition pursuant to Sec. 1135.16; and
    (7) In shrinkage assigned pursuant to Sec. 1135.41(a) to the 
receipts specified in Sec. 1135.41(a)(2) and in shrinkage specified in 
Sec. 1135.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27897, May 11, 1993, as amended at 58 FR 63292, Dec. 1, 1993]



Sec. 1135.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1135.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph

[[Page 781]]

(a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from handlers described in Sec. 1135.9 (c) and 
(d));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from handlers described in Sec. 1135.9 (c) and (d) and 
in milk diverted to such plant from another pool plant, except that, if 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handlers; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1135.9 (b) or (c) or a proprietary bulk 
tank handler is the handler pursuant to Sec. 1135.9(d), but not in 
excess of 0.5 percent of the skim milk and butterfat, respectively, in 
such milk. If the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and protein and butterfat tests determined from 
farm bulk tank samples, the applicable percentage for the cooperative 
association or the proprietary bulk tank handler shall be zero.
[46 FR 28612, May 28, 1981, as amended at 59 FR 15324, Apr. 1, 1994]



Sec. 1135.42  Classification of transfers and diversions.

    (a) Transfers and diversions (including deliveries by a handler 
described in Sec. 1135.9(d)) to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant or from a 
handler described in Sec. 1135.9(d) to a pool plant shall be classified 
as Class I milk unless both handlers request the same classification in 
another class. In either case, the classification of such transfers or 
diversions shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk, and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computation pursuant to Sec. 1135.44(a)(12) and the corresponding 
step of Sec. 1135.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1135.44(a)(7) 
and the corresponding step of Sec. 1135.44(b), the skim milk or 
butterfat so transferred or diverted shall be classified so as to 
allocate the least possible Class I utilization to such other source 
milk; and

[[Page 782]]

    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1135.44(a) 
(11) or (12) or the corresponding steps of Sec. 1135.44(b), the skim 
milk or butterfat so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to an other order plant shall be classified in the following manner. 
Such classification shall apply only to the skim milk or butterfat that 
is in excess of any receipts at the pool plant from the other order 
plant of skim milk and butterfat, respectively, in fluid milk products 
and bulk fluid cream products, respectively, that are in the same 
category as described in paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustments when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1135.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
distributing plants. Skim milk or butterfat in the following forms that 
is transferred or diverted by a handler described in Sec. 1135.9 (a), 
(b), or (d) to a producer-handler under this or any other Federal order 
or to an exempt distributing plant shall be classified:
    (1) As Class I milk, if moved in the form of a fluid milk product; 
and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt distributing plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or transferred in the form of a bulk fluid cream 
product, unless the following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, transfers or diversions

[[Page 783]]

in bulk form shall be classified on the basis of the assignment of the 
nonpool plant's utilization to its receipts as set forth in paragraphs 
(d)(2) (ii) through (viii) of this section;
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1135.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[46 FR 28612, May 28, 1981, as amended at 58 FR 27897, May 11, 1993]



Sec. 1135.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1135.44, the following rules shall apply:

[[Page 784]]

    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1135.30 and shall compute separately for each pool plant, and for 
each handler pursuant to Sec. 1135.9 (b), (c), and (d) the pounds of 
skim milk and butterfat, respectively, in each class in accordance with 
Secs. 1135.40, 1135.41, and 1135.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk of a handler pursuant to 
Sec. 1135.9 (b), (c), or (d) shall be determined separately from the 
operations of any pool plant operated by such handler.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1135.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1135.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[46 FR 28612, May 28, 1981, as amended at 58 FR 27897, May 11, 1993; 58 
FR 63292, Dec. 1, 1993]



Sec. 1135.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1135.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1135.9 (b), (c), and (d) by allocating 
the handler's receipts of skim milk and butterfat to its utilization as 
follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1135.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1135.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the

[[Page 785]]

pounds of skim milk in products specified in Sec. 1135.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1135.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1135.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1135.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount;
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and

[[Page 786]]

    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1135.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8) (i) and (ii) of this section and that were 
not offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received.
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this paragraph (a)(1) exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in Class I shall be increased by an 
amount equal to such excess quantity to be subtracted, and the pounds of 
skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section;
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1135.45(a) or

[[Page 787]]

    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes the pounds of skim milk in Class II and Class 
III combined shall be increased by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computation pursuant to paragraph (a)(12) (i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant and from 9(d) handlers 
according to the classification of such products pursuant to 
Sec. 1135.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[46 FR 28612, May 28, 1981, as amended at 58 FR 27898, May 11, 1993]



Sec. 1135.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1135.44(a)(12) and the corresponding 
step of Sec. 1135.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1135.43(d) and

[[Page 788]]

Sec. 1135.44 on the basis of such report, (including any 
reclassification of inventories of bulk concentrated fluid milk 
products), and thereafter, any change in such allocation required to 
correct errors disclosed in the verification of such report.
    (c) Furnish to each handler as described in Sec. 1135.9 (a), (b) and 
(d) who has shipped fluid milk products or bulk fluid cream products to 
an other order plant the class to which such shipments were allocated by 
the market administrator of the other order on the basis of the report 
by the receiving handler, and, as necessary, any changes in such 
allocation arising from the verification of such report.
    (d) Report to each cooperative association that so requests, on or 
before the 12th day after the end of each month, the amount and class 
utilization of producer milk delivered by members of such cooperative 
association to each handler receiving such milk. For the purpose of this 
report, the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handlers.
[46 FR 28612, May 28, 1981, as amended at 58 FR 27898, May 11, 1993]

                       Class and Component Prices



Sec. 1135.50  Class and component prices.

    The class prices for the month per hundredweight of milk shall be as 
follows:
    (a) The Class I price shall be the basic formula price pursuant to 
Sec. 1135.51(a) for the second preceding month plus $1.50.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Western nonfat dry milk price for the month, as reported by 
the Department, less 12.5 cents, times an amount computed by subtracting 
from 9 an amount calculated by dividing .4 by such nonfat dry milk 
price, plus the butterfat differential times 35 and rounded to the 
nearest cent.
    (e) The skim milk price per hundredweight shall be the basic formula 
price for the month pursuant to Sec. 1135.51(a) less an amount computed 
by multiplying the butterfat differential computed pursuant to paragraph 
(f)(3) of this section by 35.
    (f) The butterfat price per pound shall be the total of:
    (1) The skim price computed in paragraph (e) of this section divided 
by 100; and
    (2) The butterfat differential computed pursuant to paragraph (f)(3) 
of this section multiplied by 10.
    (3) Compute a butterfat differential rounded to the nearest one-
tenth cent, by multiplying the current month's butter price by 0.138, 
and subtract from the result an amount determined by multiplying 0.0028 
by 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. 1135.51 (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.
    (g) The milk protein price per pound shall be computed by 
subtracting the butterfat price, multiplied by 3.5, from the basic 
formula price and dividing the result by the percentage of protein in 
the milk on which the basic formula price is based, as announced by the 
Dairy Division. The resulting price shall be rounded to the nearest 
whole cent.
[46 FR 28612, May 28, 1981, as amended at 47 FR 42975, Sept. 30, 1982; 
51 FR 12836, Apr. 16, 1986; 58 FR 63292, Dec. 1, 1993; 59 FR 15325, Apr. 
1, 1994; 60 FR 6612, Feb. 2, 1995; 60 FR 18978, Apr. 14, 1995]



Sec. 1135.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1135.50(f)(3) and rounded to 
the nearest cent, plus or

[[Page 789]]

minus the change in gross value yielded by the butter-nonfat dry milk 
and Cheddar cheese product price formula computed pursuant to paragraphs 
(a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divided by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18978, Apr. 14, 1995]



Sec. 1135.52  [Reserved]



Sec. 1135.53  Announcement of class and component prices.

    The market administrator shall announce publicly:
    (a) On or before the 5th day of each month, the Class I price and 
the Class II price for the following month, and the Class III and Class 
III-A prices for the preceding month.

[[Page 790]]

    (b) On or before the 5th day after the end of each month, the basic 
formula price, the prices for skim milk and butterfat, and the milk 
protein price.
[59 FR 15325, Apr. 1, 1994, as amended at 60 FR 6612, Feb. 2, 1995]



Sec. 1135.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                Differential Pool and Handler Obligations



Sec. 1135.60  Computation of handlers' obligations to pool.

    The market administrator shall compute each month for each handler 
described in Sec. 1135.9(a) with respect to each of the handler's pool 
plants and for each handler qualified pursuant to Sec. 1135.9(b), (c), 
or (d) an obligation to the pool by combining the amounts computed as 
follows:
    (a) Multiply the hundredweight of producer milk assigned to Class I 
milk pursuant to Sec. 1135.44(c) by the difference between the Class I 
price and the Class III price;
    (b) Multiply the hundredweight of producer milk assigned to Class II 
milk pursuant to Sec. 1135.44(c) by the difference between the Class II 
price and the Class III price;
    (c) Add or subtract, as appropriate, the amount that results from 
multiplying the pounds of producer milk in Class III-A by the amount 
that the Class III-A price is more or less, respectively, than the Class 
III price;
    (d) Multiply the skim milk price by the hundredweight of producer 
skim milk assigned to Class I milk pursuant to Sec. 1135.44(a);
    (e) Multiply the milk protein price by the pounds of protein in 
producer skim milk assigned to Class II and Class III pursuant to 
Sec. 1135.44(a). The pounds of protein shall be computed by multiplying 
the hundredweight of skim milk so assigned by the average percentage of 
protein in all producer skim milk received by the handler during the 
month;
    (f) With respect to skim milk and butterfat overages assigned 
pursuant to Sec. 1135.44(a)(14) and (b):
    (1) Multiply the total pounds of butterfat by the butterfat price;
    (2) Multiply the skim milk pounds assigned to Class I by the skim 
milk price;
    (3) Multiply the protein pounds associated with the skim milk pounds 
assigned to Class II and III by the milk protein price;
    (4) Multiply the combined skim milk and butterfat pounds assigned to 
Class I by the difference between the Class I price and the Class III 
price; and
    (5) Multiply the combined skim milk and butterfat pounds assigned to 
Class II by the difference between the Class II price and the Class III 
price;
    (g) With respect to skim milk and butterfat assigned to shrinkage 
pursuant to Sec. 1135.44(a)(9) and (b):
    (1) Multiply the total pounds of butterfat by the butterfat price;
    (2) Multiply the skim milk pounds assigned to Class I by the skim 
milk price;
    (3) Multiply the protein pounds associated with the skim milk pounds 
assigned to Class II and III by the milk protein price;
    (4) Multiply the combined skim milk and butterfat pounds assigned to 
Class I by the difference between the Class I price and the Class III 
price;
    (5) Multiply the combined skim milk and butterfat pounds assigned to 
Class II by the difference between the Class II price and the Class III 
price; and
    (6) Subtract the Class III value of the milk at the previous month's 
protein and butterfat prices;
    (h) Multiply the difference between the Class I price and the Class 
III price by the combined pounds of skim milk and butterfat assigned to 
Class I pursuant to Sec. 1135.43(d) and subtracted from Class I pursuant 
to Sec. 1135.44(a)(7)(i) through (iv) and (b), excluding:
    (1) Receipts of bulk fluid cream products from an other order plant;
    (2) Receipts of bulk concentrated fluid milk products from pool 
plants, other order plants, and unregulated supply plants; and

[[Page 791]]

    (3) Receipts of nonfluid milk products that are distributed as 
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another order under Sec. 1135.76(a)(5) or (c);
    (i) Multiply the difference between the Class I price and the Class 
III price by the combined pounds of skim milk and butterfat subtracted 
from Class I pursuant to Sec. 1135.44(a)(7)(v) and (vi) and 
Sec. 1135.44(b);
    (j) Multiply the difference between the Class I price and the Class 
III price by the combined pounds of skim milk and butterfat in receipts 
of concentrated fluid milk products assigned to Class I pursuant to 
Sec. 1135.43(d) and Sec. 1135.44(a)(7)(i) and by the pounds of skim and 
butterfat subtracted from Class I pursuant to Sec. 1135.44(a)(11) and 
(b), excluding the skim milk and butterfat in receipts of bulk fluid 
milk products from unregulated supply plants to the extent an equivalent 
quantity of skim milk and butterfat disposed of to any 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;
    (k) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price and the Class III price) 
by the combined pounds of skim milk and butterfat contained in receipts 
of nonfluid milk products that are allocated to Class I use pursuant to 
Sec. 1135.43(d); and
    (l) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any applicable class price change shall be applied to the plant that 
used the concentrated milk in the event that the concentrated fluid milk 
products were made from bulk unconcentrated fluid milk products received 
at the plant during the prior month.
[59 FR 15326, Apr. 1, 1994]



Sec. 1135.61  Computation of weighted average differential price.

    A weighted average differential price for all milk received from 
producers shall be computed by the market administrator as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1135.60 (a) through (c) and (f) through (l) for all handlers who 
filed reports pursuant to Sec. 1135.30 for the month and who made the 
payments pursuant to Sec. 1135.71 for the preceding month;
    (b) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (c) Divide the resulting amount by the sum, for all handlers, of the 
total hundredweight of producer milk and the total hundredweight for 
which values were computed pursuant to Sec. 1135.60(j); and
    (d) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight of milk included under paragraph (c) of this section. The 
result shall be the weighted average differential price.
[59 FR 15326, Apr. 1, 1994]



Sec. 1135.62  Computation of producer protein price.

    A producer protein price shall be computed by the market 
administrator each month as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1135.60(d) and (e) for all handlers who filed reports pursuant to 
Sec. 1135.30 and who made payments pursuant to Sec. 1135.71 for the 
preceding month;
    (b) Divide the resulting amount by the total pounds or protein 
contained in producer milk; and
    (c) Round to the nearest whole cent. The result shall be the 
producer protein price.
[59 FR 15327, Apr. 1, 1994]



Sec. 1135.63  Announcement of the weighted average differential price, the producer protein price, and an estimated uniform price.

    The market administrator shall announce on or before the 14th day 
after

[[Page 792]]

the end of each month the following prices for such month:
    (a) The weighted average differential price;
    (b) The producer protein price; and
    (c) An estimated uniform price per hundredweight of milk computed by 
adding the weighted average differential price to the basic formula 
price.
[59 FR 15326, Apr. 1, 1994]

                            Payments for Milk



Sec. 1135.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit the appropriate payments made by handlers pursuant to 
Secs. 1135.71, 1135.74, 1135.75, and 1135.76 and out of which he shall 
make all payments due handlers pursuant to Secs. 1135.72, and 1135.75.
[59 FR 15327, Apr. 1, 1994]



Sec. 1135.71  Payments to the producer-settlement fund.

    On or before the 16th day after the end of the month, each handler 
shall pay to the market administrator the amount, if any, by which the 
amount as specified in paragraph (a) of this section exceeds the amount 
specified in paragraph (b) of this section:
    (a) The total obligation of the handler for such month as determined 
pursuant to Sec. 1135.60.
    (b) The sum of:
    (1) The value computed by multiplying the weighted average 
differential price by the hundredweight of producer milk received from 
handlers qualified pursuant to Sec. 1135.9(c) and from producers during 
the month;
    (2) The value computed for the protein contained in the producer 
milk included under paragraph (b)(1) of this section at the producer 
protein price; and
    (3) The value at the weighted average differential price of the 
hundredweight of skim milk and butterfat for which a value is computed 
pursuant to Sec. 1135.60(j).
[59 FR 15327, Apr. 1, 1994]



Sec. 1135.72  Payments from the producer-settlement fund.

    On or before the 18th day after the end of the month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed for such handler pursuant to Sec. 1135.71(b) exceeds the 
amount computed pursuant to Sec. 1135.71(a). If at such time the balance 
in the producer-settlement fund is insufficient to make all of the 
payments pursuant to this section, the market administrator shall reduce 
uniformly such payment and shall complete such payment as soon as the 
necessary funds become available.
[59 FR 15327, Apr. 1, 1994]



Sec. 1135.73  Payments to producers and to cooperative associations.

    Each handler shall pay for milk received from producers and 
cooperative associations as follows:
    (a) On or before the last day of the month, each handler shall pay 
to each producer from whom milk was received during the first 15 days of 
the month not less than the Class III price per hundredweight for the 
preceding month.
    (b) On or before the 19th day after the end of each month, each 
handler shall pay to each producer from whom milk was received during 
the month, a sum computed as follows:
    (1) Multiply the butterfat price for the month by the total pounds 
of butterfat in milk received from the producer;
    (2) Multiply the producer protein price for the month by the total 
pounds of protein in such milk;
    (3) Multiply the weighted average differential price for the month 
multiplied by the hundredweight of such milk;
    (4) Subtract payments made to the producer pursuant to paragraph (a) 
of this section;
    (5) Subtract deductions for marketing services pursuant to 
Sec. 1135.86; and
    (6) Subtract proper deductions authorized in writing by such 
producer.
    (c) On or before the second day prior to the dates specified in 
paragraphs (a) and (b) of this section, each handler shall pay a 
cooperative association for milk from producers who market their

[[Page 793]]

milk through the cooperative and who have authorized the cooperative to 
collect payments on their behalf an amount equal to the sum of the 
individual payments otherwise payable to such producers pursuant to 
paragraphs (a) and (b) of this section.
    (d) In the event a handler has not received full payment from the 
market administrator pursuant to Sec. 1135.72 by the 19th day of the 
month, the handler may reduce pro rata the payments to producers 
pursuant to paragraphs (b) and (c) of this section by not more than the 
amount of such underpayment. Following receipt of the balance due from 
the market administrator, the handler shall complete payments to 
producers not later than the next payment date provided under this 
paragraph.
    (e) In making payments to individual producers as required by this 
section, each handler shall furnish each producer with a supporting 
statement in such form that it may be retained by the producer, which 
shall show:
    (1) The month involved, and the identity of the handler and the 
producer;
    (2) The total pounds of milk received from the producer and the 
pounds of butterfat and protein contained therein;
    (3) The minimum rates at which payment is required pursuant to this 
section;
    (4) The rates used in making payment, if such rates are other than 
the required applicable minimums;
    (5) The amount (or rate per hundredweight) of each deduction claimed 
by the handler, including any deduction claimed under Sec. 1135.86, 
together with an explanation of each deduction; and
    (6) The net amount of the payment to the producer.
[46 FR 28612, May 28, 1981, as amended at 59 FR 15327, Apr. 1, 1994]



Sec. 1135.74  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1135.30(b) and 1135.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants, handlers pursuant to 
Sec. 1135.9 (b) and (d), and other order plants, except that subtracted 
under a similar provision of another Federal milk order; and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the estimated uniform price; and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the

[[Page 794]]

nonfluid milk ingredients at the difference between the Class I price 
applicable under the other order at the location of the plant where the 
nonfluid milk ingredients were processed (but not to be less than the 
Class III price) and the Class III price. This payment option shall 
apply only if a majority of the total milk received at the plant that 
processed the nonfluid milk ingredients is regulated under one or more 
Federal orders and payment may only be made to the producer-settlement 
fund of the order pricing a plurality of the milk used to produce the 
nonfluid milk ingredients. This payment option shall not apply if the 
source of the nonfluid ingredients used in reconstituted fluid milk 
products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1135.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant, a handler 
described in Sec. 1135.(b) and (d), and an other order plant shall be 
allocated at the partially regulated distributing plant to the same 
class in which such products were classified at the fully regulated 
plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1135.60 
shall be priced at the uniform price or estimated uniform price of the 
respective order regulating the handling of milk at the transferee-
plant, with such uniform price or estimated 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 of 
reconstituted skim milk in filled milk shall be priced at the lowest 
class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1135.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1135.60(j) less the value of such other source milk 
specified in Sec. 1135.71(b)(2), a value of milk determined pursuant to 
Sec. 1135.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1135.7(b), 
subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with his reports filed pursuant to Secs. 1135.30(b) and 
1135.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1135.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1135.50(f)(3), for milk 
received at the plant during the month that would have been producer

[[Page 795]]

milk if the plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1135.50(f)(3), for milk received at the plant during the month that 
would have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1135.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[46 FR 28612, May 28, 1981, as amended at 58 FR 27898, May 11, 1993. 
Redesignated and amended at 59 FR 15327, Apr. 1, 1994; 60 FR 6612, Feb. 
2, 1995; 60 FR 18979, Apr. 14, 1995]



Sec. 1135.75  Adjustments of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts or other verification discloses errors 
resulting in money due the market administrator from such handler or due 
such handler from the market administrator, the market administrator 
shall promptly notify such handler of any amount so due and payment 
thereof shall be made on or before the next date for making payments as 
set forth in the provisions under which such error occurred.
[46 FR 28612, May 28, 1981. Redesignated at 59 FR 15327, Apr. 1, 1994]



Sec. 1135.76  Charges on overdue accounts.

    Any unpaid obligation pursuant to Secs. 1135.71, 1135.74, 1135.75, 
1135.76, 1135.85, and 1135.86, shall be increased 1 percent each month 
beginning with the day following the date such obligation was due under 
the order. Any remaining amount due shall be increased at the same rate 
on the corresponding day of each month thereafter until paid. The 
amounts payable pursuant to this section shall be computed monthly on 
each unpaid obligation and shall include any unpaid charges previously 
made pursuant to this section. For the purpose of this section, any 
obligation that was determined at a date later than prescribed by the 
order because of a handler's failure to submit a report to the market 
administrator when due shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.
[46 FR 28612, May 28, 1981. Redesignated and amended at 59 FR 15327, 
Apr. 1, 1994]

        Administrative Assessment and Marketing Service Deduction



Sec. 1135.85  Assessment for order administration.

    As his pro rata share of the expenses of administration of the 
order, each handler shall pay to the market administrator on or before 
the 13th day after the end of the month 5 cents per hundredweight or 
such lesser amount as the Secretary may prescribe, with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1135.43(d) and other source milk

[[Page 796]]

allocated to Class I pursuant to Sec. 1135.44 (a)(7) and (a)(11) and the 
corresponding steps of Sec. 1135.44(b), except such other source milk 
that is excluded from the computations pursuant to Sec. 1135.60 (h) and 
(j); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1135.74(a)(2).
[46 FR 28612, May 28, 1981, as amended at 58 FR 27899, May 11, 1993; 59 
FR 15327, Apr. 1, 1994]



Sec. 1135.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments directly to producers (other than himself) 
pursuant to Sec. 1135.73, shall deduct 7 cents per hundredweight, or 
such lesser amount as the Secretary may prescribe with respect to all 
milk received from producers' farms during the month, and shall pay such 
deductions to the market administrator on or before the 13th day after 
the end of such month. Such moneys shall be expended by the market 
administrator to provide for market information and to verify the 
weights, samples, and tests of milk of producers who are not receiving 
such services from a cooperative association.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, each handler shall make, in lieu of the deductions specified in 
paragraph (a) of this section, such deductions from the payments to be 
made to such producers as may be authorized by the membership agreement 
or marketing contract between such cooperative association and such 
producers and on or before the 16th day after the end of each month 
shall pay such deductions to the cooperative association rendering such 
services, accompanied by a statement showing the quantity of milk for 
which a deduction was computed for each producer.



PART1136--[RESERVED]






PART 1137--MILK IN THE EASTERN COLORADO MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1137.1  General provisions.

                               Definitions

1137.2  Eastern Colorado marketing area.
1137.3  Route disposition.
1137.4--1137.6  [Reserved]
1137.7  Pool plant.
1137.8  Nonpool plant.
1137.9  Handler.
1137.10  Producer-handler.
1137.11  [Reserved]
1137.12  Producer.
1137.13  Producer milk.
1137.14  Other source milk.
1137.15  Fluid milk product.
1137.16  Fluid cream product.
1137.17  Filled milk.
1137.18  Cooperative association.
1137.19  [Reserved]
1137.20  Commercial food processing establishment.

                             Handler Reports

1137.30  Reports of receipts and utilization.
1137.31  Payroll reports.
1137.32  Other reports.

                         Classification of Milk

1137.40  Classes of utilization.
1137.41  Shrinkage.
1137.42  Classification of transfers and diversions.
1137.43  General classification rules.
1137.44  Classification of producer milk.
1137.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1137.50  Class prices.
1137.51  Basic formula price.
1137.52  Plant location adjustments for handlers.
1137.53  Announcement of class prices.
1137.54  Equivalent price.

                              Uniform Price

1137.60  Handler's value of milk for computing uniform price.
1137.61  Computation of uniform price.
1137.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1137.70  Producer-settlement fund.
1137.71  Payments to the producer-settlement fund.

[[Page 797]]

1137.72  Payments from the producer-settlement fund.
1137.73  Payments to producers and to cooperative associations.
1137.74  Butterfat differential.
1137.75  Plant location adjustments for producers and on nonpool milk.
1137.76  Payments by a handler operating a partially regulated 
          distributing plant.
1137.77  Adjustment of accounts.
1137.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1137.85  Assessment for order administration.
1137.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; (7 U.S.C. 601-674).

    Source: 47 FR 42978, Sept. 30, 1982, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1137.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1137.2  Eastern Colorado marketing area.

    Eastern Colorado marketing area hereinafter called the ``marketing 
area'' means all the territory within the perimetric boundaries of the 
counties listed below, including all territory (municipal, State, or 
Federal) installations, institutions and other establishments:

                            Colorado Counties

    Adams, Arapahoe, Boulder, Cheyenne, Clear Creek, Crowley, Custer, 
Denver, Douglas, Elbert, El Paso, Gilpin, Huerfano, Jefferson, Kiowa, 
Kit Carson, Las Animas, Larimer, Lincoln, Logan, Morgan, Otero, Park, 
Phillips, Pueblo, Sedgwick, Teller, Washington, Weld, Yuma.

                             Kansas Counties

    Cheyenne, Logan, Sherman, Wallace.



Sec. 1137.3  Route disposition.

    Route disposition means any delivery to retail or wholesale outlets 
(including a delivery by a vendor or a sale from a plant or plant store) 
of any fluid milk product classified as Class I milk, other than a 
delivery to a pool plant or a nonpool plant: Provided, That packaged 
fluid milk products, except filled milk, that are transferred to a 
distributing plant from a plant with route disposition in the marketing 
area, and which are classified as Class I under Sec. 1137.40(a), shall 
be considered as a route disposition from the transferor plant, rather 
than from the transferee plant, for the single purpose of qualifying it 
as a pool distributing plant under Sec. 1137.7(a)(1).



Secs. 1137.4--1137.6  [Reserved]



Sec. 1137.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) Any plant, hereinafter referred to as a ``distributing pool 
plant'', in which during the month fluid milk products are processed or 
packaged and from which:
    (1) An amount equal to 50 percent or more of the total receipts of 
Grade A milk (except receipts from distributing pool plants) is disposed 
of as route disposition, except filled milk. A unit consisting of two or 
more distributing plants operated by a handler shall be considered as 
one distrubuting plant for the purpose of meeting the requirements of 
this subparagraph if each plant separately meets the requirements of 
paragraph (a)(2) of this section and the handler notifies the market 
administrator in writing before the first day of the month that the 
plants should be considered as a unit. The unit shall continue from 
month to month thereafter without further notification. If, however, 
there is any change in the composition of the unit, the handler shall 
notify the market administrator in writing on or before the first day of 
the month such change is to be made; and
    (2) Ten percent or more of such receipts, or 12,000 pounds per day, 
whichever is less, are disposed of as route disposition, except filled 
milk, in the marketing area.
    (b) Any plant, hereinafter referred to as a ``supply pool plant'' 
from which during the month 50 percent of its

[[Page 798]]

dairy farm supply of Grade A milk is moved to distributing pool plant(s) 
as fluid milk products, except filled milk. Any supply plant which has 
qualified as a pool plant in each of the months of September through 
February shall be a pool plant in each of the following months of March 
through August unless written request for nonpool status for any such 
month(s) is furnished in advance to the market administrator. A plant 
withdrawn from supply pool plant status may not be reinstated for any 
subsequent month of March through August unless it fulfills the shipping 
requirements of this paragraph for such month.
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A plant meeting the requirements of paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order and from which, the Secretary determines, there is a greater 
quantity of route disposition, except filled milk, during the month in 
such other Federal order marketing area than in this marketing area, 
except that if such plant was subject to all the provisions of this part 
in the immediately preceding month, it shall continue to be subject to 
all the provisions of this part until the third consecutive month in 
which a greater proportion of its route disposition, except filled milk, 
is made in such other marketing area unless, notwithstanding the 
provisions of this paragraph, it is regulated under such other order;
    (3) A plant meeting the requirements of paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order on the basis of route disposition in such other marketing area and 
from which, the Secretary determines, there is a greater quantity of 
route disposition, except filled milk, during the month in this 
marketing area than in such other marketing area but which plant is, 
nevertheless, fully regulated under such other Federal order; and
    (4) Any distributing plant from which there is less than an average 
of 300 pounds of route disposition per day, except filled milk, in the 
marketing area during the month.

    Effective Date Note: At 62 FR 35948, July 3, 1997, in 
Sec. 1137.7(b), the second sentence is amended by suspending the words 
``plant which has qualified as a'' and ``of March through August'', 
effective Sept. 1, 1997, through Feb. 28, 1999.



Sec. 1137.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, manufacturing 
or processing plant other than a pool plant. The following categories of 
nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which there is route disposition in consumer-type packages or dispenser 
units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant which is neither 
an other order plant nor a producer-handler plant from which fluid milk 
products are moved during the month to a pool plant.



Sec. 1137.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) A cooperative association with respect to the milk of its member 
producers which it causes to be diverted for its account pursuant to 
Sec. 1137.12;
    (c) A cooperative association with respect to the milk of its member 
producers which is received from the farm for delivery to the pool plant 
of another handler in a tank truck owned and operated by or under 
contract to such cooperative association, if the cooperative association 
notifies the market administrator and the operator of the pool plant to 
whom the milk is delivered, in writing prior to the first day of the 
month in which the milk is delivered, that it elects to be the handler 
for all such milk. Such milk shall be deemed to have been received by 
such

[[Page 799]]

cooperative association at the location of the pool plant to which 
delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler; and
    (f) Any person who operates an other order plant described in 
Sec. 1137.7(c).



Sec. 1137.10  Producer-handler.

    (a) Producer-handler means any person who operates a dairy farm and 
a milk processing plant from which there is route disposition in the 
marketing area and who:
    (1) Receives no fluid milk products during the month from dairy 
farmers;
    (2) Receives no fluid milk products during the month from any other 
source except by transfer from a pool plant; and
    (3) Receives no other source milk for reconstitution into fluid milk 
products.
    (b) Such person must provide proof satisfactory to the market 
administrator that the care and management of all the dairy animals and 
other resources necessary to produce the volume of fluid milk products 
(excluding transfers from pool plants) and the operation of the 
processing and distribution business is the personal enterprise of and 
at the personal risk of such person.



Sec. 1137.11  [Reserved]



Sec. 1137.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk eligible for distribution as Grade A 
milk in compliance with the fluid milk product requirements of a duly 
constituted health authority, whose milk is received at a pool plant or 
diverted to a nonpool plant that is not a producer-handler plant within 
the limits set forth in paragraphs (a)(1) and (2) of this section:
    (1) A cooperative association may divert for its account the milk of 
any member-producer from whom at least three deliveries of milk are 
received during the month at a distributing pool plant. The total 
quantity of milk so diverted may not exceed 30 percent in the months of 
March, April, May, June, July, and December and 20 percent in other 
months of its member producer milk received at distributing pool plants 
during the month. Diversions in excess of such percentages shall not be 
considered producer milk, and the diverting cooperative shall specify 
the dairy farmers whose milk is ineligible as producer milk. Two or more 
cooperative associations may have their allowable diversions computed on 
the basis of the combined deliveries of milk by their member producers 
if each association has filed such a request in writing with the market 
administrator on or before the first day of the month the agreement is 
effective. This request shall specify the basis for assigning over-
diverted milk to the producer members of each cooperative according to a 
method approved by the market administrator.
    (2) A handler in his capacity as the operator of a distributing pool 
plant may divert for his account the milk of any producer, other than a 
member of a cooperative association which has diverted milk pursuant to 
paragraph (a)(1) of this section, from whom at least three deliveries of 
milk are received during the month at his distributing pool plant. The 
total quantity of milk so diverted may not exceed 30 percent in the 
months of March, April, May, June, July, and December and 20 percent in 
other months of the milk received at such distributing pool plant during 
the month from producers who are not members of a cooperative 
association which has diverted milk pursuant to paragraph (a)(1) of this 
section. Diversions in excess of such percentages shall not be 
considered producer milk, and the diverting handler shall specify the 
dairy farmers whose milk is ineligible as producer milk.
    (3) For the purposes of the requirements of Sec. 1137.7, milk 
diverted for the account of the operator of a distributing pool plant, 
except an operator which is also a cooperative association diverting 
milk in the same month pursuant to paragraph (a)(1) of this section, 
shall be included in the receipts of the pool plant from which diverted.
    (4) For purposes of location adjustments pursuant to Secs. 1137.52 
and 1137.75, milk diverted to a nonpool plant shall be considered to 
have been received at

[[Page 800]]

the location of the nonpool plant to which diverted.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Any person with respect to milk produced by him which is 
diverted to a pool plant from an other order plant if the order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1137.44(a)(8)(iii) and the corresponding step of Sec. 1137.44(b); 
and
    (3) Any person with respect to milk produced by him which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.
[47 FR 42978, Aug. 30, 1982]

    Effective Date Note: At 62 FR 35948, July 3, 1997, in 
Sec. 1137.12(a)(1), the first sentence is amended by suspending the 
words ``from whom at least three deliveries of milk are received during 
the month at a distributing pool plant''; and the second sentence is 
amended by suspending the words ``30 percent in the months of March, 
April, May, June, July, and December and 20 percent in other months 
of'', and the word ``distributing'', effective Sept. 1, 1997, through 
Aug. 31, 1999.



Sec. 1137.13  Producer milk.

    Producer milk means all skim milk and butterfat in milk produced by 
a producer.
    (a) With respect to receipts at a pool plant for which the handler 
operating such plant is to be responsible pursuant to Sec. 1137.60:
    (1) Received directly from such producer; and
    (2) Diverted from such pool plant to a nonpool plant for the account 
of the operator of the pool plant, subject to the limitations and 
conditions provided in Sec. 1137.12;
    (b) With respect to the additional receipts of a cooperative 
association:
    (1) For which the cooperative association is the handler pursuant to 
Sec. 1137.9(b), subject to the limitations and conditions provided in 
Sec. 1137.12; and
    (2) For which the cooperative association is the handler pursuant to 
Sec. 1137.9(c).



Sec. 1137.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1137.40(b)(1) from any source other than producers, handlers 
described in Sec. 1137.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1137.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1137.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1137.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1137.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product

[[Page 801]]

of the same nature and butterfat content.
[58 FR 27899, May 11, 1993]



Sec. 1137.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27899, May 11, 1993]



Sec. 1137.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1137.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) To have full authority in the sale of milk of its members; and
    (c) To be engaged in making collective sales, or marketing milk or 
its products for its members.



Sec. 1137.19  [Reserved]



Sec. 1137.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1137.12, 1137.13, 1137.41 and 1137.52.
[58 FR 27899, May 11, 1993]

                             Handler Reports



Sec. 1137.30  Reports of receipts and utilization.

    On or before the seventh day after the end of each month, each 
handler shall report for the month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler, with respect to each of his pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1137.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1137.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1137.9 (b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.

[[Page 802]]

    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to his receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.



Sec. 1137.31  Payroll reports.

    (a) On or before the 23rd day after the end of each month, each 
handler described in Sec. 1137.9 (a), (b), and (c) shall report to the 
market administrator his producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) His name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1137.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1137.32  Other reports.

    (a) On or before the seventh day after the end of each month, each 
handler described in Sec. 1137.9 (a) and (b) who diverted milk to 
nonpool plants shall report for the month to the market administrator, 
in the detail and on the forms prescribed by the market administrator, 
as follows:
    (1) The name of the plant to which diverted;
    (2) The name of the individual dairy farmers so diverted;
    (3) The pounds of skim milk and butterfat from each dairy farmer 
contained in the milk so diverted; and
    (4) The number of days milk of the dairy farmer was received at a 
pool plant of the diverting order.
    (b) In addition to the reports required pursuant to Secs. 1137.30 
and 1137.31 and paragraph (a) of this section, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish such handler's obligation under the order.

                         Classification of Milk



Sec. 1137.40  Classes of utilization.

    Except as provided in Sec. 1137.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1137.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk

[[Page 803]]

items, yogurt and any other semi-solid product resembling a Class II 
product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1137.15 and the fluid 
cream product definition pursuant to Sec. 1137.16; and
    (7) In shrinkage assigned pursuant to Sec. 1137.41(a) to the 
receipts specified in Sec. 1137.41(a)(2) and in shrinkage specified in 
Sec. 1137.41 (b) and (c).
[58 FR 27899, May 11, 1993]



Sec. 1137.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1137.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph in 
amounts equal to 50 times the maximum amount that may be computed 
pursuant to paragraphs (b) (1) through (6) of this section; and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph

[[Page 804]]

(a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1137.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this paragraph 
shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1137.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1137.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Except as provided in paragraph (e) of 
this section, skim milk or butterfat transferred in the form of a fluid 
milk product or a bulk fluid cream product from a pool plant to another 
pool plant shall be classified as Class I milk unless both handlers 
request the same classification in another class. In either case, the 
classification of such transfers shall be subject to the following 
conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1137.44(a)(12) and the corresponding step of 
Sec. 1137.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1137.44(a)(7) or the corresponding 
step of Sec. 1137.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1137.44(a) (11) or (12) or the 
corresponding steps of Sec. 1137.44(b), the skim milk or butterfat so 
transferred up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.

[[Page 805]]

    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to another order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1137.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to his receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (a) and (b) 
of this section are met, tranfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1137.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order

[[Page 806]]

from the nonpool plant and transfers of packaged fluid milk products 
from such nonpool plant to plants fully regulated thereunder shall be 
assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this paragraph.
    (e) Transfers by a cooperative association to pool plants. Skim milk 
and butterfat transferred in the form of bulk milk by a handler 
described in Sec. 1137.9(c) and from a pool plant operated by a 
cooperative association to another handler's pool plant shall be 
classified pursuant to Sec. 1137.44 pro rata with producer milk received 
at the transferee-plant and the value thereof at the class prices shall 
be included in his value of milk pursuant to Sec. 1137.60.
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27900, May 11, 1993]



Sec. 1137.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1137.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1137.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1137.9 (b) or (c) that was not received at a 
pool plant,

[[Page 807]]

the pounds of skim milk and butterfat, respectively, in each class in 
accordance with Secs. 1137.40, 1137.41, and 1137.42. The combined pounds 
of skim milk and butterfat so determined in each class for a handler 
described in Sec. 1137.9 (b) or (c) shall be such handler's 
classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat solids contained in such product 
plus all of the water originally associated with such solids; and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1137.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1137.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1137.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27900, May 11, 1993]



Sec. 1137.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1137.9(a) for each of his pool plants 
separately the classification of producer milk and milk subject to the 
provisions of Sec. 1137.42(e) by allocating the handler's receipts of 
skim milk and butterfat to his utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1137.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1137.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1137.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the

[[Page 808]]

pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1137.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1137.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1137.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated top Class I at the transferor-
plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (a) through (c) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk subject to the provisions of Sec. 1137.42(e), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and

[[Page 809]]

    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from another order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1137.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8) (i) and (ii) of this section and that were 
not offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received. For purposes of this subtraction at a pool 
plant operated by a cooperative association, skim milk in fluid milk 
products transferred to the pool plant of another handler shall be added 
to the remaining pounds of skim milk in each class pro rata to the 
market average utilization announced pursuant to Sec. 1137.45(a):
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraph (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then

[[Page 810]]

from Class II, with respect to whichever of the following quantities 
represents the lower proportion of Class I milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1137.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler). For purposes of such computation at 
a pool plant of a cooperative association, the pounds remaining shall 
include any remainder of the quantity added pursuant to paragraph 
(a)(11) of this section;
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1137.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk subject to the 
provisions of Sec. 1137.42(e), subtract such excess from the pounds of 
skim milk remaining in each class in series beginning with Class III. 
Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk subject to the provisions 
of Sec. 1137.42(e) in each class shall be the combined pounds of skim 
milk and butterfat remaining in each class after the computations 
pursuant to paragraph (a)(14) of this section and the corresponding step 
of paragraph (b) of this section.
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27900, May 11, 1993]



Sec. 1137.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:

[[Page 811]]

    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1137.44(a)(12) and the corresponding 
step of Sec. 1137.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1137.43(d) and Sec. 1137.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order 
plant, the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report of the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests the amount and class 
utilization of producer milk delivered by members of such association to 
each handler receiving such milk. For the purpose of this report, the 
milk so received shall be prorated to each class in acccordance with the 
total utilization of producer milk by such handler.
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27901, May 11, 1993]

                              Class Prices



Sec. 1137.50  Class prices.

    Subject to the provisions of Sec. 1137.52, the class prices per 
hundredweight for the month shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $2.73.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
[47 FR 42978, Aug. 30, 1982, as amended at 51 FR 12834, Apr. 16, 1986; 
60 FR 6612, Feb. 2, 1995]



Sec. 1137.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1137.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.

[[Page 812]]

    (b) The following produce prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for the 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18979, Apr. 14, 1995]



Sec. 1137.52  Plant location adjustments for handlers.

    (a) For milk received from producers and from handlers described in 
Sec. 1137.9(c) at a pool plant, or diverted to a nonpool plant, located 
more than 50 miles by shortest highway distance as measured by the 
market administrator, from the plant to the nearest County Courthouse 
located in Denver, Colo.; Pueblo, Colo.; or Colorado Springs, Colo., and 
classified as Class I milk or assigned Class I location adjustment 
credit pursuant to paragraph (b) of this section, the price computed 
pursuant to Sec. 1137.50(a) shall be reduced by 10 cents if such plant 
is located more than 50 miles but not more than 75 miles from such 
courthouse, and by an additional 1.5 cents for each 10 miles or fraction 
thereof that such distance exceeds 75 miles.
    (b) For purposes of calculating such adjustment, transfers between 
pool plants shall be assigned to Class I disposition at the transferee 
plant, in excess of the sum of receipts at such plant from producers and 
handlers described in Sec. 1137.9(c), and the pounds assigned as Class I 
to receipts from other order plants and unregulated supply plants. Such 
assignment is to be made first to transferor plants at which no location 
adjustment credit is applicable and then in sequence beginning with the 
plant at which the least location adjustment would apply.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, except 
that the adjusted Class I price shall not be less than the Class III 
price.

[[Page 813]]



Sec. 1137.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III price for the preceding month.
[60 FR 6612, Feb. 2, 1995]



Sec. 1137.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                              Uniform Price



Sec. 1137.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1137.9(b) and (c) with respect to milk that was not 
received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk subject to the 
provisions of Sec. 1137.42(e) that were classified in each class 
pursuant to Secs. 1137.43(a) and 1137.44(c) by the applicable class 
prices and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1137.44(a)(14) and the 
corresponding step of Sec. 1137.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1137.74, that 
are applicable at the location of the pool plant;
    (c) Add the following:
    (1) The amount obtained from multiplying the difference between the 
Class III price for the preceding month and the Class I price applicable 
at the location of the pool plant for the current month by the 
hundredweight of skim milk and butterfat subtracted from Class I 
pursuant to Sec. 1137.44(a)(9) and the corresponding step of 
Sec. 1137.44(b); and
    (2) The amount obtained from multiplying the difference between the 
Class III price for the preceding month and the Class II price for the 
current month by the lesser of:
    (i) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1137.44(a)(9) and the corresponding step of 
Sec. 1137.44(b) for the current month; or
    (ii) The hundredweight of skim milk and butterfat remaining in Class 
III after the computations pursuant to Sec. 1137.44(a)(12) and the 
corresponding step of Sec. 1137.44(b) for the preceding month, less the 
hundredweight of skim milk and butterfat specified in paragraph (c)(1) 
of this section;
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1137.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1137.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1137.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1137.44(a)(7)(v) and (vi) and 
the corresponding step of Sec. 1137.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1137.43(d) and Sec. 1137.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1137.44(a)(11) and the corresponding steps of Sec. 1137.44(b), 
excluding such skim milk and butterfat in receipts of bulk fluid milk 
products from an unregulated supply plant to the extent

[[Page 814]]

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;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1137.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1137.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27901, May 11, 1993]



Sec. 1137.61  Computation of uniform price.

    For each month the market administrator shall compute the uniform 
price per hundredweight for milk of 3.5 percent butterfat content 
received from producers as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1137.60 for all handlers who filed the reports prescribed by 
Sec. 1137.30 for the month and who made the payments pursuant to 
Secs. 1137.71 and 1137.73 for the preceding month;
    (b) Add an amount equal to the sum of the deductions to be made for 
location adjustments pursuant to Sec. 1137.75;
    (c) Add an amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1137.60(f); and
    (e) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``uniform price'' per 
hundredweight of producer milk of 3.5 percent butterfat content 
delivered to plants at which no location adjustment is applicable.



Sec. 1137.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 12th day after the end of each month the uniform price for 
such month.

                            Payments for Milk



Sec. 1137.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1137.71, 
1137.76, and 1137.77, subject to the provision of Sec. 1137.78 and out 
of which he shall make all payments pursuant to Secs. 1137.72 and 
1137.77: Provided, That any payments due to any handler shall be offset 
by any payments due from such handler.



Sec. 1137.71  Payments to the producer-settlement fund.

    (a) On or before the 14th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amount specified in paragraph (a)(1) of this section 
exceeds the amount specified in paragraph (a)(2) of this section:

[[Page 815]]

    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1137.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1137.75, of such handler's receipts of producer milk and milk 
subject to the provisions of Sec. 1137.42(e). In the case of a 
cooperative association which is a handler, less the amount due from 
other handlers pursuant to Sec. 1137.73(c), exclusive of differential 
butterfat values; and
    (ii) The value at the uniform price applicable at the location of 
the plant from which received of other source milk for which a value is 
computed pursuant to Sec. 1137.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.



Sec. 1137.72  Payments from the producer-settlement fund.

    On or before the 15th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1137.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1137.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1137.73  Payments to producers and to cooperative associations.

    Except as provided in paragraphs (b) and (c) of this section, each 
handler except a cooperative association shall make payment as specified 
in paragraph (a) of this section to each producer from whom milk is 
received:
    (a)(1) On or before the last day of each month, to each producer who 
had not discontinued shipping milk to such handler before the 18th day 
of the month, a partial payment with respect to milk received during the 
first 15 days of the month at the Class III price for the preceding 
month.
    (2) On or before the 16th day after the end of each month, for milk 
received during such month, an amount computed at not less than the 
uniform price per hundredweight pursuant to Sec. 1137.61, as adjusted by 
the butterfat differential specified in Sec. 1137.74 and location 
adjustments specified in Sec. 1137.75, plus or minus adjustments for 
errors made in previous payments to such producers and less:
    (i) Payments made pursuant to paragraph (a)(1) of this section;
    (ii) Deductions for marketing services pursuant to Sec. 1137.86; and
    (iii) Proper deductions authorized in writing by such producer: 
Provided, That if by such date such handler has not received full 
payment for such delivery period pursuant to Sec. 1137.72 he may reduce 
his total payment to all producers uniformly by not more than the amount 
of reduction in payment from the market administrator; the handler 
shall, however, complete such payments not later than the date for 
making such payments pursuant to this paragraph next following receipt 
of the balance from the market administrator.
    (b)(1) Upon receipt of a written request from a cooperative 
association which the market administrator determines is authorized by 
its members to collect payment for their milk and receipt of a written 
promise to reimburse

[[Page 816]]

the handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the cooperative association each handler 
shall pay to the cooperative association on or before the second day 
prior to the date of payment to producers in lieu of payments pursuant 
to paragraph (a) of this section an amount equal to the sum of the 
individual payments otherwise payable to such producers. The foregoing 
payment shall be made with respect to milk of each producer whom the 
cooperative association certifies is a member effective on and after the 
first day of the calendar month next following receipt of such 
certification through the last day of the month next preceding receipt 
of notice from the cooperative association of a termination of 
membership or until the original request is rescinded in writing by the 
cooperative association; and
    (2) A copy of each such request, promise to reimburse and certified 
list of members shall be filed simultaneously with the market 
administrator by the cooperative association and shall be subject to 
verification at his discretion through audit of the records of the 
cooperative association pertaining thereto. Exceptions, if any, to the 
accuracy of such certification by a producer claimed to be a member, or 
by a handler, shall be made by written notice to the market 
administrator and shall be subject to his determination.
    (c) For milk received from a pool plant operated by a cooperative 
association or from a cooperative association that is a handler pursuant 
to Sec. 1137.9(c), each handler shall on or before the second day prior 
to the date payments are due individual producers, pay such cooperative 
association for such milk as follows:
    (1) A partial payment for milk received during the first 15 days of 
the month at not less than the Class III price for the preceding month; 
and
    (2) A final settlement equal to the value of such milk at the 
uniform price pursuant to Sec. 1137.61, as adjusted pursuant to 
Secs. 1137.74 and 1137.75, less payment made pursuant to paragraph 
(c)(1) of this section.
    (d) In making the payments to producers pursuant to paragraphs 
(a)(2) and (b) of this section, each handler shall furnish each producer 
or cooperative association from whom he has received milk with a 
supporting statement which shall show for each month:
    (1) The month and identity of the handler and of the producer;
    (2) The total pounds and the average butterfat content of milk 
received from such producer;
    (3) The minimum rate or rates at which payment to such producer is 
required pursuant to this part;
    (4) The rate which is used in making the payment if such rate is 
other than the applicable minimum rate;
    (5) The amount, or the rate per hundredweight and nature of each 
deduction claimed by the handler; and
    (6) The net amount of payment to such producer.



Sec. 1137.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which 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. 1137.51 (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.
[60 FR 18979, Apr. 14, 1995]



Sec. 1137.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price to be paid for milk received at a pool plant 
from producers, in bulk from pool plants operated by cooperative 
associations, and from handlers described in Sec. 1137.9(c) may be 
reduced by the amount of the location adjustment applicable at the 
location of the pool plant at which such milk was first physically 
received from producers, and the uniform price for producer milk 
diverted to a nonpool plant shall be reduced according to the

[[Page 817]]

location of such nonpool plant, each at the rates set forth in 
Sec. 1137.52; and
    (b) For the purposes of computations pursuant to Secs. 1137.71 and 
1173.72 the uniform price shall be adjusted at the rates set forth in 
Sec. 1137.52 applicable at the location of the nonpool plant from which 
the milk was received (but not to be less than the Class III price).



Sec. 1137.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Sec. 1137.30(b) and 1137.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not another order plant to 
the extent that the equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the uniform price, both prices to be applicable at the 
location of the partially regulated distributing plant (except that the 
Class I price and the uniform price shall not be less than the Class III 
price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1137.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;

[[Page 818]]

    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1137.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1137.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1137.60(f) less the value of such other source milk 
specified in Sec. 1137.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1137.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1137.7(b) 
subject to the following conditions:
    (a) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1137.30(b) and 
1137.31(b) similar reports for each such nonpool supply plant;
    (b) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (c) The value of milk determined pursuant to Sec. 1137.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1137.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1137.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1137.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only

[[Page 819]]

be made to the producer-settlement fund of the order pricing a plurality 
of the milk used to produce the nonfluid milk ingredients. This payment 
option shall not apply if the source of the nonfluid ingredients used in 
reconstituted fluid milk products cannot be determined by the market 
administrator.
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27901, May 11, 1993]



Sec. 1137.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts, or other verification discloses errors 
resulting in moneys due a producer, a cooperative association, or the 
market administrator from such handler or due such handler from the 
market administrator, the market administrator shall promptly notify 
such handler of any amount so due and payment thereof shall be made on 
or before the next date for making payments as set forth in the 
provisions under which such error occurred.



Sec. 1137.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1137.71 or 
Sec. 1137.77 relative to payments to the producer settlement fund shall 
be increased one-half of 1 percent on the first day of the month next 
following the due date of such obligation and on the first day of each 
month thereafter until such obligation is paid.

        Administrative Assessment and Marketing Service Deduction



Sec. 1137.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 14th 
day after the end of the month 4 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Producer milk (including milk subject to the provisions of 
Sec. 1137.42(e) but excluding such milk in the case of a cooperative 
association which is a handler of milk subject to the provisions of 
Sec. 1137.42(e)) and such handler's own production;
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1137.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1137.44 (a)(7) and (a)(11) and the corresponding 
steps of Sec. 1137.44(b), except such other source milk that is excluded 
from the computations pursuant to Sec. 1137.60 (d) and (f); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant during the month that exceeds the skim milk 
and butterfat subtracted pursuant to Sec. 1137.76(a)(2).
[47 FR 42978, Aug. 30, 1982, as amended at 58 FR 27902, May 11, 1993]



Sec. 1137.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to producers for milk (other than milk of his 
own production) pursuant to Sec. 1137.73, shall deduct 6 cents per 
hundredweight, or such lesser amount as may be prescribed by the 
Secretary, and shall pay such deductions to the market administrator on 
or before the 14th day after the end of the month. Such money shall be 
used by the market administrator to provide market information and to 
check the accuracy of the testing and weighing of their milk for 
producers who are not receiving such services from a cooperative 
association.
    (b) In the case of producers who are members of a cooperative 
association which the Secretary has determined is actually performing 
the services set forth in paragraph (a) of this section, each handler 
shall make, in lieu of the deduction specified in paragraph (a) of this 
section, such deductions from the payments to be made to producers as 
may be authorized by the membership agreement or marketing contract 
between the cooperative association and its members, and on or before 
the 16th day after the end of each month, the handler shall pay the 
aggregate amount of such deductions to the cooperative association, 
furnishing a statement showing the amount of the deductions and the 
quantity of milk on

[[Page 820]]

which the deduction was computed from each producer.



PART 1138--MILK IN THE NEW MEXICO-WEST TEXAS MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1138.1  General provisions.

                               Definitions

1138.2  New Mexico-West Texas marketing area.
1138.3  Route disposition.
1138.4  Plant.
1138.5  Distributing plant.
1138.6  Supply plant.
1138.7  Pool plant.
1138.8  Nonpool plant.
1138.9  Handler.
1138.10  Producer-handler.
1138.11  [Reserved]
1138.12  Producer.
1138.13  Producer milk.
1138.14  Other source milk.
1138.15  Fluid milk product.
1138.16  Fluid cream product.
1138.17  Filled milk.
1138.18  Cooperative association.
1138.19--1138.20  [Reserved]
1138.21  Commercial food processing establishment.

                             Handler Reports

1138.30  Reports of receipts and utilization.
1138.31  Payroll reports.
1138.32  Other reports.

                         Classification of Milk

1138.40  Classes of utilization.
1138.41  Shrinkage.
1138.42  Classification of transfers and diversions.
1138.43  General classification rules.
1138.44  Classification of producer milk.
1138.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1138.50  Class prices.
1138.51  Basic formula price.
1138.52  [Reserved]
1138.53  Plant location adjustments for handlers.
1138.54  Announcement of class prices.
1138.55  Equivalent price.

                              Uniform Price

1138.60  Handler's value of milk for computing uniform price.
1138.61  Computation of uniform price.
1138.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1138.70  Producer-settlement fund.
1138.71  Payments to the producer-settlement fund.
1138.72  Payments from the producer-settlement fund.
1138.73  Payments to producers and to cooperative associations.
1138.74  Butterfat differential.
1138.75  Plant location adjustments for producers and on nonpool milk.
1138.76  Payments by a handler operating a partially regulated 
          distributing plant.
1138.77  Adjustment of accounts.
1138.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1138.85  Assessment for order administration.
1138.86  Deduction for marketing services.

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

    Source: 56 FR 52448, Oct. 21, 1991, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1138.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1138.2  New Mexico-West Texas marketing area.

    The New Mexico-West Texas marketing area, hereinafter called the 
marketing area, means all territory within the boundaries of the 
following counties, and all territory occupied by government (Municipal, 
State or Federal) reservations, installations, institutions, or other 
similar establishments if any part thereof is within any of the listed 
counties:
    Zone 1: Following counties--Bernalillo, Catron, Cibola, Colfax, 
Curry, De Baca, Dona Ana, Grant, Guadalupe, Harding, Hidalgo, Lincoln, 
Los Alamos, Luna, McKinley, Mora, Otero, Quay, Rio Arriba, Roosevelt, 
Sandoval, San Miguel, Santa Fe, Sierra, Socorro,

[[Page 821]]

Taos, Torrance, Union and Valencia, all in the State of New Mexico, and 
El Paso in Texas.
    Zone 2: Following counties--Archuleta, LaPlata and Montezuma in 
Colorado, and Chaves, Eddy, Lea and San Juan in New Mexico.
    Zone 3: Following counties--Armstrong, Bailey, Briscoe, Carson, 
Castro, Childress, Cochran, Collingsworth, Cottle, Crosby, Dallam, Deaf 
Smith, Dickens, Donley, Floyd, Gaines, Garza, Gray, Hale, Hall, 
Hansford, Hartley, Hemphill, Hockley, Hutchinson, Lamb, Lipscomb, 
Lubbock, Lynn, Moore, Motley, Ochiltree, Oldham, Parmer, Potter, 
Randall, Roberts, Sherman, Swisher, Terry, Wheeler and Yoakum, all in 
the state of Texas.



Sec. 1138.3  Route disposition.

    Route disposition means any delivery to a retail or wholesale outlet 
(except to a plant) either direct or through any distribution facility 
(including disposition from a plant store, vendor or vending machine) of 
any fluid milk product classified as Class I milk.



Sec. 1138.4  Plant.

    Plant means the land, buildings, facilities and equipment 
constituting a single operating unit or establishment at which milk or 
milk products (including filled milk) are received, processed or 
packaged. Separate facilities used only as a reload point for 
transferring bulk milk from one tank truck to another or separate 
facilities used only as a distribution point for storing packaged fluid 
milk products in transit for route disposition shall not be a plant 
under this definition.



Sec. 1138.5  Distributing plant.

    Distributing plant means any plant: (a) Approved by a duly 
constituted regulatory agency for the handling of milk approved for 
fluid consumption.
    (b) In which fluid milk products are processed or packaged; and
    (c) From which there is route disposition in the marketing area 
during the month.



Sec. 1138.6  Supply plant.

    Supply plant means a plant approved by a duly constituted regulatory 
agency for the handling of milk approved for fluid consumption from 
which fluid milk products are transferred to a distributing plant(s) 
during the month.



Sec. 1138.7  Pool plant.

    Pool plant means: (a) A distributing plant: (1) From which during 
the month there is total route disposition (except filled milk) in an 
amount not less than 50 percent of the total quantity of fluid milk 
products (except filled milk) received at such plant, including producer 
milk diverted from the plant, and not less than 10 percent of such 
receipts are disposed of as fluid milk products on routes in the 
marketing area; or
    (2) Located in the marketing area that qualifies pursuant to 
paragraph (a)(1) of this section so long as this order's Class I price 
applicable at such plant location is not less than an other order's 
Class I price applicable at the same location even though the plant may 
meet the pooling requirements of the other Federal order and have 
greater route disposition in the other marketing area than in the New 
Mexico-West Texas marketing area.
    (b) A supply plant from which during the month not less than 50 
percent of the total quantity of milk that is received from dairy 
farmers (including producer milk diverted from the plant pursuant to 
Sec. 1138.13, but excluding milk diverted to such plant) and handlers 
described in Sec. 1138.9(c) is transferred to plants described in 
paragraph (a) of this section, subject to the following. A supply plant 
that has qualified as a pool plant during each of the immediately 
preceding months of September through January shall continue to qualify 
in each of the following months of February through August.
    (c) Any plant located in the marketing area that is operated by a 
cooperative association if pool plant status under this paragraph is 
requested by the cooperative association and 35 percent or more of the 
producer milk of members of the cooperative association (and any 
producer milk of nonmembers and members of another cooperative 
association which may be marketed by the cooperative association) is 
physically received during the month in the form of bulk fluid milk 
products at plants specified in paragraph (a) of this

[[Page 822]]

section either directly from farms or by transfer from supply plants 
operated by the cooperative association and from plants of the 
cooperative association for which pool plant status has been requested 
under this paragraph subject to the following conditions:
    (1) The plant does not qualify as a pool plant under paragraph (a) 
or (b) of this section or under comparable provisions of another Federal 
order; and
    (2) The plant is approved by a duly constituted regulatory agency 
for the handling of milk approved for fluid consumption in the marketing 
area.
    (d) The shipping standards in paragraphs (b) and (c) of this section 
may be increased or decreased up to 10 percentage points by the Director 
of the Dairy Division if the Director finds such revision is necessary 
to obtain needed shipments or to prevent uneconomic shipments. Before 
making such a finding the Director shall investigate the need for 
revision, either at the Director's initiative or at the request of 
interested persons. If the investigation shows that a revision might be 
appropriate, the Director shall issue a notice stating that revision is 
being considered and inviting data, views, and arguments. If a plant 
which would not otherwise qualify as a pool plant during the month 
qualifies as a pool plant because of a reduction in shipping standards 
pursuant to this paragraph, such plant shall be a nonpool plant for such 
month if the operator files a written request for nonpool plant status 
with the market administrator at the time the report is filed for such 
plant pursuant to Sec. 1138.30.
    (e) The term pool plant shall not apply to the following plants:
    (1) A producer-handler plant, a governmental agency plant, or an 
exempt plant.
    (2) A distributing plant qualified pursuant to paragraph (a)(1) of 
this section which also meets the pooling requirements of another 
Federal order and from which there is a greater quantity of route 
disposition, except filled milk, during the month in such other Federal 
order marketing area than in this marketing area, except that if such 
plant was subject to all the provisions of this part in the immediately 
preceding month, it shall continue to be subject to all the provisions 
of this part until the third consecutive month in which a greater 
proportion of its route disposition, except filled milk, is made in such 
other marketing area unless, notwithstanding the provisions of this 
paragraph, it is regulated under such other order. On the basis of a 
written application made by the plant operator at least 15 days prior to 
the date for which a determination of the Secretary is to be effective, 
the Secretary may determine that the route disposition in the respective 
marketing areas to be used for purposes of this paragraph shall exclude 
(for a specified period of time) route disposition made under limited 
term contracts to governmental bases and institutions;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section which also meets the pooling requirements of another Federal 
order and from which there is a greater quantity of route disposition, 
except filled milk, during the month in this marketing area than in such 
other Federal order marketing area but which plant is, nevertheless, 
fully regulated under such other Federal order;
    (4) A supply plant qualified pursuant to paragraph (b) of this 
section which also meets the pooling requirements of another Federal 
order and from which greater qualifying shipments are made during the 
month to plants regulated under such other order than are made to plants 
regulated under this part; or
    (5) A plant qualified pursuant to paragraph (b) of this section 
which has automatic pooling status under another Federal order.

    Effective Date Note: At 62 FR 50486, Sept. 26, 1997, in Sec. 1138.7, 
paragraph (a)(1), the words ``including producer milk diverted from the 
plant,'' were suspended; and in paragraph (c), the words ``35 percent or 
more of the producer'' were suspended, effective Oct. 1, 1997, through 
Sept. 30, 1999.



Sec. 1138.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and

[[Page 823]]

pooling provisions of another order issued pursuant to the Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a distributing 
plant that does not qualify as a pool plant and is not an other order 
plant, a governmental agency plant, or a producer-handler plant.
    (d) Unregulated supply plant means a nonpool plant, except an other 
order plant, a governmental agency plant, or a producer handler plant, 
from which fluid milk products are moved during the month to a pool 
plant qualified pursuant to Sec. 1138.7.
    (e) Governmental agency plant means a plant owned and operated by a 
governmental agency or establishment which processes or packages milk or 
filled milk that is distributed in the marketing area. Such plant shall 
be exempt from the pricing and pooling provisions of this order.
    (f) Exempt plant means any plant that has monthly route disposition 
of 150,000 pounds or less that may be exempt from the pricing and 
pooling provisions of this order if the handler operating the plant 
files timely reports as specified by the market administrator and 
maintains adequate books and records that are made available to the 
market administrator which will enable determination of the exempt 
status of such plant.



Sec. 1138.9  Handler.

    Handler means: (a) Any person who operates a pool plant;
    (b) Any cooperative association with respect to the milk of 
producers which it causes to be diverted pursuant to Sec. 1138.13 for 
the account of such cooperative association;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler for such milk 
and will purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) Any person who is a producer-handler or who operates a 
governmental agency or exempt plant; and
    (f) Any person who operates an other order plant described in 
Sec. 1138.7(e) or an unregulated supply plant.



Sec. 1138.10  Producer-handler.

    Producer-handler means any person: (a) Who processes and packages 
milk from his or her own farm's production;
    (b) Who has route disposition within the marketing area consisting 
of any portion of such milk;
    (c) Who receives no fluid milk products from other dairy farmers or 
from any source other than a pool plant and whose receipts from pool 
plants are not in excess of 11,000 pounds per month;
    (d) Who disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from own farm production or pool plants; and
    (e) Who furnishes to the Market Administrator for verification, 
subject to review by the Secretary, evidence that the care and 
management of all the dairy animals and other resources necessary to 
produce the entire amount of fluid milk products handled (excluding 
receipts from pool plants) is the personal enterprise of and at the 
personal risk of such person and the operation of the processing and 
distribution business is the personal enterprise of and at the personal 
risk of the same person.



Sec. 1138.11  [Reserved]



Sec. 1138.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved for

[[Page 824]]

fluid consumption by a duly constituted regulatory agency and whose milk 
is:
    (1) Received at a pool plant or by a handler described in 
Sec. 1138.9(c); or
    (2) Diverted pursuant to Sec. 1138.13 by a handler for such 
handler's account.
    (b) Producer shall not include: (1) A producer-handler as defined in 
any order (including this part) issued pursuant to the Act;
    (2) A governmental agency that operates a plant exempt pursuant to 
Sec. 1138.8(e) and a handler that operates an exempt plant pursuant to 
Sec. 1138.8(f);
    (3) Any person with respect to milk production that is diverted to a 
pool plant from an other order plant if the other order designates such 
person as a producer under that order and such milk is allocated to 
Class II or Class III utilization pursuant to Sec. 1138.44(a)(8)(iii) 
and the corresponding step of Sec. 1138.44(b); or
    (4) Any person with respect to milk production that is reported as 
diverted to an other order plant if any portion of such person's milk so 
moved is assigned to Class I under the provisions of such other order.



Sec. 1138.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk from a 
producer that is:
    (a) Received by the operator of a pool plant directly from such 
producer. Any milk picked up from the producer's farm tank in a tank 
truck owned and operated by, or under the control of, the operator of a 
pool plant but which is not received at a plant until the following 
month, shall be considered as having been received by the handler during 
the month in which it is picked up at the producer's farm and shall be 
priced at the location of the plant where it is physically received in 
the following month. This paragraph shall apply in like manner to milk 
received by the operator of a pool plant who, in accordance with 
Sec. 1138.9(c), is the handler for such milk.
    (b) Received by a handler described in Sec. 1138.9(c).
    (c) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant, without limit in any month. 
Such milk shall be priced at the location of the plant to which 
diverted.
    (d) Diverted by the operator of a pool plant or by a cooperative 
association from a pool plant to a nonpool plant (other than a producer-
handler plant), subject to the following conditions:
    (1) In each of the months of September through January, milk of a 
producer shall not be eligible for diversion from a pool plant under 
this section unless at least one day's production from such producer is 
physically received at a pool plant during the month;
    (2) The total quantity of milk diverted by a cooperative association 
in any month shall not exceed the total quantity of producer milk that 
the cooperative association caused to be delivered to and was physically 
received at pool plants during the month;
    (3) The operator of a pool plant other than a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that is diverting milk during the month pursuant 
to paragraph (d)(2) of this section. The total quantity of milk so 
diverted in any month shall not exceed the total quantity of milk that 
was physically received at pool plant(s) as producer milk for which the 
plant operator is the handler;
    (4) Any milk diverted in excess of the limits prescribed in 
paragraphs (d) (2) and (3) of this section shall not be producer milk. 
In such event, the diverting handler may designate the dairy farmer 
deliveries that shall not be producer milk. If the handler fails to so 
designate, milk diverted on the last day of the month, then the second-
to-last-day of the month, and so on, shall be excluded until all 
diversions in excess of the prescribed limits are accounted for;
    (5) The quantity of milk diverted from a pool plant that would cause 
the pool plant to become a nonpool plant shall not be producer milk. 
Diversions in excess of the prescribed limit shall be prorated among the 
diverting handlers;
    (6) If a dairy farmer loses producer status under this order (except 
as a result of temporary loss of approval from a duly constituted 
regulatory agency for the production of milk for fluid

[[Page 825]]

consumption), such dairy farmer's milk shall not be eligible for 
diversion until it has been physically received as producer milk at a 
pool plant; and
    (7) Diverted milk shall be priced at the location of the plant to 
which diverted.

    Effective Date Note: At 62 FR 50486, Sept. 26, 1997, in 
Sec. 1138.13, paragraphs (d) (1), (2), and (5) were suspended, effective 
Oct. 1, 1997, through Sept. 30, 1999.



Sec. 1138.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1138.40(b)(1) from any source other than producers, handlers 
described in Sec. 1138.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1138.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1138.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1138.40(b)(1) for which the handler fails to 
establish a disposition.



Sec. 1138.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27902, May 11, 1993]



Sec. 1138.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27902, May 11, 1993]



Sec. 1138.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).



Sec. 1138.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association: (a) To be qualified under the provisions of the Act of 
Congress of February 18, 1922, as amended, known as the Capper-Volstead 
Act;
    (b) To have full authority in the sale of milk of its members; and
    (c) To be engaged in making collective sales or marketing or milk 
products for its members.



Secs. 1138.19--1138.20  [Reserved]



Sec. 1138.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a

[[Page 826]]

milk or filled milk plant, to which bulk fluid milk products and bulk 
fluid cream products are disposed of, or producer milk is diverted, that 
uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1138.13, 1138.41 and 1138.53.
[58 FR 27902, May 11, 1993]

                             Handler Reports



Sec. 1138.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
shall report for such month to the market administrator, in the detail 
and on the forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of such handler's pool 
plants, shall report the quantities of skim milk and butterfat contained 
in or represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1138.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk.
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1138.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1138.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report for each of the handler's plants with respect to 
its receipts and utilization of milk, filled milk, and milk products in 
such manner as the market administrator may prescribe.



Sec. 1138.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1138.9(a), (b) and (c) who pays producers 
pursuant to Sec. 1138.73 shall report to the market administrator the 
following information with respect to the handler's partial and final 
payments for producer milk received during such month;
    (1) The name and address of each producer;
    (2) The amount paid each producer; and
    (3) The dates such payments were made.
    (b) On or before the 20th day after the end of the month, each 
handler operating a partially regulated distributing plant who elects to 
make payment pursuant to Sec. 1138.76(b) shall report to the market 
administrator with respect to milk received from each dairy farmer who 
would have been a producer if the plant had been fully regulated the 
following for such month;
    (1) The name and address of each dairy farmer;
    (2) The total pounds of milk received from each dairy farmer;
    (3) The average butterfat content of such milk;
    (4) The amount and nature of any deductions, as authorized in 
writing by the dairy farmer, from the payment for such milk; and
    (5) The rate of payment per hundredweight and the net amount paid 
each dairy farmer.

[[Page 827]]



Sec. 1138.32  Other reports.

    (a) On or before the 21st day of each month, each handler described 
in Sec. 1138.9(a) who is required pursuant to Sec. 1138.71(c) to make 
payments to the market administrator for milk received from producers 
and cooperative associations shall report to the market administrator 
the following information with respect to its receipts of milk during 
the first 15 days of the month;
    (1) The name and address of each producer from whom milk was 
received;
    (2) The total pounds of milk received from such producer;
    (3) The amount and nature of any deductions, as authorized in 
writing by the producer, to be made from the partial payment for such 
milk;
    (4) The total pounds of milk received from a handler described in 
Sec. 1138.9(c); and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (b) On or before the 7th day after the end of each month, each 
handler described in Sec. 1138.9 (a), (b) and (c) shall report to the 
market administrator the following information with respect to its 
receipts of milk during such month.
    (1) The name and address of each producer from whom milk was 
received;
    (2) The total pounds of producer milk received from such producer, 
its average butterfat content and the total pounds of milk diverted to 
each plant that is not a pool plant;
    (3) Except in the case of producer milk for which a cooperative 
association is collecting payments, the amount and nature of any 
deductions, as authorized in writing by the producer, to be made from 
the final payment for such milk;
    (4) The total pounds of skim and butterfat received from a handler 
described in Sec. 1138.9(c) and
    (5) The pounds of skim milk and butterfat in bulk fluid milk 
products received from a pool plant operated by a cooperative 
association.
    (c) On or before the reporting dates specified in paragraphs (a) and 
(b) of this section, each cooperative association that operates a pool 
plant from which bulk fluid milk products were transferred to pool 
plants of other handlers within the time periods described in paragraphs 
(a) and (b) of this section shall report to each such pool plant 
operator and to the market administrator the name and location of the 
transferor-plant and the total pounds and butterfat content of the bulk 
fluid milk products transferred from the plant.
    (d) In addition to the reports required pursuant to paragraphs (a) 
through (c) of this section and Sec. 1138.30 and Sec. 1138.31, each 
handler shall report such other information as the market administrator 
deems necessary to verify or establish such handler's obligation under 
the order.
    (e) Each handler other than a cooperative association who causes 
milk to be diverted shall, prior to such diversion, report to the market 
administrator his intention to divert such milk, the proposed date or 
dates of such diversion, and the plant to which such milk is to be 
diverted.

                         Classification of Milk



Sec. 1138.40  Classes of utilization.

    Except as provided in Sec. 1138.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1138.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;

[[Page 828]]

    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1138.15 and the fluid 
cream product definition pursuant to Sec. 1138.16; and
    (7) In shrinkage assigned pursuant to Sec. 1138.41(a) to the 
receipts specified in Sec. 1138.41(a)(2) and in shrinkage specified in 
Sec. 1138.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.
[58 FR 27902, May 11, 1993, as amended at 58 FR 63292, Dec. 1, 1993]

[[Page 829]]



Sec. 1138.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1138.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat;
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraph (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1138.9(c) and in milk 
diverted to such plant from another pool plant, except that, in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this subparagraph shall be 
2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat respectively, in 
bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1138.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1138.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or

[[Page 830]]

divertee-plant after the computations pursuant to Sec. 1138.44(a)(12) 
and the corresponding step of Sec. 1138.44(b). The amount of skim milk 
or butterfat classified in each class shall include the assigned 
utilization of skim milk or butterfat in transfers of concentrated fluid 
milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1138.44(a)(7) 
or the corresponding step of Sec. 1138.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1138.44(a) 
(11) or (12) or the corresponding step of Sec. 1138.44(b), the skim milk 
or butterfat so transferred or diverted, up to the total of the skim 
milk and butterfat, respectively, in such receipts of other source milk, 
shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
bulk fluid cream product from a pool plant to an other order plant shall 
be classified in the following manner. Such classification shall apply 
only to the skim milk or butterfat that is in excess of any receipts at 
the pool plant from the other order plant of skim milk and butterfat, 
respectively, in fluid milk products and bulk fluid cream products, 
respectively, that are in the same category as described in paragraph 
(b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the class to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I subject to 
adjustment when such information is available.
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1138.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
exempt plants and governmental agency plants. Skim milk or butterfat 
transferred in the following forms from a pool plant to a producer-
handler under this or any other Federal order or transferred or diverted 
from a pool plant to an exempt plant or and a governmental agency plant 
shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose the transferee's utilization of skim milk and butterfat 
in each class, in series beginning with Class III, shall be assigned to 
the extent possible to its receipt of skim milk and butterfat, 
respectively, in bulk fluid cream products, pro rata to each source.

[[Page 831]]

    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, an exempt handler plant, or a governmental agency plant 
shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraph (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1138.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator.
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and

[[Page 832]]

    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
    (e) Transfers by a handler described in Sec. 1138.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1138.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1138.44 pro rata with producer milk 
received at the transferee-handler's plant and the value thereof at the 
class prices shall be included in the pool plant handler's value of milk 
pursuant to Sec. 1138.60.
[56 FR 52448, Oct. 21, 1991, as amended by 58 FR 27903, May 11, 1993]



Sec. 1138.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1138.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1138.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1138.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in each 
class in accordance with Secs. 1138.40, 1138.41 and 1138.42. The 
combined pounds of skim milk and butterfat so determined in each Class 
for a handler described in Sec. 1138.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1138.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1138.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1138.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 27903, May 11, 1993; 58 
FR 63292, Dec. 1, 1993]



Sec. 1138.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1138.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1138.9(c), by allocating the handler's 
receipts of skim milk and butterfat to the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1138.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:

[[Page 833]]

    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1138.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1138.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1138.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1138.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1138.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant and an exempt plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant; 
and
    (vii) Receipts of fluid milk products from a person described in 
Sec. 1138.12(b)(5);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for

[[Page 834]]

which the handler requests a classification other than Class I, but not 
in excess of the pounds of skim milk remaining in Class II and Class III 
combined:
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount;
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1138.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1138.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity pro-rated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v), and (8) (i) and (ii) of this section and that were 
not offset by transfers or diversions of fluid milk products to the same 
unregulated supply plant from which fluid milk products to be allocated 
at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing

[[Page 835]]

as necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk;
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1138.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall

[[Page 836]]

be decreased by a like amount (decreasing as necessary Class III and 
then Class II). In such case the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount beginning with the 
nearest plant at which Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such product pursuant to Sec. 1138.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1138.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1138.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 27903, May 11, 1993



Sec. 1138.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1138.44(a)(12) and the corresponding 
step of Sec. 1138.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1138.43(d) and Sec. 1138.44 on 
the basis of such report (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which shipments were allocated by the market administrator 
of the other order on the basis of the report by the receiving handler, 
and, as necessary, any changes in such allocation arising from the 
verification of such report.
    (d) On or before the 12th day after the end of the each month, 
report to each cooperative association which so requests, the amount and 
class utilization of milk received by each handler from producers whose 
milk is being marketed by such cooperative association. For the purpose 
of this report, the milk caused to be so delivered by a cooperative 
association shall be pro-rated to each class in the proportion that the 
total receipts of producer milk by such handler were used in each class.
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 27903, May 11, 1993]

                              Class Prices



Sec. 1138.50  Class prices.

    Subject to the provisions of Sec. 1138.53, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus $2.35.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.

[[Page 837]]

    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 63292, Dec. 1, 1993; 60 
FR 6613, Feb. 2, 1995]



Sec. 1138.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1138.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price date determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent

[[Page 838]]

preceding period, and divide by the annual yield factor for Cheddar 
cheese, 9.87, to determine the quantity (in hundredweights) of milk used 
in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18979, Apr. 14, 1995]



Sec. 1138.52  [Reserved]



Sec. 1138.53  Plant location adjustments for handlers.

    For milk received at a plant from producers or a handler described 
in Sec. 1138.9(c) and which is classified as Class I milk, the price 
specified in Sec. 1138.50(a) shall be adjusted by the amount stated in 
paragraph (a) of this section for the location of such plant:
    (a) For a plant located within one of the zones set forth in 
Sec. 1138.2, the adjustment shall be as follows:

                                                                        
------------------------------------------------------------------------
                  Zone                     Adjustment per hundredweight 
------------------------------------------------------------------------
Zone 1.................................  No adjustment.                 
Zone 2.................................  Minus 15 cents.                
Zone 3.................................  Plus 14 cents.                 
------------------------------------------------------------------------

    (b) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section.



Sec. 1138.54  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and the Class II price for the 
following month, and the Class III and Class III-A price for the 
preceding month.
[60 FR 6613, Feb. 2, 1995]



Sec. 1138.55  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                              Uniform Price



Sec. 1138.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of his pool plants and of each handler 
described in Sec. 1138.9 (b) and (c) with respect to milk that was not 
received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1138.9(c) that were classified in each class 
pursuant to Secs. 1138.43(a) and 1138.44(c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1138.44(a)(14) and the 
corresponding step of Sec. 1138.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1138.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1138.44(a)(9) and the corresponding step of Sec. 1138.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1138.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1138.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1138.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;

[[Page 839]]

    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1138.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1138.44(b);
    (f) Add the amount obtained from multiplying the Class I 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. 1138.43(d) and Sec. 1138.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1138.44(a)(11) and the corresponding steps of Sec. 1138.44(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;
    (g) Subtract for a handler described in Sec. 1138.9(c) the amount 
obtained from multiplying the Class III price for the preceding month by 
the hundredweight of skim milk and butterfat contained in inventory at 
the beginning of the month that was delivered to another handler's pool 
plant during the month;
    (h) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1138.43(d);
    (i) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of an 
other order under Sec. 1138.76(a)(5) or (c); and
    (j) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 27903, May 11, 1993]



Sec. 1138.61  Computation of uniform price.

    The market administrator shall compute for each month the uniform 
price per hundredweight for milk of 3.5 percent butterfat content as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1138.60 for all handlers who filed the reports prescribed in 
Sec. 1138.30 for the month and who made the payments pursuant to 
Sec. 1138.71 for the preceding month;
    (b) Add not less than one-half of the unobligated balance in the 
producer-settlement fund;
    (c) Add the aggregate of all minus location adjustments and subtract 
the aggregate of all plus location adjustments computed pursuant to 
Sec. 1138.75;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in the computations;
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1138.60(f); and
    (e) Subtract not more than 5 cents. The result shall be the 
``uniform price'' for milk received from producers.



Sec. 1138.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and

[[Page 840]]

    (b) The 12th day after the end of each month the applicable uniform 
price pursuant to Sec. 1138.61 for such month.

                            Payments for Milk



Sec. 1138.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Sec. Sec. 1138.71, 
1138.76 and 1138.77 and from which he shall make all payments pursuant 
to Sec. Sec. 1138.72 and 1138.77, except that payments to a cooperative 
association pursuant to Sec. 1138.72 shall be offset by any payments due 
from such cooperative association pursuant to Sec. 1138.71 that have not 
been received by the market administrator.



Sec. 1138.71  Payments to the producer-settlement fund.

    (a) Subject to paragraph (d) of this section, each handler shall pay 
to the market administrator on or before the 14th day after the end of 
the month the amount, if any, by which the amount specified in paragraph 
(a)(1) of this section exceeds the amount specified in paragraph (a)(2) 
of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1138.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1138.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1138.9(c). In the case of a 
cooperative association which is a handler, less the amount due from 
other handlers pursuant to Sec. 1138.73(d), exclusive of differential 
butterfat values; and
    (ii) The value at the uniform price applicable at the location of 
the plant from which received of other source milk for which a value is 
computed pursuant to Sec. 1138.60(f).
    (b) Subject to paragraph (d) of this section, each person who 
operated a plant that was regulated during such month under an order 
providing for individual-handler pooling shall pay to the market 
administrator on or before the 25th day after the end of each month an 
amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.
    (c) Any handler who the market administrator determines was more 
than 3 days late in making any payment obligation under part 1138 shall 
pay to the market administrator the amount the handler would have 
otherwise been required to pay to producers and cooperative associations 
pursuant to Sec. 1138.73. Payment shall be made to the market 
administrator on or before the day prior to the dates specified in 
Sec. 1138.73 and such payments shall continue until the handler has met 
all payment obligations for 3 consecutive months.
    (d) The following conditions shall apply with respect to payments 
prescribed in paragraphs (a), (b) and (c) of this section:
    (1) Payments to the market administrator shall be deemed not to have 
been made until such payments have been received by the market 
administrator.
    (2) If the date by which payments must be received by the market 
administrator falls on a Saturday or Sunday or any day that is a 
national holiday, payment shall not be due until the next day on which 
the market administrator's office is open for public business.
    (3) Payments due the market administrator from a cooperative 
association handler may be offset by payments determined by the market 
administrator to be due the cooperative association pursuant to 
Sec. 1138.73 (b) and (d).

[[Page 841]]



Sec. 1138.72  Payments from the producer-settlement fund.

    (a) On or before the 15th day after the end of each month the market 
administrator shall pay to each handler except one making payment 
pursuant to Sec. 1138.71(c) the amount, if any, by which the amount 
computed pursuant to Sec. 1138.71(a)(2) exceeds the amount computed 
pursuant to Sec. 1138.71(a)(1).
    (b) If the market administrator received payment from a handler(s) 
pursuant to Sec. 1138.71(c), he shall distribute such amount plus any 
amount due such handler(s) pursuant to paragraph (a) of this section to 
producers and to cooperative associations in the same manner as provided 
in Sec. 1138.73. In the event the handler fails to transmit the total 
amount due, the market administrator shall reduce uniformly the payments 
due to producers of such handler and complete such payments when the 
remaining amount is received.
    (c) If at any time the balance in the producer-settlement fund is 
insufficient to make all payments pursuant to paragraph (a) of this 
section, the market administrator shall reduce uniformly such payments 
and shall complete such payments as soon as the appropriate funds are 
available.



Sec. 1138.73  Payments to producers and to cooperative associations.

    (a) Except as provided in Sec. 1138.71(c) and paragraphs (b), (d) 
and (f) of this section, each handler shall make payment to each 
producer from whom milk is received during the month as follows:
    (1) On or before the last day of each month each producer who did 
not discontinue shipping milk to such handler before the 23rd day of the 
month, an amount equal to not less than the previous month's uniform 
price (adjusted for location of such plant) multiplied by the 
hundredweight of milk received from such producer during the first 15 
days of the month, less proper deductions authorized in writing by the 
producer, provided that the deductions do not exceed the value of the 
milk received during the partial payment period and the handler has paid 
such deductions to assignees by the date payment is otherwise due the 
producer.
    (2) On or before the 17th day of the following month, an amount 
equal to not less than the appropriate uniform price adjusted by the 
butterfat differential and location adjustments to producers multiplied 
by the hundredweight of milk received from such producer during the 
month, subject to the following adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1138.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producer; and
    (iv) Less proper deductions authorized in writing by such producer, 
provided that the deductions do not exceed the value of the milk 
received during the final payment period and the handler has paid such 
deductions to assignees by the date payment is otherwise due to the 
producer: Provided, That if by such date such handler had not received 
full payment from the market administrator pursuant to Sec. 1138.72(a) 
for such month, he may reduce pro rata his payments to producers by not 
more than the amount of such underpayment. Payments to producer shall be 
completed thereafter not later than the date for making payments 
pursuant to this paragraph next following after the receipt of the 
balance due from the market administrator.
    (b) Except as provided in paragraph (f) of this section, in the case 
of a cooperative association which the market administrator determines 
is authorized by those producers for whom it markets milk to collect 
payment for their milk and which has so requested any handler in 
writing, such handler other than one specified in Sec. 1138.71(c) shall 
on or before the 2nd day prior to the date on which payments are due 
individual producers pay the cooperative association for milk received 
during the month from those producers for whom it markets milk as 
determined by the market administrator an amount equal to not less than 
the amount due such producers as determined pursuant to paragraph (a) of 
this section.

[[Page 842]]

    (c) In making payments to producers pursuant to paragraph (a) of 
this section, or to a cooperative association pursuant to paragraph (b) 
of this section, each handler shall furnish such producer or cooperative 
association with respect to each of the producers for whom it markets 
milk and from whom the handler received milk during the month, a written 
statement showing:
    (1) The identity of the handler and the producer and the month to 
which the payment applies;
    (2) The total pounds, and, with respect to final payments, the 
average butterfat content of the milk for which payment is being made;
    (3) The minimum rate of payment required by the order and the rate 
of payment used if such rate is other than the applicable minimum rate;
    (4) The amount and nature of any deductions from the amount 
otherwise due the producer; and
    (5) The new amount of payment to the producer.
    (d) Except as provided in Sec. 1138.71(c) and paragraph (f) of this 
section, each handler pursuant to Sec. 1138.9(a) who receives milk from 
a cooperative association as a handler pursuant to Sec. 1138.9(c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payment for their milk, shall pay 
such cooperative for such milk as follows:
    (1) On or before the 2nd day prior to the last day of the month for 
milk received during the first 15 days of the month, not less than the 
applicable partial payment rate specified for such month in paragraph 
(a)(1) of this section; and
    (2) On or before the 15th day of the following month for milk 
received during the month, not less than the uniform price as adjusted 
pursuant to Sec. 1138.74 and Sec. 1138.75, less any payments made 
pursuant to paragraph (a)(1) of this section.
    (e) Except as provided in Sec. 1138.71(c), each handler who received 
bulk fluid milk or bulk fluid cream products from a pool plant operated 
by a cooperative association shall pay the following amounts for such 
products to the cooperative association:
    (1) On or before the 2nd day prior to the last day of each month, an 
amount determined by multiplying such receipts during the first 15 days 
of the month by the applicable partial payment rate specified for such 
month in paragraph (a)(1) of this section. If the handler so elects, 
such price may be adjusted by the butterfat differential specified in 
Sec. 1138.74 for the preceding month.
    (2) On or before the 15th day after the end of each month, an amount 
determined by multiplying the quantity of such receipts during the month 
that was classified in each class pursuant to Sec. 1138.42(a) by the 
applicable class price, as adjusted by the butterfat differential 
specified in Sec. 1138.74, less any payments made by the handler 
pursuant to paragraph (e)(1) of this section for such month. For the 
purpose of such computation, the applicable Class I price shall be the 
Class I price applicable at the transferee plant including the 
applicable administrative assessment rate.
    (f) If the application of Sec. 1138.71(d)(2) results in a delay in 
payment by the market administrator to handlers, the payments prescribed 
in paragraphs (a), (b) and (d) of this section may be delayed by the 
same number of days.
    (g) If the market administrator does not receive the full payment 
required of a handler pursuant to Sec. 1138.71(c), he shall reduce 
uniformly per hundredweight the payments due producers and cooperative 
associations for their milk received by such handler by a total amount 
not in excess of the amount due from such handler. The market 
administrator shall complete such payments on or before the next date 
for making payments pursuant to this section following the date on which 
the remaining payment is received from such handler.



Sec. 1138.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which

[[Page 843]]

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. 1138.51 (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.
[60 FR 18980, Apr. 14, 1995]



Sec. 1138.75  Plant location adjustments for producers and on nonpool milk.

    (a) In making payments required pursuant to Sec. 1138.73, the 
uniform price computed pursuant to Sec. 1138.61 shall be adjusted by the 
amounts set forth in Sec. 1138.53 according to the location of the plant 
where the milk being priced was received.
    (b) For the purpose of computations pursuant to Secs. 1138.71 and 
1138.72, the uniform price shall be adjusted by the amount set forth in 
Sec. 1138.53 that is applicable at the location of the non-pool plant 
from which the milk was received.



Sec. 1138.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Sec. 1138.30(b) and Sec. 1138.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the uniform price, both prices to be applicable at the 
location of the partially regulated distributing plant; and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the

[[Page 844]]

nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1138.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. 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. 1138.60 
shall be priced at the 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 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 of reconstituted 
skim milk in filled milk shall be priced at the lowest class price of 
the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1138.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1138.60(f) less the value of such other source milk 
specified in Sec. 1138.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1138.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1138.7(b) 
subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1138.30(b) and 
1138.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1138.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1138.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated.
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1138.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.

[[Page 845]]

    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1138.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 27904, May 11, 1993]



Sec. 1138.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts discloses adjustments to be made, for any 
reason, which results in monies due the market administrator from such 
handler, the market administrator shall promptly notify such handler of 
any such amount due, and payment thereof shall be made on or before the 
next date for making payment set forth in the provision under which the 
error occurred. Any monies found to be due a handler from the market 
administrator shall be paid promptly to such handler, except that the 
market administrator shall offset any monies due a handler against 
monies due from such handler. Whenever verification by the market 
administrator of the payment by a handler to any producer or cooperative 
association for milk received by such handler discloses payment of less 
than is required pursuant to Sec. 1138.73, the handler shall pay such 
balance due such producer or cooperative association not later than the 
time of making payment to producers or cooperative associations next 
following such disclosure.



Sec. 1138.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1138.71, 
1138.73, 1138.76, 1138.77, 1138.85, or 1138.86 shall be increased 1 
percent beginning on the first day after the due date, and on the same 
day of each subsequent month until such obligation is paid, subject to 
the following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section; and
    (b) For the purpose of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.

        Administrative Assessment and Marketing Service Deduction



Sec. 1138.85  Assessment for order administration.

    As each handler's pro rata share of the expense of administration of 
the order, each handler shall pay to the market administrator on or 
before the 15th day after the end of the month 5 cents per hundredweight 
or such lesser amount as the Secretary may prescribe with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1138.9(c) that were delivered to pool plants of other handlers or 
held in inventory at the end of the month;
    (b) Receipts from a handler described in Sec. 1138.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk

[[Page 846]]

products assigned to Class I use pursuant to Sec. 1138.43(d) and other 
source milk allocated to Class I pursuant to Sec. 1138.44 (a)(7) and 
(a)(11) and the corresponding steps of Sec. 1138.44(b), except such 
other source milk that is excluded from the computations pursuant to 
Sec. 1138.60(d) and (f); and
    (d) Route disposition from a partially regulated distributing plant 
in the marketing area that exceeds the skim milk and butterfat specified 
in Sec. 1138.76(a)(2).
[56 FR 52448, Oct. 21, 1991, as amended at 58 FR 27904, May 11, 1993]



Sec. 1138.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, in making payments to producers pursuant to Sec. 1138.73, shall 
deduct 6 cents per hundredweight, or such lesser amount as the Secretary 
may prescribe, with respect to the milk of such producer (except a 
handler's own farm production) for whom the marketing services set forth 
in this paragraph are not being performed by a cooperative association 
as determined by the Secretary. Each handler making such deductions 
shall pay the deductions to the market administrator on or before the 
15th day after the end of the month. The monies shall be used by the 
market administrator to verify or establish weights, samples and tests 
of producer milk and provide producers with market information. The 
services shall be performed by the market administrator or an agent 
engaged by and responsible to the market administrator.
    (b) In the case of producers for whom a cooperative association is 
actually performing the services set forth in paragraph (a) of this 
section, each handler shall make, in lieu of the deduction specified in 
paragraph (a) of this section, such deductions from the payments to be 
made to such producer as may be authorized by the membership agreement 
or marketing contract between such cooperative association and such 
producers, and on or before the 15th day after the end of each month, 
pay such deduction to the cooperative association rendering such 
services accompanied by a statement showing the quantity of milk for 
which such deduction was computed for each such producer.



PART 1139--MILK IN THE GREAT BASIN MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1139.1  General provisions.

                               Definitions

1139.2  Great Basin marketing area.
1139.3  Route disposition.
1139.4  [Reserved]
1139.5  Distributing plant.
1139.6  Supply plant.
1139.7  Pool plant.
1139.8  Nonpool plant.
1139.9  Handler.
1139.10  Producer-handler.
1139.11  Approved milk.
1139.12  Producer.
1139.13  Producer milk.
1139.14  Other source milk.
1139.15  Fluid milk product.
1139.16  Fluid cream product.
1139.17  Filled milk.
1139.18  Cooperative association.
1139.19  [Reserved]
1139.20  Federation.
1139.21  Commercial food processing establishment.

                             Handler Reports

1139.30  Reports of receipts and utilization.
1139.31  Payroll reports.
1139.32  Other reports.

                         Classification of Milk

1139.40  Classes of utilization.
1139.41  Shrinkage.
1139.42  Classification of transfers and diversions.
1139.43  General accounting and classification rules.
1139.44  Classification of producer milk.
1139.45  Market administrator's reports and announcements concerning 
          classification.

                       Class and Component Prices

1139.50  Class prices and component prices.
1139.51  Basic formula price.
1139.52  Plant location adjustments for handlers.
1139.53  Announcement of class and component prices.
1139.54  Equivalent price.

[[Page 847]]

                Differential Pool and Handler Obligations

1139.60  Computation of handlers' obligations to pool.
1139.61  Computation of weighted average differential value.
1139.62  Computation of producer protein price.
1139.63  Uniform price and handlers' obligations for producer milk.
1139.64  Announcement of weighted average differential price, producer 
          protein price, and uniform price.

                            Payments for Milk

1139.70  Producer-settlement fund.
1139.71  Payments to the producer-settlement fund.
1139.72  Payments from the producer-settlement fund.
1139.73  Value of producer milk.
1139.74  Payments to producers and to cooperative associations.
1139.75  Location and zone differentials for producer and nonpool milk.
1139.76  Payments by a handler operating a partially regulated 
          distributing plant.
1139.77  Adjustment of accounts.
1139.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1139.85  Assessment for order administration.
1139.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended (7 U.S.C. 601-674).

    Source: 53 FR 4590, Feb. 17, 1988, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1139.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference, and made a part of this order.

                               Definitions



Sec. 1139.2  Great Basin marketing area.

    Great Basin marketing area (hereinafter called the ``marketing 
area'') means all the territory, including all municipalities and 
government reservations and installations within, or partially within, 
the counties listed below:

Utah Counties: All
Nevada Counties: Clark, Elko, Lincoln and White Pine
Wyoming Counties: Lincoln and Uinta
Idaho Counties: Bannock, Bear Lake, Bingham, Bonneville, Caribou, 
    Franklin, Jefferson, Madison, Oneida and Power



Sec. 1139.3  Route disposition.

    Route disposition means any delivery of a fluid milk product from a 
plant to a retail or wholesale outlet (including any delivery to a 
distribution point by a vendor, from a plant store, or through a vending 
machine). The term ``route disposition'' does not include a delivery to 
a plant defined in Sec. 1139.7 (a) or (b).



Sec. 1139.4  [Reserved]



Sec. 1139.5  Distributing plant.

    Distributing plant means a plant in which approved fluid milk 
products or filled milk are processed or packaged, and from which fluid 
milk products are disposed of on routes in the marketing area during the 
month.
[53 FR 4590, Feb. 17, 1988; 53 FR 6916, Mar. 3, 1988]



Sec. 1139.6  Supply plant.

    Supply plant means a plant from which approved fluid milk products 
or filled milk are transferred in bulk form during the month to a pool 
distributing plant.



Sec. 1139.7  Pool plant.

    Pool plant means any plant, except a plant defined in Sec. 1139.8, 
which meets the standards of one or more of the following paragraphs:
    (a) A distributing plant from which not less than:
    (1) 50 percent in any month of September through February, 45 
percent of any month of March and April, and 40 percent in any month of 
May through August of the approved fluid milk products, except filled 
milk, received at such plant (excluding milk received at such plant from 
other order plants or dairy farms which is classified in Class II or 
Class III under this order and which is subject to the pricing and 
pooling provisions of any other order issued pursuant to the Act), are 
disposed of as route disposition; and

[[Page 848]]

    (2) 15 percent of such receipts are disposed of as route disposition 
in the marketing area during the month.
    (3) If a handler operates more than one distributing plant, the 
combined receipts and fluid milk product dispositions of such plants may 
be used as the basis for qualifying all of the plants pursuant to 
paragraph (a)(1) of this section, provided the handler so notifies the 
market administrator in writing before the last day of the month for 
which such consolidation is desired.
    (b) A distributing plant that meets the following conditions:
    (1) The plant is located in the marketing area;
    (2) The plant meets the requirements of paragraph (a)(1) of this 
section; and
    (3) The principal activity of such plant is the processing and 
distribution of aseptically processed and packaged fluid milk products.
    (c) A supply plant from which during the month not less than 50 
percent of its approved milk receipts from dairy farmers is transferred 
to a pool distributing plant pursuant to paragraphs (a) or (b) of this 
section as fluid milk products. Any supply plant that has qualified as a 
pool plant in each of the immediately preceding months of August through 
February shall be a pool plant in each of the following months of March 
through July unless written request for nonpool status for any of such 
months is filed by the plant operator with the market administrator 
prior to the first day of the month the request is to be effective. A 
plant withdrawn from pool supply plant status may not be reinstated for 
any subsequent month of the March through July period unless it fulfills 
the transferring requirement of this paragraph for such month.
    (d) Any manufacturing plant, or other plant not defined in 
paragraphs (a), (b) or (c) of this section, located within the marketing 
area at which milk is received from producers and which is owned and 
operated by a cooperative association or federation which delivers at 
least 35 percent of its producer milk (including that in fluid milk 
products transferred from its own plant pursuant to this paragraph that 
is not in excess of the amount in producer milk actually received at 
such plant) to pool distributing plants during the current month or the 
12-month period ending with the current month, if the cooperative 
association or federation requests pool plant status for such plant in 
writing before the first day of any month for which such status is to be 
effective.
    (e) The pool plant performance standards in paragraphs (a)(1), (b), 
(c) or (d) of this section may be reduced or increased by 10 percentage 
points by the Director of the Dairy Division if that person finds such 
revision is necessary to assure orderly marketing and efficient handling 
of milk in the marketing area. Before making such a finding, the 
Director shall investigate the need for revision either at the 
Director's own initiative or at the request of interested persons. If 
the investigation shows that a revision might be appropriate, the 
Director shall issue a notice stating that the revision is being 
considered and invite data, views, and arguments.
[53 FR 4590, Feb. 17, 1988, as amended at 54 FR 30882, July 25, 1989]



Sec. 1139.8  Nonpool plant.

    Nonpool plant means any plant defined in this section, and any other 
milk receiving, manufacturing, or processing plant, other than a pool 
plant:
    (a) Producer-handler plant means a plant operated by a producer-
handler as defined in this, or any other order issued pursuant to the 
Act.
    (b) Other order plant means a plant as specified under paragraph 
(b)(1), (2) or (3) of this section that is fully subject to the pricing 
and pooling provisions of another order issued pursuant to the Act:
    (1) A distributing plant qualified pursuant to Sec. 1139.7(a) that 
also meets the pool plant requirements of another Federal order, and 
from which the Secretary determines a greater quantity of Class I milk 
was disposed of as route disposition during the month in such other 
Federal order marketing area than was disposed of as route disposition 
in this marketing area, except that if such plant was subject to all the 
provisions of this order in the immediately preceding month, it shall 
continue to be subject to all the provisions

[[Page 849]]

of this order until the third consecutive month in which a greater 
proportion of its Class I route disposition is made in such other 
marketing area;
    (2) A supply plant qualified pursuant to Sec. 1139.7(c) that also 
meets the pool plant requirements of another Federal order and from 
which a larger quantity of fluid milk products is transferred during the 
month to plants regulated under such other order than is transferred to 
distributing plants under this order, except that transfers to other 
order plants for Class III dispositions during the months of March 
through July shall be disregarded for purposes of this computation if 
the operator of the supply plant elects to retain pool status under this 
order; or
    (3) A plant qualified pursuant to Sec. 1139.7(a), (b), or (c) which 
the Secretary determines, despite the provisions of this order, to be 
fully regulated under another Federal order.
    (c) Exempt plant means a distributing plant:
    (1) Having less than an average of one thousand pounds per day of 
route dispositions in the marketing area during the month;
    (2) Operated by a governmental agency, or a duly accredited college 
or university, disposing of fluid milk products only through the 
operation of its own food service, and having no route dispositions in 
commercial channels; or
    (3) From which the total route disposition is to individuals or 
institutions for charitable purposes without remuneration from such 
individuals or institutions.
    (d) Partially regulated distributing plant means a distributing 
plant that does not qualify as a pool plant and is not an other order 
plant, a producer-handler plant, or an exempt distributing plant.
    (e) Unregulated supply plant means a supply plant that does not 
qualify as a pool plant and is not an other order plant, a producer-
handler plant, or an exempt distributing plant.



Sec. 1139.9  Handler.

    Handler means:
    (a) Any person who operates one or more pool plants;
    (b) Any cooperative association with respect to producer milk 
diverted for the account of such association pursuant to Sec. 1139.13;
    (c) Any cooperative association or federation with respect to milk 
that is received at the farm for delivery to a pool plant of another 
handler in a tank truck owned and operated by, or under the control of, 
such cooperative association or federation; or
    (d) Any person who operates a plant defined in Sec. 1139.8 (a) 
through (e).



Sec. 1139.10  Producer-handler.

    Producer-handler means any person who meets all of the following 
conditions:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by such person in accordance with the 
conditions set forth in paragraph (b) of this section, and provides 
proof satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
such person's sole risk, and under such person's complete and exclusive 
management and control;
    (2) Each such farm is owned or operated by and at the sole risk of 
such person, and under such person's complete and exclusive management 
and control; and
    (3) Only such person, and no other person (except a member of such 
person's immediate family, or a stockholder in the case of a corporate 
operator) employed on such farm(s) own, fully or partially, either the 
cows producing the milk on the farm or the farm on which it is produced;
    (b) Operates a plant in which approved milk is processed or packaged 
and from which there is route disposition during the month in the 
marketing area, and:
    (1) No fluid milk products are received at such plant during the 
month or by such person at any other location except:
    (i) From the dairy farm(s) specified in paragraph (a) of this 
section; and
    (ii) From pool plants by transfer or diversion, or from other order 
plants, excluding flavored and cultured fluid milk products, in an 
amount that is not in excess of the larger of 5,000

[[Page 850]]

pounds or 5 percent of such person's Class I disposition during the 
month, except, such monthly limit shall not apply during the following 
months of December through August to a producer-handler who received an 
amount, excluding flavored and cultured fluid milk products, not in 
excess of the larger of 15,000 pounds or 5 percent of such person's 
Class I disposition during the previous period of September through 
November.
    (2) Such plant is operated under such person's complete and 
exclusive management and control and at such person's sole risk, and is 
not used during the month to process, package, receive or otherwise 
handle fluid milk products for any other person; and
    (3) For the purpose of this section, all fluid milk products 
disposed of as route disposition or at stores operated by such person or 
by any person (including the operator of a plant, or vendor) who 
controls or is controlled by such person (e.g., as an interlocking 
stockholder) or in which such person (including, in the case of a 
corporation, any stockholder therein) has a financial interest, shall be 
considered as having been received at such person's plant; and the 
utilization for such plant shall include all such route and store 
dispositions; and
    (c) Disposes of no other source milk (except in the fortification of 
fluid milk products) as Class I milk.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 32435, June 10, 1993]



Sec. 1139.11  Approved milk.

    Approved milk means any milk or fluid milk product that is approved 
for fluid consumption by a duly constituted regulatory authority.



Sec. 1139.12  Producer.

    (a) Except as provided in paragraph (b) hereof, producer means any 
person:
    (1) Who produces approved milk; and
    (2) Whose milk is received at a pool plant or diverted to a nonpool 
plant within the limits set forth in Sec. 1139.13.
    (b) ``Producer'' shall not include:
    (1) A producer-handler as defined under any order (including this 
order) issued pursuant to the Act;
    (2) Any person with respect to milk diverted to a pool plant from an 
other order plant, if the other order designates such person as a 
producer under that order, and such milk is allocated to Class II or 
Class III utilization pursuant to Sec. 1139.44(a)(8)(iii) and the 
corresponding step of Sec. 1139.44(b);
    (3) Any person with respect to milk diverted to another order plant 
if any part of such milk was allocated to Class I, or the other order 
defines such person as a producer; or
    (4) Any person whose milk is received at a nonpool plant (except an 
other order plant) other than as a diversion from a pool plant after the 
first delivery of milk from such dairy farmer in any month was received 
as approved milk at a pool plant, or was otherwise qualified as producer 
milk.



Sec. 1139.13  Producer milk.

    Producer milk means the skim milk and butterfat in milk of a 
producer that is:
    (a) Received or diverted by a handler defined in Sec. 1139.9(a) 
under one of the following conditions:
    (1) Received at such handler's pool plant directly from the farm of 
such producer;
    (2) Received at such handler's pool plant from a handler defined in 
Sec. 1139.9(c); or
    (3) Diverted to a nonpool plant subject to the conditions set forth 
in paragraph (d) of this section;
    (b) Diverted by a handler defined in Sec. 1139.9(b) to a nonpool 
plant subject to the conditions set forth in paragraph (d) of this 
section;
    (c) Received by a handler defined in Sec. 1139.9(c) from the 
producer's farm in excess of the producer's milk that is received at 
pool plants pursuant to paragraph (a)(2) of this section. Such producer 
milk shall be deemed to have been received by the handler at the 
location of the pool plant to which the milk was delivered;
    (d) The following conditions shall apply to producer milk diverted 
to a nonpool plant:
    (1) The weighted average differential applicable to such milk shall 
be adjusted based on the location of the plant to which delivered, but 
it shall not be adjusted to a lower figure than is applicable at the 
location determined pursuant to Sec. 1139.52 (a) or (b)

[[Page 851]]

based on the location of the county seat or the county courthouse of the 
county in which such producer's farm is located.
    (2) A cooperative association or federation may divert for its 
account the milk of any of its producers from whom at least one day's 
milk production is received during the month at a pool plant. The total 
quantity of milk diverted by a cooperative association during any month 
may not exceed 75 percent of the producer milk that the cooperative 
association causes to be delivered to or diverted from pool plants 
during the month. Two or more cooperative associations may have their 
allowable diversions computed on the basis of their combined deliveries 
of the producer milk which the cooperative associations cause to be 
delivered to pool plants or diverted pursuant to this section if each 
association has filed a request in writing with the market administrator 
before the first day of the month the agreement is effective. This 
request shall specify the basis for assigning over-diverted milk to the 
producer deliveries of each cooperative association according to a 
method approved by the market administrator.
    (3) The operator of a pool plant (other than a cooperative 
association or federation) may divert for its account the milk of any 
producer (other than milk diverted pursuant to paragraph (d)(2) of this 
section) from whom at least one day's milk production is received during 
the month at a pool plant. The total quantity of milk so diverted may 
not exceed 70 percent in the months of April through August, and 60 
percent in other months of the producer milk received at or diverted 
from such pool plant for which the operator of such plant is the handler 
during the month. The milk for which the operator of such plant is the 
handler for the month may not duplicate milk diverted pursuant to 
paragraph (d)(2) of this section;
    (4) The diversion limits of this paragraph may be increased or 
decreased by up to 10 percentage points by the Director of the Dairy 
Division if that person finds such revision is necessary to obtain 
needed shipments or to prevent uneconomic shipments. Before making such 
a finding, the Director shall investigate the needs for revision either 
at the Director's own initiative or at the request of interested 
persons. If the investigation shows that a revision might be 
appropriate, the Director shall issue a notice stating that the revision 
is being considered and invite data, views, and arguments;
    (5) Diversions in excess of the percentages in paragraphs (d)(2) and 
(d)(3) of this section shall not be producer milk, and the diverting 
handler shall designate the milk which is not producer milk. If the 
handler fails to make such designation, no milk diverted by the handler 
shall be producer milk. In the event some of the milk of any producer is 
determined not to be producer milk pursuant to this paragraph, other 
milk delivered by the producer during the month as producer milk will 
not be subject to Sec. 1139.12(b)(4); and
    (6) Milk of a dairy farmer who was not a producer in the preceding 
month shall not be eligible for diversion until after one day's milk 
production from such farmer has been received at a pool plant.
[53 FR 4590, Feb. 17, 1988, as amended at 54 FR 30882, July 25, 1989; 56 
FR 65821, Dec. 19, 1991; 58 FR 32435, June 10, 1993]

    Effective Date Note: At 55 FR 18304, May 2, 1990, Sec. 1139.13(d)(6) 
was indefinitely suspended effective Apr. 1, 1990.



Sec. 1139.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1139.40(b)(1) from any source other than producers, handlers 
defined in Sec. 1139.9(c), pool plants, or inventory at the beginning of 
the month;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1139.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1139.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and

[[Page 852]]

    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1139.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1139.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.
[58 FR 27904, May 11, 1993]



Sec. 1139.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.
[58 FR 27905, May 11, 1993]



Sec. 1139.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted or modified by the addition 
of nonfat milk solids), with or without milk fat, so that the product 
(including stabilizers, emulsifiers, or flavoring), resembles milk or 
any other fluid milk product, and contains less than 6 percent nonmilk 
fat (or oil).



Sec. 1139.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of dairy farmers, including producers, which the Secretary determines, 
after application by the cooperative association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act'', and any 
amendments thereto;
    (b) To have full authority in the sale of milk of its members and to 
be engaged in making collective sales of or marketing milk for its 
members; and
    (c) To have its entire activities under the control of its members.



Sec. 1139.19  [Reserved]



Sec. 1139.20  Federation.

    Federation means a business organization which is incorporated under 
state law that is owned and operated by two or more cooperative 
associations as defined in Sec. 1139.18.



Sec. 1139.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1139.12, 1139.13, 1139.41 and 1139.52.
[58 FR 27905, May 11, 1993]

[[Page 853]]

                             Handler Reports



Sec. 1139.30  Reports of receipts and utilization.

    On or before the seventh day after the end of the month, each 
handler shall report to the market administrator, in the detail and on 
forms prescribed by the market administrator, the following information 
for such month:
    (a) Each handler who operates one or more pool plants shall report 
for each such plant the quantities of, and the pounds of skim milk and 
butterfat contained in or represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler, and the pounds of milk protein contained in such receipts;
    (2) Receipts of milk from handlers defined in Sec. 1139.9(c) and the 
pounds of milk protein contained in such receipts;
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1139.40(b)(1); and
    (6) The utilization, disposition or month-end inventories of all 
milk, filled milk, and milk products required to be reported pursuant to 
this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required under paragraph (a) of this section. Receipts of 
milk that would have been producer milk if the plant had been fully 
regulated shall be reported in lieu of producer milk.
    (c) Each handler as defined in Sec. 1139.9(b) and (c) shall report:
    (1) The quantities of, and pounds of skim milk, butterfat and milk 
protein contained in receipts of milk from producers; and
    (2) The utilization or disposition of all skim milk, butterfat and 
milk protein in such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to all receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.
[53 FR 4590, Feb. 17, 1988; 53 FR 6916, Mar. 3, 1988]



Sec. 1139.31  Payroll reports.

    (a) On or before the 21st day after the end of each month, each 
handler who pays producers pursuant to Sec. 1139.74 shall submit a 
producer payroll to the market administrator which shall include the 
following information for each producer from whom milk was received 
during such month:
    (1) The name and address of the producer;
    (2) The total pounds and, with respect to final payments, the 
average butterfat and milk protein content of the milk, and the number 
of days on which milk was received from each producer;
    (3) The minimum payment required by the order, and the amount paid 
if more than the minimum required;
    (4) The amount and nature of any deductions from such payment;
    (5) The net amount of payment to the producer; and
    (6) The date the payment was made.
    (b) On or before the 21st day after the end of the month, each 
handler operating a partially regulated distributing plant who elects to 
make payments pursuant to Sec. 1139.76(a)(2) shall report to the market 
administrator with respect to milk received from each dairy farmer who 
would have been a producer if the plant had been fully regulated in the 
same manner as prescribed for reports required by paragraph (a) of this 
section.



Sec. 1139.32  Other reports.

    In addition to the reports required pursuant to Secs. 1139.30 and 
1139.31, each handler shall report such other information as the market 
administrator deems necessary to verify or establish such handler's 
obligations under this order.

                         Classification of Milk



Sec. 1139.40  Classes of utilization.

    Except as provided in Sec. 1139.42, all skim milk and butterfat 
required to be

[[Page 854]]

reported by a handler pursuant to Sec. 1139.30 shall be classified as 
follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost

[[Page 855]]

by a handler in a vehicular accident, flood, fire, or in a similar 
occurrence beyond the handler's control, to the extent that the 
quantities destroyed or lost can be verified from records satisfactory 
to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1139.15 and the fluid 
cream product definition pursuant to Sec. 1139.16; and
    (7) In shrinkage assigned pursuant to Sec. 1139.41(a) to the 
receipts specified in Sec. 1139.41(a)(2) and in shrinkage specified in 
Sec. 1139.41 (b) and (c).
[58 FR 27905, May 11, 1993]



Sec. 1139.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1139.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim and butterfat, 
respectively, at each pool plant to the respective qualities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator, or 
received from handlers defined in Sec. 1139.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from handlers defined in Sec. 1139.9(c), except if the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
protein and butterfat tests determined from farm bulk tank samples, the 
applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted by the plant operator to another plant, except 
that if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and protein and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk milk transferred to other plants that is not in excess of the 
respective quantities of skim milk and butterfat to which percentages 
are applied in paragraphs (b) (1), (2), (4), (5), and (6) of this 
section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association or 
federation is the handler pursuant to Sec. 1139.9(b) or (c), but not in 
excess of 0.5 percent of skim milk and butterfat, respectively, thereof. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm and protein and butterfat tests determined from farm bulk tank 
samples, the applicable percentage for the cooperative association or 
federation shall be zero.

[[Page 856]]



Sec. 1139.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant shall be classified as Class I milk 
unless both handlers request the same classification in another class. 
In either case, the classification of such transfers shall be subject to 
the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computation 
pursuant to Sec. 1139.44 (a)(12) and the corresponding step of 
Sec. 1139.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1139.44(a)(7) or the corresponding 
step of Sec. 1139.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1139.44(a)(11) or (12) or the 
corresponding steps of Sec. 1139.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to an other order plant shall be classified in the following manner. 
Such classification shall apply only to the skim milk or butterfat that 
is in excess of any receipts at the pool plant from the other order 
plant of skim milk and butterfat, respectively, in fluid milk products 
and bulk fluid cream products, respectively, that are in the same 
category as described in paragraph (b)(1),(2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred or diverted in bulk form, classification shall be 
in the classes to which allocated under the other order (including 
allocation under the conditions set forth in paragraph (b)(3) of this 
section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administator for the purpose of establishing classification under 
this paragraph, classification shall be as Class I, subject to 
adjustments when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1139.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
plants. Skim milk or butterfat in the following forms that is 
transferred or diverted to a producer-handler under this or any other 
Federal order or to an exempt distributing plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and

[[Page 857]]

    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt distributing plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or transferred in the form of a bulk fluid cream 
product, unless the following conditions apply:
    (i) If the transferor-handler or divertor-handler so requests and 
the conditions described in paragraphs (d)(2)(i) (a) and (b) of this 
section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignments of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (a) The transferor-handler or divertor-handler claims such 
classification in his report of receipts and utilization filed pursuant 
to Sec. 1139.30 for the month within which such transaction occurred; 
and
    (b) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (a) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (b) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (c) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (d) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (a) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (b) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (a) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of approved 
milk for such nonpool plant; and
    (b) To such nonpool plant's receipts of approved milk from plants 
not fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of approved milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned,

[[Page 858]]

pro rata among such plants, to the extent possible first to any 
remaining Class I utilization, then to Class II utilization, and then to 
Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
[53 FR 4590, Feb. 17, 1988; 53 FR 6916, Mar. 3, 1988; 58 FR 27905, May 
11, 1993]



Sec. 1139.43  General accounting and classification rules.

    (a) Each month the market administrator shall:
    (1) Correct for mathematical and other obvious errors all reports 
filed pursuant to Sec. 1139.30; and
    (2) Compute separately for each pool plant and for each cooperative 
association with respect to milk for which it is the handler pursuant to 
Sec. 1139.9 (b) or (c) that was not received at a pool plant, the pounds 
of skim milk and butterfat, respectively, in each class in accordance 
with Secs. 1139.40, 1139.41, and 1139.42. The combined pounds of skim 
milk and butterfat so determined in each class for a handler described 
in Sec. 1139.9 (b) or (c) shall be such handler's classification of 
producer milk.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids.
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1139.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1139.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1139.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27906, May 11, 1993]



Sec. 1139.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler defined in Sec. 1139.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1139.9(c) by allocating the handler's receipts 
of skim milk and butterfat to the utilization of such receipts by such 
handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1139.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
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;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the

[[Page 859]]

month. This paragraph shall apply only if the pool plant was subject to 
the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1139.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds 
remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1139.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1139.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1139.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1139.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
approved milk status is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order, or from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant; 
and
    (vii) Receipts of milk from a dairy farmer pursuant to 
Sec. 1139.12(b)(4);
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III;
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(a) through (c) this section. Should the pounds of skim milk 
to be subtracted from Class II and Class III combined exceed the

[[Page 860]]

pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (a) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (b) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1139.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (c) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1139.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5), and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraph (a)(11)(i) of this 
section, subtract from the pounds of skim milk remaining in each class 
at the plant, pro rata to the total pounds of skim milk remaining in 
Class I and in Class II and Class III combined at this allocation step 
at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8) (i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from any class 
pursuant to this paragraph exceed the pounds of skim milk remaining in 
such class, the pounds of skim milk in such class shall be increased by 
an amount equal to such quantity to be subtracted and the pounds of skim 
milk in the other classes (beginning with the higher priced class) shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at other pool plants of 
the handler shall be adjusted to the extent possible in the reverse 
direction by a like amount. Such adjustment shall be made at the other 
plants in sequence beginning with the plant having the least minus 
location adjustment;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid

[[Page 861]]

milk products from an other order plant that are in excess of bulk fluid 
milk products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii) and (iii) 
of this section, such subtraction shall be pro rata to the pounds of 
skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (a) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1139.45(a); or
    (b) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received; and
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to either paragraph (a)(12) (i) or (ii) 
of this section result in a quantity of skim milk to be subtracted from 
any class that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in such class shall be increased by an amount 
equal to such excess quantity to be subtracted and the pounds of skim 
milk in the other classes (beginning with the higher priced class) shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at other pool plants of 
the handler shall be adjusted to the extent possible in the reverse 
direction by a like amount. Such adjustment shall be made at the other 
plants in sequence beginning with the plant having the least minus 
location adjustment;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1139.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1139.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1139.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to (a)(14) of this section and the corresponding 
step of paragraph (b) of this section.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27906, May 11, 1993]



Sec. 1139.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1139.44(a)(12) and the corresponding 
step of Sec. 1139.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as

[[Page 862]]

possible after the report of receipts and utilization for the month is 
received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1139.43(d) and Sec. 1139.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) Report to each cooperative association that so requests, on or 
before the 12th day after the end of each month, the amount and class 
utilization of producer milk delivered by members of such cooperative 
association to each handler receiving such milk. For the purpose of this 
report, the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27906, May 11, 1993]

                       Class and Component Prices



Sec. 1139.50  Class prices and component prices.

    Subject to the provisions of Sec. 1139.51 and Sec. 1139.52, the 
class and component prices for the month, per hundredweight or per 
pound, shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus $1.90.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) The skim milk price per hundredweight shall be the basic formula 
price for the month less an amount computed by multiplying the butterfat 
differential computed pursuant to paragraph (e)(1) of this section by 
35.
    (e) Butterfat price. The butterfat price per pound shall be the 
total of paragraphs (e)(2) and (e)(3) of this section computed as 
follows:
    (1) Compute a butterfat differential rounded to the nearest one-
tenth cent, by multiplying the current month's butter price by 0.138, 
and subtract from the result an amount determined by multiplying 0.0028 
by 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. 1139.51 (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.
    (2) The skim milk value per hundredweight for the month, computed 
pursuant to paragraph (d) of this section, divided by 100; and
    (3) The butterfat differential for the month computed pursuant to 
paragraph (e)(1) of this section multiplied by 10.
    (f) Handler protein price. The price per pound for milk protein 
shall be computed by subtracting from the Class III price the butterfat 
price multiplied by 3.5, and dividing the result by the average protein 
content of the milk on which the basic formula price is based for the 
previous month as reported by the Department and adjusted for the 
current month by the Dairy Division, and rounding the result to the 
nearest whole cent.
[53 FR 4590, Feb. 17, 1988, as amended at 55 FR 53288, Dec. 28, 1990; 58 
FR 32435, June 10, 1993; 60 FR 6613, Feb. 2, 1995; 60 FR 18980, Apr. 14, 
1995]



Sec. 1139.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base

[[Page 863]]

month'' series, as reported by the Department, adjusted to a 3.5 percent 
butterfat basis using the butterfat differential for the preceding month 
computed pursuant to Sec. 1139.50(e)(1) and rounded to the nearest cent, 
plus or minus the change in gross value yielded by the butter-nonfat dry 
milk and Cheddar cheese product price formula computed pursuant to 
paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.
[60 FR 18980, Apr. 14, 1995]



Sec. 1139.52  Plant location adjustments for handlers.

    (a) The Class I price shall be adjusted for plants located in the 
zones set forth below as follows:
    (1) Zone 1 0 adjustments.

[[Page 864]]

                              Utah Counties

Box Elder, Cache, Carbon, Daggett, Davis, Duchesne, Emery, Grand, Jaub, 
Millard, Morgan, Rich, Salt Lake, Sanpete, Sevier, Summit, Tooele, 
Uinta, Utah, Wasatch and Weber

                             Nevada Counties

Elko and White Pine

    (2) Zone 2 Minus $0.25 adjustment.

                             Idaho Counties

Bannock, Bear Lake, Caribou, Franklin, Oneida and Power

    (3) Zone 3 Minus $0.30 adjustment.

                             Idaho Counties

Bingham, Bonneville, Jefferson and Madison

                            Wyoming Counties

Lincoln and Uinta

                             Nevada Counties

Clark and Lincoln

                              Utah Counties

Beaver, Garfield, Iron, Kane, Piute, San Juan, Washington and Wayne

    (b) For milk received from producers at a plant located outside the 
zones specified in paragraph (a) of this section, the Class I price 
applicable at the nearer of the Clark County, Nevada, courthouse or the 
Salt Lake County, Utah, courthouse shall be reduced by 1.5 cents per 
hundredweight for each ten miles or fraction thereof of distance by 
shortest hard-surfaced highway, as determined by the market 
administrator, between the plant and the nearer of the two courthouses.
    (c) For purposes of calculating location adjustments, receipts of 
fluid milk products from pool plants shall be assigned any Class I 
utilization at the transferee plant that is in excess of the sum of 
receipts at such plant from producers and the pounds assigned as Class I 
to receipts from other order plants and unregulated supply plants. Such 
assignment shall be made first to receipts from plants at which no 
location adjustment credit is applicable and then in sequence beginning 
with the plant at which the least location adjustment would apply.
    (d) The Class I differential applicable to other source milk shall 
be adjusted at the rates set forth in paragraphs (a) or (b) of this 
section, except that the differential shall not be less than zero.
[53 FR 4590, Feb. 17, 1988; 53 FR 6916, Mar. 3, 1988]



Sec. 1139.53  Announcement of class and component prices.

    The market administrator shall announce publicly on or before:
    (a) The 5th day of each month, the Class I price and the Class II 
price for the following month.
    (b) The 5th day after the end of each month, the Class III price, 
and the prices for skim milk and butterfat computed pursuant to 
Sec. 1139.50 (d) and (e) respectively, and the handler protein price 
computed pursuant to Sec. 1139.50(f) for such month.
[58 FR 32436, June 10, 1993, as amended at 60 FR 6613, Feb. 2, 1995]



Sec. 1139.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
order for computing class prices or for other purposes is not available 
as prescribed in this order, the market administator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

                Differential Pool and Handler Obligations



Sec. 1139.60  Computation of handlers' obligations to pool.

    The market administrator shall compute each month for each handler 
defined in Sec. 1139.9(a) with respect to each of such handler's pool 
plants, and for each handler defined in Sec. 1139.9(b) and (c), an 
obligation to the pool computed by adding the following values:
    (a) The pounds of producer milk in Class I as determined pursuant to 
Sec. 1139.44 multiplied by the difference between the Class I price 
(adjusted pursuant to Sec. 1139.52) and the Class III price;
    (b) The pounds of producer milk in Class II as determined pursuant 
to Sec. 1139.44 multiplied by the difference between the Class II price 
and Class III price;
    (c) The value of the product pounds, skim milk, and butterfat in 
overage assigned to each class pursuant to

[[Page 865]]

Sec. 1139.44(a)(14) and the value of the corresponding protein pounds 
associated with the skim milk subtracted from Class II and Class III 
pursuant to Sec. 1139.44(a)(14), by multiplying the skim milk pounds so 
assigned by the percentage of protein in the handler's receipts of 
producer skim milk during the month, as follows:
    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1139.44(a)(14) and the corresponding step of 
Sec. 1139.44(b), multiplied by the difference between the Class I price 
adjusted for location and the Class III price, plus the hundredweight of 
skim milk subtracted from Class I pursuant to Sec. 1139.44(a)(14) 
multiplied by the skim milk price, plus the butterfat pounds of overage 
subtracted from Class I pursuant to Sec. 1139.44(b) multiplied by the 
butterfat price;
    (2) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1139.44(a)(14) and the corresponding step of 
Sec. 1139.44(b) multiplied by the difference between the Class II price 
and the Class III price, plus the protein pounds in skim milk subtracted 
from Class II pursuant to Sec. 1139.44(a)(14) multiplied by the protein 
price, plus the butterfat pounds of overage subtracted from Class II 
pursuant to Sec. 1139.44(b) multiplied by the butterfat price;
    (3) The protein pounds in skim milk overage subtracted from Class 
III pursuant to Sec. 1139.44(a)(14) multiplied by the protein price, 
plus the butterfat pounds of overage subtracted from Class III pursuant 
to Sec. 1139.44(b) multiplied by the butterfat price;
    (d) The value of the product pounds, skim milk, and butterfat 
subtracted from Class I or Class II pursuant to Sec. 1139.44(a)(9) and 
the corresponding step of Sec. 1139.44(b), and the value of the protein 
pounds associated with the skim milk subtracted from Class II pursuant 
to Sec. 1139.44(a)(9), computed by multiplying the skim milk pounds so 
subtracted by the percentage of protein in the handler's receipts of 
producer skim milk during the previous month, as follows:
    (1) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1139.44(a)(9) and the 
corresponding step of Sec. 1139.44(b) applicable at the location of the 
pool plant at the current month's Class I-Class III price difference and 
the current month's skim milk and butterfat prices, less the Class III 
value of the milk at the previous month's protein and butterfat prices;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1139.44(a)(9) and the 
corresponding step of Sec. 1139.44(b) at the current month's Class II-
Class III price difference and the current month's protein and butterfat 
prices, less the Class III value of the milk at the previous month's 
protein and butterfat prices;
    (e) The value of the product pounds, skim milk and butterfat 
assigned to Class I pursuant to Sec. 1139.43(d) and the hundredweight of 
skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1139.44(a)(7)(i) through (iv) and (vii), and the corresponding step 
of Sec. 1139.44(b), excluding receipts of bulk fluid cream products from 
another order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants, applicable at 
the location of the pool plant at the current month's Class I-Class III 
price difference;
    (f) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1139.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1139.44(b) applicable at the location of 
the transferor-plant at the current month's Class I-Class III price 
difference;
    (g) The value of the product pounds, skim milk and butterfat in 
receipts of concentrated fluid milk products assigned to Class I 
pursuant to 1139.43(d) and Sec. 1139.44(a)(7)(i) and the pounds of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1139.44(a)(11) and the corresponding steps of Sec. 1139.44(b), 
excluding such hundredweight in receipts of bulk fluid milk products 
from an unregulated supply plant to the extent that an equivalent 
quantity disposed of to such plant by handlers fully regulated by any 
Federal order is classified and priced as Class I milk and is not used 
as an offset for any other payment obligation under any order, 
applicable at the location of the nearest unregulated supply plants

[[Page 866]]

from which an equivalent volume was received at the current month's 
Class I-Class III price difference;
    (h) The pounds of skim milk in Class I producer milk, as determined 
pursuant to Sec. 1139.44, multiplied by the skim milk price for the 
month computed pursuant to Sec. 1139.50(f).
    (i) The pounds of protein in skim milk in Class II and Class III, 
computed by multiplying the skim milk pounds so assigned by the 
percentage of protein in the handler's receipts of producer skim milk 
during the month for each report filed, separately, multiplied by the 
protein price for the month computed pursuant to Sec. 1139.50(e).
    (j) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1139.43(d);
    (k) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1139.76(a)(1)(v) or (c); and
    (l) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27906, May 11, 1993]



Sec. 1139.61  Computation of weighted average differential value.

    For each month the market administrator shall compute the weighted 
average differential value for milk received from all producers as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1139.60, paragraphs (a) through (g) and (j) and (k), for all 
handlers who made reports pursuant to Sec. 1139.30 and who made payments 
pursuant to Sec. 1139.71 for the preceding month;
    (b) Add an amount equal to the sum of the deductions to be made for 
location adjustments pursuant to Sec. 1136.75;
    (c) Add an amount equal to not less than one-half the unobligated 
balance in the producer-settlement fund;
    (d) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk;
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1139.60(g).
    (e) Subtract not more than 5 cents per hundredweight. The result is 
the ``Weighted Average Differential Price''.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27907, May 11, 1993]



Sec. 1139.62  Computation of producer protein price.

    For each month the market administrator shall compute the producer 
protein price to be paid to all producers for the pounds of protein in 
their milk, as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1139.60, paragraphs (h) and (i), for all handlers who made reports 
pursuant to Sec. 1139.30 and who made payments pursuant to Sec. 1139.71 
for the preceding month;
    (b) Divide the resulting amount by the total pounds of protein in 
producer milk; and
    (c) Round to the nearest whole cent. The result is the ``Producer 
protein price.''



Sec. 1139.63  Uniform price and handlers' obligations for producer milk.

    (a) A uniform price for producer milk containing 3.5 percent 
butterfat shall be computed by adding the weighted average differential 
price determined

[[Page 867]]

pursuant to Sec. 1139.61 to the basic formula price for the month.
    (b) Handler obligations to producers and cooperative associations 
for producer milk shall be determined in accordance with the provisions 
of Secs. 1139.73 and 1139.74.



Sec. 1139.64  Announcement of weighted average differential price, producer protein price, and uniform price.

    The market administrator shall announce publicly on or before the 
12th day after the end of the month the weighted average differential 
price computed pursuant to Sec. 1139.61, the producer protein price 
computed pursuant to Sec. 1139.62, and the uniform price computed 
pursuant to Sec. 1139.63(a).

                            Payments for Milk



Sec. 1139.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit payments made by handlers pursuant to Secs. 1139.71, 1139.76 and 
1139.77, subject to the provisions of Sec. 1139.78, and out of which he 
shall make payments pursuant to Secs. 1139.72 and 1139.77. Payment due a 
handler from the fund shall be offset as appropriate against payments 
due from such handler.



Sec. 1139.71  Payments to the producer-settlement fund.

    (a) Each handler whose obligation computed pursuant to paragraph 
(a)(1) of this section exceeds such handler's credit computed pursuant 
to paragraph (a)(2) of this section shall pay to the market 
administrator no later than the 14th of the month, an amount equal 
thereto:
    (1) The total obligation of the handler for such month as determined 
pursuant to Sec. 1139.60.
    (2) The sum of:
    (i) The value of such handler's receipts of producer milk and milk 
received from a handler defined in Sec. 1139.9(c) at the weighted 
average differential price adjusted pursuant to Sec. 1139.75; and
    (ii) The value of the protein in such handler's receipts of producer 
milk and milk received from a handler defined in Sec. 1139.9(c) at the 
producer protein price computed pursuant to Sec. 1139.62; and
    (iii) The value at the weighted average differential price 
applicable at the location of the plant from which received of other 
source milk for which a value is computed pursuant to Sec. 1139.60(g).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route dispositions from such plant in the marketing area which was 
allocated to Class I at such plant; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price f.o.b. the other order plant and the Class III 
price.
    (c) The following conditions shall apply with respect to the payment 
prescribed in paragraph (a) of this section:
    (1) Payments due the market administrator shall be deemed not to 
have been made until the money owed has been received at the market 
administrator's office, or deposited into the market administrator's 
bank account; and
    (2) If the date by which the payment must be received by the market 
administrator falls on a Saturday or Sunday or on any national holiday, 
payments shall not be due until the next day on which the market 
administrator's office is open for public business.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 32436, June 10, 1993]



Sec. 1139.72  Payments from the producer-settlement fund.

    On or before the 15th day after the end of the month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1139.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1139.71(a)(1). If the date by which such 
payments are to be made falls on

[[Page 868]]

a Saturday or Sunday or a national holiday, such payments need not be 
made until the next day on which the market administrator's office is 
open for public business. If at such time the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this 
section, the market administrator shall reduce uniformly such payments 
and shall complete such payments as soon as funds are available.
[58 FR 32436, June 10, 1993]



Sec. 1139.73  Value of producer milk.

    (a) The partial payment for milk received from each producer during 
the first 15 days of the month shall be determined by a rate computed by 
multiplying the Class III price for the preceding month by 1.2, but not 
to exceed the current month's Class I price.
    (b) The total value of milk received from producers during any month 
shall be computed as follows:
    (1) The weighted average differential price computed pursuant to 
Sec. 1139.61 subject to the appropriate plant location adjustment times 
the total hundredweight of milk received from the producer; plus
    (2) The total milk protein contained in the producer milk received 
from the producer multiplied by the producer protein price computed 
pursuant to Sec. 1139.62; plus
    (3) The total butterfat contained in the producer milk received from 
the producer times the butterfat price computed pursuant to 
Sec. 1139.50(d).



Sec. 1139.74  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (c), (d) or (e) of this section, 
each handler shall, on or before the last day of each month, make a 
partial payment to each producer from whom milk was received during the 
first 15 days of the month, and who had shipped milk to such handler 
through the 17th day of the month, at the rate set forth in 
Sec. 1139.73(a), less proper deductions authorized in writing by such 
producer;
    (b) Except as provided in paragraph (c), (d) or (e) of this section, 
each handler shall, on or before the 17th day of the following month, 
make a final payment to each producer for milk received from such 
producer during the month at no less than the total amount computed in 
accordance with the provisions set forth in Sec. 1139.73(b) with respect 
to such milk:
    (1) Less any deductions for marketing services pursuant to 
Sec. 1139.86;
    (2) Less payment made pursuant to paragraph (a) of this section for 
such month;
    (3) Less proper deductions authorized in writing by such producer;
    (4) Plus or minus adjustments for errors made in previous payments 
to such producer and proper deductions authorized in writing by such 
producer; and
    (5) If by the date specified such handler has not received full 
payment from the market administrator pursuant to Sec. 1139.72 for such 
month, the handler may reduce his payments to producers pro rata by not 
more than the amount of such underpayment. Payments to producers shall 
be completed thereafter no later than the date for making payments 
pursuant to this paragraph next following after receipt of the balance 
due from the market administrator.
    (c) Payment shall be made in the manner set forth in subparagraphs 
(1) and (2) of this section to a cooperative association for milk 
received from such association pursuant to Sec. 1139.13(a)(2) or from 
its member producers pursuant to Sec. 1139.13(a)(1) if the cooperative 
association is authorized by its members to collect payment for their 
milk and the cooperative association notifies the handler and the market 
administrator in writing of its desire to make such collection:
    (1) On or before the 3rd day prior the last day of the month for 
milk received from the members of such cooperative association at the 
rates set forth in Sec. 1139.73(a); and
    (2) On or before the 16th day of the following month such handler 
shall pay to such cooperative association the sum of the payments 
computed in accordance with the procedures set forth in Sec. 1139.73(b) 
with respect to deliveries by producer-members of such cooperative 
association to handler(s) from whom payment has been requested, less the 
amounts of payments made to such cooperative association pursuant to

[[Page 869]]

paragraph (c)(1) of this section, and less the amount retained by 
handlers as authorized deductions.
    (d) Each handler who received milk from producers for which payment 
is to be made to a cooperative association pursuant to paragraph (c) of 
this section shall report to such cooperative association and to the 
market administrator on or before the 7th day of the following month as 
follows:
    (1) The total pounds of milk received during the month and, if 
requested, the pounds received from each member-producer;
    (2) The amount of payment made pursuant to paragraph (c)(1) of this 
section and the quantity of milk to which such payment applied; and
    (3) The amount or rate and nature of any proper deductions 
authorized to be made from such payments.
    (e) Each handler shall pay a cooperative association for milk 
received from a pool plant operated by such association on the basis of 
the classification thereof assigned by the market administrator as 
follows:
    (1) On or before the 3rd day prior to the last day of the month for 
milk received during the first 15 days of the month at the Class III 
price (or basic formula price) for the previous month; and
    (2) On or before the 16th day after the end of the month for milk 
received during the month at the following rates:
    (i) The butterfat price per pound for the butterfat contained in 
such milk; plus
    (ii) The milk protein price per pound for the pounds of protein 
contained in Class II and Class III use and the skim milk price per 
hundredweight for Class I use of such milk; plus
    (iii) The difference between the Class I price adjusted pursuant to 
Sec. 1139.52 and the Class III price multiplied by the hundredweight of 
such milk classified as Class I; plus
    (iv) The difference between the Class II and Class III prices 
multiplied by the hundredweight of such milk classified as Class II; 
plus
    (v) The amount assessed by the market administrator with respect to 
such milk pursuant to 1139.85; less
    (vi) Payments made pursuant to paragraph (e)(1) of this section.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 32436, June 10, 1993]



Sec. 1139.75  Location and zone differentials for producer and nonpool milk.

    (a) In making payments computed pursuant to Sec. 1139.72 and in 
crediting handlers for payment due pursuant to Sec. 1139.71(a)(2)(i) the 
market administrator shall adjust the weighted average differential 
price by an amount equal to the plant location adjustment specified in 
Sec. 1139.52 applicable at the plant where the milk was first received 
from producers, except that the weighted average differential applicable 
at any location shall not be less than zero.
    (b) The weighted average differential price applicable to other 
source milk pursuant to Sec. 1139.71(a)(2)(iii) shall be adjusted at the 
rates set forth in Sec. 1139.52 (a) or (b) applicable at the location of 
the nonpool plant from which the milk was received (but not to be less 
than zero).
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 32436, June 10, 1993]



Sec. 1139.76  Payments by a handler operating a partially regulated distributing plant.

    (a) Each handler who operates a partially regulated distributing 
plant that is not subject to a milk classification and pricing program 
that provides for marketwide pooling of producer returns and is enforced 
under the authority of a state government shall pay on or before the 
25th day after the end of the month to the market administrator for the 
producer-settlement fund the amount computed pursuant to paragraph 
(a)(1) of this section, or, if the handler submits pursuant to 
Secs. 1139.30(b) and 1139.31(b) the information necessary for making the 
appropriate computations, and so elects, the amount computed pursuant to 
paragraph (a)(2) of this section:
    (1) An amount computed as follows:
    (i) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;

[[Page 870]]

    (ii) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant;
    (a) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (b) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool 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;
    (iii) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (iv) Multiply the remaining pounds by the amount the Class I-Class 
III price difference exceeds the weighted average differential computed 
pursuant to Sec. 1139.61 as adjusted by the appropriate location or zone 
differential (but in no case less than 0);
    (v) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(1)(iii) of this section by 
the difference between the Class I price applicable at the location of 
the partially regulated distributing plant less $1.00 (but not to be 
less than the Class III price) and the Class III price. For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (2) An amount computed as follows:
    (i) Determine the value that would have been computed pursuant to 
Sec. 1139.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (a) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which products were classified at the fully 
regulated plant;
    (b) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be allocated to the extent 
possible to those receipts at the partially regulated distributing plant 
from pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (a)(2)(i)(a) of this section. 
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. 1139.60(e) shall be priced at the 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 uniform price 
(or weighted average 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 of reconstituted skim milk in filled milk 
shall be priced at the lowest class price of the respective order;
    (c) If the operator of the partially regulated distributing plant so 
requests, the value of milk determined pursuant to Sec. 1139.60 for such 
handler

[[Page 871]]

shall include in lieu of the value of other source milk specified in 
Sec. 1139.60(g) less the value of such other source milk specified in 
Sec. 1139.71(a)(2)(iii) a value of milk determined pursuant to 
Sec. 1139.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1139.7(c) 
subject to the following conditions:
    (1) The operator of the partially regulated distributing plant 
submits with reports filed for the month pursuant to Secs. 1139.30(b) 
and 1139.31(b) similar reports for each nonpool supply plant;
    (2) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all milk and milk products received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (3) The value of milk determined pursuant to Sec. 1139.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (ii) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (a)(2)(i) of this section, subtract:
    (a) The gross payment made by the operator of such partially 
regulated distributing plant, less the value of the butterfat at the 
butterfat price specified in Sec. 1139.50(d), for milk received at the 
plant during the month that would have been producer milk if the plant 
had been fully regulated;
    (b) If paragraph (a)(2)(i)(c) of this section applies, the gross 
payments by the operator of such nonpool supply plant, less the value of 
the butterfat at the butterfat price specified in Sec. 1139.50(d), for 
milk received at the plant during the month that would have been 
producer milk if the plant had been fully regulated; and
    (c) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant, 
and like payments by the operator of the nonpool supply plant if 
paragraph (a)(2)(i)(c) of this section applies.
    (b) Each handler who operates a partially regulated distributing 
plant which is subject to marketwide pooling of returns under a milk 
classification and pricing program that is imposed under the authority 
of the state government shall pay on or before the 25th day after the 
end of the month to the market administrator for the producer-settlement 
fund an amount computed as follows:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant;
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision under another Federal milk 
order;
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool plants 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;
    (3) Determine the value of the remaining pounds according to the 
difference between the appropriate Class prices applicable at the 
location of the partially regulated distributing plant (but not to be 
less than zero) as announced by the State order and as determined 
pursuant to Sec. 1139.50.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1139.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of

[[Page 872]]

the total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27907, May 11, 1993]



Sec. 1139.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's reports, 
books, records, or accounts or other verification discloses errors 
resulting in money due a producer, a cooperative association, or the 
market administrator from such handler or due such handler from the 
market administrator, the market administrator shall promptly notify 
such handler of any amount so due, and payment thereof shall be made on 
or before the next date for making payments as set forth in the 
provisions under which such error occurred.
[53 FR 4603, Feb. 17, 1988; 53 FR 6916, Mar. 3, 1988]



Sec. 1139.78  Charges on overdue accounts.

    (a) Any unpaid balance due from a handler pursuant to Secs. 1139.71, 
1139.76, 1139.77, 1139.85 and 1139.86, or under this section shall be 
increased 1% per month on the next day following the due date of such 
unpaid obligation and any balance remaining unpaid shall likewise be 
increased on the first day of each month thereafter until paid.
    (b) For the purpose of this section, any obligation that was 
determined at a date later than that prescribed by the order because of 
a handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.

        Administrative Assessment and Marketing Service Deduction



Sec. 1139.85  Assessment for order administration.

    A pro rata share of the expense of administration of the order shall 
be paid to the market administrator by each handler on or before the 
14th day after the end of the month at the rate of 4 cents per 
hundredweight, or such lesser amount as the Secretary may prescribe, 
with respect to:
    (a) Producer milk (including milk received from a handler defined in 
Sec. 1139.9(c), but excluding in the case of a cooperative association 
which is a handler pursuant to Sec. 1139.9(c), milk which was received 
at the pool plant of another handler) and such handler's own production;
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1139.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1139.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1139.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1139.60 (e) and (g); and
    (c) Route disposition in the marketing area from a partially 
regulated distributing plant during the month that exceeds the quantity 
subtracted pursuant to Sec. 1139.76(a)(1)(ii).
[53 FR 4590, Feb. 17, 1988, as amended at 58 FR 27907, May 11, 1993]



Sec. 1139.86  Deduction for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler in making payments to producers for milk pursuant to 
Sec. 1139.74 (other than milk of the handler's own production) shall 
deduct 6 cents per hundredweight, or such lesser amount as may be 
prescribed by the Secretary, and shall pay such deductions to the market 
administrator on or before the 14th day after the end of the month.
    (b) The monies acquired by the market administrator pursuant to 
paragraph (a) of this section shall be expended by the market 
administrator to

[[Page 873]]

provide market information, and to verify or establish the weights, 
samples and tests of milk of any producer for whom a cooperative 
association is not performing the same services on a comparable basis as 
determined by the Secretary.



PART 1150--DAIRY PROMOTION PROGRAM--Table of Contents




               Subpart--Dairy Promotion and Research Order

                               Definitions

Sec.
1150.101  Act.
1150.102  Department.
1150.103  Secretary.
1150.104  Board.
1150.105  Person.
1150.106  United States.
1150.107  Fiscal period.
1150.108  Eligible organization.
1150.109  Qualified State or regional program.
1150.110  Producer.
1150.111  Milk.
1150.112  Dairy products.
1150.113  Fluid milk products.
1150.114  Promotion.
1150.115  Research.
1150.116  Nutrition education.
1150.117  Plans and projects.
1150.118  Marketing.
1150.119  Cooperative association.

               National Dairy Promotion and Research Board

1150.131  Establishment and membership.
1150.132  Term of office.
1150.133  Nominations.
1150.134  Nominee's agreement to serve.
1150.135  Appointment.
1150.136  Vacancies.
1150.137  Procedure.
1150.138  Compensation and reimbursement.
1150.139  Powers of the Board.
1150.140  Duties of the Board.

                        Expenses and Assessments

1150.151  Expenses.
1150.152  Assessments.
1150.153  Qualified State or regional dairy product promotion, research 
          or nutrition education programs.
1150.154  Influencing governmental action.
1150.155  Adjustment of accounts.
1150.156  Charges and penalties.

               Promotion, Research and Nutrition Education

1150.161  Promotion, research and nutrition education.

                       Reports, Books and Records

1150.171  Reports.
1150.172  Books and records.
1150.173  Confidential treatment.

                              Miscellaneous

1150.181  Proceedings after termination.
1150.182  Effect of termination or amendment.
1150.183  Personal liability.
1150.184  Patents, copyrights, inventions and publications.
1150.185  Amendments.
1150.186  Separability.
1150.187  Paperwork Reduction Act assigned number.

   Subpart--Procedure for Certification of Milk Producer Organizations

1150.270  General.
1150.271  Definitions.
1150.272  Responsibility for administration of regulations.
1150.273  Application for certification.
1150.274  Certification standards.
1150.275  Inspection and investigation.
1150.276  Review of certification.
1150.277  Listing of certified organizations.
1150.278  Confidential treatment.

    Authority: 7 U.S.C. 4501-4513.

    Source: 49 FR 11816, Mar. 28, 1984, unless otherwise noted.



               Subpart--Dairy Promotion and Research Order

                               Definitions



Sec. 1150.101  Act.

    Act means Title I, Subtitle B, of the Dairy and Tobacco Adjustment 
Act of 1983, Pub. L. 98-180, 97 Stat. 1128, as approved November 29, 
1983, and any amendments thereto.



Sec. 1150.102  Department.

    Department means the United States Department of Agriculture.



Sec. 1150.103  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any other officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.

[[Page 874]]



Sec. 1150.104  Board.

    Board means the National Dairy Promotion and Research Board 
established pursuant to Sec. 1150.131.



Sec. 1150.105  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative or other entity.



Sec. 1150.106  United States.

    United States means the 48 contiguous States in the continental 
United States.



Sec. 1150.107  Fiscal period.

    Fiscal period means the calendar year or such other annual period as 
the Board may determine.



Sec. 1150.108  Eligible organization.

    Eligible organization means any organization which has been 
certified by the Secretary pursuant to Secs. 1150.270 through 1150.278 
of this part.



Sec. 1150.109  Qualified State or regional program.

    Qualified State or regional program means any State or regional 
dairy product promotion, research or nutrition education program which 
is certified as a qualified program pursuant to Sec. 1150.153.



Sec. 1150.110  Producer.

    Producer means any person engaged in the production of milk for 
commercial use.



Sec. 1150.111  Milk.

    Milk means any class of cow's milk produced in the United States.



Sec. 1150.112  Dairy products.

    Dairy products means products manufactured for human consumption 
which are derived from the processing of milk, and includes fluid milk 
products.



Sec. 1150.113  Fluid milk products.

    Fluid milk products means those milk products normally consumed in 
liquid form as a beverage.



Sec. 1150.114  Promotion.

    Promotion means actions such as paid advertising, sales promotion, 
and publicity to advance the image and sales of, and demand for, dairy 
products generally.



Sec. 1150.115  Research.

    Research means studies testing the effectiveness of market 
development and promotion efforts, studies relating to the nutritional 
value of milk and dairy products, and other related efforts to expand 
demand for dairy products.



Sec. 1150.116  Nutrition education.

    Nutrition education means those activities intended to broaden the 
understanding of sound nutritional principles, including the role of 
milk and dairy products in a balanced diet.



Sec. 1150.117  Plans and projects.

    Plans and projects means promotion, research and nutrition education 
plans, studies or projects pursuant to Secs. 1150.139, 1150.140 and 
1150.161.



Sec. 1150.118  Marketing.

    Marketing means the sale or other disposition in commerce of dairy 
products.



Sec. 1150.119  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which is organized under the provisions of the Act of 
Congress of February 18, 1922, as amended, known as the ``Capper-
Volstead Act''.

               National Dairy Promotion and Research Board



Sec. 1150.131  Establishment and membership.

    (a) There is hereby established a National Dairy Promotion and 
Research Board of thirty-six members. For purposes of nominating 
producers to the Board, the United States shall be divided into thirteen 
geographic regions and the number of Board members from each region 
shall be as follows:
    (1) One member from region number one comprised of the following 
States: Washington and Oregon.

[[Page 875]]

    (2) Five members from region number 2 comprised of the following 
State: California.
    (3) Two members from region number three comprised of the following 
States: Arizona, Colorado, Idaho, Montana, Nevada, Utah and Wyoming.
    (4) Three members from region number four comprised of the following 
States: Arkansas, Kansas, New Mexico, Oklahoma and Texas.
    (5) Three members from region number five comprised of the followng 
States: Minnesota, North Dakota and South Dakota.
    (6) Six members from region number six comprised of the following 
State: Wisconsin.
    (7) Three members from region number seven comprised of the 
following States: Illinois, Iowa, Missouri and Nebraska.
    (8) One member from region number eight comprised of the following 
States: Alabama, Kentucky, Louisiana, Mississippi and Tennessee.
    (9) Three members from region number nine comprised of the following 
States: Indiana, Michigan, Ohio and West Virginia.
    (10) Two members from region number ten comprised of the following 
States: Florida, Georgia, North Carolina, South Carolina and Virginia.
    (11) Three members from region number eleven comprised of the 
following States: Delaware, Maryland, New Jersey and Pennsylvania.
    (12) Three members from region number twelve comprised of the 
following State: New York.
    (13) One member from region number thirteen comprised of the 
following States: Connecticut, Maine, Massachusetts, New Hampshire, 
Rhode Island and Vermont.
    (b) The Board shall be composed of milk producers appointed by the 
Secretary either from nominations submitted pursuant to Sec. 1150.133 or 
in accordance with Sec. 11150.136. A milk producer may be nominated only 
to represent the region in which such producer's milk is produced.
    (c) At least every five years, and not more than every three years, 
the Board shall review the geographic distribution of milk production 
volume throughout the United States and, if warranted, shall recommend 
to the Secretary a reapportionment of regions and/or a modification of 
the number of members from regions in order to best reflect the 
geographic distribution of milk production volume in the United States.
    (d) The number of members for each region which shall serve on the 
Board shall be determined by dividing the total pounds of milk produced 
in the United States for the calendar year previous to the date of 
review by 36 which provides a factor of pounds of milk per member, and 
then dividing the total pounds of milk for each region by such factor.
    (e) In determining the volume of milk produced in the United States, 
the Board and the Secretary shall utilize the information received by 
the Board pursuant to Sec. 1150.171 and data published by the 
Department.
[49 FR 11816, Mar. 28, 1984, as amended at 54 FR 6264, Feb. 9, 1989; 59 
FR 13435, Mar. 22, 1994]



Sec. 1150.132  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that the members appointed to the initial Board shall serve 
proportionately, for terms of one, two and three years.
    (b) Each member of the Board shall serve until October 31 of the 
year in which his/her term expires, except that a retiring member may 
serve until a successor is appointed.
    (c) No member shall serve more than two consecutive terms.
[49 FR 11816, Mar. 28, 1984, as amended at 60 FR 53253, Oct. 13, 1995]



Sec. 1150.133  Nominations.

    Nominations for members of the Board shall be made in the following 
manner:
    (a) Upon effectuation of this provision, the Secretary shall solicit 
nominations for the initial Board from all eligible organizations. If 
the Secretary determines that a substantial number of producers are not 
members of, or their interests are not represented by, such eligible 
organizations, the Secretary shall also solicit nominations from such 
producers through general

[[Page 876]]

farmer organizations or by other means.
    (b) After the appointment of the initial Board, the Secretary shall 
announce at least 120 days in advance when a Board member's term is 
expiring and shall solicit nominations for that position in the manner 
described in paragraph (a) of this section. Nominations for such 
position should be submitted to the Secretary not less than 60 days 
prior to the expiration of such term.
    (c) An eligible organization may submit nominations only for 
positions on the Board that represent regions in which such eligible 
organization can establish that it represents a substantial number of 
producers. If there is more than one Board position for any such region, 
the organization may submit nominations for each position.
    (d) Where there is more than one eligible organization representing 
producers in a specific region, they may caucus and jointly nominate 
producers for each position representing that region on the Board for 
which a member is to be appointed. If joint agreement is not reached 
with respect to any such nominations, or if no caucus is held, each 
eligible organization may submit to the Secretary nominations for each 
appointment to be made to represent that region.



Sec. 1150.134  Nominee's agreement to serve.

    Any producer nominated to serve on the Board shall file with the 
Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with any organization that operates a 
qualified State or regional program or has a contractual relationship 
with the Board; and
    (c) Withdraw from participation in deliberations, decision-making, 
or voting on matters where paragraph (b) applies.



Sec. 1150.135  Appointment.

    From the nominations made pursuant to Sec. 1150.133, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided for in Sec. 1150.131(a).



Sec. 1150.136  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
appoint a successor from the most recent list of nominations for the 
position or from nominations made by the Board.



Sec. 1150.137  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Board. Any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. The Board shall establish rules concerning timely notice of 
meetings.
    (b) The Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph when in the 
opinion of the chairman of the Board such action must be taken before a 
meeting can be called. Action taken by this emergency procedure is valid 
only if all members are notified and provided the opportunity to vote 
and any telephone vote is confirmed promptly in writing. Any action so 
taken shall have the same force and effect as though such action had 
been taken at a properly convened meeting of the Board.
[49 FR 11816, Mar. 28, 1984, as amended at 50 FR 9984, Mar. 13, 1985]



Sec. 1150.138  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for necessary and reasonable expenses, including a per 
diem allowance as recommended by the Board and approved by the 
Secretary, incurred by them in the performance of their duties under 
this subpart.



Sec. 1150.139  Powers of the Board.

    The Board shall have the following powers:
    (a) To receive and evaluate, or on its own initiative develop, and 
budget for plans or projects to promote the use of fluid milk and dairy 
products as well as projects for research and nutrition education and to 
make recommendations to the Secretary regarding such proposals;

[[Page 877]]

    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (e) To disseminate information to producers or eligible 
organizations through programs or by direct contact utilizing the public 
postage system or other systems;
    (f) To select committees and subcommittees of Board members, and to 
adopt such rules for the conduct of its business as it may deem 
advisable;
    (g) To establish advisory committees of persons other than Board 
members and pay the necessary and reasonable expenses and fees of the 
members of such committees;
    (h) To recommend to the Secretary amendments to this subpart; and
    (i) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1150.152 in, and only in, obligations 
of the United States or any agency thereof, in general obligations of 
any State or any political subdivision thereof, in any interest-bearing 
account or certificate of deposit of a bank that is a member of the 
Federal Reserve System, or in obligations fully guaranteed as to 
principal and interest by the United States.



Sec. 1150.140  Duties of the Board.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairman and such other officers as may be 
necessary;
    (b) To appoint from its members an executive committee whose 
membership shall equally reflect each of the different regions in the 
United States in which milk is produced, and to delegate to the 
committee authority to administer the terms and provisions of this 
subpart under the direction of the Board and within the policies 
determined by the Board;
    (c) To appoint or employ such persons as it may deem necessary and 
define the duties and determine the compensation of each;
    (d) To review all programs that promote milk and dairy products on a 
brand or trade name basis that have requested certification pursuant to 
Sec. 1150.153, and to recommend to the Secretary whether such request 
should be granted;
    (e) To develop and submit to the Secretary for approval, promotion, 
research, and nutrition education plans or projects resulting from 
research or studies conducted either by the Board or others;
    (f) To solicit, among other proposals, research proposals that would 
increase the use of fluid milk and dairy products by the military and by 
persons in developing nations, and that would demonstrate the 
feasibility of converting surplus nonfat dry milk to casein for domestic 
and export use;
    (g) To prepare and submit to the Secretary for approval, budgets on 
a fiscal period basis of its anticipated expenses and disbursements in 
the administration of this subpart, including probable costs of 
promotion, research and nutrition education plans or projects, and also 
including a general description of the proposed promotion, research and 
nutrition education programs contemplated therein;
    (h) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and prepare and submit such 
reports from time to time to the Secretary as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (i) With the approval of the Secretary, to enter into contracts or 
agreements with national, regional or State dairy promotion and research 
organizations or other organizations or entities for the development and 
conduct of activities authorized under Secs. 1150.139 and 1150.161, and 
for the payment of the cost thereof with funds collected through 
assessments pursuant to Sec. 1150.152. Any such contract or agreement 
shall provide that:
    (1) The contractors shall develop and submit to the Board a plan or 
project together with a budgets or budget

[[Page 878]]

which shall show the estimated cost to be incurred for such plan or 
project;
    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
transactions and make periodic reports to the Board of activities 
conducted and an accounting for funds received and expended, and such 
other reports as the Secretary or the Board may require. The Secretary 
or employees of the Board may audit periodically the records of the 
contracting party;
    (j) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (k) To have an audit of its financial statements conducted by a 
certified public accountant in accordance with generally accepted 
auditing standards, at least once each fiscal period and at such other 
times as the Secretary may request, and to submit a copy of each such 
audit report to the Secretary;
    (l) To give the Secretary the same notice of meetings of the Board, 
committees of the Board and advisory committees as is given to such 
Board or committee members in order that the Secretary, or a 
representative of the Secretary, may attend such meetings;
    (m) To submit to the Secretary such information pursuant to this 
subpart as may be requested; and
    (n) To encourage the coordination of programs of promotion, research 
and nutrition education designed to strengthen the dairy industry's 
position in the marketplace and to maintain and expand domestic and 
foreign markets and uses for fluid milk and dairy products produced in 
the United States.

                        Expenses and Assessments



Sec. 1150.151  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve) as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. However, after 
the first full year of operation of the order, administrative expenses 
incurred by the Board shall not exceed 5 percent of the projected 
revenue of that fiscal year. Such expenses shall be paid from 
assessments collected pursuant to Sec. 1150.152.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1150.152, for administrative costs incurred 
by the Department after May 1, 1984.



Sec. 1150.152  Assessments.

    (a) Each person making payment to a producer for milk produced in 
the United States and marketed for commercial use shall collect an 
assessment on all such milk handled for the account of the producer at 
the rate of 15 cents per hundredweight of milk for commercial use or the 
equivalent thereof and shall remit the assessment to the Board.
    (b) Any producer marketing milk of that producer's own production in 
the form of milk or dairy products to consumers, either directly or 
through retail or wholesale outlets, shall remit to the Board an 
assessment on such milk at the rate of 15 cents per hundredweight of 
milk for commercial use or the equivalent thereof.
    (c) In determining the assessment due from each producer pursuant to 
Sec. 1150.152 (a) and (b), a producer who is participating in a 
qualified State or regional program(s) shall receive a credit for 
contributions to such program(s), but not to exceed the following 
amounts:
    (1) In the case of contributions for milk marketed on or before May 
31, 1984, up to the actual rate of contribution that was in effect under 
such program(s) on November 29, 1983, not to exceed 15 cents per 
hundredweight of milk marketed.
    (2) In all other cases, the credit shall not exceed 10 cents per 
hundredweight of milk marketed.
    (d) In order for a producer described in Sec. 1150.152(a) to receive 
the credit authorized in Sec. 1150.152(c), either the producer or a 
cooperative association on behalf of the producer must establish to the 
person responsible for remitting the assessment to the Board that the 
producer is contributing to a qualified

[[Page 879]]

State or regional program. Producers who contribute to a qualified 
program directly (other than through a payroll deduction) must establish 
with the person responsible for remitting the assessment to the Board, 
with validation by the qualified program, that they are making such 
contributions.
    (e) In order for a producer described in Sec. 1150.152(b) to receive 
the credit authorized in Sec. 1150.152(c), the producer and the 
applicable qualified State or regional program must establish to the 
Board that the producer is contributing to a qualified State or regional 
program.
    (f) The collection of assessments pursuant to Sec. 1150.152(a) and 
(b) shall begin with respect to milk marketed on and after the effective 
date of this section and shall continue until terminated by the 
Secretary. If the Board is not constituted by the date the first 
assessments are to be collected, the Secretary shall have the authority 
to receive the assessments on behalf of the Board. The Secretary shall 
remit such assessments to the Board when it is constituted.
    (g) Each person responsible for the remittance of the assessment 
pursuant to Sec. 1150.152(a) and (b) shall remit the assessment to the 
Board not later than the last day of the month following the month in 
which the milk was marketed.
    (h) Money remitted to the Board shall be in the form of a negotiable 
instrument made payable to ``National Dairy Promotion and Research 
Board.'' Remittances and reports specified in Sec. 1150.171 shall be 
mailed to the location designated by the Secretary or the Board.



Sec. 1150.153  Qualified State or regional dairy product promotion, research or nutrition education programs.

    (a) Any organization which conducts a State or regional dairy 
product promotion, research or nutrition education program may apply to 
the Secretary for certification of qualification so that producers may 
receive credit pursuant to Sec. 1150.152(c) for contributions to such 
program.
    (b) In order to be certified by the Secretary as a qualified 
program, the program must:
    (1) Conduct activities as defined in Secs. 1150.114, 1150.115, and 
1150.116 that are intended to increase consumption of milk and dairy 
products generally;
    (2) Except for programs operated under the laws of the United States 
or any State, have been active and ongoing before enactment of the Act;
    (3) Be financed primarily by producers, either individually or 
through cooperative associations;
    (4) Not use a private brand or trade name in its advertising and 
promotion of dairy products unless the Board recommends and the 
Secretary concurs that such preclusion should not apply;
    (5) Certify to the Secretary that any requests from producers for 
refunds under the program will be honored by forwarding to either the 
Board or a qualified State or regional program designated by the 
producer that portion of such refunds equal to the amount of credit that 
otherwise would be applicable to that program pursuant to 
Sec. 1150.152(c); and
    (6) Not use program funds for the purpose of influencing 
governmental policy or action.
    (c) An application for certification of qualifications of any State 
or regional dairy product promotion, research or nutrition education 
program which does not satisfy the requirements specified in paragraph 
(b) of this section shall be denied. The certification of any qualified 
program which fails to satisfy the requirements specified in paragraph 
(b) of this section after certification shall be subject to suspension 
or termination.
    (1) Prior to the denial of an application for certification of 
qualification, or the suspension or termination of an existing 
certification, the Director of the Dairy Division shall afford the 
applicant or the holder of an existing certification an opportunity to 
achieve compliance with the requirements for certification within a 
reasonable time, as determined by the Director.
    (2) Any State or regional dairy product promotion, research or 
nutrition education program whose application for certification of 
qualification is to be denied, or whose certification of qualification 
is to be suspended or terminated shall be given written notice

[[Page 880]]

of such pending action and shall be afforded an opportunity to petition 
the Secretary for a review of the action. The petition shall be in 
writing and shall state the facts relevant to the matter for which the 
review is sought, and whether petitioner desires an informal hearing. If 
an informal hearing is not requested, the Director of the Dairy Division 
shall issue a final decision setting forth the action to be taken and 
the basis for such action. If petitioner requests a hearing, the 
Director of the Dairy Division, or a person designated by the Director, 
shall hold an informal hearing in the following manner:
    (i) Notice of a hearing shall be given in writing and shall be 
mailed to the last known address of the petitioner or of the State or 
regional program, or to an officer thereof, at least 20 days before the 
date set for the hearing. Such notice shall contain the time and place 
of the hearing and may contain a statement of the reason for calling the 
hearing and the nature of the questions upon which evidence is desired 
or upon which argument may be presented. The hearing place shall be as 
convenient to the State or regional program as can reasonably be 
arranged.
    (ii) Hearings are not to be public and are to be attended only by 
representatives of the petitioner or the State or regional program and 
of the U.S. Government, and such other parties as either the State or 
regional program or the U.S. Government desires to have appear for 
purposes of submitting information or as counsel.
    (iii) The Director of the Dairy Division, or a person designated by 
the Director, shall be the presiding officer at the hearing. The hearing 
shall be conducted in such manner as will be most conducive to the 
proper disposition of the matter. Written statements or briefs may be 
filed by the petitioner or the State or regional program, or other 
participating parties, within the time specified by the presiding 
officer.
    (iv) The presiding officer shall prepare preliminary findings 
setting forth a recommendation as to what action should be taken and the 
basis for such action. A copy of such findings shall be served upon the 
petitioner or the State or regional program by mail or in person. 
Written exceptions to the findings may be filed within 10 days after 
service thereof.
    (v) After due consideration of all the facts and the exceptions, if 
any, the Director of the Dairy Division shall issue a final decision 
setting forth the action to be taken and the basis for such action.
[49 FR 11816, Mar. 28, 1984, as amended at 56 FR 8258, Feb. 28, 1991]



Sec. 1150.154  Influencing governmental action.

    No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action, except to recommend to the Secretary amendments to this subpart.



Sec. 1150.155  Adjustment of accounts.

    Whenever the Board or the Department determines through an audit of 
a person's reports, records, books or accounts or through some other 
means that additional money is due the Board or that money is due such 
person from the Board, such person shall be notified of the amount due. 
The person shall then remit any amount due the Board by the next date 
for remitting assessments as provided in Sec. 1150.152. Overpayments 
shall be credited to the account of the person remitting the overpayment 
and shall be applied against amounts due in succeeding months.



Sec. 1150.156  Charges and penalties.

    (a) Late-payment charge. Any unpaid assessments to the Board 
pursuant to Sec. 1150.152 shall be increased 1.5 percent each month 
beginning with the day following the date such assessments were due. Any 
remaining amount due, which shall include any unpaid charges previously 
made pursuant to this section, shall be increased at the same rate on 
the corresponding day of each month thereafter until paid. For the 
purpose of this section, any assessment that was determined at a date 
later than prescribed by this subpart because of a person's failure to 
submit a report to the Board when due shall be considered to have been 
payable by the date it would have been due if the report had been filed 
when due. The timeliness of a payment to the Board shall be based

[[Page 881]]

on the applicable postmark date or the date actually received by the 
Board, whichever is earlier.
    (b) Penalties. Any person who willfully violates any provision of 
this subpart shall be assessed a civil penalty by the Secretary of not 
more than $1,000 for each such violation and, in the case of a willful 
failure to pay, collect, or remit the assessment as required by this 
subpart, in addition to the amount due, a penalty equal to the amount of 
the assessment on the quantity of milk as to which the failure applies. 
The amount of any such penalty shall accrue to the United States and may 
be recovered in a civil suit brought by the United States. The remedies 
provided in this section shall be in addition to, and not exclusive of, 
other remedies that may be available by law or in equity.

               Promotion, Research and Nutrition Education



Sec. 1150.161  Promotion, research and nutrition education.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any plans or projects 
authorized in Secs. 1150.139, 1150.140 and this section. Such plans or 
projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate plans or projects for promotion, research and nutrition 
education with respect to milk and dairy products; and
    (2) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing and utilization of milk and 
dairy products and the creation of new products thereof, to the end that 
marketing and utilization of milk and dairy products may be encouraged, 
expanded, improved or made more acceptable. Included shall be research 
and studies of proposals intended to increase the use of fluid milk and 
dairy products by the military and by persons in developing nations and 
proposals intended to demonstrate the feasibility of converting nonfat 
dry milk to casein for domestic and export use.
    (b) Each plan or project authorized under Sec. 1150.161(a) shall be 
periodically reviewed or evaluated by the Board to insure that the plan 
or project contributes to an effective program of promotion, research 
and nutrition education. If it is found by the Board that any such plan 
or project does not further the purposes of the Act, the Board shall 
terminate such plan or project.
    (c) No plan or project authorized under Sec. 1150.161(a) shall make 
use of unfair or deceptive acts or practices with respect to the 
quality, value or use of any competing product.

                       Reports, Books and Records



Sec. 1150.171  Reports.

    Each producer marketing milk of that producer's own production 
directly to consumers and each person making payment to producers and 
responsible for the collection of the assessment under Sec. 1150.152 
shall be required to report at the time for remitting assessments to the 
Board such information as may be required by the Board or by the 
Secretary. Such information may include but not be limited to the 
following:
    (a) The quantity of milk purchased, initially transferred or which, 
in any other manner, are subject to the collection of the assessment;
    (b) The amount of assessment remitted;
    (c) The basis, if necessary, to show why the remittance is less than 
the number of hundredweights of milk multiplied by 15 cents; and
    (d) The date any assessment was paid.



Sec. 1150.172  Books and records.

    Each person who is subject to this subpart, and other persons 
subject to Sec. 1150.171, shall maintain and make available for 
inspection by employees of the Board and the Secretary such books and 
records as are necessary to carry out the provisions of this subpart and 
the regulations issued hereunder, including such records as are 
necesssary to verify any reports required. Such records shall be 
retained for at least two years beyond the fiscal period of their 
applicability.

[[Page 882]]



Sec. 1150.173  Confidential treatment.

    All information obtained from such books, records or reports under 
the Act and this subpart shall be kept confidential by all persons, 
including employees and former employees of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and all employees and all former officers and employees 
of contracting agencies having access to such information, and shall not 
be available to Board members. Only those persons having a specific need 
for such information in order to effectively administer the provisions 
of this subpart shall have access to such information. In addition, only 
such information so furnished or acquired as the Secretary deems 
relevant shall be disclosed by them, and then only in a suit or 
administrative hearing brought at the discretion, or upon the request, 
of the Secretary, or to which the Secretary or any officer of the United 
States is a party, and involving this subpart. Nothing in this section 
shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of the subpart violated by 
such person.

                              Miscellaneous



Sec. 1150.181  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of, or under the control of 
the Board, including unpaid claims or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec. 1150.140(i);
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such persons as the Secretary may direct; 
and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research or nutrition education plans or projects authorized 
pursuant to this subpart.



Sec. 1150.182  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant hereto, 
or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.

[[Page 883]]



Sec. 1150.183  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly, in any way whatsoever to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission of such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec. 1150.184  Patents, copyrights, inventions and publications.

    Any patents, copyrights, trademarks, inventions or publications 
developed through the use of funds collected under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
inure to the benefit of the Board. Upon termination of this subpart, 
Sec. 1150.181 shall apply to determine disposition of all such property.



Sec. 1150.185  Amendments.

    The Secretary may from time to time amend provisions of this part. 
Any interested person or organization affected by the provisions of the 
Act may propose such amendments to the Secretary.



Sec. 1150.186  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec. 1150.187  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping requirements contained 
in Secs. 1150.133, 1150.152, 1150.153, 1150.171, 1150.172, 1150.202, 
1150.204, 1150.205, 1150.211 and 1150.273 of these regulations (7 CFR 
Part 1150) have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB Control Number 0581-0147.
[50 FR 9984, Mar. 13, 1985]



   Subpart--Procedure for Certification of Milk Producer Organizations



Sec. 1150.270  General.

    Organizations must be certified by the Secretary that they are 
eligible to represent milk producers and to participate in the making of 
nominations of milk producers to serve as members of the National Dairy 
Promotion and Research Board as provided in the Dairy and Tobacco 
Adjustment Act of 1983. Certifications of eligibility required of the 
Secretary shall be conducted in accordance with this subpart.



Sec. 1150.271  Definitions.

    As used in this subpart:
    (a) Act means Title I, Subtitle B, of the Dairy and Tobacco 
Adjustment Act of 1983, Pub. L. 98-180, 97 Stat. 1128, as approved 
November 29, 1983, and any amendments thereto;
    (b) Department means the United States Department of Agriculture;
    (c) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated to act in the Secretary's stead;
    (d) Dairy Division means the Dairy Division of the Department's 
Agricultural Marketing Service;
    (e) Producer means any person engaged in the production of milk for 
commercial use;
    (f) Dairy products means products manufactured for human consumption 
which are derived from the processing of milk, and includes fluid milk 
products; and
    (g) Fluid milk products means those milk products normally consumed 
in liquid form as a beverage.



Sec. 1150.272  Responsibility for administration of regulations.

    The Dairy Division shall have the responsibility for administering 
the provisions of this subpart.

[[Page 884]]



Sec. 1150.273  Application for certification.

    Any organization whose membership consists primarily of milk 
producers may apply for certification. Applicant organizations should 
supply information for certification using as a guide ``Application for 
Certification of Organizations,'' Form DA-26. Form DA-26 may be obtained 
from the Dairy Division, Agricultural Marketing Service, United States 
Department of Agriculture, Washington, DC 20250.



Sec. 1150.274  Certification standards.

    (a) Certification of eligible organizations shall be based, in 
addition to other available information, on a factual report submitted 
by the organization, which shall contain information deemed relevant and 
specified by the Secretary for the making of such determination, 
including the following:
    (1) Geographic territory covered by the organization's active 
membership;
    (2) Nature and size of the organization's active membership 
including the total number of active milk producers represented by the 
organization;
    (3) Evidence of stability and permanency of the organization;
    (4) Sources from which the organization's operating funds are 
derived;
    (5) Functions of the organization; and
    (6) The organization's ability and willingness to further the aims 
and objectives of the Act.
    (b) The primary considerations in determining the eligibility of an 
organization shall be whether its membership consists primarily of milk 
producers who produce a substantial volume of milk, and whether the 
primary or overriding interest of the organization is in the production 
or processing of fluid milk and dairy products and promotion of the 
nutritional attributes of fluid milk and dairy products.
    (c) The Secretay shall certify any organization which he finds meets 
the criteria under this section and his determination as to eligibility 
shall be final.



Sec. 1150.275  Inspection and investigation.

    The Secretary shall have the right, at any time after an application 
is received from an organization, to examine such books, documents, 
papers, records, files, and facilities of an organization as he deems 
necessary to verify the information submitted and to procure such other 
information as may be required to determine whether the organization is 
eligible for certification.



Sec. 1150.276  Review of certification.

    Certifications issued pursuant to this subpart are subject to 
termination or suspension if the organization does not currently meet 
the certification standards. A certified organization may be requested 
at any time to supply the Dairy Division with such information as may be 
required to show that the organization continues to be eligible for 
certification. Any information submitted to satisfy a request pursuant 
to this section shall be subject to inspection and investigation as 
provided in Sec. 1150.275.



Sec. 1150.277  Listing of certified organizations.

    A copy of each certification shall be furnished by the Dairy 
Division to the respective organization. Copies also shall be filed in 
the Dairy Division where they will be available for public inspection.



Sec. 1150.278  Confidential treatment.

    All documents and other information submitted by applicant 
organizations and otherwise obtained by the Department by investigation 
or examination of books, documents, papers, records, files, or 
facilities shall be kept confidential by all employees of the 
Department. Only such information so furnished or acquired as the 
Secretary deems relevant shall be disclosed by them, and then only in 
the issuance of general statements based upon the applications of a 
number of persons, which do not identify the information furnished by 
any one person.



PARTS 1151-1159  [RESERVED]






PART 1160--FLUID MILK PROMOTION PROGRAM--Table of Contents




                   Subpart--Fluid Milk Promotion Order

                               Definitions

Sec.
1160.101  Act.

[[Page 885]]

1160.102  Department.
1160.103  Secretary.
1160.104  United States.
1160.105  Board.
1160.106  Person.
1160.107  Fluid milk product.
1160.108  Fluid milk processor.
1160.109  Milk.
1160.110  Class I price.
1160.111  Promotion.
1160.112  Research.
1160.113  Fiscal period.
1160.114  Eligible organization.
1160.115  Milk marketing area.
1160.116  [Reserved]
1160.117  Continuation referendum.

              National Fluid Milk Processor Promotion Board

1160.200  Establishment and membership.
1160.201  Term of office.
1160.202  Nominations.
1160.203  Nominee's agreement to serve.
1160.204  Appointment.
1160.205  Vacancies.
1160.206  Procedure.
1160.207  Compensation and reimbursement.
1160.208  Powers of the Board.
1160.209  Duties of the Board.
1160.210  Expenses.
1160.211  Assessments.
1160.212  Influencing governmental action.
1160.213  Adjustment of accounts.
1160.214  Charges and penalties.

               Promotion, Consumer Education and Research

1160.301  Promotion, consumer education and research.

                       Reports, Books and Records

1160.401  Reports.
1160.402  Books and records.
1160.403  Confidential treatment.

                              Miscellaneous

1160.501  Continuation referenda.
1160.502  Proceedings after suspension or termination.
1160.503  Effect of suspension, termination or amendment.
1160.504  Personal liability.
1160.505  Patents, copyrights, inventions and publications.
1160.506  Amendments.
1160.507  Report.
1160.508  Separability.

 Subpart--Procedure for Conduct of Referenda in Connection with a Fluid 
                          Milk Promotion Order

Sec.
1160.600  General.
1160.601  Definitions.
1160.602  Conduct of referendum.
1160.603  Who may vote.
1160.604  Duties of the referendum agent.
1160.605  Scheduling of referendum.
1160.606  Notice of referendum.
1160.607  Tabulation of ballots.
1160.608  Confidential information.
1160.609  Supplementary instructions.

    Authority: 7 U.S.C. 6401-6417.

    Source: 58 FR 46763, Sept. 3, 1993, unless otherwise noted.



                   Subpart--Fluid Milk Promotion Order

    Source: 58 FR 62503, Nov. 29, 1993, unless otherwise noted.

                               Definitions



Sec. 1160.101  Act.

    Act means the Fluid Milk Promotion Act of 1990, Subtitle H of Title 
XIX of the Food, Agriculture, Conservation, and Trade Act of 1990, 
Public Law 101-624, 7 U.S.C. 6401-6417, and any amendments thereto.



Sec. 1160.102  Department.

    Department means the United States Department of Agriculture.



Sec. 1160.103  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec. 1160.104  United States.

    United States means the 48 contiguous states in the continental 
United States and the District of Columbia, except that United States 
means the 50 states of the United States of America and the District of 
Columbia under the following provisions: the petition and review under 
section 1999K of the Act, enforcement under section 1999L of the Act, 
and investigations and power to subpoena under section 1999M of the Act.



Sec. 1160.105  Board.

    Board means the National Processor Advertising and Promotion Board 
established pursuant to 7 U.S.C. 6407(b)(1)

[[Page 886]]

and this subpart (hereinafter known as the National Fluid Milk Processor 
Promotion Board or Board).



Sec. 1160.106  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative or other entity.



Sec. 1160.107  Fluid milk product.

    (a) Fluid milk product means any of the following products in fluid 
or frozen form: milk, skim milk, lowfat milk, milk drinks, buttermilk, 
filled milk, and milkshake and ice milk mixes containing less than 20 
percent total solids, including any such products that are flavored, 
cultured, modified with added nonfat milk solids, concentrated (if in a 
consumer-type package), or reconstituted.
    (b) Fluid milk product does not include evaporated or condensed milk 
(plain or sweetened), evaporated or condensed skim milk (plain or 
sweetened), formulas specifically prepared for infant feeding or dietary 
use that are packaged in hermetically sealed glass or all-metal 
containers, any product that contains by weight less than 6.5 percent 
milk solids, and whey.



Sec. 1160.108  Fluid milk processor.

    (a) Fluid milk processor means any person who processes and markets 
commercially fluid milk products in consumer-type packages in the United 
States, except that the term fluid milk processor shall not include in 
each of the respective fiscal periods those persons who process and 
market not more than 500,000 pounds of such fluid milk products during 
the representative month, which shall be the first month of the fiscal 
period; Provided, however, that for the fiscal period following the 
initial fiscal period, the representative month shall be September 1995.
    (b) Any person who did not qualify as a fluid milk processor for a 
fiscal period because of the 500,000-pound limitation shall not later 
qualify as a fluid milk processor during that fiscal period even though 
the monthly volume limitation is later exceeded during that period.
    (c) Any person who qualified as a fluid milk processor for a fiscal 
period and whose monthly marketings of fluid milk products later become 
500,000 pounds or less shall no longer qualify as a fluid milk processor 
during that fiscal period beginning with the month in which the 
marketings first dropped below the volume limitation.
    (d) For the purpose of determining qualification as a fluid milk 
processor, each processor of fluid milk products shall report for the 
representative month of each fiscal period the hundredweight of fluid 
milk products processed and marketed by the processor.
[58 FR 62503, Nov. 29, 1993, as amended at 62 FR 3983, Jan. 28, 1997]



Sec. 1160.109  Milk.

    Milk means any class of cow's milk produced in the United States.



Sec. 1160.110  Class I price.

    Class I price is the price that is established for Class I milk in 
each marketing area under milk marketing orders authorized by the 
Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C. 601-
674.



Sec. 1160.111  Promotion.

    Promotion means the following activities:
    (a) Consumer Education, which means any program utilizing public 
relations, advertising or other means devoted to educating consumers 
about the desirable characteristics of fluid milk products and directed 
toward increasing the general demand for fluid milk products.
    (b) Advertising, which means any advertising or promotion program 
involving only fluid milk products and directed toward educating 
consumers about the positive attributes of fluid milk and increasing the 
general demand for fluid milk products.



Sec. 1160.112  Research.

    Research means market research to support advertising and promotion 
efforts, including educational activities, research directed to product 
characteristics, and product development, including new products or 
improved technology in production, manufacturing

[[Page 887]]

or processing of milk and the products of milk.
[62 FR 3983, Jan. 28, 1997]



Sec. 1160.113  Fiscal period.

    Fiscal period means the initial period of up to 30 months that this 
subpart is effective. Thereafter, the fiscal period shall be such annual 
period as the Board may determine, except that the Board may provide for 
a lesser or greater period as it may find appropriate for the period 
immediately after the initial fiscal period to assure continuity of 
fiscal periods until the beginning of the first annual fiscal period.
[62 FR 3983, Jan. 28, 1997]



Sec. 1160.114  Eligible organization.

    Eligible organization means an organization eligible to nominate 
members of the Board and which meets the following criteria:
    (a) Is a nonprofit organization pursuant to section 501(c) (3), (5), 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5), or (6));
    (b) Is governed by a board comprised of a majority of fluid milk 
processors; and
    (c) Represents fluid milk processors on a national basis whose 
members process more than 50 percent of the fluid milk products 
processed and marketed within the United States.



Sec. 1160.115  Milk marketing area.

    Milk marketing area means each area within which milk being marketed 
is subject to a milk marketing order issued pursuant to the Agricultural 
Marketing Agreement Act of 1937, as amended, 7 U.S.C. 601-674, or 
applicable state laws.



Sec. 1160.116  [Reserved]



Sec. 1160.117  Continuation referendum.

    Continuation referendum means that referendum among fluid milk 
processors that the Secretary shall conduct as provided in 
Sec. 1160.501.

              National Fluid Milk Processor Promotion Board



Sec. 1160.200  Establishment and membership.

    (a) There is hereby established a National Fluid Milk Processor 
Promotion Board of 20 members, 15 of whom shall represent geographic 
regions and five of whom shall be at-large members of the Board. To the 
extent practicable, members representing geographic regions shall 
represent fluid milk processing operations of differing sizes. No fluid 
milk processor shall be represented on the Board by more than one 
member. The at-large members shall include at least three fluid milk 
processors and at least one member from the general public. Except for 
the member or members from the general public, nominees appointed to the 
Board must be active owners or employees of a fluid milk processor. The 
failure of such a member to own or work for the fluid milk processor 
with whom the member was associated at the time of his or her 
appointment to the Board shall disqualify that member for membership on 
the Board in the position previously held by such member for the 
remainder of that term.
    (b) In selecting the 15 Board members who represent geographic 
regions, one member shall be selected from each of the following 
regions:

Region 1. Connecticut, Maine, Massachusetts, New Hampshire, Rhode 
Island, and Vermont.
Region 2. New York and New Jersey.
Region 3. Delaware, Maryland, Pennsylvania, Virginia, and the District 
of Columbia.
Region 4. Georgia, North Carolina and South Carolina.
Region 5. Florida.
Region 6. Ohio and West Virginia.
Region 7. Michigan, Minnesota, North Dakota, South Dakota and Wisconsin.
Region 8. Illinois and Indiana.
Region 9. Alabama, Kentucky, Louisiana, Mississippi and Tennessee.
Region 10. Texas.
Region 11. Arkansas, Iowa, Kansas, Missouri, Nebraska and Oklahoma.
Region 12. Arizona, Colorado, New Mexico, Nevada, and Utah.
Region 13. Idaho, Montana, Oregon, Washington and Wyoming.

[[Page 888]]

Region 14. Northern California which shall be composed of the Northern 
California Marketing Area and the South Valley Marketing Area as defined 
by the Stabilization and Marketing Plan, as amended, issued by the 
California Department of Food and Agriculture pursuant to the provisions 
of Chapter 2, Part 3, Division 21, of the California Food and 
Agriculture Code, effective February 3, 1992.
Region 15. Southern California which shall be composed of the Southern 
California Marketing Area as defined by the Stabilization and Marketing 
Plan, as amended, issued by the California Department of Food and 
Agriculture pursuant to the provisions of Chapter 2, Part 3, Division 
21, of the California Food and Agriculture Code, effective February 3, 
1992.
[58 FR 62503, Nov. 29, 1993, as amended at 62 FR 3983, Jan. 28, 1997]



Sec. 1160.201  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that the members appointed to the initial Board shall serve 
proportionately, for terms of one year, two years, and three years, as 
determined by the Secretary. The terms of all Board members shall expire 
upon the suspension or termination of the order except as provided in 
Sec. 1160.502.
    (b) No member shall serve more than two consecutive terms, except 
that any member who is appointed to serve for an initial term of one or 
two years shall be eligible to be reappointed for two three-year terms. 
Appointment to another position on the Board is considered a consecutive 
term.
[58 FR 62503, Nov. 29, 1993, as amended at 62 FR 3983, Jan. 28, 1997]



Sec. 1160.202  Nominations.

    Nominations for members of the Board shall be made in the following 
manner:
    (a) The Secretary shall solicit nominations for the initial Board 
from individual fluid milk processors and other interested parties, 
including eligible organizations. Fluid milk processors and other 
interested parties may submit nominations for positions on the Board for 
regions in which they are located or market fluid milk, and for at-large 
members. Eligible organizations may submit a slate of nominees for seats 
in all regions and for at-large members.
    (b) After the appointment of the initial Board, the Secretary shall 
announce at least 180 days in advance of the expiration of members' 
terms that such terms are expiring, and shall solicit nominations for 
such positions in the manner described in paragraph (a) of this section. 
Nominations for such positions should be submitted to the Secretary not 
less than 120 days prior to the expiration of members' terms.



Sec. 1160.203  Nominee's agreement to serve.

    Each nominee for Board membership must file with the Secretary at 
the time of nomination a written agreement to serve on the Board if 
appointed.



Sec. 1160.204  Appointment.

    From the nominations made pursuant to Sec. 1160.202, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided for in Secs. 1160.200 and 1160.201.



Sec. 1160.205  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
appoint a successor from the most recent list of nominations made by 
individual fluid milk processors and other interested parties, including 
eligible organizations, for the Board, or from nominations made by the 
Board.



Sec. 1160.206  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Board. Any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. The Board shall establish rules concerning timely notice of 
meetings.
    (b) The Board may take action upon the concurring votes of a 
majority of members by mail, telephone, telegraph, or other means of 
electronic communication when, in the opinion of the chairperson of the 
Board, such action must be taken before a meeting can be called. Action 
taken by this emergency procedure is valid only if all members are 
notified and provided the opportunity to vote and any telephone vote

[[Page 889]]

is confirmed promptly in writing. Any action so taken shall have the 
same force and effect as though such action had been taken at a properly 
convened meeting of the Board.



Sec. 1160.207  Compensation and reimbursement.

    The members of the Board and trustees, if any, named under 
Sec. 1160.502, shall serve without compensation but shall be reimbursed 
for necessary and reasonable expenses incurred by them in the 
performance of their duties under this subpart.



Sec. 1160.208  Powers of the Board.

    The Board shall have the following powers:
    (a) To receive and evaluate, or on its own initiative develop, and 
budget for plans or projects to educate consumers and promote the use of 
fluid milk products and to make recommendations to the Secretary 
regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (e) To employ such persons as the Board deems necessary and 
determine the duties and compensation of such persons;
    (f) To contract with eligible organizations or other persons to 
conduct activities authorized pursuant to this subpart;
    (g) To select committees and subcommittees of the Board members, to 
adopt bylaws, and to adopt such rules for the conduct of its business as 
it may deem advisable;
    (h) To recommend to the Secretary amendments to this subpart; and
    (i) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1160.211 in, and only in, obligations 
of the United States or any agency thereof, in general obligations of 
any State or any political subdivision thereof, in any interest-bearing 
account or certificate of deposit of a bank that is a member of the 
Federal Reserve System, or in obligations fully guaranteed as to 
principal and interest by the United States.



Sec. 1160.209  Duties of the Board.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson, who may serve for a term of a fiscal 
period pursuant to Sec. 1160.113, and not more than two consecutive 
terms, and to select such other officers as may be necessary;
    (b) To prepare and submit to the Secretary for approval a budget for 
each fiscal period of the anticipated expenses and disbursements in the 
administration of this subpart, including a description of and the 
probable costs of consumer education, promotion and research projects;
    (c) To develop and submit to the Secretary for approval promotion 
and consumer education, and research plans or projects;
    (d) To the extent practicable, carry out consumer education and 
promotion programs under Sec. 1160.301 in such a manner as to ensure 
that advertising coverage in each of the regions defined in 
Sec. 1160.200 is proportionate to funds collected from each such region;
    (e) To disseminate information to fluid milk processors or eligible 
organizations;
    (f) To maintain minutes, books and records that accurately reflect 
all of the acts and transactions of the Board, which shall be available 
to the Secretary for inspection and audit, and prepare and promptly 
report minutes of each Board meeting to the Secretary and submit such 
reports from time to time to the Secretary as the Secretary may 
prescribe, and to account with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g) To enter into contracts or agreements, with the approval of the 
Secretary, with such persons and organizations as the Board may approve 
for the development and conduct of activities authorized under this 
subpart and for the payment of the cost thereof with funds collected 
through assessments

[[Page 890]]

pursuant to Sec. 1160.211 and income from such assessments. Any such 
contract or agreement shall provide that:
    (1) The contractors shall develop and submit to the Board a plan or 
project together with a budget(s) showing the estimated cost of such 
plan or project;
    (2) Any such plan or project shall be adopted upon approval of the 
Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
transactions and make periodic reports to the Board of all activities 
conducted pursuant to the contract or agreement, and provide accounts of 
all funds received and expended, and such other reports as the Secretary 
or the Board may require. The Secretary or employees of the Board 
periodically may audit the records of the contracting parties;
    (h) For the initial fiscal period, the Board shall contract, to the 
extent practicable and subject to the approval of the Secretary, with an 
eligible organization to carry out the provisions of this subpart;
    (i) To prepare and make public, at least annually, a report of its 
activities and an accounting for funds received and expended;
    (j) To have an audit of its financial statements conducted by a 
certified public accountant in accordance with generally accepted 
auditing standards, at the end of the first 15 months of the initial 
fiscal period, at the end of the initial fiscal period, and at least 
once each fiscal period thereafter as well as at such other times as the 
Secretary may request, and to submit a copy of each such audit report to 
the Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
and committees of the Board, including actions conducted under 
Sec. 1160.206(b), as is given to such Board or committee members in 
order that the Secretary, or a representative of the Secretary, may 
attend such meetings;
    (l) To submit to the Secretary such information pursuant to this 
subpart as may be requested;
    (m) The Board shall take reasonable steps to coordinate the 
collection of assessments, and promotion, education, and research 
activities of the Board, with the National Dairy Promotion and Research 
Board established under section 113(b) of the Dairy Production 
Stabilization Act of 1983 (7 U.S.C. 4504(b)); and
    (n) The Board shall conduct advertising using third parties only 
through contracts which shall prohibit the third party from selling, 
offering for sale, or otherwise making available advertising time or 
space to private industry members conducting brand-name advertising 
which immediately precedes, follows, appears in juxtaposition, or 
appears in the midst of Board-sponsored advertising.
[58 FR 62503, Nov. 29, 1993, as amended at 61 FR 27003, May 30, 1996; 62 
FR 3983, Jan. 28, 1997]



Sec. 1160.210  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve) as the Secretary finds are 
reasonable and likely to be incurred by the Board for its 
administration, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart; except that, 
after the Board's first year, it shall not spend on its administration 
more than 5 percent of the assessments collected during any fiscal 
period subsequent to the initial fiscal period. Such administrative 
expenses shall be paid from assessments collected pursuant to 
Sec. 1160.211.
    (b) The Board shall reimburse the Secretary for administrative costs 
incurred by the Department from assessments collected pursuant to 
Sec. 1160.211.
    (c) Within 30 days after funds are remitted from Regions 14 and 15, 
the Board shall provide a grant of 80% of such funds to the entity 
authorized by the laws of the State of California to conduct an 
advertising program for fluid milk products in that State for the 
purpose of implementing a coordinated advertising program in the markets 
within those regions. Such grant shall be provided with the approval of 
the Secretary on the following conditions:
    (1) The granted funds shall be utilized to implement a fluid milk 
promotion campaign within the markets within those regions. Verification 
of the implementation of this program shall be provided to the Board.

[[Page 891]]

    (2) The Board shall ensure that the recipients of these funds 
implement a research and evaluation program to determine the effect of 
such program on consumption of fluid milk within the region.
    (3) The recipient of these funds must provide to the Board data from 
the research and evaluation programs so that the Board can determine the 
effect of the program on consumption of fluid milk.



Sec. 1160.211  Assessments.

    (a) (1) Each fluid milk processor shall pay to the Board or its 
designated agent an assessment of $.20 per hundredweight of fluid milk 
products processed and marketed commercially in consumer-type packages 
in the United States by such fluid milk processor. Producer-handlers 
required to pay assessments under section 113(g) of the Dairy Production 
Stabilization Act of 1983 (7 U.S.C. 4504(g)), and not exempt under 
Sec. 1160.108, shall also pay the assessment under this subpart. No 
assessments are required on fluid milk products exported from the United 
States. The Secretary shall have the authority to receive assessments on 
behalf of the Board.
    (2) The Secretary shall announce the establishment of the assessment 
each month in the Class I price announcement in each milk marketing area 
by adding it to the Class I price for the following month. In the event 
the assessment is suspended for a given month, the Secretary shall 
inform all fluid milk processors of the suspension in the Class I price 
announcement for that month. The Secretary shall also inform fluid milk 
processors marketing fluid milk in areas not subject to milk marketing 
orders administered by the Secretary of the establishment or suspension 
of the assessment.
    (3) Each processor responsible for remitting an assessment shall 
remit it to the Board not later than the last day of the month following 
the month that the assessed milk was marketed.
    (b) Such assessments shall not:
    (1) Reduce the prices paid under the Federal milk marketing orders 
issued under section 8c of the Agricultural Adjustment Act (7 U.S.C. 
608c), reenacted with amendments by the Agricultural Marketing Agreement 
Act of 1937;
    (2) Otherwise be deducted from the amounts that handlers must pay to 
producers for fluid milk products sold to a processor; or
    (3) Otherwise be deducted from the price of milk paid to a producer 
by a handler, as determined by the Secretary.
    (c) Money remitted to the Board or the Board's designated agent 
shall be in the form of a negotiable instrument made payable to the 
Board or its agent, as the case may be. Processors must mail remittances 
and reports specified in Secs. 1160.108, 1160.211(a)(1), 1160.213, 
1160.214, and 1160.401 to the location designated by the Board or its 
agent.
[58 FR 62503, Nov. 29, 1993, as amended at 62 FR 3983, Jan. 28, 1997]



Sec. 1160.212  Influencing governmental action.

    No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action, except to recommend to the Secretary amendments to this subpart.



Sec. 1160.213  Adjustment of accounts.

    Whenever the Board or the Secretary determines through an audit of a 
processor's reports, records, books or accounts or through some other 
means that additional money is due the Board or to such processor from 
the Board, the Board shall notify that person of the amount due or 
overpaid. If the processor owes money to the Board, it shall remit that 
amount by the next date for remitting assessments as provided in 
Sec. 1160.211. If the processor has overpaid, that amount shall be 
credited to its account and applied against amounts due in succeeding 
months.



Sec. 1160.214  Charges and penalties.

    (a) Late-payment charge. Any unpaid assessments shall be increased 
1.5 percent each month beginning with the day following the date such 
assessments were due. Any remaining amount due, which shall include any 
unpaid charges previously made pursuant to this section, shall be 
increased at the same rate on the corresponding day of each month 
thereafter until

[[Page 892]]

paid. For the purpose of this section, any assessment determined at a 
date later than prescribed by this subpart because of the failure of a 
processor to submit a report to the Board when due shall be considered 
to have been payable by the date it would have been due if the report 
had been filed when due. The receipt of a payment by the Board will be 
based on the earlier of the postmark date or the actual date of receipt.
    (b) Penalties. The Secretary may assess any person who violates any 
provision of this subpart a civil penalty of not less than $500 nor more 
than $5,000 for each such violation. In the case of a willful failure to 
pay an assessment as required by this subpart, in addition to the amount 
due, the Secretary may assess an additional penalty of not less than 
$10,000 nor more than $100,000 for each such violation. The amount of 
any such penalty shall accrue to the United States, which may recover 
such amount in a civil suit. The remedies provided in this section are 
in addition to, and not exclusive of, other remedies that may be 
available by law or in equity.

               Promotion, Consumer Education and Research



Sec. 1160.301  Promotion, consumer education and research.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any plans or projects 
authorized in Secs. 1160.208 and 1160.209. Such plans or projects shall 
provide for:
    (1) The establishment, issuance, effectuation, and administration of 
consumer education, promotion and research activities with respect to 
fluid milk products; and
    (2) The evaluation of consumer education, promotion and research 
activities implemented under the direction of the Board, and the 
communication of such evaluation to fluid milk processors and the 
public.
    (b) The Board shall periodically review or evaluate each plan or 
project authorized under Sec. 1160.301(a) to ensure that it contributes 
to an effective program of promotion, consumer education and research. 
If the Board finds that any such plan or project does not further the 
purposes of the Act, the Board shall terminate that plan or project.
    (c) No plan or project authorized under Sec. 1160.301(a) may employ 
unfair or deceptive acts or practices with respect to the quality, value 
or use of any competing product.
    (d) No plan or project authorized under Sec. 1160.301(a) may make 
use of a brand or trade name of a fluid milk product, except that this 
paragraph does not preclude the Board from offering program material to 
commercial parties to use under such terms and conditions as the Board 
may prescribe, subject to approval by the Secretary.

                       Reports, Books and Records



Sec. 1160.401  Reports.

    Each fluid milk processor marketing milk and paying an assessment 
under Sec. 1160.211 shall be required to report upon the remittance of 
such assessments such information as the Board or the Secretary may 
require. Such information shall include but not be limited to the 
following:
    (a) The quantity of fluid milk products marketed that is subject to 
the collection of the assessment;
    (b) The amount of assessment remitted;
    (c) The reason, if necessary, why the remittance is less than the 
number of hundredweights of milk multiplied by 20 cents; and
    (d) The date any assessment was paid.



Sec. 1160.402  Books and records.

    Each person subject to this subpart shall maintain and make 
available for inspection by agents of the Board and the Secretary such 
books and records as are necessary to carry out the provisions of this 
subpart and the regulations issued hereunder, including such records as 
are necessary to verify any reports required. Such books and records 
shall be retained for at least two years beyond the fiscal period of 
their applicability.



Sec. 1160.403  Confidential treatment.

    (a) All persons, including agents and former agents of the Board, 
all officers and employees and all former officers

[[Page 893]]

and employees of the Department, and all officers and all employees and 
all former officers and employees of contracting agencies having access 
to commercial or financial information obtained from such books, records 
or reports under the Act and this subpart shall keep such information 
confidential, and not make it available to Board members. Only those 
persons, as determined by the Secretary, who have a specific need for 
such information in order to effectively administer the provisions of 
this subpart shall have access to such information. In addition, they 
shall disclose only that information the Secretary deems relevant, and 
then only in a suit or administrative hearing brought at the discretion, 
or upon the request, of the Secretary, or to which the Secretary or any 
officer of the United States is a party, and involving this subpart. 
Nothing in this section, however, shall be deemed to prohibit:
    (1) The issuance of general statements based upon the reports of the 
number of processors, individuals, groups of individuals, partnerships, 
corporations, associations, cooperatives, or other entities subject to 
this subpart or statistical data collected from such sources, which 
statements do not identify the information furnished by any such 
parties, and
    (2) The publication, at the direction of the Secretary, of the name 
of any processor, individuals, group of individuals, partnership, 
corporation, association, cooperative, or other entity that has been 
adjudged to have violated this subpart, together with a statement of the 
particular provisions of the subpart so violated.
    (b) Except as otherwise provided in this subpart, information 
obtained under this subpart may be made available to another agency of 
the Federal Government for a civil or criminal law enforcement activity 
if the activity is authorized by law and if the head of the agency has 
made a written request to the Secretary specifying the particular 
information desired and the law enforcement activity for which the 
information is sought.
    (c) Any person violating this section, on conviction, shall be 
subject to a fine of not more than $1,000 or to imprisonment for not 
more than 1 year, or both, and if such person is an agent of the Board 
or an officer or employee of the Department shall be removed from 
office.
    (d) Nothing in this subsection authorizes the Secretary to withhold 
information from a duly authorized committee or subcommittee of 
Congress.

                              Miscellaneous



Sec. 1160.501  Continuation referenda.

    (a) The Secretary at any time may conduct a referendum among those 
persons who the Secretary determines were fluid milk processors during a 
representative period, as determined by the Secretary, on whether to 
suspend or terminate the order. The Secretary shall hold such a 
referendum at the request of the Board or of any group of such 
processors that marketed during a representative period, as determined 
by the Secretary, 10 percent or more of the volume of fluid milk 
products marketed in the United States by fluid milk processors voting 
in the preceding referendum.
    (b) Any suspension or termination of the order on the basis of a 
referendum conducted pursuant to this section must be favored:
    (1) By at least 50 percent of the fluid milk processors voting in 
the referendum; and
    (2) By fluid milk processors voting in the referendum that marketed 
during a representative period, as determined by the Secretary, 40 
percent or more of the volume of fluid milk products marketed in the 
United States by fluid milk processors voting in the referendum.
    (c) If the Secretary determines that the suspension or termination 
of the order is favored in the manner set forth in Sec. 1160.501(b), the 
Secretary shall take such action within 6 months of such determination.
[58 FR 62503, Nov. 29, 1993, as amended at 62 FR 3983, Jan. 28, 1997]



Sec. 1160.502  Proceedings after suspension or termination.

    (a) Upon the suspension or termination of this subpart, the Board 
shall recommend to the Secretary not more than five of its members to 
serve as

[[Page 894]]

trustees for the purpose of liquidating the affairs of the Board. Once 
the Secretary has designated such members as trustees, they shall become 
trustees of all the funds and property that the Board owns, possesses, 
or controls, including unpaid and undelivered property or any other 
unpaid claim existing at the time of such termination. The actions of 
such trustees shall be subject to approval by the Secretary.
    (b) The said trustees shall:
    (1) Serve as trustees until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements that it entered pursuant to Secs. 1160.208 and 1160.209;
    (3) Account for all receipts and disbursements and deliver to any 
person designated by the Secretary all property on hand, together with 
all books and records of the Board and the trustees; and
    (4) At the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in the Secretary's 
designee full title and right to all of the funds, property, and claims 
of the Board or the trustees.
    (c) The Secretary's designee shall be subject to the same 
obligations with respect to funds, property or claims transferred or 
delivered pursuant to this subpart as the Board and the trustees.
    (d) The Board, the trustees or the Secretary's designee shall 
deliver to the Secretary any residual funds not required to pay 
liquidation expenses, which funds may be used, to the extent 
practicable, to continue one or more of the promotion, research or 
nutrition education plans or projects authorized pursuant to this 
subpart.



Sec. 1160.503  Effect of suspension, termination or amendment.

    Unless otherwise expressly provided by the Secretary, the suspension 
or termination of this subpart or of any regulation issued pursuant 
hereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability of the 
Board or its trustees which shall have arisen or which may hereafter 
arise in connection with any provision of this subpart or any regulation 
issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person, with respect to any such violation.



Sec. 1160.504  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly, in any way whatsoever to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission by such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec. 1160.505  Patents, copyrights, inventions and publications.

    Any patents, copyrights, trademarks, inventions or publications 
developed through the use of funds collected under the provisions of 
this subpart are the property of the United States Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications, inure to the benefit of the Board. Section 1160.502 
governs the disposition of all such property upon suspension or 
termination of this subpart.



Sec. 1160.506  Amendments.

    The Secretary may from time to time amend provisions of this 
subpart. Any interested person or organization affected by the 
provisions of the Act may propose amendments to the Secretary.



Sec. 1160.507  Report.

    The Secretary shall provide annually for an independent evaluation 
of the effectiveness of the fluid milk promotion program carried out 
under this subtitle during the previous fiscal year, in conjunction with 
the evaluation of the National Dairy Promotion and Research Board 
established under section 113(b) of the Dairy Production Stabilization 
Act of 1983 (7 U.S.C. 4504(b)).

[[Page 895]]



Sec. 1160.508  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or any circumstances is held 
invalid, such declaration or holding shall not offset the validity of 
the remainder of this subpart or the applicability thereof to other 
persons or circumstances.



 Subpart--Procedure for Conduct of Referenda in Connection with a Fluid 
                          Milk Promotion Order



Sec. 1160.600  General.

    Referenda to determine whether eligible fluid milk processors favor 
the issuance, continuance, termination or suspension of a Fluid Milk 
Promotion Order authorized by the Fluid Milk Promotion Act of 1990 shall 
be conducted in accordance with this subpart.



Sec. 1160.601  Definitions.

    As used in this subpart:
    (a) Act means the Fluid Milk Promotion Act of 1990 (Subtitle H of 
Title XIX of the Food, Agriculture, Conservation, and Trade Act of 1990, 
Pub. L. 101-624, 7 U.S.C. 6401-6417) and any amendments thereto.
    (b) Department means the United States Department of Agriculture.
    (c) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    (d) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (e) Order means a Fluid Milk Promotion Order, and any amendments 
thereto, authorized by the Act.
    (f) Board means the National Fluid Milk Processor Promotion Board 
established pursuant to the Act.
    (g) Assessment means the monies that are collected and remitted to 
the Board pursuant to the Act.
    (h) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative association or other entity.
    (i) Fluid milk processor means any person who is defined as a fluid 
milk processor under the order, or under the proposed order on which the 
initial referendum is held.
    (j) Referendum agent means the person designated by the Secretary to 
conduct the referendum.
    (k) Representative period means the period designated by the 
Secretary pursuant to Sections 1999N and 1999O of the Act.



Sec. 1160.602  Conduct of referendum.

    (a) The referendum shall be conducted by mail in the manner 
prescribed in this subpart. The referendum agent may utilize such 
personnel or agencies of the Department as are deemed necessary by the 
Administrator. There shall be no voting except within the time specified 
by the referendum agent.
    (b) The referendum agent shall mail to each fluid milk processor 
that has properly registered to participate in the referendum:
    (1) A ballot containing a description of the question(s) upon which 
the referendum is being held;
    (2) Instructions for completing the ballot; and
    (3) A statement as to the time within which the ballot must be 
mailed to the referendum agent.



Sec. 1160.603  Who may vote.

    (a) Each person who was a fluid milk processor during the 
representative period, as determined by the Secretary, and who at the 
time of voter registration and when voting is processing and marketing 
commercially fluid milk products in consumer-type packages in the United 
States shall be entitled to vote in a referendum, and no such person 
shall be refused a ballot. Any person casting more than one ballot with 
conflicting votes shall thereby invalidate all ballots cast by such 
person in such referendum. Each person voting shall have registered with 
the referendum agent prior to the voting period. Each ballot cast shall 
contain a certification by the person casting the ballot

[[Page 896]]

that such person is qualified to vote. All information required on the 
ballot pertinent to the identification of the person voting must be 
supplied and certified to as being correct in order for the ballot to be 
valid.
    (b) Voting by proxy or agent will not be permitted. However, the 
ballot of a fluid milk processor who is other than an individual may be 
cast by a person who is duly authorized to do so, and such ballot shall 
contain a certification by such person that the entity on whose behalf 
the ballot is cast was a fluid milk processor during the representative 
period. All information required on the ballot pertinent to the 
identification of the fluid milk processor on whose behalf the ballot is 
cast must be supplied and certified to as being correct in order for the 
ballot to be valid.



Sec. 1160.604  Duties of the referendum agent.

    The referendum agent, in addition to any other duties imposed by 
this subpart, shall:
    (a) For the purpose of adjusting the rate of assessment, determine 
and publicly announce prior to the voting period the total volume of 
fluid milk products marketed by all processors of fluid milk in the 
United States during the representative period and the portion of such 
volume that must be represented by those fluid milk processors voting in 
favor of the question included on the ballot if the referendum question 
is to pass.
    (b)(1) Within 12 days after the deadline for registering to vote in 
the referendum, the referendum agent shall make available upon request a 
list of those fluid milk processors that properly registered. Any 
challenge of a processor's eligibility to vote must be received by the 
referendum agent within 17 days of the deadline for voter registration.
    (2) If the voting eligibility of any fluid milk processor is 
challenged within the timeframe specified in Sec. 1160.604(b)(1), the 
referendum agent shall review the challenge and make a final 
determination regarding the processor's eligibility to vote.
    (3) Prior to the time of mailing ballots to fluid milk processors, 
the referendum agent shall prepare a final list of eligible voters and 
make such list available upon request.
    (c) Verify the eligibility of all persons voting in the referendum 
by reviewing all ballots cast to assure that each ballot:
    (1) Was mailed within the prescribed time;
    (2) Contains all certifications required attesting to the 
eligibility of the person to vote, and that the person voting filed with 
the referendum agent prior to the voting period the advance registration 
required pursuant to Sec. 1160.606(a)(1); and
    (3) Was completed with respect to all necessary information 
pertinent to the identification of the person voting so that additional 
verification can be conducted by the referendum agent to substantiate 
the eligibility of each such person to vote.
    (d) Conduct further verification, as necessary, to determine the 
eligibility of each person to vote. Such verification may be completed 
by reviewing readily available sources of information, including the 
following:
    (1) Records of the Department;
    (2) Fluid milk processors' records; and
    (3) Any other reliable sources of information which may be available 
to the referendum agent.
    (e) Further verify ballots to avoid a duplication of votes. The 
following criteria shall serve as a guide:
    (1) Each fluid milk processor that is other than an individual shall 
be regarded as one person for voting purposes;
    (2) No more than one vote may be cast on behalf of any one fluid 
milk processor; and
    (3) In the event that more than one individual claim the right to 
vote and cast a ballot for a fluid milk processor, concurring votes of 
such individuals shall be treated as one vote while any conflicting 
votes shall thereby invalidate all ballots cast by such individuals.
[58 FR 62503, Nov. 29, 1993, as amended at 62 FR 3983, Jan. 28, 1997]



Sec. 1160.605  Scheduling of referendum.

    A referendum shall be held:
    (a) Whenever prescribed by the order;

[[Page 897]]

    (b) For the purpose of adjusting the rate of assessment:
    (1) At the direction of the Secretary; or
    (2) Upon request of the Board or upon request of any group of fluid 
milk processors that marketed during a representative period, as 
determined by the Secretary, 10 percent or more of the volume of fluid 
milk products marketed by all processors of fluid milk in the United 
States during that period; or
    (c) For the purpose of suspending or terminating the order:
    (1) At the direction of the Secretary; or
    (2) Upon request of the Board or upon request of any group of fluid 
milk processors that marketed during a representative period, as 
determined by the Secretary, 10 percent or more of the volume of fluid 
milk products marketed by fluid milk processors voting in the preceding 
referendum.
[62 FR 3984, Jan. 28, 1997]



Sec. 1160.606  Notice of referendum.

    The referendum agent shall provide at least 30 days' notice of any 
referendum authorized by the Act by:
    (a) Mailing to each known person processing fluid milk products a 
notice of referendum, which shall include:
    (1) An advance registration form to be filed with the referendum 
agent prior to the voting period by any person choosing to vote in the 
referendum, with a statement as to the time within which the 
registration form must be mailed to the referendum agent;
    (2) A copy of the final rule, when applicable;
    (3) A sample ballot containing a description of the question(s) upon 
which the referendum is being held; and
    (4) Rules for participating in the referendum, including a statement 
as to the time within which the ballot must be mailed to the referendum 
agent; and
    (b) Giving public notice of the referendum:
    (1) By furnishing press releases and other information to available 
media of public information (including but not limited to press, radio, 
and television facilities) announcing the time within which ballots must 
be completed and mailed to the referendum agent, eligibility 
requirements, required certifications to cast a valid ballot, where 
additional information, ballots and instructions may be obtained, and 
other pertinent information; and
    (2) By such other means as the referendum agent may deem advisable.



Sec. 1160.607  Tabulation of ballots.

    (a) The referendum agent shall verify the validity of all ballots 
cast in accordance with the instructions and requirements specified in 
Secs. 1160.602 through 1160.606. Ballots that are not valid shall be 
marked ``disqualified'' with a notation on the ballot as to the reason 
for the disqualification.
    (b) The total number of ballots cast, including the disqualified 
ballots, shall be ascertained. The number of ballots cast approving, the 
number of ballots cast disapproving, and the pounds of fluid milk 
products distributed during the representative period by the processors 
represented in each grouping of ballots, shall also be ascertained. The 
ballots marked ``disqualified'' shall not be considered as approving or 
disapproving, and the persons who cast such ballots shall not be 
regarded as participating in the referendum.
    (c) The referendum agent shall notify the Administrator of the 
number of ballots cast, the count of the votes, the number of 
disqualified ballots, and the volume of fluid milk products associated 
with the ballots cast as prescribed in Sec. 1160.607(b). The referendum 
agent shall seal the ballots and transmit to the Administrator a 
complete detailed report of all actions taken in connection with the 
referendum and all other information furnished to or compiled by the 
referendum agent.
    (d) Announcement of the results of the referendum will be made only 
at the direction of the Secretary. The referendum agent or others who 
assist in the referendum shall not disclose the results of the 
referendum or the total number of ballots and votes cast.



Sec. 1160.608  Confidential information.

    The ballots cast, the identity of any person who voted, or the 
manner in which any person voted and all information furnished to, 
compiled by, or in the possession of the referendum agent,

[[Page 898]]

except the list of eligible voters, shall be regarded as confidential.



Sec. 1160.609  Supplementary instructions.

    The Administrator is authorized to issue instructions and to 
prescribe forms and ballots, not inconsistent with the provisions of 
this subpart, to govern the conduct of referenda by referendum agents.



PARTS 1161-1199  [RESERVED]



[[Page 899]]


                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected



[[Page 901]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 1998)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2--[Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)
        II  Federal Claims Collection Standards (General 
                Accounting Office--Department of Justice) (Parts 
                100--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Advisory Committee on Federal Pay (Parts 1400--1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
       VII  Advisory Commission on Intergovernmental Relations 
                (Parts 1700--1799)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)

[[Page 902]]

      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                          Title 6--[Reserved]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Consumer Service, Department of Agriculture 
                (Parts 210--299)

[[Page 903]]

       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
      XIII  Northeast Dairy Compact Commission (Parts 1300--1399)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  [Reserved]
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)

[[Page 904]]

     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--499)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Meat and Poultry 
                Inspection, Department of Agriculture (Parts 300--
                599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
        XI  United States Enrichment Corporation (Parts 1100--
                1199)
        XV  Office of the Federal Inspector for the Alaska Natural 
                Gas Transportation System (Parts 1500--1599)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)

[[Page 905]]

      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Thrift Depositor Protection Oversight Board (Parts 
                1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700-1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Export Administration, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)

[[Page 906]]

            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)

[[Page 907]]

        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development, International 
                Development Cooperation Agency (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  United States Information Agency (Parts 500--599)
        VI  United States Arms Control and Disarmament Agency 
                (Parts 600--699)
       VII  Overseas Private Investment Corporation, International 
                Development Cooperation Agency (Parts 700--799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Board for International Broadcasting (Parts 1300--
                1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

[[Page 908]]

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs and Section 202 Direct Loan Program) 
                (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--999)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Part 1001)

[[Page 909]]

       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--799)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

[[Page 910]]

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
        VI  Bureau of Mines, Department of the Interior (Parts 
                600--699)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)
      XXIX  Presidential Commission on the Assignment of Women in 
                the Armed Forces (Part 2900)

[[Page 911]]

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100-1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
       XIV  Assassination Records Review Board (Parts 1400-1499)

[[Page 912]]

             Title 37--Patents, Trademarks, and Copyrights

         I  Patent and Trademark Office, Department of Commerce 
                (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
         V  Council on Environmental Quality (Parts 1500--1599)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans 
                Employment and Training, Department of Labor 
                (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       301  Travel Allowances (Parts 301-1--301-99)
       302  Relocation Allowances (Parts 302-1--302-99)

[[Page 913]]

       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Parts 303-1--303-2)
       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Health Care Financing Administration, Department of 
                Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)

[[Page 914]]

         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  ACTION (Parts 1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
      XXII  Christopher Columbus Quincentenary Jubilee Commission 
                (Parts 2200--2299)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)

[[Page 915]]

        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  United States Information Agency (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)

[[Page 916]]

       III  Federal Highway Administration, Department of 
                Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 917]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 1998)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

ACTION                                            45, XII
Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Commission on Intergovernmental          5, VII
     Relations
Advisory Committee on Federal Pay                 5, IV
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Consumer Service                       7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alaska Natural Gas Transportation System, Office  10, XV
     of the Federal Inspector
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII

[[Page 918]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Arms Control and Disarmament Agency, United       22, VI
     States
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Assassination Records Review Board                36, XIV
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Board for International Broadcasting              22, XIII
Census Bureau                                     15, I
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Christopher Columbus Quincentenary Jubilee        45, XXII
     Commission
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Commerce Department                               44, IV
  Census Bureau                                   15, I`
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Export Administration, Bureau of                15, VII
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office                     37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 919]]

  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Enrichment Corporation, United States             10, XI
Environmental Protection Agency                   5, LIV; 40, I
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                25, III, LXXVII; 48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export Administration, Bureau of                  15, VII
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII

[[Page 920]]

Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               4, II
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II; 49, III
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Inspector for the Alaska Natural Gas      10, XV
     Transportation System, Office of
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Pay, Advisory Committee on                5, IV
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Property Management Regulations System    41, Subtitle C
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Consumer Service                         7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I, II
General Services Administration                   5, LVII
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Property Management Regulations System  41, 101, 105
  Federal Travel Regulation System                41, Subtitle F
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
     of Certain Employees
[[Page 921]]

  Relocation Allowances                           41, 302
  Travel Allowances                               41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Great Lakes Pilotage                              46, III
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Health Care Financing Administration            42, IV
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Health Care Financing Administration              42, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Information Agency, United States                 22, V
  Federal Acquisition Regulation                  48, 19
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Intergovernmental Relations, Advisory Commission  5, VII
     on
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II

[[Page 922]]

  Mines, Bureau of                                30, VI
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
  International Development, United States        22, II; 48, 7
       Agency for
  Overseas Private Investment Corporation         5, XXXIII; 22, VII
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             4, II
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training, Office of    41, 61; 20, IX
       the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Management and Budget, Office of                  5, III, LXXVII; 48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II

[[Page 923]]

Mines, Bureau of                                  30, VI
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National and Community Service, Corporation for   45, XXV
National Council on Disability                    34, XII
National Credit Union Administration              12, VII
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Dairy Compact Commission                7, XIII
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office                       37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
     Acquisition Regulation
[[Page 924]]

  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Commission on the Assignment of      32, XXIX
     Women in the Armed Forces
Presidential Documents                            3
Prisons, Bureau of                                28, V
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Depositor Protection Oversight Board       12, XV
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II; 49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X

[[Page 925]]

Transportation, Office of                         7, XXXIII
Travel Allowances                                 41, 301
Treasury Department                               5, XXI; 17, IV
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
United States Enrichment Corporation              10, XI
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training, Office of the  41, 61; 20, IX
     Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 927]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
1986, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 1986, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, and 1973-1985'' published in seven 
separate volumes.

                                  1986

7 CFR
                                                                   51 FR
                                                                    Page
Chapter X
1001.50  (a) revised...............................................12831
1002.50a  (a) revised..............................................12831
1004.50  (a) revised...............................................12831
1006.15  Amended...................................................11551
1006.50  (a) revised...............................................12831
1006.52  (a) table revised; interim................................20462
    (a) table revised..............................................26226
1007.15  (b)(1) amended.............................................1246
1007.40  (b)(4)(vi) amended.........................................1246
1007.50  (a) revised...............................................12831
1007.52  (a) and (b) revised; interim.......................20462, 26225
1007.61  (a)(3) revised; interim............................20462, 26225
1007.75  (a) revised; interim...............................20462, 26225
1011  Technical correction.........................................15876
1011.7  (a)(2) suspended in part...................................44265
1011.50  (a) revised...............................................12831
1011.52  (a) revised; interim...............................20462, 26226
1012.50  (a) revised...............................................12831
1012.52  (a) table revised; interim.........................20463, 26226
1013.50  (a) revised...............................................12832
1013.52  (a) table revised; interim.........................20463, 26226
1030.50  (a) revised...............................................12832
1032.13  (b)(2) temporarily suspended in part......................15753
1032.50  (a) revised...............................................12832
1032.52  (a)(1), (2)(i) and (ii), (3), and (4) and (b) revised; 
        (a)(2)(iii) added; interim.................................27153
1033.6  (a), (b), and (c) revised; (d) and (e) added; interim......27154
1033.51  (a) revised...............................................12832
1033.53  (a)(1), (2), and (3) revised; (a)(4) redesignated as 
        (a)(5) and revised; new (a)(4) added; interim..............27154
1036.7  (d) revised; (f) added.....................................30326
1036.13  (e) and (f) introductory text, (1)(ii), and (2)(ii) 
        revised....................................................30326
1036.50  (a) revised...............................................12832
1040.7  (b)(2) temporarily suspended in part.......................15754
1040.50  (a) revised...............................................12832
1044.51  (a) revised...............................................12832
1046.50  (a) revised...............................................12832
1046.52  (a) revised; interim...............................20463, 26226
1049.50  (a) revised...............................................12832
1049.52  (a)(1) and (2) revised; interim...........................27155
1050.50  (a) revised...............................................12832
1050.52  (a) and (b) revised; interim..............................27155
1062  Removed.......................................................1361
1064.50  (a) revised...............................................12832
1064.52  (a) revised; interim......................................28688
    (a) revised; final.............................................44591
1065.7  (c) temporarily suspended in part..........................22924
    (b) temporarily amended........................................30205

[[Page 928]]

1065.13  (d)(2) and (3) temporarily amended.................22272, 32624
1065.50  (a) revised...............................................12832
1068.50  (a) revised...............................................12832
1075.51  (a) revised...............................................12833
1076.13  (c)(2) and (3) temporarily suspended......................27156
1076.50  (a) revised...............................................12833
1079.7  (b) temporarily amended....................................33565
1079.13  (d) (2) and (3) temporarily suspended in part.............33873
1079.50  (a) revised...............................................12833
1093.50  (a) revised...............................................12833
1093.52  (a)(1) table revised; (a)(2), (3), (4), and (6) amended; 
        interim.............................................20463, 26226
1094.2  Amended; interim....................................20464, 26227
1094.7  (c) amended................................................11552
    (c) temporarily suspended in part..............................15755
1094.50  (a) revised...............................................12833
1094.52  (a)(1) table revised; (a)(2)(i), (ii), and (iii), (3), 
        and (5) amended; interim............................20464, 26227
1096.50  (a) revised...............................................12833
1096.52  (a) revised; interim...............................20464, 26227
1097.7  (b) temporarily suspended..................................40783
1097.50  (a) revised...............................................12833
1097.52  Revised...................................................20956
1098.50  (a) revised...............................................12833
1098.52  (a) revised; interim...............................20464, 26227
1099.50  (a) revised...............................................12833
1099.52  (a) revised; interim...............................20464, 26228
1102  Existing regulations unchanged...............................44591
1102.50  (a) revised...............................................12833
1106.2  Revised; interim...........................................28688
    Revised; final.................................................44591
1106.7  (c) temporarily amended.....................................6731
    (c) introductory text temporarily suspended in part.............7247
    (b)(1) temporarily suspended in part....................11298, 15756
1106.50  (a) revised...............................................12833
1106.52  (a) revised; interim......................................28689
    (a) revised; final.............................................44591
    (a)(6) introductory text correctly added; (a)(8)(i) corrected 
                                                                   45575
    (a)(8)(i) correctly designated.................................46746
1108.50  (a) revised...............................................12833
1108.52  (a) revised; interim......................................28689
    (a) revised....................................................44592
    (a)(1)(iii) corrected..........................................45575
1120.50  (a) revised...............................................12833
1124.2  Revised.....................................................7743
1124.9  (b) introductory text revised...............................7743
1124.11  (a) and (b) revised........................................7743
1124.33  Added......................................................7743
1124.46  (a)(4) and (5)(i) revised..................................7744
1124.51  (a) revised...............................................12833
1124.82  (c)(1) and (2) revised; (c)(3) added.......................7744
1125.50  (a) revised...............................................12834
1126.50  (a) revised...............................................12834
1126.52  (a) revised; interim......................................28690
    (a) revised; final.............................................44593
1131.50  (a) revised...............................................12834
1132.50  (a) revised...............................................12834
1134.50  (a) revised...............................................12834
1135  Heading corrected............................................15876
1135.7  (a)(2) amended; (b) introductory text revised..............12835
1135.13  (f) (1) through (5) revised...............................12835
1135.50  (a) revised........................................12834, 12836
1136.7  (a) temporarily suspended in part....................8642, 31760
1136.13  (c)(2) temporarily suspended; (c)(3) and (4) temporarily 
        suspended in part...........................................2670
    (c) (2), (3), and (4) temporarily suspended in part............19822
1136.50  (a) revised...............................................12834
1137.7  (b) temporarily suspended in part....................1362, 34947
1137.12  (a)(1) temporarily suspended in part.........1362, 10611, 32057
    (a)(1) suspended in part.......................................42820
1137.50  (a) revised...............................................12834
1138.50  (a) revised...............................................12834
1139.13  (d)(2) temporarily suspended in part.......................8643
1139.50  (a) revised...............................................12834

                                  1987

7 CFR
                                                                   52 FR
                                                                    Page
Chapter X
1002.3  Revision at 50 FR 45596 removed............................48795
1002.51  (c) revision at 50 FR 45596 removed.......................48795
1004.2  (d)(2)(ii) and (e) revisions at 50 FR 45596 removed........48795

[[Page 929]]

1004.12  (d) temporarily suspended in part.........................34764
1004.52  (a) revision at 50 FR 45596 removed.......................48795
1004.75  Revision at 50 FR 45596 removed...........................48795
1006.52  (a) table revised..........................................5071
1007.52  (a) and (b) revised........................................5071
1007.61  (a)(3) revised.............................................5071
1007.73  (a)(2) introductory text revised...........................5071
1007.75  (a) revised................................................5071
1011.7  (a)(2) revised.............................................26470
1011.52  (a) revised................................................5071
1012.52  (a) table revised..........................................5072
1013.52  (a) table revised..........................................5072
1030  Existing regulations unchanged................................3413
1030.52  (b) revised...............................................39612
1030.55  Added.....................................................39612
    (b) corrected..................................................42760
1030.60  (c), (f), and (g) amended; (h) added......................39613
1032.7  (d)(2) revised..............................................3216
1032.52  (a)(1), (2) (i) and (ii), (3), and (4), and (b) revised; 
        (a)(2)(iii) added...........................................3413
1033.6  (a), (b), and (c) revised; (d) and (e) added................3414
1033.41  (b)(3) and (c)(1) revised.................................30887
1033.53  (a) (1), (2), and (3) revised; (a)(4) redesignated as 
        (a)(5) and republished; new (a)(4) added....................3414
1036.2  (a), (b), and (c) revised; (d) removed.......................242
1036.15  Revised...................................................30887
1036.40  (b)(3) and (c)(1) revised.................................30888
1036.50  (a) amended.................................................242
1036.52  (a) and (b) revised.........................................242
1040.7  (b)(1) introductory text temporarily suspended in part; 
        (b)(1)(i) temporarily suspended............................11456
    (b)(2) introductory text temporarily suspended in part; (b)(2) 
(i) and (ii) temporarily suspended.................................18340
    (b) introductory text, (1), (2), (3) and (4) revised; (b)(6) 
added..............................................................30888
1040.13  (d) (1) and (2) revised...................................30889
1040.40  (b)(3), (c)(1) (ii), (iv), (v) and (vii) revised..........30888
1040.50  (b)(1) amended............................................30889
1046.9  (c) amended................................................17748
1046.52  (a) revised................................................5072
1049.52  (a) (1) and (2) revised....................................3414
1050.52  (a) and (b) revised........................................3415
1065.7  (c) temporarily suspended in part..........................25204
    (b) temporarily amended........................................32532
1065.13  (d) (2) and (3) temporarily amended..........1315, 28462, 32532
1065.52  (b)(3) amended.............................................3217
1068.7  (a)(3) added...............................................36910
1076.13  (d) (2) and (3) temporarily suspended.....................28463
1079.7  (b) temporarily amended....................................33916
1079.13  (d) (2) and (3) temporarily suspended in part.............31752
1079.52  (b)(3) amended.............................................3217
1093.52  (a)(1) table revised; (a)(2), (3), (4) and (6) amended.....5072
1094.2  Amended.....................................................5072
1094.52  (a)(1) table revised; (a)(2)(i), (ii), and (iii), (3) and 
        (5) amended.................................................5073
1096.52  (a) revised................................................5073
1097.7  (b) temporarily suspended..................................10730
1098.52  (a) revised................................................5073
1099.52  (a) revised................................................5073
1102  Removed.......................................................6318
1106.2  Amended.....................................................6318
1106.7  (c) introductory text revised; (c) temporary amendments of 
        51 FR 6731 and 7247 terminated..............................6318
1106.12  (b)(5) temporarily suspended..............................20384
1106.13  (d)(1) suspended..........................................19837
1106.52  (a)(1) table amended; (a)(3)(i) and (4) revised............6318
1124.9  (b) temporarily suspended in part..........................43316
1137.7  (b) temporarily suspended in part..........................35396
1137.12  (a)(1) temporarily suspended in part...............10732, 42271

                                  1988

7 CFR
                                                                   53 FR
                                                                    Page
Chapter X
1002.90  Amended...................................................48516
    Corrected......................................................49966

[[Page 930]]

1004.61  (b) (3) and (7) amended; eff. 2-1-89......................50916
1004.105  Removed; eff. 3-31-89....................................50916
1004.106  Removed; eff. 3-31-89....................................50916
1004.110--1004.122  Removed; eff. 3-31-89..........................50916
1007.7  (e)(3) revised; (e)(4) added...............................48518
1030.4  Revised....................................................26759
1030.6  Revised....................................................26759
1030.7  Revised....................................................26759
    (b) introductory text and (4)(i)(B) corrected..................27798
1030.13  (a) amended; (d) (3) and (6) removed; (d) (4), (5), and 
        (7) redesignated as (d) (3), (4), and (5); (d) (1) and (2) 
        revised....................................................26761
1030.30  (a) introductory text amended; (a)(3) revised.............26761
1032  Heading amended..............................................10058
1032.2  Revised....................................................10058
1032.3  Revised....................................................10059
1032.6  Amended....................................................10058
1032.7  Introductory text, (a), (b), and (d)(2) revised; (d)(3) 
        amended....................................................10058
1032.13  Revised...................................................10059
    (b)(2) temporarily suspended in part; (b)(3) temporarily 
suspended..........................................................11638
1032.19  Removed...................................................10059
1032.51  Amended...................................................10059
1032.52  (a) introductory text amended; (a)(2) revised.............10059
1032.75  (a) amended...............................................10059
1033.56  (a) amended; (c) added....................................21626
1046.7  (e) revised................................................21627
1046.13  (c)(4) added..............................................21627
1050.13  (d)(1) temporarily suspended in part; (d) (2), (3), (4), 
        and (5) temporarily suspended..............................10060
1064.73  (a)(3) amended; (a)(4) removed............................10357
1064.105--1064.122  Removed........................................10357
    Undesignated center heading correctly removed..................11590
1064.105--1064.107  Removed........................................10357
1064.110--1064.122  Removed........................................10357
1065.7  (c) temporarily suspended in part..........................17687
    (b) temporarily amended thru 3-89..............................35996
1065.13  (d) (2) and (3) temporarily amended.......................15360
    (d) (2) and (3) temporarily amended thru 3-89..................35996
1068.7  (d) (3) and (6) revised; (d) (4) and (5) redesignated as 
        (d) (5) and (7) and revised; new (d)(4) added..............19745
1076.13  (c)(2) and (3) temporarily suspended thru 2-89............28632
1079.7  (b) introductory text temporarily amended..................36237
1079.13  (d) (2) and (3) temporarily suspended in part.............36236
1097.7  (b) temporarily suspended...................................3735
1098.7  (d)(2) revised.............................................48517
1098.9  (c) amended................................................37730
1098.52  (a)(4) revised; (b) and (c) redesignated as (c) and (d); 
        new (b) added..............................................48517
1098.60  (g) removed...............................................48517
1098.61  (a)(2) revised............................................48517
1098.73  (c) amended...............................................37730
1098.75  Revised...................................................48517
1098.90  Amended...................................................48517
1098.92  Amended...................................................48517
1099.13  (c)(2) suspended; (c)(3) suspended in part; indefinitely 
                                                                   44854
1106.5  (c) revised................................................15796
1106.6  Temporarily suspended in part...............................9854
    Temporarily suspended in part thru 8-89........................48519
1106.7  (b)(1) temporarily suspended in part........................9854
    (b)(1) temporarily suspended in part thru 8-89.................48519
    Revised........................................................15796
1106.12  (b)(5) temporarily suspended...............................5150
1106.13  (d)(1) temporarily suspended...............................9854
1124  Revised; eff. 2-1-89.........................................52978
1124.9  (b) temporarily suspended in part..........................38284
1125  Removed; eff. 2-1-89.........................................52976
1126.7  (e) temporarily suspended in part..........................11639
    (d) introductory text and (e) introductory text temporarily 
suspended in part..................................................33103
1126.13  (e) (2) and (3) temporarily suspended in part.............11639
    (e) (1), (2), and (3) temporarily suspended in part............33103

[[Page 931]]

1126.55  Added; interim............................................26227
    Revised........................................................39445
1126.60  (h) revised; interim......................................26228
    (h) revised....................................................39445
1135.13  (f) (3), (4), (5), and (6) suspended......................50918
1136  Removed.......................................................4590
1137.7  (b) temporarily suspended in part..........................39447
1137.12  (a)(1) temporarily suspended in part......................39447
1139  Revised.......................................................4590
1139.5  Corrected...................................................6916
1139.30  (b) corrected..............................................6916
1139.40  (c)(5) corrected...........................................6916
1139.42  (a) introductory text and (c)(2), (d)(2)(ii)(a), (b) and 
        (c) corrected...............................................6916
1139.50  (e) corrected..............................................6916
1139.52  (b) corrected..............................................6916
1139.77  Corrected..................................................6916

                                  1989

7 CFR
                                                                   54 FR
                                                                    Page
Chapter X
1006.7  Revised.....................................................6383
1006.13  (b) revised................................................6383
1006.40  (b)(6) revised; (b)(7) removed.............................6384
1006.41  Revised....................................................6384
1006.50  (b) introductory text revised; interim....................49956
1006.51  Amended....................................................6384
1006.52  (c) added..................................................6384
1006.53  Revised; interim..........................................49956
1006.60  (h) removed................................................6384
1006.75  (b) revised................................................6384
1006.78  Revised....................................................6384
1007.50  (b) introductory text revised; interim....................49956
1007.53  Revised; interim..........................................49956
1011.50  (b) introductory text revised; interim....................49956
1011.53  Revised; interim..........................................49956
1012.7  Revised.....................................................6384
1012.13  (b) revised................................................6385
1012.40  (b)(6) revised; (b)(7) removed.............................6385
1012.41  Revised....................................................6385
1012.50  (b) introductory text revised; interim....................49957
1012.51  Amended....................................................6386
1012.52  (c) added..................................................6386
1012.53  Revised; interim..........................................49957
1012.60  (h) removed................................................6386
1012.75  (b) revised................................................6386
1012.78  Revised....................................................6386
1013.7  Revised.....................................................6386
1013.12  Revised....................................................6386
1013.13  (b) revised................................................6386
1013.40  (b)(6) revised; (b)(7) removed.............................6387
1013.41  Revised....................................................6387
1013.50  Introductory text and (c) revised..........................6387
    (b) introductory text revised; interim.........................49957
1013.51  Amended....................................................6387
1013.52  (c) added..................................................6387
1013.53  Revised; interim..........................................49957
1013.60  (h) removed................................................6387
1013.73  (a) (1) and (2) amended....................................6387
1013.75  (b) revised................................................6388
1013.78  Revised....................................................6388
1013.50  (b) introductory text revised; interim....................49957
1030.2  (b)(1) amended; eff. 1-1-90................................53526
1030.50  (b) introductory text revised; interim....................49957
1030.53  Revised; interim..........................................49957
1032.7  (b) temporarily suspended in part; eff. 11-89 through 1-90
                                                                   48079
1032.50  (b) introductory text revised; interim....................49957
1032.53  Revised; interim..........................................49957
1033.27  (k) (1) and (3) revised; interim..........................49957
1033.51  (b) introductory text revised; interim....................49957
1036.7  (b) and (d) amended (temporary) eff. 10-89 through 2-90....46363
1036.40  (c) (1) and (3) revised...................................36753
1036.50  (b) introductory text revised; interim....................49958
1036.53  Revised; interim..........................................49958
1040.50  (b) introductory text revised; interim....................49958
1040.52  (a)(1) revised; (a)(2) amended............................29328
1040.53  Revised; interim..........................................49958
1040.74  Amended...................................................29328
1040.75  (a)(2) removed; (a)(3) revised............................29328
1046.50  (b) introductory text revised; interim....................49958

[[Page 932]]

1046.53  Revised; interim..........................................49958
1049.50  (b) introductory text revised; interim....................49958
1049.53  Revised; interim..........................................49958
1050.50  (b) introductory text revised; interim....................49958
1050.53  Revised; interim..........................................49958
1064.50  (b) introductory text revised; interim....................49959
1064.53  Revised; interim..........................................49959
1065.7  (b) introductory text amended..............................41241
1065.13  (d) (2) and (3) temporarily amended.......................15171
    (d) (2) and (3) amended........................................41241
1065.50  (b) introductory text revised; interim....................49959
1065.53  Revised; interim..........................................49959
1068.50  (b) introductory text revised; interim....................49959
1068.53  Revised; interim..........................................49959
1076.13  (c) (2) and (3) temporarily suspended.....................31799
1076.50  (b) introductory text revised; interim....................49959
1076.53  Revised; interim..........................................49959
1079.2  (a) and (b) revised; (c) and (d) added; eff. 1-1-90........53527
1079.7  (b) amended................................................41242
    (d) revised; eff. 1-1-90.......................................53527
1079.13  (d) (2) and (3) temporarily suspended in part.............40858
1079.50  (b) introductory text revised; interim....................49959
1079.52  (a)(2)(ii) revised; eff. 1-1-90...........................53528
1079.53  Revised; interim..........................................49960
1093.50  (b) introductory text revised; interim....................49959
1093.53  Revised; interim..........................................49960
1094.50  (b) introductory text revised; interim....................49960
1094.53  Revised; interim..........................................49960
1096.50  (b) introductory text revised; interim....................49960
1096.53  Revised; interim..........................................49960
1097.7  (b) removed.................................................3424
1097.50  (b) introductory text revised; interim....................49960
1097.53  Revised; interim..........................................49960
1098.50  (b) introductory text revised; interim....................49960
1098.53  Revised; interim..........................................49960
1099.50  (b) introductory text revised; interim....................49960
1099.53  Revised; interim..........................................49961
1106.12  (b)(5) temporarily suspended..............................13837
1106.13  (d)(1) temporarily suspended..............................12584
1106.50  (b) introductory text revised; interim....................49961
1106.53  Revised; interim..........................................49961
1108.50  (b) introductory text revised; interim....................49961
1108.53  Revised; interim..........................................49961
1120.50  (b) introductory text revised; interim....................49961
1120.53  Revised; interim..........................................49961
1124.2  Corrected...................................................3557
1124.7  (b)(1) corrected............................................3557
1124.17  Corrected..................................................3557
1124.40  (c)(6) corrected...........................................5587
1124.43  (b) corrected..............................................3557
1124.44  (a)(13)(i) corrected.......................................3557
    (a)(9)(ii) introductory text corrected..........................5587
1124.50  (c)(3) corrected...........................................5587
    (b) introductory text revised; interim.........................49961
1124.51a  (a) introductory text corrected...........................3557
1124.52  (a) introductory text, (c), and (d) introductory text 
        corrected...................................................3557
1124.53  Revised; interim..........................................49961
1126.7  (d) introductory text and (e) introductory text 
        temporarily suspended in part..............................32953
1126.13  (e) (1), (2), and (3) temporarily suspended in part.......32953
1126.50  (b) introductory text revised; interim....................49961
1126.53  Revised; interim..........................................49962
1131.50  (b) introductory text revised; interim....................49962
1131.53  Revised; interim..........................................49962
1132.50  (b) introductory text revised; interim....................49962
1132.53  Revised; interim..........................................49962
1134.50  (b) introductory text revised; interim....................49962
1134.53  Revised; interim..........................................49962
1135.13  (f), (3), (4), (5), and (6) temporarily suspended.........23457
1135.50  (b) introductory text revised; interim....................49962
1135.53  Revised; interim..........................................49962
1137.7  (b) suspended in part......................................41438
    Technical correction...........................................45891

[[Page 933]]

1137.12  (a)(1) temporarily suspended in part...............13668, 41438
    Technical correction...........................................45891
1137.50  (b) introductory text revised; interim....................49962
1137.53  Revised; interim..........................................49963
1138.50  (b) introductory text revised; interim....................49963
1138.53  Revised; interim..........................................49963
1139.7  (d) amended.........................................25443, 30882
1139.10  (b)(1)(ii) temporarily suspended in part..................53530
1139.13  (d)(3) amended............................................30882
    (d)(6) temporarily suspended...................................46724
1139.50  (b) introductory text revised; interim....................49963
1139.53  Revised; interim..........................................49963
1150.131  (a) (2) and (5) revised...................................6264

                                  1990

7 CFR
                                                                   55 FR
                                                                    Page
Chapter X
1001.51  Revised...................................................53278
1001.76  (b) revised...............................................53278
1002.22  (m)(2) amended.............................................3199
1002.30  Introductory text revised..................................3199
1002.50  Revised...................................................53278
1002.50a  Introductory text revised.................................3199
    Corrected.......................................................5716
1002.80  (a) through (f) redesignated as (b) through (g); new (a) 
        added; new (b) introductory text and new (c) revised........3200
1002.81  Revised...................................................53278
1002.85  Amended....................................................3200
1002.86  (a) and (b) amended........................................3200
1002.89  (f)(1) amended.............................................3200
1004.51  Revised...................................................53278
1004.74  Revised...................................................53278
1005  Added........................................................31352
1005.7  (a)(2) amended (temporary).................................43084
1005.51  Revised...................................................53279
1005.74  Revised...................................................53279
1006.50  (b) introductory text revised.............................25963
1006.51  Revised...................................................53279
1006.52  (a) amended...............................................17589
1006.53  Revised...................................................25963
1006.74  Revised...................................................53279
1007.32  (a) temporarily suspended.................................34218
1007.50  (b) introductory text revised.............................25963
1007.51  Revised...................................................53279
1007.53  Revised...................................................25963
1007.61  (a) in part and (b) temporarily suspended.................34218
1007.74  Revised...................................................53279
1011.50  (b) introductory text revised.............................25963
1011.51  Revised...................................................53279
1011.53  Revised...................................................25963
1011.74  Revised...................................................53279
1012.15  Amended...................................................18099
1012.50  (b) introductory text revised.............................25963
1012.51  Revised...................................................53280
1012.52  (a) amended...............................................17589
1012.53  Revised...................................................25963
1012.74  Revised...................................................53280
1013.50  (b) introductory text revised.............................25963
1013.51  Revised...................................................53280
1013.52  (a) amended...............................................17589
1013.53  Revised...................................................25964
1013.74  Revised...................................................53280
1030.7  (b) introductory text amended..............................41334
    (b) introductory text amended..................................51686
1030.50  (b) introductory text revised.............................25964
1030.51  Revised...................................................53280
1030.53  Revised...................................................25964
1030.74  Revised...................................................53280
1032.7  (b) temporarily suspended in part...........................2227
1032.13  (d)(2) temporarily suspended in part......................12810
1032.50  (b) introductory text revised.............................25964
1032.51  Revised...................................................53280
1032.53  Revised...................................................25964
1032.74  Revised...................................................53280
1033.27  (k)(1) and (3) revised....................................25964
1033.50  Revised...................................................53280
1033.51  (b) introductory text revised.............................25964
1033.73  Revised...................................................53281
1036.7  (b) and (d) amended (temporary) eff. 9-90 through 2-91.....35139
1036.50  (b) introductory text revised.............................25964

[[Page 934]]

1036.51  Revised...................................................53281
1036.53  Revised...................................................25964
1036.74  Revised...................................................53281
1040.50  (b) introductory text revised.............................25964
1040.51  Revised...................................................53281
1040.53  Revised...................................................25965
1040.74  Revised...................................................53281
1044.18  Removed...................................................53281
1044.22  (i)(1)(i), (ii), (iii) and (2) revised....................53281
1044.46  (c) revised...............................................53481
1044.50  Revised...................................................53281
1044.52  Removed...................................................53281
1044.61  (a) revised...............................................53281
1044.62  Revised...................................................53281
1046.50  (b) introductory text revised.............................25965
1046.51  Revised...................................................53282
1046.53  Revised...................................................25965
1046.74  Revised...................................................53282
1049.50  (b) introductory text revised.............................25965
1049.51  Revised...................................................53282
1049.53  Revised...................................................25965
1049.74  Revised...................................................53282
1050.50  (b) introductory text revised.............................25965
1050.51  Revised...................................................53282
1050.53  Revised...................................................25965
1050.74  Revised...................................................53282
1064.50  (b) introductory text revised.............................25965
1064.51  Revised...................................................53282
1064.53  Revised...................................................25965
1064.74  Revised...................................................53282
1065.50  (b) introductory text revised.............................25965
1065.51  Revised...................................................53283
1065.53  Revised...................................................25966
1065.74  Revised...................................................53283
1068.7  (a)(1) and (b) revised; (d)(1) and (2) removed; (d)(4) 
        introductory text, (i), (iv), and (5)(ii)(B) revised; 
        (d)(7) redesignated as (8); new (d)(7) added...............26635
1068.13  (d)(2) revised; (d)(4) and (5) redesignated as (d)(5) and 
        (6); new (d)(4) added......................................26636
1068.50  (b) introductory text revised.............................25966
1068.51  Revised...................................................53283
1068.53  Revised...................................................25966
1068.74  Revised...................................................53283
1068.85  Introductory text amended.................................26636
1075.22  Removed...................................................53283
1075.27  (j)(1)(i), (ii), (iii) and (2) revised....................53283
1075.46  (c) revised...............................................53283
1075.50  Revised...................................................53283
1075.52  Removed...................................................53283
1075.70  (a) revised...............................................53282
1075.71  (b) removed; (c) and (d) redesignated as (b) and (c)......53283
1075.81  Revised...................................................53283
1076.13  (c)(2), (3), and (4) removed..............................35895
1076.50  (b) introductory text revised.............................25966
1076.51  Revised...................................................53284
1076.53  Revised...................................................25966
1076.74  Revised...................................................53284
1079.7  (b) introductory text amended..............................41505
1079.13  (d)(2) and (3) temporarily suspended in part..............41182
1079.50  (b) introductory text revised.............................25966
1079.51  Revised...................................................53284
1079.53  Revised...................................................25966
1079.74  Revised...................................................53284
1093.50  (b) introductory text revised.............................25966
1093.51  Revised...................................................53284
1093.53  Revised...................................................25966
1093.74  Revised...................................................53284
1094.50  (b) introductory text revised.............................25966
1094.51  Revised...................................................53284
1094.53  Revised...................................................25966
1094.74  Revised...................................................53284
1096.50  (b) introductory text revised.............................25967
1096.51  Revised...................................................53284
1096.53  Revised...................................................25967
1096.74  Revised...................................................53285
1097.50  (b) introductory text revised.............................25967
1097.51  Revised...................................................53285
1097.53  Revised...................................................25967
1097.74  Revised...................................................53285
1098.50  (b) introductory text revised.............................25967
1098.51  Revised...................................................53285
1098.53  Revised...................................................25967
1098.74  Revised...................................................53285
1099.50  (b) introductory text revised.............................25967

[[Page 935]]

1099.51  Revised...................................................53285
1099.53  Revised...................................................25967
1099.74  Revised...................................................53285
1106.6  Suspended in part...................................11000, 41828
1106.7  (b)(1) suspended in part............................11000, 41828
1106.12  (b)(5) removed............................................11000
1106.13  (d)(1) suspended..........................................11000
1106.50  (b) introductory text revised.............................25967
1106.51  Revised...................................................53285
1106.53  Revised...................................................25968
1106.74  Revised...................................................53285
1108.50  (b) introductory text revised.............................25968
1108.51  Revised...................................................53286
1108.53  Revised...................................................25968
1108.74  Revised...................................................53286
1120.50  (b) introductory text revised.............................25968
1120.51  Revised...................................................53286
1120.53  Revised...................................................25968
1120.74  Revised...................................................53286
1124.50  (b) introductory text revised.............................25968
1124.51  Revised...................................................53286
1124.53  Revised...................................................25968
1124.74  Revised...................................................53286
1126.7  (d) introductory text and (e) introductory text 
        temporarily suspended in part..............................34678
1126.13  (e)(1), (2) and (3) temporarily suspended in part.........34678
1126.50  (b) introductory text revised.............................25968
1126.51  Revised...................................................53286
1126.53  Revised...................................................25968
1126.74  Revised...................................................53286
1131.50  (b) introductory text revised.............................25968
1131.51  Revised...................................................53287
1131.53  Revised...................................................25968
1131.74  Revised...................................................53287
1132.50  (b) introductory text revised.............................25969
1132.51  Revised...................................................53287
1132.53  Revised...................................................25969
1132.74  Revised...................................................53287
1134.50  (b) introductory text revised.............................25969
1134.51  Revised...................................................53287
1134.53  Revised...................................................25969
1134.74  Revised...................................................53287
1135.50  (b) introductory text revised.............................25969
1135.51  Revised...................................................53287
1135.53  Revised...................................................25969
1135.74  Revised...................................................53287
1137.7  (b) temporarily suspended in part..........................41061
1137.12  (a)(1) temporarily suspended in part......................41061
1137.50  (b) introductory text revised.............................25969
1137.51  Revised...................................................53287
1137.53  Revised...................................................25969
1137.74  Revised...................................................53288
1138.50  (b) introductory text revised.............................25969
1138.51  Revised...................................................53288
1138.53  Revised...................................................25969
1138.74  Revised...................................................53288
1139.10  (b)(1)(ii) temporarily suspended in part; eff. through 8-
        91.........................................................52982
1139.13  (d)(6) suspended..........................................18304
1139.50  (b) introductory text revised.............................25970
    (d) and (f) revised............................................53288
1139.51  (a) revised...............................................53288
1139.53  Revised...................................................25970

                                  1991

7 CFR
                                                                   56 FR
                                                                    Page
Chapter X
1001.5  Revised.....................................................5309
1001.5a  Removed....................................................5309
1001.5b  Removed....................................................5309
1001.5c  Removed....................................................5309
1001.6  Revised.....................................................5309
1001.7  Revised.....................................................5310
1001.8  Revised.....................................................5310
1001.9  (d) revised.................................................5311
1001.10  Revised....................................................5311
1001.12  (e) and (f) revised........................................5311
1001.14  Revised....................................................5311
1001.15  (a) introductory text and (b) introductory text amended 
                                                                    5311
1001.16  (a) and (b) revised........................................5311
1001.17  Revised....................................................5312
1001.18  Revised....................................................5312
1001.21  Added......................................................5312
1001.30  Revised....................................................5312
1001.31  Revised....................................................5312
1001.40  Revised....................................................5313
1001.41  Revised....................................................5313
1001.42  Revised....................................................5314
1001.43  Revised....................................................5315

[[Page 936]]

1001.44  Revised....................................................5315
1001.45  Revised....................................................5317
1001.46  Removed....................................................5317
1001.47  Removed....................................................5317
1001.48  Removed....................................................5317
1001.50  Revised....................................................5317
1001.51  Revised....................................................5318
1001.52  (a)(4)(ii) revised; (d) added..............................5318
1001.53  Introductory text, (f), (g) and (h)(1) revised; (e) 
        removed.....................................................5318
1001.54  Revised....................................................5319
1001.60  Revised....................................................5319
1001.61  Redesignated as 1001.62 and revised; new 1001.61 added.....5319
    (c), (d) and (e) temporarily suspended.........................13394
1001.62  Redesignated as 1001.63 and revised; new 1001.62 
        redesignated from 1001.61 and revised.......................5319
    (c) and (d) temporarily suspended..............................13394
1001.63  Redesignated from 1001.62 and revised......................5319
1001.70  Amended....................................................5320
1001.71  (a)(1) through (4) revised.................................5320
1001.73  (a) and (b) amended........................................5320
1001.74  (d)(1) through (3) amended.................................5320
1001.78  Revised....................................................5320
1001.85  (c) revised................................................5320
1002.6  Revised.....................................................5320
1002.14  (a) revised; (b) added.....................................5320
1002.15  Revised....................................................5321
1002.18  Added......................................................5321
1002.19  Added......................................................5321
1002.22  Revised....................................................5321
1002.25  Introductory text, (a)(2), (3), (c)(5), (k)(1), and (l) 
        amended; (c) introductory text, (1), and (h) revised........5321
1002.26  (a) revised................................................5322
1002.27  Nomenclature change; (c) through (j) redesignated as (d) 
        through (k); (b) introductory text, new (d), (h) 
        introductory text, (2), (3), and (i) revised; new (c) and 
        (l) added...................................................5322
1002.30  Introductory text and (d) amended; (b) revised.............5323
1002.41  Revised....................................................5323
1002.42  Revised....................................................5323
1002.44  Revised....................................................5324
1002.45  Revised....................................................5325
1002.50  Redesignated as 1002.51 and revised; new 1002.50 
        redesignated from 1002.50a and revised......................5327
1002.50a  Redesignated as 1002.50 and revised.......................5327
1002.51  Redesignated as 1002.52; new 1002.51 redesignated from 
        1002.50 and revised.........................................5327
1002.52  Redesignated from 1002.51..................................5327
    Introductory text and (e) amended; (c) revised..................5328
1002.53  Revised....................................................5328
1002.55  Revised....................................................5328
1002.56  Added......................................................5328
1002.60  Redesignated from 1002.70; nomenclature change; (a) 
        amended; (d) revised........................................5328
1002.61  Redesignated from 1002.71; (b-1) through (g) redesignated 
        as (c) through (h); introductory text, (a), (b), (e) and 
        new (h) amended.............................................5329
1002.62  Added......................................................5329
1002.70--1002.77  Undesignated center heading transferred from 
        1002.83--1002.89............................................5329
1002.70  Redesignated as 1002.60; nomenclature change; (a) 
        amended; (d) revised........................................5328
    Redesignated from 1002.83 and revised...........................5329
1002.71  Redesignated as 1002.61; (b-1) through (g) redesignated 
        as (c) through (h); introductory text, (a), (b), (e) and 
        new (h) amended; new 1002.71 redesignated from 1002.84 and 
        amended.....................................................5329
    (c) temporarily suspended......................................13394
1002.72  Redesignated from 1002.85 and amended......................5329
1002.73  Redesignated from 1002.86; (a) amended.....................5329
1002.74  Redesignated from 1002.87..................................5329
1002.75  Redesignated from 1002.88..................................5329
1002.76  Redesignated from 1002.88a and amended.....................5329

[[Page 937]]

1002.77  Redesignated from 1002.89; (l) removed.....................5329
1002.82  Revised....................................................5329
1002.83--1002.89  Undesignated center heading transferred to 
        1002.70--1002.77............................................5329
1002.83  Redesignated as 1002.70 and revised........................5329
1002.84  Redesignated as 1002.71 and amended........................5329
1002.85  Redesignated as 1002.72 and amended; new 1002.85 
        redesignated from 1002.90 and amended; undesignated center 
        heading transferred from 1002.90............................5329
1002.86  Redesignated as 1002.73; (a) amended.......................5329
1002.87  Redesignated as 1002.74....................................5329
1002.88  Redesignated as 1002.75....................................5329
1002.88a  Redesignated as 1002.76 and amended.......................5329
1002.89  Redesignated as 1002.77; (l) removed.......................5329
1002.90  Redesignated as 1002.85 and amended; undesignated center 
        heading transferred to 1002.85..............................5329
1002.102  Revised..................................................22297
1002.103--1002.127  Removed........................................22297
1002.128  Revised..................................................22297
1002.129  Revised..................................................22297
1002.140  Revised..................................................22297
1002.141  (a), (b), (e) and (f) revised............................22298
1002.142  (a) revised..............................................22298
1002.143  (a) revised..............................................22298
1002.145  Revised..................................................22298
1002.180  Revised..................................................22298
1002.220  Revised..................................................22299
1002.221  Introductory text revised................................22299
1002.222  Introductory text revised................................22299
1002.233  Revised..................................................22299
1002.242  Revised..................................................22300
1002.246  (b) revised; (c) amended.................................22300
1002.248  Revised..................................................22300
1002.249  Revised..................................................22300
1002.260  Revised..................................................22300
1004.10  (d) revised................................................5329
1004.11  Revised....................................................5329
1004.12  (a), (e), and (f)(5) revised...............................5329
1004.13  (a) revised................................................5329
1004.14  Revised....................................................5329
1004.15  Revised....................................................5330
1004.16  Added......................................................5330
1004.21  Added......................................................5330
1004.30  (a)(1) through (3) revised.................................5330
    Revised........................................................61348
1004.32  (a)(1)(iii), (2) and (d)(2) revised.......................61349
1004.40  Revised....................................................5330
1004.41  Revised....................................................5331
1004.42  Revised....................................................5331
1004.43  Revised....................................................5333
1004.44  Revised....................................................5333
1004.45  (b) amended; (c) and (d) revised...........................5335
1004.50  Revised....................................................5335
    (d), (e) and (f) added.........................................61349
1004.51  Revised....................................................5335
    (a) amended....................................................61349
1004.52  (a) amended................................................5336
1004.53  Revised....................................................5336
    Heading and (a)(3) revised.....................................61349
1004.54  Revised...................................................61349
1004.60  Undesignated center heading revised; section revised.......5336
    Revised........................................................61349
1004.61  (a)(4)(ii) and (c) amended; (a)(5) and (b) revised.........5336
    Revised........................................................61350
1004.62  Revised...................................................61351
1004.63  Undesignated center heading and section added.............61351
1004.71  (b)(2) amended; (c)(2) revised.............................5337
    (b) revised; (c) removed.......................................61351
1004.73  (a)(1) amended.............................................5337
    Redesignated as 1004.74; new 1004.73 added.....................61351
1004.74  Removed; new 1004.74 redesignated from 1004.73; (a)(2), 
        (c), (d)(2) and (e)(2) revised.............................61351
1004.75  Revised....................................................5337
    Revised........................................................61351
1004.76  (a)(1)(i) and (b)(5) revised...............................5337
    (a)(1)(i) amended; (b)(5) revised..............................61352
1004.85  (a) revised................................................5337
    (a) amended....................................................61352

[[Page 938]]

1004.86  Revised...................................................61352
1004.92  (a) amended; (e) removed...................................5337
1005.7  (a)(2) revised.............................................31858
1007.13  (b)(2), (4) and (5) temporarily suspended thru 8-31-91....13578
1007.32  (a) suspended.............................................43691
1007.61  (a) suspended in part; (b) suspended......................43691
1030.7  (b) introductory text amended..............................66954
1046.7  (a)(1), (b) and (c) revised.................................9275
1106.6  Temporarily suspended in part thru 8-31-91..................5924
1106.7  (b)(1) temporarily suspended in part thru 8-31-91...........5924
1106.9  (f) amended................................................52447
1106.13  (d)(1) temporarily suspended thru 8-31-91..................5924
1106.43  Introductory text amended.................................52447
1106.44  (a)(1) amended............................................52447
1106.52  (a) introductory text amended; (a)(6) and (7) revised; 
        (a)(8) and (9) removed.....................................52447
1120  Removed......................................................52462
1124.7  (b) introductory text temporarily amended...................2841
    (b) introductory text temporarily amended; effective through 
2-29-92............................................................46227
1126.7  (d) introductory text and (e) introductory text 
        temporarily suspended in part..............................42222
1126.13  (e)(1), (2) and (3) temporarily suspended in part.........42222
1126.50  (a) revised...............................................52447
1126.52  (a) revised...............................................52447
1132  Removed......................................................52462
1137.7  (b) suspended in part through 2-92.........................49396
1137.12  (a)(1) suspended in part through 8-92.....................49396
1138  Revised......................................................52448
1139.10  (b)(1)(ii) suspended in part through 8-92.................66780
1139.13  (d)(2) amended............................................65821
1150.153  (c) added.................................................8258

                                  1992

7 CFR
                                                                   57 FR
                                                                    Page
Chapter X
1001.40  (c)(1)(iii) revised; (d) added..............................174
1001.43  (f) added...................................................174
1001.50  (d) added...................................................174
    (d) revised; interim...........................................49635
1001.54  Revised.....................................................174
1001.62  (c) and (d) temporarily suspended.........................20958
1002.61  (d) and (e) temporarily suspended.........................20958
1004.40  (c)(1)(iii) revised; (d) added..............................175
1004.43  (d) added...................................................175
1004.50  Heading revised; (g) added..................................175
    (g) revised; interim...........................................49635
1004.53  (a)(2) revised..............................................175
1004.60  (k) added...................................................175
1004.71  (b)(2) amended..............................................175
1006.13  (b)(2) suspended..........................................61780
1007.13  (b)(4) and (5) suspended; effective through 8-31-92........3921
1007.32  (a) suspended; eff. 8-1-92 through 8-31-92................39115
1007.61  (a) suspended in part; (b) suspended; eff. 8-1-92 through 
        8-31-92....................................................39115
1012.13  (b)(2) suspended..........................................61780
1013.13  (b)(2) suspended..........................................61780
1030.7  (b)(6)(v) suspended; eff. 10-1-92 through 1-31-93..........49132
1032.7  (b) temporarily suspended in part 12-91 through 1-92........1637
1065  Marketing percentages..................................4150, 45564
1065.6  Temporarily suspended in part through 8-31-92...............4152
    Suspended in part..............................................45563
1065.7  (b)(1) temporarily suspended in part through 8-31-92........4152
    (b)(1) suspended in part.......................................45563
1065.13  (d)(1) temporarily suspended through 8-31-92...............4152
    (d)(1) suspended in part.......................................45563
1093.13  (c)(1), (2) and (4) suspended.............................31309
1096.13  (d)(3) and (4) amended....................................31636
1097.2--1097.95  Removed...........................................48450
1098.7  (d)(2)(ii) suspended in part...............................39352
    (a) suspended in part..........................................53434
1099.2--1099.86  Removed...........................................48450
1106.6  Suspended in part...........................................3276

[[Page 939]]

1106.7  (b)(1) suspended in part....................................3276
    (c) introductory text amended; eff. 10-1-92 through 9-30-94....48939
1106.13  (d)(1) suspended...........................................3276
1124.7  (b) amended; eff. 10-1-92 through 2-28-93..................47569
1124.40  (c)(1)(iii) revised; (d) added..............................175
1124.43  (e) added...................................................175
1124.50  (c) revised; (d) added......................................175
    (d) revised; interim...........................................49635
1124.53  Revised.....................................................175
1126.7  (d) introductory text and (e) introductory text suspended 
        in part 9-92 through 7-93..................................46080
1126.13  (e)(1), (2) and (3) suspended in part 9-92 through 7-93 
                                                                   46081
1137.7  (b) suspended in part 9-92 through 2-93....................45566
1137.12  Suspended in part 9-92 through 8-93.......................45566
1139.10  (b)(1)(ii) suspended in part 12-1-92 through 8-31-93......49133

                                  1993

7 CFR
                                                                   58 FR
                                                                    Page
Chapter X
1001  Marketing percentages.........................................5255
1001.17  Revised...................................................27775
1001.18  Revised...................................................27775
1001.22  Added.....................................................27775
1001.40  (b) and (c) revised.......................................27776
1001.42  Amended; (d)(2)(vi) and (vii) revised.....................27776
1001.43  (g) added.................................................27776
1001.44  (a)(5) amended; (a)(6) and (7)(i) revised.................27776
1001.45  (b) revised...............................................27777
1001.50  (d) revised...............................................63285
1001.53  (h)(1) revised............................................27777
1001.60  (d), (f) and (g) revised; (h) and (i) added...............27777
1001.61  (c) redesignated as (d); (a) and new (d) revised; new (c) 
        and (e) added..............................................27777
1001.62  (c) and (d) suspended; eff. through 11-30-93..............17947
1002  Determination................................................50511
1002.15  Revised...................................................27778
1002.18  Revised...................................................27778
1002.20  Added.....................................................27778
1002.22  (e) added.................................................27778
1002.40  Revised...................................................27778
    (d) added......................................................63285
1002.41  (c) and (d) revised.......................................27778
    (d)(1)(iii) revised; (e) added.................................63285
1002.44  (a) introductory text and (d) introductory text revised; 
        (a)(1) amended.............................................27779
1002.45  (a)(6) amended; (a)(7) and (8)(i) revised.................27779
1002.50  (e) added.................................................63285
1002.52  (c) table amended.........................................63285
1002.56  (a)(2) revised............................................63285
1002.60  (d)(2) revised; (d)(3), (4) and (e) redesignated as 
        (d)(5), (6) and (f); new (d)(3), new (4) and new (e) added
                                                                   27779
1002.61  (d) and (e) suspended; eff. through 11-30-93..............17947
    (g) and (h) revised............................................27780
1002.74  (a)(1) and (2) amended; (a)(3) added......................27780
1002.102  Revised..................................................51983
1002.140  (a) and (b) revised......................................51983
1002.141  Heading, (a), (b), (d), (e) and (f) revised..............51983
1002.143  (a)(5) revised...........................................51983
1002.160  Revised..................................................51984
1002.180  Revised..................................................51984
1002.220  (b) and (c) revised......................................51984
1002.230  Revised..................................................51984
1002.231  Revised..................................................51984
1002.232  (b) revised..............................................51984
1002.233  Revised..................................................51984
1002.234  Added....................................................51985
1002.241  (a) revised..............................................51985
1002.243  Heading and (b) revised..................................51985
1002.245  Revised..................................................51985
1002.246  Revised..................................................51985
1002.247  Heading revised; (c)(1) and (2) amended..................51985
1002.260  Heading, introductory text and (a) introductory text 
        revised....................................................51986
1004  Marketing percentages.........................................5255
1004.7  (a) suspended in part through 2-28-94......................45418
    (e) suspended in part through 2-28-94..........................52406
1004.12  (d)(2) suspended in part through 2-28-94..................52405
1004.15  Revised...................................................27780
1004.16  Revised...................................................27780
1004.22  Added.....................................................27780
1004.40  (b) and (c) revised.......................................27780

[[Page 940]]

1004.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27781
1004.43  (e) added.................................................27781
1004.44  (a)(6) amended; (a)(7) and (8)(i) revised.................27781
1004.45  (c) revised...............................................27782
1004.50  Undesignated center heading and (g) revised...............63285
1004.60  (f) and (h) revised; (l), (m) and (n) added...............27782
1004.74  (a)(2)(iii) removed; (a)(2)(iv) and (v) redesignated as 
        (a)(2)(iii) and (iv).......................................27782
1004.76  (b)(3) and (5) revised; (c) added.........................27782
1004.85  (a) revised...............................................27783
1005.15  Revised...................................................27783
1005.16  Revised...................................................27783
1005.19  Added.....................................................27783
1005.40  Revised...................................................27783
    (c)(1)(iii) revised; (d) added.................................63285
1005.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27784
1005.43  (d) added.................................................27784
    (e) added......................................................63286
1005.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) amended............27784
1005.45  (b) revised...............................................27784
1005.50  (d) added.................................................63286
1005.53  (b)(1) introductory text revised..........................27785
1005.54  Revised...................................................63286
1005.60  (d) and (f) revised; (g), (h) and (i) added...............27785
1005.76  (a)(3) and (5) revised; (c) added.........................27785
1005.85  (c) revised...............................................27785
1006.15  Revised...................................................27786
1006.16  Revised...................................................27786
1006.21  Added.....................................................27786
1006.40  Revised...................................................27786
1006.42  Revised...................................................27787
1006.43  (a) revised; (c) and (d) added............................27788
1006.44  Revised...................................................27788
1006.45  (a) amended; (b) revised..................................27790
1006.50  (c) added.................................................27790
1006.60  Revised...................................................27790
1006.76  (b)(3) and (5) revised; (c) added.........................27791
1006.85  (b) revised...............................................27791
1007.13  (b)(4) and (5) suspended in part..........................40724
1007.15  Revised...................................................27791
1007.16  Revised...................................................27791
1007.21  Added.....................................................27791
1007.32  (a) suspended; eff. 8-1-93 through 8-31-93................43068
1007.40  Revised...................................................27792
    (c)(1)(iii) revised; (d) added.................................63286
1007.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27792
1007.43  (d) added.................................................27792
    (e) added......................................................63286
1007.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27793
1007.45  (b) revised...............................................27793
1007.50  (d) added.................................................63286
1007.53  Revised...................................................63286
1007.60  (d), (f) and (g) revised; (h) and (i) added...............27793
1007.61  (a) introductory text in part and (b) suspended; eff. 8-
        1-93 through 8-31-93.......................................43068
1007.76  (a)(3) and (5) revised; (c) added.........................27793
1007.85  (b) revised...............................................27794
1011.13  (e)(3) amended; eff. through 7-31-93......................17948
1011.15  Revised...................................................27794
1011.16  Revised...................................................27794
1011.19  Added.....................................................27794
1011.40  Revised...................................................27794
    (c)(1)(iii) revised; (d) added.................................63286
1011.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27795
1011.43  (d) added.................................................27795
    (e) added......................................................63286
1011.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27795
1011.45  (b) revised...............................................27796
1011.50  (d) added.................................................63286
1011.52  (b)(1) introductory text revised..........................27796
1011.53  Revised...................................................63286
1011.60  (d),(f) and (g) revised; (h) and (i) added................27796
1011.76  (a)(3) and (5) revised; (c) added.........................27796
1011.85  (c) revised...............................................27797
1012.15  Revised...................................................27797
1012.16  Revised...................................................27797
1012.20  Added.....................................................27797
1012.40  Revised...................................................27797

[[Page 941]]

1012.42  Revised...................................................27798
1012.43  (a) revised; (c) and (d) added............................27799
1012.44  Revised...................................................27799
1012.45  (a) amended; (b) revised..................................27801
1012.50  (c) added.................................................27801
1012.60  Revised...................................................27801
1012.76  (b)(3) and (5) revised; (c) added.........................27802
1012.85  (b) revised...............................................27802
1013.15  Revised...................................................27802
1013.16  Revised...................................................27803
1013.20  Added.....................................................27803
1013.40  Revised...................................................27803
1013.42  Revised...................................................27803
1013.43  (c) and (d) added.........................................27805
1013.44  Revised...................................................27805
1013.45  (a) amended; (b) revised..................................27807
1013.50  (c) revised...............................................27807
1013.60  Revised...................................................27807
1013.76  (b)(3) and (5) revised; (c) added.........................27808
1013.85  (a)(2) revised............................................27808
1030.7  (b)(6)(v) temporarily suspended through 1-31-94............40038
    (b) introductory text amended; eff. in part to 9-30-93.........48954
1030.15  Revised...................................................27808
1030.16  Revised...................................................27808
1030.21  Added.....................................................27808
1030.40  Revised...................................................27808
    (c)(1)(iii) revised; (d) added.................................63286
1030.42  (a) amended; (d)(2)(vi) and (vii) revised.................27809
1030.43  (d) added.................................................27809
    (e) added......................................................63286
1030.44  (a)(2)(iii) added; (a)(5) amended; (a)(8)(i)(a) and (b) 
        redesignated as (a)(8)(i)(A) and (B); (a)(6), (7)(i), new 
        (8)(i)(B) and (9) revised..................................27809
1030.45  (b) revised...............................................27810
1030.50  (d) added.................................................63286
1030.52  (c)(1) and (5) revised....................................27810
1030.53  Revised...................................................63286
1030.60  (d) and (f) revised; (g) and (h) amended; (i), (j) and 
        (k) added..................................................27810
1030.76  (a)(3) and (5) revised; (c) added.........................27810
1030.85  (b) revised...............................................27811
1032.15  Revised...................................................27811
1032.16  Revised...................................................27811
1032.19  Added.....................................................27811
1032.40  Revised...................................................27811
1032.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27812
1032.43  (d) added.................................................27812
1032.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27812
1032.45  (b) revised...............................................27813
1032.60  (d), (f) and (g) revised; (h) and (i) added...............27813
1032.76  (a)(3) and (5) revised; (c) added.........................27813
1032.85  (b) revised...............................................27814
1033  Undesignated center heading removed..........................27823
1033.1  Undesignated center heading added..........................27823
1033.2  Redesignated from 1033.6...................................27814
    Undesignated center heading added..............................27823
1033.3  Redesignated from 1003.8 and amended.......................27814
1033.4  Redesignated from 1033.9...................................27814
1033.5  Redesignated as 1033.19; new 1033.5 redesignated from 
        1033.10....................................................27814
1033.6  Redesignated as 1033.2; new 1033.6 redesignated from 
        1033.11....................................................27814
1033.7  Redesignated as 1033.15....................................27814
    Redesignated from 1033.12; introductory text and (b) 
introductory text amended; (d) added...............................27815
    (b) introductory text revised; (b)(2) and (3) redesignated as 
(b)(3) and (4); new (b)(2) added; (c) introductory text and (2) 
amended............................................................43505
1033.8  Redesignated as 1033.3; new 1033.8 redesignated from 
        1033.13....................................................27814
1033.9  Redesignated as 1033.4; new 1033.9 redesignated from 
        1033.16; (b), (e) and (f) amended..........................27814
1033.10  Redesignated as 1033.5; new 1033.10 redesignated from 
        1033.17....................................................27814
1033.11  Redesignated as 1033.6....................................27814

[[Page 942]]

1033.12  Redesignated as 1033.7; new 1033.12 redesignated from 
        1033.14; (a)(2), (3) and (b)(2) amended....................27815
1033.13  Redesignated as 1033.8; new 1033.13 redesignated from 
        1033.15 and amended........................................27814
    (e)(2), (3) and (f) revised....................................43506
1033.14  Redesignated as 1033.12; new 1033.14 redesignated from 
        1033.18; (b) amended.......................................27815
1033.15  Redesignated as 1033.13; new 1033.15 redesignated from 
        1033.7 and revised.........................................27814
1033.16  Redesignated as 1033.9....................................27814
    Added..........................................................27815
1033.17  Redesignated as 1033.10...................................27814
    Redesignated from 1033.20......................................27815
1033.18  Redesignated as 1033.14...................................27815
1033.19  Removed; new 1033.19 redesignated from 1033.5.............27814
1033.20  Redesignated as 1033.17; new 1033.20 redesignated from 
        1033.21; introductory text amended.........................27815
1033.21  Redesignated as 1033.20; new 1033.21 added................27815
1033.27  Removed...................................................27815
1033.30  (a)(1)(iv), (2), (b)(1) introductory text and (2) amended
                                                                   27815
    Undesignated center heading added..............................27823
    (a)(1)(i), (3)(ii), (4) and (b) revised........................43506
1033.31  Redesignated as 1033.32; new 1033.31 redesignated from 
        former 1033.32; (b) amended................................27815
    (a)(2) and (c) revised; (b) amended............................43506
1033.32  Redesignated as 1033.31; new 1033.32 redesignated from 
        former 1033.31; (c)(4), (d)(3), (e)(4) and (g) amended.....27815
    (e)(2), (4), (5) and (f) revised...............................43506
1033.40  Removed; new 1033.40 redesignated from 1033.41 and 
        revised....................................................27815
    Undesignated center heading added..............................27823
    (c)(1)(iii) revised; (d) added.................................63287
1033.41  Redesignated as 1033.40...................................27815
    Redesignated from 1033.42 and revised..........................27816
    (c) amended....................................................43506
1033.42  Redesignated as 1033.41; new 1033.42 redesignated from 
        1033.43 and revised........................................27816
1033.43  Redesignated as 1033.42...................................27816
    Redesignated from 1033.45 and revised..........................27818
    (d) revised....................................................43507
    (f) added......................................................63287
1033.44  Added.....................................................27818
1033.45  Redesignated as 1033.43...................................27818
    Added..........................................................27820
1033.46  Removed...................................................27820
1033.50  Removed; new 1033.50 redesignated from 1033.51; 
        introductory text, (b) introductory text, (1) and (2) 
        amended....................................................27820
    Undesignated center heading added..............................27823
    Heading and introductory text revised; (d), (e) and (f) added 
                                                                   43507
    (g) added......................................................63287
1033.51  Redesignated as 1033.50; new 1033.51 added................27820
1033.51a  Removed..................................................27821
1033.52  Redesignated from 1033.53; (a) introductory text and (1) 
        amended; (b) revised.......................................27821
1033.53  Redesignated as 1033.52; new 1033.53 added................27821
    Revised........................................................43507
    (a)(2) revised.................................................63287
1033.56  Removed...................................................27821
1033.57  Redesignated as 1033.76...................................27822
1033.60--1033.61  Undesignated center heading added................27823
    Undesignated center heading revised............................43507
1033.60  Revised............................................27821, 43507
    (m) added......................................................63287
1033.61  (f)(2) amended............................................27822
    Revised........................................................43508
1033.62  Added.....................................................43508
1033.63  Added.....................................................43508
1033.64  Added.....................................................43508
1033.65  Added.....................................................43508
1033.66  Added.....................................................43509

[[Page 943]]

1033.70  (c) removed; (a) revised; (b) added.......................27822
    Undesignated center heading added..............................27823
    (b) revised....................................................43509
1033.71  (a), (b) introductory text and (1) amended; (c) 
        redesignated as (d); new (c) added; (d) introductory text 
        revised....................................................27822
    (b) introductory text and (1) revised..........................43509
1033.72  (b)(2) and (e)(2) amended.................................27822
    (b) introductory text and (d)(2) revised.......................43509
1033.74  Revised...................................................27822
1033.75  Redesignated as 1033.86...................................27822
1033.76  Redesignated as 1033.85...................................27822
    Redesignated from 1033.57; heading, (b)(3) and (5) revised; 
introductory text, (a)(1)(i) and (ii) amended; (c) added...........27822
1033.85  Redesignated from 1033.76; heading and (c) revised; (a), 
        (b) and (d)(2) amended.....................................27822
    Undesignated center heading added..............................27823
1033.86  Redesignated from 1033.75; heading revised................27822
    (a) revised....................................................43509
1036.7  (d) introductory text and (2) amended......................40725
    (b) revised....................................................43509
1036.13  (a)(3) and (b) amended; (e), (f) and (h) revised; (g) 
        removed....................................................43509
1036.15  Revised...................................................27823
1036.16  Revised...................................................27823
1036.21  Added.....................................................27823
1036.30  (a)(1)(i), (3)(ii), (4) and (b) revised...................43510
1036.31  (a)(2) and (b)(3) revised.................................43510
1036.32  (c)(2) and (d) revised....................................43510
1036.40  Revised...................................................27823
    (c)(1)(iii) revised; (d) added.................................63287
1036.41  Revised...................................................27824
    (c) amended....................................................43510
1036.42  (a)(1) amended; (c)(3)(iv) revised........................27825
1036.43  Revised...................................................27825
    (e) added......................................................63287
1036.44  (a)(1), (2), (3)(i), (5), (6), (7)(i) and (8) through 
        (15) revised; (a)(7)(iv) and (c) amended; (a)(16) removed 
                                                                   27825
1036.45  (b) revised...............................................27827
1036.50  Heading and introductory text revised; (d), (e) and (f) 
        added......................................................43510
    (g) added......................................................63287
1036.53  Revised...................................................43511
    (a)(2) revised.................................................63287
1036.60--1036.62  Undesignated center heading revised..............43511
1036.60  (d), (e) and (f) revised; (g) and (h) added...............27827
    Revised........................................................43511
    (m) added......................................................63287
1036.61  Revised...................................................43512
1036.62  Revised...................................................43512
1036.63  Added.....................................................43512
1036.64  Added.....................................................43512
1036.65  Added.....................................................43512
1036.66  Added.....................................................43512
1036.71  (b) introductory text, (1) and (c) revised................43512
1036.72  Revised...................................................43513
1036.73  (a)(2) introductory text, (b)(2), (d)(2) and (3) revised 
                                                                   43513
1036.76  (b)(3) and (5) revised; (c) added.........................27827
1036.85  (a) revised...............................................27828
    Introductory text amended......................................43513
1036.86  (a) amended...............................................43513
1040.15  Revised...................................................27828
1040.16  Revised...................................................27828
1040.19  Added.....................................................27828
1040.40  Revised...................................................27828
    (c)(1)(iii) revised; (d) added.................................63287
1040.41  (a)(2) revised............................................27829
1040.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27829
1040.43  (e) added.................................................27829
    (f) added......................................................63287
1040.44  (a)(12)(i)(a) and (b) redesignated as (a)(12)(i)(A) and 
        (B); (a)(2), (5), (6), (7)(i) through (iv), (8)(ii), (9), 
        (11), (12)(i)(B) and (ii) revised; (a)(7)(v), (8)(i) and 
        (12)(i) introductory text amended; (a)(12)(iii) and (iv) 
        added......................................................27829
1040.45  (b) revised...............................................27831
1040.50  (d) added.................................................63287
1040.53  Revised...................................................63287

[[Page 944]]

1040.60  (d), (f), (g) and (h) revised; (i) added..................27831
1040.76  (a)(3) and (5) revised; (c) added.........................27831
1040.85  (b) revised...............................................27832
1044.6  Revised....................................................27832
1044.18  Added.....................................................27832
1044.20  Added.....................................................27832
1044.21  Added.....................................................27832
1044.22  (i)(1)(iii) and (l) revised; (i)(3) added.................27832
    (i)(1)(iii) revised............................................63288
1044.40  Removed; new 1044.40 redesignated from 1044.41 and 
        revised....................................................27833
    (c)(1)(iii) revised; (d) added.................................63288
1044.41  Redesignated as 1044.40; new 1044.41 redesignated from 
        1044.42 and revised........................................27833
1044.42  Redesignated as 1044.41...................................27833
    Redesignated from 1044.43 and revised..........................27834
1044.43  Redesignated as 1044.42...................................27834
    Redesignated from 1044.45 and revised..........................27835
    (f) added......................................................63288
1044.44  Redesignated from 1044.46 and revised.....................27835
1044.45  Redesignated as 1044.43...................................27835
1044.46  Redesignated as 1044.44...................................27835
1044.50  Removed; new 1044.50 redesignated from 1044.51; 
        introductory text amended; (b) revised; (c) added..........27837
    (d) added......................................................63288
1044.51  Redesignated as 1044.50; new 1044.51 added................27837
1044.60  (a), (b), (c) introductory text, (1) and (2) amended......27838
1044.63  Amended...................................................27838
1044.71  Revised...................................................27838
1046.15  Revised...................................................27838
1046.16  Revised...................................................27838
1046.19  Added.....................................................27838
1046.40  Revised...................................................27838
    (c)(1)(iii) revised; (d) added.................................63288
1046.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27839
1046.43  (d) added.................................................27839
    (e) added......................................................63288
1046.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27839
1046.45  (b) revised...............................................27840
1046.50  (d) added.................................................63288
1046.53  Revised...................................................63288
1046.60  (d), (f) and (g) revised; (h) and (i) added...............27840
1046.76  (a)(3) and (5) revised; (c) added.........................27840
1046.85  (b) revised...............................................27840
1049.3  Revised....................................................43513
1049.6  Revised....................................................43513
1049.7  (a) and (b) revised; (c) redesignated as (d); new (c) 
        added......................................................43513
1049.13  Revised...................................................43514
1049.15  Revised...................................................27841
1049.16  Revised...................................................27841
1049.19  Added.....................................................27841
1049.30  (a)(1), (6) and (c) revised...............................43514
1049.31  (a)(3) and (4) revised....................................43515
1049.32  (a) and (b) designation removed; amended..................43515
1049.40  Revised...................................................27841
    (c)(1)(iii) revised; (d) added.................................63288
1049.41  (c) amended...............................................43515
1049.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27842
1049.43  (d) added.................................................27842
    (e) added......................................................63288
1049.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27842
1049.45  (b) revised...............................................27842
1049.50  Heading, introductory text and (a) revised; (d), (e) and 
        (f) added..................................................43515
    (g) added......................................................63288
1049.52  (a) and (b) revised.......................................43515
1049.53  Revised...................................................43515
    (a)(2) revised.................................................63288
1049.60--1049.62  Undesignated center heading revised..............43515
1049.60  (d) and (f) revised; (g), (h) and (i) added...............27842
    Revised........................................................43516
    (l) added......................................................63288
1049.61  Revised...................................................43516
1049.62  Revised...................................................43517
1049.63  Added.....................................................43517
1049.64  Added.....................................................43517

[[Page 945]]

1049.65  Added.....................................................43517
1049.66  Added.....................................................43517
1049.71  (a)(1) and (2) revised....................................43517
1049.73  (a)(2) amended; (c)(2)(ii) and (d)(2) revised.............43517
1049.75  Revised...................................................43518
1049.76  (a)(3) and (5) revised; (c) added.........................27843
1049.78  Revised...................................................43518
1049.85  (b) revised...............................................27843
1049.86  (a) amended...............................................43518
1050.15  Revised...................................................27843
1050.16  Revised...................................................27843
1050.19  Added.....................................................27844
1050.40  Revised...................................................27844
1050.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27844
1050.43  (d) added.................................................27845
1050.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27845
1050.45  (b) revised...............................................27845
1050.60  (d), (f) and (g) revised; (h) and (i) added...............27845
1050.76  (a)(3) and (5) revised; (c) added.........................27846
1050.85  (b) revised...............................................27846
1064.15  Revised...................................................27846
1064.16  Revised...................................................27846
1064.19  Added.....................................................27846
1064.40  Revised...................................................27846
1064.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27847
1064.43  (d) added.................................................27847
1064.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27847
1064.45  (b) revised...............................................27848
1064.60  (d) and (f) revised; (g), (h) and (i) added...............27848
1064.76  (a)(3) and (5) revised; (c) added.........................27848
1064.85  (b) revised...............................................27849
1065.15  Revised...................................................27849
1065.16  Revised...................................................27849
1065.19  Added.....................................................27849
1065.40  Revised...................................................27849
    (c)(1)(iii) revised; (d) added.................................63288
1065.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27850
1065.43  (d) added.................................................27850
    (e) added......................................................63289
1065.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27850
1065.45  (b) revised...............................................27850
1065.50  (d) added.................................................63289
1065.52  (d)(1) revised............................................27851
1065.53  Revised...................................................63289
1065.60  (d) and (f) revised; (g), (h) and (i) added...............27851
1065.76  (a)(3) and (5) revised; (c) added.........................27851
1065.85  (b) revised...............................................27851
1068.15  Revised...................................................27852
1068.16  Revised...................................................27852
1068.19  Added.....................................................27852
1068.40  Revised...................................................27852
    (c)(1)(iii) revised; (d) added.................................63289
1068.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27853
1068.43  (e) added.................................................27853
    (f) added......................................................63289
1068.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27853
1068.45  (b) revised...............................................27853
1068.50  (d) added.................................................63289
1068.53  Revised...................................................63289
1068.60  (d) and (f) revised; (g) amended; (h), (i) and (j) added 
                                                                   27853
1068.76  (a)(3) and (5) revised; (c) added.........................27854
1068.85  (d) revised...............................................27854
1075  Determination................................................50511
1075.1--1075.23  Undesignated center heading removed; new 
        undesignated center heading added..........................27865
1075.2  Redesignated from 1075.6...................................27855
    Undesignated center heading removed; new undesignated center 
heading added......................................................27865
1075.3  Redesignated from 1075.20 and amended......................27855
1075.5  Redesignated as 1075.18; new 1075.5 redesignated from 
        1075.9.....................................................27855
1075.6  Redesignated as 1075.2; new 1075.6 redesignated from 
        1075.10 and amended........................................27855

[[Page 946]]

1075.7  Removed; new 1075.7 redesignated from 1075.12; (c) added 
                                                                   27855
1075.8  Redesignated as 1075.12; new 1075.8 redesignated from 
        1075.13....................................................27855
1075.9  Redesignated as 1075.5; new 1075.9 redesignated from 
        1075.14....................................................27855
1075.10  Redesignated as 1075.6; new 1075.10 redesignated from 
        1075.15....................................................27855
1075.11  Removed...................................................27855
1075.12  Redesignated as 1075.7; new 1075.12 redesignated from 
        1075.8 and revised.........................................27855
1075.13  Redesignated as 1075.8; new 1075.13 redesignated from 
        1075.17 and revised........................................27855
1075.14  Redesignated as 1075.9; new 1075.14 redesignated from 
        1075.19 and revised........................................27855
1075.15  Redesignated as 1075.10; new 1075.15 redesignated from 
        1075.18 and revised........................................27855
1075.16  Revised...................................................27855
1075.17  Redesignated as 1075.13; new 1075.17 redesignated from 
        1075.23....................................................27855
1075.18  Redesignated as 1075.15; new 1075.18 redesignated from 
        1075.5.....................................................27855
1075.19  Redesignated as 1075.14...................................27855
    Added..........................................................27856
1075.20  Redesignated as 1075.3....................................27855
    Added..........................................................27856
1075.22  Removed...................................................27855
1075.23  Redesignated as 1075.17...................................27855
1075.27  Removed...................................................27855
1075.30--1075.31  Undesignated center heading removed..............27865
1075.30  Revised...................................................27856
    Undesignated center heading added..............................27865
1075.31  Heading revised; (a) removed; (b) redesignated as (a) and 
        amended; new (b) added.....................................27856
1075.32  Added.....................................................27856
1075.40--1075.46  Undesignated center heading removed..............27865
1075.40  Removed; new 1075.40 redesignated from 1075.41 and 
        revised....................................................27857
    Undesignated center heading added..............................27865
1075.41  Redesignated as 1075.40; new 1075.41 redesignated from 
        1075.42 and revised........................................27857
1075.42  Redesignated as 1075.41...................................27857
    Redesignated from 1075.44 and revised..........................27858
1075.43  Redesignated from 1075.45 and revised.....................27859
1075.44  Redesignated as 1075.42...................................27858
    Redesignated from 1075.46 and revised..........................27859
1075.45  Redesignated as 1075.43...................................27859
    Added..........................................................27861
1075.46  Redesignated as 1075.44...................................27859
1075.50--1075.54  Undesignated center heading removed..............27865
1075.50  Removed; new 1075.50 redesignated from 1075.51; 
        introductory text amended; (b) revised; (c) added..........27861
    Undesignated center heading added..............................27865
1075.51  Redesignated as 1075.50...................................27861
    Added..........................................................27862
1075.52  Redesignated from 1075.53 and revised.....................27862
1075.53  Redesignated as 1075.52; new 1075.53 added................27862
1075.60  Removed; new 1075.60 redesignated from 1075.70............27862
    Revised........................................................27863
    Undesignated center heading added..............................27865
1075.61  Removed; new 1075.61 redesignated from 1075.72 and 
        revised....................................................27863
1075.62  Redesignated as 1075.76; new 1075.62 added................27863
1075.70--1075.72  Undesignated center heading removed..............27865
1075.70  Redesignated as 1075.60...................................27862
    Redesignated from 1075.83 and revised..........................27863

[[Page 947]]

    Undesignated center heading added..............................27865
1075.71  Removed; new 1075.71 redesignated from 1075.84............27863
    Revised........................................................27864
1075.72  Redesignated as 1075.61...................................27863
    Redesignated from 1075.85 and revised..........................27864
1075.73  Redesignated from 1075.80; heading revised; (a) and (b) 
        amended....................................................27864
1075.74  Redesignated from 1075.81.................................27864
1075.75  Redesignated from 1075.82; heading revised; (a) and (b) 
        amended....................................................27864
1075.76  Redesignated from 1075.62.................................27863
    Revised........................................................27864
    Corrected......................................................64110
1075.77  Added.....................................................27865
1075.80--1075.88  Undesignated center heading removed..............27865
1075.80  Redesignated as 1075.73...................................27864
1075.81  Redesignated as 1075.74...................................27864
1075.82  Redesignated as 1075.75...................................27864
1075.83  Redesignated as 1075.70...................................27863
1075.84  Redesignated as 1075.71...................................27863
1075.85  Redesignated as 1075.72...................................27864
    Redesignated from 1075.88 and revised; undesignated center 
heading added......................................................27865
1075.86  Removed...................................................27865
1075.87  Removed...................................................27865
1075.88  Redesignated as 1075.85...................................27865
1076.15  Revised...................................................27865
1076.16  Revised...................................................27865
1076.19  Added.....................................................27866
1076.40  Revised...................................................27866
1076.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27866
1076.43  (d) added.................................................27867
1076.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27867
1076.45  (b) revised...............................................27867
1076.52  (b)(1) revised............................................27867
1076.60  (d) and (f) revised; (g), (h) and (i) added...............27867
1076.76  (a)(3) and (5) revised; (c) added.........................27868
1076.85  (b) revised...............................................27868
1079.15  Revised...................................................27868
1079.16  Revised...................................................27868
1079.19  Added.....................................................27868
1079.40  Revised...................................................27868
    (c)(1)(iii) revised; (d) added.................................63289
1079.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27869
1079.43  (d) added.................................................27869
    (e) added......................................................63289
1079.44  (a)(2), (5), (6), (7)(i) and (9) revised; (a)(7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27869
1079.45  (b) revised...............................................27870
1079.50  (d) added.................................................63289
1079.52  (d)(1) revised............................................27870
1079.53  Revised...................................................63289
1079.60  (d) and (f) revised; (g) amended; (h), (i) and (j) added 
                                                                   27870
1079.76  (a)(3) and (5) revised; (c) added.........................27870
1079.85  (d) revised...............................................27871
1093.15  Revised...................................................27871
1093.16  Revised...................................................27871
1093.19  Added.....................................................27871
1093.40  Revised...................................................27871
    (c)(1)(iii) revised; (d) added.................................63289
1093.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27872
1093.43  (d) added.................................................27872
    (e) added......................................................63289
1093.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27872
1093.45  (b) revised...............................................27873
1093.50  (d) added.................................................63289
1093.52  (b)(1) introductory text revised..........................27873
1093.53  Revised...................................................63290
1093.60  (d), (f) and (g) revised; (h) and (i) added...............27873
1093.76  (a)(3) and (5) revised; (c) added.........................27873
1093.85  (c) revised...............................................27874
1094.15  Revised...................................................27874
1094.16  Revised...................................................27874
1094.19  Added.....................................................27874

[[Page 948]]

1094.40  Revised...................................................27874
    (c)(1)(iii) revised; (d) added.................................63290
1094.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27875
1094.43  (d) added.................................................27875
    (e) added......................................................63290
1094.44  (a)(2),(6),(7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27875
1094.45  (b) revised...............................................27876
1094.50  (d) added.................................................63290
1094.52  (b)(1) introductory text revised..........................27876
1094.53  Revised...................................................63290
1094.60  (d), (f) and (h) revised; (g) amended; (i) and (j) added 
                                                                   27876
1094.76  (a)(3) and (5) revised; (c) added.........................27876
1094.85  (c) revised...............................................27877
1096.7  (d)(3) suspended in part through 5-31-95...................63032
1096.15  Revised...................................................27877
1096.16  Revised...................................................27877
1096.19  Added.....................................................27877
1096.40  Revised...................................................27877
    (c)(1)(iii) revised; (d) added.................................63290
1096.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27878
1096.43  (d) added.................................................27878
    (e) added......................................................63290
1096.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27878
1096.45  (b) revised...............................................27878
1096.50  (d) added.................................................63290
1096.52  (b)(1) revised............................................27878
1096.53  Revised...................................................63290
1096.60  (d), (f) and (g) revised; (h) and (i) added...............27879
1096.76  (a)(3) and (5) revised; (c) added.........................27879
1096.85  (a) revised...............................................27879
1097.2--1097.95  Reinstated.........................................6679
    Removed........................................................35361
1098.2--1098.94  Removed...........................................35362
1098.61  (a) suspended in part and (b) suspended through 7-30-93 
                                                                   40727
1099  Referendum order.............................................35362
1099.2--1099.86  Reinstated.........................................6691
1099.15  Revised...................................................43519
1099.16  Revised...................................................43519
1099.19  Added.....................................................43519
1099.40  Revised...................................................43519
    (c)(1)(iii) revised; (d) added.................................63290
1099.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............43520
1099.43  (d) added.................................................43520
    (e) added......................................................63290
1099.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) and (11) introductory text amended............43520
1099.45  (b) revised...............................................43521
1099.50  (d) added.................................................63290
1099.53  Revised...................................................63290
1099.60  (d), (f) and (g) revised; (h) and (i) added...............43521
1099.76  (a)(3) and (5) revised; (c) added.........................43521
1099.85  (b) revised...............................................43522
1106.6  Suspended in part...........................................8896
    Suspended in part; eff. 10-1-93 through 1-30-94................60543
1106.7  (b)(1) and (2) suspended in part............................8896
    (b)(1) suspended in part; eff. 10-1-93 through 1-30-94.........60543
1106.13  (d)(1) suspended through 8-31-93..........................14308
1106.15  Revised...................................................27879
1106.16  Revised...................................................27880
1106.19  Added.....................................................27880
1106.40  Revised...................................................27880
    (c)(1)(iii) revised; (d) added.................................63290
1106.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27881
1106.43  (d) added.................................................27881
    (e) added......................................................63291
1106.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27881
1106.45  (b) revised...............................................27881
1106.50  (d) added.................................................63291
1106.52  (b)(1) revised............................................27881
1106.53  Revised...................................................63291
1106.60  (d) and (f) revised; (g) amended; (h), (i) and (j) added 
                                                                   27881
1106.76  (a)(3) and (5) revised; (c) added.........................27882
1106.85  (c) revised...............................................27882
1108.15  Revised...................................................27882
1108.16  Revised...................................................27882
1108.19  Added.....................................................27883
1108.32  (b)(1)(ii) amended........................................36861

[[Page 949]]

1108.40  Revised...................................................27883
    (c)(1)(iii) revised; (d) added.................................63291
1108.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27883
1108.43  (d) added.................................................27884
    (e) added......................................................63291
1108.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27884
1108.45  (b) revised...............................................27884
1108.50  (d) added.................................................63291
1108.52  (b)(1) revised............................................27884
1108.53  Revised...................................................63291
1108.60  (d) and (f) revised; (g) amended; (h), (i) and (j) added 
                                                                   27884
1108.61  Heading, (a) introductory text and (6) amended; (b) 
        removed....................................................36861
1108.73  (a)(2) amended; (c)(2)(ii) removed........................36861
1108.75  (a) amended...............................................36861
1108.76  (a)(3) and (5) revised; (c) added.........................27885
1108.85  (c) revised...............................................27885
1108.90  Removed...................................................36861
1108.91  Removed...................................................36861
1108.92  Removed...................................................36861
1108.93  Removed...................................................36861
1108.94  Removed...................................................36861
1108.95  Removed...................................................36861
1108.96  Removed...................................................36861
1124  Marketing percentages.........................................5255
1124.15  Revised...................................................27885
1124.16  Revised...................................................27885
1124.20  Added.....................................................27885
1124.40  (a), (b) and (c) revised..................................27886
1124.42  (a)(1) amended; (d)(2)(vi) and (vii) revised; (e) removed
                                                                   27886
1124.43  (f) added.................................................27886
1124.44  (a)(6) amended; (a)(7), (8)(i) and (10) revised...........27887
1124.45  (b) revised...............................................27887
1124.50  (d) revised...............................................63291
1124.52  (d)(1) revised............................................27887
1124.60  (d) and (f) revised; (g) redesignated as (j); new (g), 
        (h) and (i) added..........................................27887
1124.76  (b)(3) and (4) revised; (c) added.........................27887
1124.85  (b) revised...............................................27888
1126.7  (d) introductory text and (e) introductory text suspended 
        in part through 7-31-95....................................40729
1126.13  (e)(1), (2) and (3) suspended in part through 7-31-95.....40729
1126.15  Revised...................................................27888
1126.16  Revised...................................................27888
1126.21  Added.....................................................27888
1126.40  Revised...................................................27888
    (c)(1)(iii) revised; (d) added.................................63291
1126.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27889
1126.43  (d) added.................................................27889
    (e) added......................................................63291
1126.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27889
1126.45  (b) revised...............................................27890
1126.50  (d) added.................................................63291
1126.52  (b)(1) introductory text revised..........................27890
1126.53  Revised...................................................63292
1126.60  (d) and (f) revised; (g) and (h) amended; (i), (j) and 
        (k) added..................................................27890
1126.76  (a)(3) and (5) revised; (c) added.........................27890
1126.85  (c) revised...............................................27891
1131.15  Revised...................................................27891
1131.16  Revised...................................................27891
1131.19  Added.....................................................27891
1131.40  Revised...................................................27891
    (c)(1)(iii) revised; (d) added.................................63292
1131.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27892
1131.43  (d) added.................................................27892
    (e) added......................................................63292
1131.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27892
1131.45  (b) revised...............................................27892
1131.50  (d) added.................................................63292
1131.53  Revised...................................................63292
1131.60  (d) and (f) revised; (g), (h) and (i) added...............27893
1131.76  (a)(3) and (5) revised; (c) added.........................27893
1131.85  (a)(2) revised............................................27893
1134.15  Revised...................................................27893
1134.16  Revised...................................................27894
1134.20  Added.....................................................27894
1134.40  Revised...................................................27894

[[Page 950]]

1134.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27895
1134.43  (d) added.................................................27895
1134.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27895
1134.45  (b) revised...............................................27895
1134.60  (d), (f) and (g) revised; (h) and (i) added...............27895
1134.76  (a)(3) and (5) revised; (c) added.........................27896
1134.85  (b) revised...............................................27896
1135.15  Revised...................................................27896
1135.16  Revised...................................................27896
1135.20  Added.....................................................27896
1135.40  Revised...................................................27897
    (c)(1)(iii) revised; (d) added.................................63292
1135.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27897
1135.43  (d) added.................................................27897
    (e) added......................................................63292
1135.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27898
1135.45  (b) revised...............................................27898
1135.50  (d) added.................................................63292
1135.53  Revised...................................................63292
1135.60  (d) and (f) revised; (g), (h) and (i) added...............27898
1135.76  (a)(3) and (5) revised; (c) added.........................27898
1135.85  (b) revised...............................................27899
1137.7  (b) suspended in part through 2-94.........................40730
1137.12  (a)(1) suspended in part through 8-94.....................40730
1137.15  Revised...................................................27899
1137.16  Revised...................................................27899
1137.20  Added.....................................................27899
1137.40  Revised...................................................27899
1137.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27900
1137.43  (d) added.................................................27900
1137.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27900
1137.45  (b) revised...............................................27901
1137.60  (d), (f) and (g) revised; (h) and (i) added...............27901
1137.76  (a)(3) and (5) revised; (c) added.........................27901
1137.85  (b) revised...............................................27902
1138.7  (a)(1) and (c) suspended in part; eff. through 9-30-95.....57962
1138.13  (d)(1), (2) and (5) suspended; eff. through 9-30-95.......57962
1138.15  Revised...................................................27902
1138.16  Revised...................................................27902
1138.21  Added.....................................................27902
1138.40  Revised...................................................27902
    (c)(1)(iii) revised; (d) added.................................63292
1138.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27903
1138.43  (d) added.................................................27903
    (e) added......................................................63292
1138.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27903
1138.45  (b) revised...............................................27903
1138.50  (d) added.................................................63292
1138.54  Revised...................................................63292
1138.60  (d) and (f) revised; (g) amended; (h), (i) and (j) added 
                                                                   27904
1138.76  (a)(3) and (5) revised; (c) added.........................27904
1138.85  (c) revised...............................................27904
1139.10  (b)(1)(ii) revised........................................32435
1139.13  (d)(1) and (2) revised....................................32435
1139.15  Revised...................................................27904
1139.16  Revised...................................................27905
1139.21  Added.....................................................27905
1139.40  Revised...................................................27905
1139.42  (a)(1) amended; (d)(2)(vi) and (vii) revised..............27905
1139.43  (d) added.................................................27906
1139.44  (a)(2), (6), (7)(i) and (9) revised; (a)(5), (7)(v), 
        (8)(i), (ii) introductory text and (11) introductory text 
        amended....................................................27906
1139.45  (b) revised...............................................27906
1139.50  (d), (e) and (f) revised..................................32436
1139.53  Revised...................................................32436
1139.60  (e) and (g) revised; (j), (k) and (l) added...............27906
1139.61  (a) amended...............................................27907
1139.71  (a) introductory text revised; (c) added..................32436
1139.72  Revised...................................................32436
1139.74  (c) introductory text and (e) revised.....................32436
1139.75  (a) revised...............................................32436
1139.76  (a)(1)(iii) and (v) revised; (c) added....................27907

[[Page 951]]

1139.85  (b) revised...............................................27907
1160  Added........................................................46763
    Subpart (1160.101-1160.508) added..............................62503

                                  1994

7 CFR
                                                                   59 FR
                                                                    Page
Chapter X
Chapter  X Policy statement........................................51083
1001  Clarification................................................42422
1001.62  (c) and (d) removed.......................................16512
1002  Clarification................................................42422
1002.61  (d) and (e) removed.......................................16512
1004  Clarification................................................42422
1004.7  (a) and (e) stayed in part; eff. 9-1-94 through 2-28-95....49344
1004.12  (d) introductory text stayed in part; (d)(1) and (2) 
        stayed; eff. 9-1-94 through 2-28-95........................49344
1005  Clarification................................................42422
1005.7  (d)(3) stayed in part; eff. 3-1-94 through 2-28-95.........15318
1006  Clarification................................................42422
1007  Clarification................................................42422
1007.7  (e)(3) stayed in part and (e)(4) stayed; eff. 3-1-94 
        through 2-28-95............................................15318
1007.32  (a) stayed; eff. 7-1-94 to 8-31-94.........................6869
1007.61  (a) stayed in part and (b) stayed; eff. 7-1-94 to 8-31-94
                                                                    6869
1011  Clarification................................................42422
1011.7  (b) amended; eff. 3-1-94 through 7-31-94...................13644
    (d)(3)  stayed in part; eff. 3-1-94 through 2-28-95............15318
1012  Clarification................................................42422
1013  Clarification................................................42422
1030  Clarification................................................42422
1030.7  (b) introductory text amended..............................44033
1032  Clarification................................................42422
1033  Clarification................................................42422
1033.60  (m) redesignated as (n); new (m) added....................24031
1036  Clarification................................................42422
1036.7  Regulation at 58 FR 40725 eff. date extended through 12-
        31-95......................................................48557
    (d)  and (2) amended; eff. 1-1-96..............................48558
    (b)  introductory text amended; eff. 9-1-94 through 2-28-95....49345
    Regulation  at 59 FR 49345 corrected...........................53726
1036.60  (m) redesignated as (n); new (m) added....................24031
1040  Clarification................................................42422
1040.5  Amended....................................................33419
1040.7  Introductory text and (a) revised; (b) introductory text 
        amended....................................................33419
1044  Clarification................................................42422
1046  Clarification................................................42422
1046.2  stayed in part; eff. 3-1-94 through 2-28-95................15318
1049  Clarification................................................42422
1049.60  (l) redesignated as (m); new (l) added....................24031
1050  Clarification................................................42422
1064  Clarification................................................42422
1065  Clarification................................................42422
1068  Clarification................................................42422
1075  Clarification................................................42422
1076  Clarification................................................42422
1079  Clarification................................................42422
1093  Clarification................................................42422
1094  Clarification................................................42422
1094.7  (c) stayed in part; eff. 3-3-94 through 12-31-95...........10057
1096  Clarification................................................42422
1097  Removed......................................................60065
1098  Removed......................................................13645
1099  Clarification................................................42422
1106  Authority citation revised...................................11182
    Clarification..................................................42422
1106.3  Stayed in part..............................................1274
1106.6  Stayed in part; eff. 2-1-94 through 8-31-96................11182
1106.7  (b)(1) stayed in part; eff. 2-1-94 through 8-31-96.........11182
    Regulation at 57 FR 48939 eff. date extended through 9-30-95 
                                                                   48787
1106.13  (d)(1) stayed; eff. 2-1-94 through 8-31-96................11182
1108  Clarification................................................42422
1124  Authority citation revised...................................15319
    Clarification..................................................42422
1124.7  (b)  introductory text amended.............................15319
1124.9  (c) amended................................................15319
1124.10  (c)(2) revised............................................15319
1124.19  Revised...................................................15319

[[Page 952]]

1124.30  (a)(1)(i), (ii), (c)(1), (2) and (3) revised..............15319
1124.31  (a)(1), (b) introductory text and (1) revised.............15320
1124.32  Revised...................................................15320
1124.41  (c) amended...............................................15320
1124.50--1124.54  Undesignated center heading revised..............15320
1124.50  Revised...................................................15320
1124.51  Revised...................................................15320
1124.51a  Removed..................................................15321
1124.53  Revised...................................................15321
1124.60--1124.62  Undesignated center heading revised..............15321
1124.60  Revised...................................................15321
1124.61  Revised...................................................15322
1124.62  Redesignated as 1124.63; new 1124.62 added................15322
1124.63  Redesignated from 1124.62 and revised.....................15322
1124.70  Revised...................................................15322
1124.71  Revised...................................................15322
1124.72  Revised...................................................15323
1124.73  Revised...................................................15322
1124.74  Removed; new 1124.74 redesignated from 1124.75; (c) 
        revised....................................................15323
1124.75  Redesignated as 1124.74...................................15323
    Redesignated  from 1124.76; (a)(1)(i), (a)(2)(i) and (b)(4) 
amended............................................................15324
1124.76  Redesignated as 1124.75; new 1124.76 redesignated from 
        1124.77....................................................15324
1124.77  Redesignated as 1124.76; new 1124.77 redesignated from 
        1124.78; (a) introductory text amended.....................15324
1124.78  Redesignated as 1124.77...................................15324
1124.85  (b) and (c)(2) amended....................................15324
1126  Clarification................................................42422
1126.12  (b)(5) stayed.............................................26737
1131  Clarification................................................42422
1134  Clarification................................................42422
1135  Authority citation revised...................................15324
    Clarification..................................................42422
1135.9  (c)  amended...............................................15324
1135.19  Revised...................................................15324
1135.30  Introductory text, (a) and (c) revised; (b) and (d) 
        redesignated as (d) and (e); new (b) added.................15324
1135.31  (a) introductory text amended; (a)(4) revised.............15324
1135.41  (b)(3) amended; (c) revised...............................15324
1135.50--1135.62  Undesignated center heading revised..............15325
1135.50  Heading and (a) revised; (b) introductory text, (1) and 
        (2) amended; (e), (f) and (g) added........................15325
1135.51  Revised...................................................15325
1135.51a  Removed..................................................15325
1135.53  Revised...................................................15325
1135.60--1135.62  Undesignated center heading added................15325
1135.60  Revised...................................................15326
1135.61  Revised...................................................15326
1135.62  Redesignated as 1135.63...................................15326
    Added..........................................................15327
1135.63  Redesignated  from 1135.62 and revised....................15326
1135.70  Revised...................................................15327
1135.71  Revised...................................................15327
1135.72  Revised...................................................15327
1135.73  (b), (d) and (e)(2) through (6) revised...................15327
1135.74  Removed; new 1135.74 redesignated from 1135.76; (a)(4), 
        (b)(1)(i), (ii) and (iii) introductory text amended; 
        (b)(1)(iii)(a), (b) and (c) redesignated as 
        (b)(1)(iii)(A), (B) and (C)................................15327
1135.75  Redesignated from 1135.77.................................15327
1135.76  Redesignated as 1135.74; new 1135.76 redesignated from 
        1135.78 and amended........................................15327
1135.77  Redesignated as 1135.75...................................15327
1135.78  Redesignated as 1135.76...................................15327
1135.85  (b) and (c) amended.......................................15327
1137  Clarification................................................42422
1137.7  (b) stayed in part; eff. 9-1-94 through 2-28-95............46158
1137.12  (a)(1) stayed in part; eff. 9-1-94 through 8-31-95........46158
1138  Clarification................................................42422
1139  Clarification................................................42422
1150.131  (a)(4) and (8) revised...................................13435

[[Page 953]]

                                  1995

7 CFR
                                                                   60 FR
                                                                    Page
Chapter X
1001.21  Removed....................................................6607
1001.50  (b) revised................................................6607
1001.51  Heading revised; (a) designation and (b) removed...........6607
    Revised........................................................18953
1001.54  Revised....................................................6607
1001.76  (b) revised...............................................18954
1002.19  Removed....................................................6607
1002.50  (c) revised................................................6607
1002.51  Heading revised; (a) designation and (b) removed...........6607
    Revised........................................................18954
1002.56  Introductory text and (b) revised; (a) introductory text 
        removed; (a)(1) and (2) through (6) redesignated as (a) 
        and (c) through (g).........................................6607
    (e), (f) and (g) revised; (h) added............................18955
1002.77  (i)(1) and (3) amended....................................62019
1002.81  Revised...................................................18955
1002.100--1002.260  (Subpart) Removed..............................62018
1002.300--1002.353  (Subpart) Removed..............................62019
1002.400--1002.444  (Subpart) Removed..............................62019
1002.500--1002.501  (Subpart) Removed..............................62018
1004.7  (a) introductory text and (e) introductory text stayed in 
        part; eff. 9-1-95 through 2-29-96..........................43954
    (a)(1), (4) and (d)(1) revised; (g) added......................55310
    Stay at 60 FR 43954 rescinded..................................63612
1004.12  (d) introductory text, (1) and (2) stayed in part; eff. 
        9-1-95 through 2-29-96.....................................43954
    (d)(2)(i) and (ii) revised; (g) added..........................55310
    Stay at 60 FR 43954 rescinded..................................63612
1004.21  Removed....................................................6607
1004.50  (b) revised................................................6607
    (d)(1) revised.................................................18955
1004.51  Heading revised; (a) designation and (b) removed...........6607
    Revised........................................................18955
1004.53  Introductory text and (b) revised; (a) introductory text 
        removed; (a)(1), (2) and (3) redesignated as (a), (c) and 
        (d).........................................................6607
1005.7  (d)(3) stayed in part; eff. 3-1-95 through 2-28-96..........7434
1005.13  (d)(2) stayed in part; eff. 1-1-95 through 2-28-95..........320
1005.20  Removed....................................................6608
1005.50  (b) revised................................................6608
1005.51  Revised...................................................18956
1005.52  Removed....................................................6608
1005.54  Revised....................................................6608
1005.74  Revised...................................................18956
1006.19  Removed....................................................6608
1006.50  (b) revised................................................6608
1006.51  Revised...................................................18956
1006.51a  Removed...................................................6608
1006.53  Revised....................................................6608
1006.74  Revised...................................................18957
1007  Revised......................................................29437
1007.7  (e)(3) and (4) stayed in part; eff. 3-1-95 through 2-28-96
                                                                    7434
1007.20  Removed....................................................6608
1007.50  (b) revised................................................6608
1007.51  Revised...................................................18957
1007.51a  Removed...................................................6608
1007.53  Revised....................................................6608
1007.74  Revised...................................................18958
1011.7  (b) amended; eff. 3-1-95 through 7-31-95....................6395
    (d)(3) stayed in part; eff. 3-1-95 through 2-28-96..............7434
1011.20  Removed....................................................6608
1011.50  (b) revised................................................6608
1011.51  Revised...................................................18958
1011.51a  Removed...................................................6608
1011.53  Revised....................................................6608
1011.74  Revised...................................................18958
1012.19  Removed....................................................6608
1012.50  (b) revised................................................6608
1012.51  Revised...................................................18959
1012.51a  Removed...................................................6608
1012.53  Revised....................................................6608
1012.74  Revised...................................................18959
1013.19  Removed....................................................6608
1013.50  (b) revised................................................6608
1013.51  Revised...................................................18959
1013.51a  Removed...................................................6608
1013.53  Revised....................................................6608
1013.74  Revised...................................................18960
1030.20  Removed....................................................6608
1030.30  (a) and (c) revised; (d) removed..........................57149

[[Page 954]]

1030.31  (a) revised...............................................57149
1030.50  (b) revised................................................6608
    Heading, introductory text and (a) revised; (e) through (l) 
added..............................................................57149
1030.51  Revised...................................................18960
1030.51a  Removed...................................................6608
1030.53  Revised.............................................6608, 57150
1030.60  Undesignated center heading, heading, introductory text, 
        (a) and (f) revised........................................57150
1030.61  Heading, introductory text and (a) revised................57150
1030.62  Revised...................................................57151
1030.71  (a)(2) revised............................................57151
1030.73  (a), (c) and (d) revised; (e) added.......................57151
1030.74  Revised............................................18961, 57152
1030.75  Revised...................................................57152
1030.76  (a)(4) revised; (b)(1)(ii) and (iii) amended..............57152
1032.7  (b) stayed in part; eff. 12-1-94 through 1-31-95.............321
    (c) stayed in part; eff. 1-1-95 through 1-31-95.................6006
1032.20  Removed....................................................6609
1032.50  (b) revised................................................6609
1032.51  Revised...................................................18961
1032.51a  Removed...................................................6609
1032.53  Revised....................................................6609
1032.74  Revised...................................................18961
1033.20  Removed....................................................6609
1033.50  (b) revised................................................6609
1033.51  Heading revised; (a) designation and (b) removed...........6609
    Revised........................................................18961
1033.53  Introductory text and (b) revised; (a) introductory text 
        removed; (a)(1) and (2) through (5) redesignated as (a) 
        and (c) through (f).........................................6609
1033.73  Revised...................................................18962
1036.20  Removed....................................................6609
1036.50  (b) revised................................................6609
1036.51  Revised...................................................18962
1036.51a  Removed...................................................6609
1036.53  Introductory text and (b) revised; (a) introductory text 
        removed; (a)(1) and (2) through (5) redesignated as (a) 
        and (c) through (f).........................................6609
1036.73  (a)(2)(iii) amended; (a)(2)(iv) removed...................22256
1036.74  Revised...................................................18963
1036.105  Removed..................................................22256
1036.106  Removed..................................................22256
1036.107  Removed..................................................22256
1036.110  Removed..................................................22256
1036.111  Removed..................................................22256
1036.112  Removed..................................................22256
1036.113  Removed..................................................22256
1036.114  Removed..................................................22256
1036.115  Removed..................................................22256
1036.116  Removed..................................................22256
1036.117  Removed..................................................22256
1036.118  Removed..................................................22256
1036.119  Removed..................................................22256
1036.120  Removed..................................................22256
1036.121  Removed..................................................22256
1036.122  Undesignated center heading and section removed..........22256
1040.7  (b)(5)(iii) and (7) added..................................45575
1040.21  Removed....................................................6609
1040.30  (a) and (c) revised; (d) removed..........................45575
1040.31  (a) revised...............................................45575
1040.41  (c) amended...............................................45575
1040.50  (b) revised................................................6609
    Heading, introductory text and (a) revised; (e) through (l) 
added..............................................................45575
1040.51  Revised...................................................18963
1040.51a  Removed...................................................6609
1040.53  Revised.............................................6609, 45576
1040.60  Heading, undesignated centerheading, introductory text, 
        (a) and (f) revised........................................45576
1040.61  Revised...................................................45576
1040.62  Revised...................................................45577
1040.63  Added.....................................................45577
1040.71  (a)(1) and (2) revised....................................45577
1040.73  (a) amended; (b)(1)(ii) and (c) revised...................45577
1040.74  Revised............................................18963, 45577
1040.75  (a)(1) and (c) revised....................................45577
1040.76  (a)(4) revised; (b)(1)(ii) amended........................45577
1040.85  Introductory text amended.................................45578
1040.86  (a) amended...............................................45578
1044.20  Removed....................................................6609
1044.22  (i)(1)(i) revised; (i)(3) removed..........................6609
1044.50  (b) revised................................................6609
1044.51  Heading revised; (a) designation and (b) removed...........6609
    Revised........................................................18964
1044.62  Revised...................................................18964

[[Page 955]]

1046.2  Stayed in part; eff. 3-1-95 through 2-28-96.................7434
1046.20  Removed....................................................6609
1046.50  (b) revised................................................6609
1046.51  Revised...................................................18964
1046.51a  Removed...................................................6609
1046.53  Revised....................................................6609
1046.74  Revised...................................................18965
1049.20  Removed....................................................6610
1049.50  (b) revised................................................6610
1049.51  Revised...................................................18965
    Correctly designated...........................................58731
1049.51a  Removed...................................................6610
1049.53  Introductory text and (b) revised; (a) introductory text 
        removed; (a)(1) and (2) through (5) redesignated as (a) 
        and (c) through (f).........................................6610
1049.74  Revised...................................................18966
1050.13  (d)(2) stayed in part...............................7435, 18344
1050.20  Removed....................................................6610
1050.50  (b) revised................................................6610
1050.51  Revised...................................................18966
1050.51a  Removed...................................................6610
1050.53  Revised....................................................6610
1050.74  Revised...................................................18966
1064.20  Removed....................................................6610
1064.50  (b) revised................................................6610
1064.51  Revised...................................................18966
1064.51a  Removed...................................................6610
1064.53  Revised....................................................6610
1064.74  Revised...................................................18967
1065.20  Removed....................................................6610
1065.30  (a) and (c) revised; (d) removed..........................57152
1065.31  (a) revised...............................................57152
1065.50  (b) revised................................................6610
    Heading, introductory text and (a) revised; (e) through (l) 
added..............................................................57152
1065.51  Revised...................................................18967
1065.51a  Removed...................................................6610
1065.53  Revised.............................................6610, 57153
1065.60  Undesignated center heading, heading, introductory text, 
        (a) and (f) revised........................................57153
1065.61  Heading, introductory text, (a) and (f) revised...........57153
1065.62  Revised...................................................57154
1065.71  (a)(2) revised............................................57154
1065.73  (a), (c), (d) and (e) revised.............................57154
1065.74  Revised............................................18968, 57155
1065.75  Revised...................................................57155
1065.76  (a)(4) revised; (b)(1)(ii) and (iii) amended..............57155
1068.20  Removed....................................................6610
1068.30  (a) and (c) revised; (d) removed..........................57155
1068.31  (a) revised...............................................57155
1068.50  (b) revised................................................6610
    Heading, introductory text and (a) revised; (e) through (l) 
added..............................................................57155
1068.51  Revised...................................................18968
1068.51a  Removed...................................................6610
1068.53  Revised.............................................6610, 57156
1068.60  Undesignated center heading, heading, introductory text, 
        (a), (f) and (g) revised...................................57156
1068.61  Heading, introductory text, (a) and (e) revised...........57156
1068.62  Revised...................................................57157
1068.71  (a) revised...............................................57157
1068.73  Revised...................................................57157
1068.74  Revised............................................18968, 57158
1068.75  Revised...................................................57158
1068.76  (a)(4) revised; (b)(1)(ii) amended........................57158
1068.85  Introductory text amended.................................57158
1068.86  (a) and (b) amended.......................................57158
1075.20  Removed....................................................6610
1075.50  (b) revised................................................6610
    (c) revised....................................................18969
1075.51  Heading revised; (a) designation and (b) removed...........6610
    Revised........................................................18969
1075.53  Revised....................................................6610
1075.74  Revised...................................................18969
1076.20  Removed....................................................6610
1076.30  (a) and (c) revised; (d) removed..........................57158
1076.31  (a) revised...............................................57158
1076.50  (b) revised................................................6610
    Heading, introductory text and (a) revised; (e) through (l) 
added..............................................................57158
1076.51  Revised...................................................18969
1076.51a  Removed...................................................6610
1076.53  Revised.............................................6610, 57159
1076.60  Undesignated center heading, heading, introductory text, 
        (a) and (f) revised........................................57159
1076.61  Heading, introductory text, (a) and (e) revised...........57159
1076.62  Revised...................................................57160

[[Page 956]]

1076.71  (a)(2) revised............................................57160
1076.72  Amended...................................................57160
1076.73  (a), (c), (d) and (e) revised.............................57160
1076.74  Revised............................................18970, 57161
1076.75  Revised...................................................57161
1076.76  (a)(4) revised; (b)(1)(ii) and (iii) amended..............57161
1079.20  Removed....................................................6611
1079.30  (a) and (c) revised; (d) removed..........................57161
1079.31  (a) revised...............................................57161
1079.50  (b) revised................................................6611
    Heading, introductory text and (a) revised; (e) through (l) 
added..............................................................57161
1079.51  Revised...................................................18970
1079.51a  Removed...................................................6611
1079.53  Revised.............................................6611, 57162
1079.60  Undesignated center heading, heading, introductory text, 
        (a), (f) and (g) revised...................................57162
1079.61  Heading, introductory text, (a) and (e) revised...........57162
1079.62  Revised...................................................57163
1079.71  (a)(2) revised............................................57163
1079.73  Revised...................................................57163
1079.74  Revised............................................18971, 57164
1079.75  Revised...................................................57164
1079.76  (a)(4) revised; (b)(1)(ii) and (iii) amended..............57161
1093  Removed......................................................29453
1093.20  Removed....................................................6611
1093.50  (b) revised................................................6611
1093.51  Revised...................................................18971
1093.51a  Removed...................................................6611
1093.53  Revised....................................................6611
1093.74  Revised...................................................18971
1094  Removed......................................................29453
1094.20  Removed....................................................6611
1094.50  (b) revised................................................6611
1094.51  Revised...................................................18971
1094.51a  Removed...................................................6611
1094.53  Revised....................................................6611
1094.74  Revised...................................................18972
1096  Removed......................................................29453
1096.20  Removed....................................................6611
1096.50  (b) revised................................................6611
1096.51  Revised...................................................18972
1096.51a  Removed...................................................6611
1096.53  Revised....................................................6611
1096.74  Revised...................................................18973
1099  Removed......................................................63613
1099.2  Removed....................................................55180
1099.3  Removed....................................................55180
1099.5  Removed....................................................55180
1099.6  Removed....................................................55180
1099.7  Removed....................................................55180
1099.8  Removed....................................................55180
1099.9  Removed....................................................55180
1099.10  Removed...................................................55180
1099.12  Removed...................................................55180
1099.13  Removed...................................................55180
1099.14  Removed...................................................55180
1099.15  Removed...................................................55180
1099.16  Removed...................................................55180
1099.17  Removed...................................................55180
1099.18  Removed...................................................55180
1099.19  Removed...................................................55180
1099.20  Removed............................................29466, 55180
1099.30  Removed...................................................55180
1099.31  Removed...................................................55180
1099.32  Removed...................................................55180
1099.40  Removed...................................................55180
1099.41  Removed...................................................55180
1099.42  Removed...................................................55180
1099.43  Removed...................................................55180
1099.44  Removed...................................................55180
1099.45  Removed...................................................55180
1099.50  (b) revised...............................................29466
    Removed........................................................55180
1099.51  Revised............................................18973, 29466
    Removed........................................................55180
1099.51a  Removed...........................................29467, 55180
1099.52  Removed...................................................55180
1099.53  Revised...................................................29467
    Removed........................................................55180
1099.60  Removed...................................................55180
1099.61  Removed...................................................55180
1099.62  Removed...................................................55180
1099.70  Removed...................................................55180
1099.71  Removed...................................................55180
1099.72  Removed...................................................55180
1099.73  Removed...................................................55180
1099.74  Revised............................................18973, 29467
    Removed........................................................55180
1099.75  Removed...................................................55180
1099.76  Removed...................................................55180
1099.77  Removed...................................................55180
1099.85  Removed...................................................55180
1099.86  Removed...................................................55180
1106.20  Removed....................................................6611
1106.50  (b) revised................................................6611
1106.51  Revised...................................................18974
1106.51a  Removed...................................................6611
1106.53  Revised....................................................6611
1106.74  Revised...................................................18974
1108  Removed......................................................29453
1108.20  Removed....................................................6611

[[Page 957]]

1108.50  (b) revised................................................6611
1108.51  Revised...................................................18974
1108.51a  Removed...................................................6611
1108.53  Revised....................................................6611
1108.74  Revised...................................................18975
1124.19  Revised....................................................6611
    Removed........................................................18975
1124.50  (b) revised; (e) and (f)(2) amended........................6611
    (e) and (f)(2) amended; (f)(3) added...........................18975
1124.51  Heading revised; (a) designation and (b) removed; new 
        undesignated text amended...................................6612
    Revised........................................................18975
1124.53  (a) revised; (b) removed; (c) redesignated as (b)..........6612
1124.75  (a)(2)(i) amended...................................6612, 18976
1126  Authority citation revised...................................40261
1126.7  (d) introductory text and (e) introductory text stayed in 
        part; eff. 8-1-95 through 7-31-97..........................40261
1126.13  (e)(2) stayed; eff. 3-1-95 through 7-31-95................17192
    (e)(1), (2) and (3) stayed in part; eff. 8-1-95 through 7-31-
97.................................................................40262
1126.20  Removed....................................................6612
1126.50  (b) revised................................................6612
1126.51  Revised...................................................18976
1126.51a  Removed...................................................6612
1126.53  Revised....................................................6612
1126.74  Revised...................................................18976
1131.7  (c) stayed in part; eff. 4-1-95 through 3-31-96............17193
1131.10  (a)(1)(ii) revised; (a)(3) redesignated as (a)(4); new 
        (a)(3) added...............................................55990
1131.13  (a)(2) and (b)(1) amended.................................55990
1131.20  Removed....................................................6612
1131.21  Removed...................................................55990
1131.22  Removed...................................................55990
1131.30  (d) redesignated as (e) and amended; new (d) added........55990
1131.33  Removed...................................................55990
1131.42  (c) introductory text and (1) revised; (d)(2)(vi) amended
                                                                   55990
1131.44  (a)(4) amended............................................55990
1131.50  (b) revised................................................6612
    (a) revised....................................................55990
1131.51  Revised...................................................18976
1131.51a  Removed...................................................6612
1131.53  Revised....................................................6612
1131.61  (b) removed; (c) through (f) redesignated as (b) through 
        (e); new (d)(1) and (2) revised; new (d)(3) removed........55990
1131.72  Heading revised; (b) removed; (c) redesignated as (b).....55991
1131.74  Revised...................................................18977
1131.77  Amended...................................................55991
1131.85  (b) removed...............................................55991
1134.19  Removed....................................................6612
1134.50  (b) revised................................................6612
1134.51  Revised...................................................18977
1134.51a  Removed...................................................6612
1134.53  Revised....................................................6612
1134.74  Revised...................................................18978
1135.19  Revised....................................................6612
    Removed........................................................18978
1135.50  (b) revised; (e) and (f)(2) amended........................6612
    (e) and (f)(2) amended; (f)(3) added...........................18978
1135.51  Heading revised; (a) designation and (b) removed; new 
        undesignated text amended...................................6612
    Revised........................................................18978
1135.53  (a) revised; (b) removed; (c) redesignated as (b)..........6612
1135.74  (b)(2)(i) and (ii) amended..........................6612, 18979
1137.7  (b) stayed in part; eff. 9-1-95 through 2-29-96............46215
1137.12  (a)(1) stayed in part; eff. 9-1-95 through 8-31-96........46215
1137.19  Removed....................................................6612
1137.50  (b) revised................................................6612
1137.51  Revised...................................................18979
1137.51a  Removed...................................................6612
1137.53  Revised....................................................6612
1137.74  Revised...................................................18979
1138.7  (a)(1) and (c) introductory text stayed in part; eff. 10-
        1-95 through 9-31-97.......................................50088
1138.13  (d)(1), (2) and (5) stayed in part; eff. 10-1-95 through 
        9-31-97....................................................50089
1138.20  Removed....................................................6612
1138.50  (b) revised................................................6613
1138.51  Revised...................................................18979
1138.52  Removed....................................................6613
1138.54  Revised....................................................6613
1138.74  Revised...................................................18980

[[Page 958]]

1139.19  Removed....................................................6613
1139.50  (b) revised................................................6613
    (d) amended; (e) revised.......................................18980
1139.51  Heading revised; (a) designation and (b) removed...........6613
    Revised........................................................18980
1139.53  (a) revised; (b) removed; (c) redesignated as (b)..........6613
1150  Authority citation revised...................................61198
1150.132  (b) revised..............................................53253
1150.200--1150.212  (Subpart) Removed..............................61198
1150.250--1150.252  (Subpart) Removed..............................37325
1160.650--1160.652  (Subpart) Removed..............................37325

                                  1996

7 CFR
                                                                   61 FR
                                                                    Page
Chapter X
1002.14  (d) stayed; eff. 5-1-96 through 9-30-96...................20721
1002.77  Regulation at 60 FR 62019 confirmed.......................11294
1002.300--1002.353  (Subpart) Regulation at 60 FR 62019 confirmed 
                                                                   11294
1002.400--1002.444  (Subpart) Regulation at 60 FR 62019 confirmed 
                                                                   11294
1004.61  Heading and introductory text revised; (b) removed........69017
1004.63  Amended; heading revised..................................69017
1004.73  (a) introductory text and (1) amended; (b) removed........69017
1004.75  (a) amended...............................................69017
1004.90--1004.95  Undesignated center heading removed..............69017
1004.90  Removed...................................................69017
1004.91  Removed...................................................69017
1004.92  (c) stayed in part; eff. 5-1-96 through 9-30-96...........20721
    Removed........................................................69017
1004.93  Removed...................................................69017
1004.94  Removed...................................................69017
1004.95  Removed...................................................69017
1005.7  (d) redesignated as (e); introductory text and (b)amended; 
        and new (e) revised; new (d) added..........................1148
1005.30  (a) and (c) revised; interim..............................41490
1005.32  (a) amended................................................1148
    (a) removed....................................................69017
1005.53  (a)(6) redesignated as (a)(7) and revised; new (a)(6) 
        added.......................................................1148
1005.61  
    (a) introductory text, (5) and (b) introductory text amended 
                                                                    1148
    (a)(4), (5), (b)(5) and (6) redesignated as (a)(5), (6), 
(b)(6) and (7); new (a)(4) and new (b)(5) added; (b)(3), new (6) 
and new (7) amended; interim.......................................41490
    Heading revised; (a) introductory text and (6) amended; (b) 
removed............................................................69017
1005.62  (b) revised...............................................69018
1005.71  (a)(2)(i) amended.........................................69018
1005.73  (a)(2) introductory text, (c)(2), (d)(4) and (5) amended; 
        (d)(3) removed.............................................69018
1005.74  Amended...................................................69018
1005.75  (a) amended...............................................69018
1005.80--1005.82  Undesignated center heading added; interim.......41490
1005.80  Added; interim............................................41490
1005.81  Added; interim............................................41490
1005.82  Added; interim............................................41490
1005.90--1005.94  Undesignated center heading removed..............69018
1005.90  Amended....................................................1148
    Removed........................................................69018
1005.91  Amended....................................................1148
    Removed........................................................69018
1005.92  Removed...................................................69018
1005.93  (b) and (e) introductory text amended......................1148
    Removed........................................................69018
1005.94  Amended....................................................1148
    Removed........................................................69018
1007.2  Amended....................................................20125
1007.30  (a) and (c) revised; interim..............................41491
1007.32  (a) removed...............................................69018
1007.50  (d) amended...............................................20125
1007.61  (a)(4), (5), (b)(5) and (6) redesignated as (a)(5), (6), 
        (b)(6) and (7); new (a)(4) and new (b)(5) added; (b)(3), 
        new (6) and new (7) amended; interim.......................41491
    Heading revised; (a) introductory text and (6) amended; (b) 
removed............................................................69018
1007.62  (b) amended...............................................69018

[[Page 959]]

1007.71  (a)(2)(i) amended.........................................69018
1007.73  (a)(1), (2), (d)(2), (f)(4) and (5) amended; (f)(3) 
        removed....................................................69018
1007.74  Amended...................................................69018
1007.75  (a) amended...............................................69018
1007.80--1007.82  Undesignated center heading added; interim.......41492
1007.80  Added; interim............................................41492
1007.81  Added; interim............................................41492
1007.82  Added; interim............................................41492
1007.90--1007.94  Undesignated center heading removed..............69018
1007.90  Removed...................................................69018
1007.91  Removed...................................................69018
1007.92  (c) introductory text amended.............................20125
    Removed........................................................69018
1007.93  Removed...................................................69018
1007.94  Removed...................................................69018
1011.2  (b) revised.................................................1148
1011.7  Introductory text amended; (d) redesignated as (e); (b) 
        and new (e) revised; new (d) added..........................1148
1011.13  (e)(3) amended.............................................1149
1011.30  (a) and (c) revised; interim..............................41493
1011.32  (a) removed...............................................69018
1011.52  (a)(3) revised.............................................1149
1011.61  (a)(4), (5), (b)(5) and (6) redesignated as (a)(5), (6), 
        (b)(6) and (7); new (a)(4) and new (b)(5) added; (b)(3), 
        new (6) and new (7) amended; interim.......................41493
    Heading revised; (a) introductory text amended; (b) removed....69018
1011.62  (b) amended...............................................69018
1011.71  (a)(2)(i) amended.........................................69018
1011.73  (a)(2) introductory text, (c)(2), (d)(4) and (5) amended; 
        (d)(3) removed.............................................69018
1011.74  Amended...................................................69018
1011.75  (a) amended...............................................69018
1011.80--1011.82  Undesignated center heading added; interim.......41493
1011.80  Added; interim............................................41493
1011.81  Added; interim............................................41493
1011.82  Added; interim............................................41493
1011.90--1011.94  Undesignated center heading removed..............69018
1011.90  Removed...................................................69018
1011.91  Removed...................................................69018
1011.92  Removed...................................................69018
1011.93  Removed...................................................69018
1011.94  Removed...................................................69018
1046.2  Amended.....................................................1149
1046.30  (a) and (c) revised; interim..............................41494
1046.32  (d) removed...............................................69018
1046.61  (a)(4), (5), (b)(5) and (6) redesignated as (a)(5), (6), 
        (b)(6) and (7); new (a)(4) and new (b)(5) added; (b)(3), 
        new (6) and new (7) amended; interim.......................41494
    Heading revised; (a) introductory text amended; (b) removed....69018
1046.62  (b) amended...............................................69018
1046.71  (a)(2)(i) amended.........................................69018
1046.73  (f)(2) revised; interim...................................41495
    (a), (b) introductory text, (d)(4) and (5) amended; (d)(3) 
removed............................................................69019
1046.74  Amended...................................................69019
1046.75  (a) amended...............................................69019
1046.80--1046.82  Undesignated center heading added; interim.......41495
1046.80  Added; interim............................................41495
1046.81  Added; interim............................................41495
1046.82  Added; interim............................................41495
1046.90--1011.94  Undesignated center heading removed..............69019
1046.90  Removed...................................................69019
1046.91  Removed...................................................69019
1046.92  Removed...................................................69019
1046.93  Removed...................................................69019
1046.94  Removed...................................................69019
1075  Removed......................................................67927
1075.2--1075.19  Undesignated center heading removed...............47039
1075.2  Removed....................................................47039
1075.3  Removed....................................................47039
1075.5  Removed....................................................47039
1075.6  Removed....................................................47039
1075.7  Removed....................................................47039
1075.8  Removed....................................................47039
1075.9  Removed....................................................47039
1075.10  Removed...................................................47039
1075.12  Removed...................................................47039
1075.13  Removed...................................................47039
1075.14  Removed...................................................47039
1075.15  Removed...................................................47039
1075.16  Removed...................................................47039
1075.17  Removed...................................................47039
1075.18  Removed...................................................47039

[[Page 960]]

1075.19  Removed...................................................47039
1075.30--1075.32  Undesignated center heading removed..............47039
1075.30  Removed...................................................47039
1075.31  Removed...................................................47039
1075.32  Removed...................................................47039
1075.40--1075.45  Undesignated center heading removed..............47039
1075.40  Removed...................................................47039
1075.41  Removed...................................................47039
1075.42  Removed...................................................47039
1075.43  Removed...................................................47039
1075.44  Removed...................................................47039
1075.45  Removed...................................................47039
1075.50--1075.54  Undesignated center heading removed..............47039
1075.50  Removed...................................................47039
1075.51  Removed...................................................47039
1075.52  Removed...................................................47039
1075.53  Removed...................................................47039
1075.54  Removed...................................................47039
1075.60--1075.62  Undesignated center heading removed..............47039
1075.60  Removed...................................................47039
1075.61  Removed...................................................47039
1075.62  Removed...................................................47039
1075.70--1075.77  Undesignated center heading removed..............47039
1075.70  Removed...................................................47039
1075.71  Removed...................................................47039
1075.72  Removed...................................................47039
1075.73  Removed...................................................47039
1075.74  Removed...................................................47039
1075.75  Removed...................................................47039
1075.76  Removed...................................................47039
1075.77  Removed...................................................47039
1075.85  Undesignated center heading and section removed...........47039
1079.7  (b) introductory text amended; eff. in part 12-1-96 
        through 3-31-97 and in part 4-1-97.........................55733
1106.6  Stayed in part; eff. 9-1-96 through 8-31-98................35596
1106.7  (b)(1) stayed in part; eff. 9-1-96 through 8-31-98.........35597
1106.13  (d)(1) stayed; eff. 9-1-96 through 8-31-98................35597
1131.7  (c) stayed in part; eff. 4-1-96 through 3-31-97............17562
1137.7  (b) stayed in part; eff. 9-1-96 through 2-28-97............55206
1137.12  (a)(1) stayed in part; eff. 9-1-96 through 8-31-97........55206
1160.209  (a) revised..............................................27003

                                  1997

7 CFR
                                                                   62 FR
                                                                    Page
Chapter X
1005.30  (a)(5), (6) and (c)(3) revised; (a)(7) and (8) 
        redesignated as (a)(8) and (9); new (a)(7) added...........39739
1005.32  (a) added.................................................39740
1005.61  (a)(4) removed; (a)(5) and (6) redesignated as (a)(4) and 
        (5)........................................................39740
1005.77  Revised...................................................39740
1005.78  Introductory text amended.................................39740
1005.81  (a) and (b) revised; (c) removed..........................39740
1005.82  Revised...................................................39740
1006.7  (c) introductory text and (2) stayed in part...............36651
1007.30  (a)(5), (6) and (c)(3) revised; (a)(7) and (8) 
        redesignated as (a)(8) and (9); new (a)(7) added...........39741
1007.32  (a) added.................................................39742
1007.61  (a)(4) removed; (a)(5) and (6) redesignated as (a)(4) and 
        (5)........................................................39742
1007.78  Amended...................................................39742
1007.81  (a) and (b) revised; (c) removed..........................39742
1007.82  Revised...................................................39742
1011.2--1011.19  Undesignated center heading and sections removed 
                                                                   47927
1011.30--1011.32  Undesignated center heading and sections removed
                                                                   47927
1011.40--1011.45  Undesignated center heading and sections removed
                                                                   47927
1011.50--1011.54  Undesignated center heading and sections removed
                                                                   47927
1011.60--1011.62  Undesignated center heading and sections removed
                                                                   47927
1011.61  Heading revised; (a) introductory text and (6) amended; 
        (b) removed..................................................918
    (a)(4) suspended...............................................46666

[[Page 961]]

1011.70--1011.77  Undesignated center heading and sections removed
                                                                   47927
1011.80--1011.82  Undesignated center heading and sections removed
                                                                   47927
1011.81  (b) suspended.............................................46666
1011.85--1011.86  Undesignated center heading and sections removed
                                                                   47927
1046.30  (a)(5), (6) and (c)(3) revised; (a)(7) and (8) 
        redesignated as (a)(8) and (9); new (a)(7) added...........39743
1046.32  (c) redesignated as (d); new (c) added....................39743
1046.61  Heading revised; (a) introductory text and (6) amended; 
        (b) removed..................................................918
    (a)(4) removed; (a)(5) and (6) redesignated as (a)(4) and (5) 
                                                                   39743
1046.77  Revised...................................................39743
1046.78  Amended...................................................39744
1046.81  (a) and (b) revised; (c) removed..........................39744
1046.82  Revised...................................................39744
1079.7  (b) introductory text amended; eff. 12-1-96 through 3-31-
        97...........................................................920
1124.2  Amended........................................................2
1124.30  (a)(1)(i), (ii), (c)(1) and (3) revised.......................2
1124.31  (a)(1) and (b)(1) revised.....................................2
1124.50  (f) introductory text and (g) revised; (h) added..............3
1124.53  Revised.......................................................3
1124.60--1124.63  Undesignated center heading revised..................3
1124.60  (f) through (m) redesignated as (g) through (n); heading, 
        (e), new (g) introductory text, new (3), new (h)(3) and 
        new (6) revised; new (f) added; new (h) introductory text 
        amended........................................................3
1124.61  Heading, introductory text, (a), (d) and (e) revised..........3
1124.62  Removed; new 1124.62 redesignated from 1124.63 and 
        revised........................................................3
1124.63  Redesignated as 1124.62.......................................3
1124.71  (a)(1) and (b)(3) revised; (b)(1) amended.....................3
1124.73  (a)(2)(ii) through (vi), (c) introductory text, (1) and 
        (f)(2) revised; (a)(2)(vii) added; (c)(2) and (d)(2) 
        amended........................................................4
1124.74  (c) amended...................................................4
1124.75  (a)(1)(i) amended.............................................4
1124.85  (b) amended...................................................4
1126.7  (d) introductory text and (e) introductory text stayed in 
        part; eff. 8-1-97 through 7-31-99..........................41812
1126.13  (e)(1) and (3) stayed in part; (e)(2) stayed; eff. 8-1-97 
        through 7-31-99............................................41812
1131.7  (c) stayed in part; eff. 4-1-97 through 3-31-99............26736
1137.7  (b) stayed in part; eff. 9-1-97 through 2-28-99............35948
1137.12  (a)(1) stayed in part; eff. 9-1-97 through 8-31-99........35948
1138.7  (a)(1) and (c) suspended in part; eff. 10-1-97 through 9-
        30-99......................................................50486
1138.13  (d)(1), (2) and (5) suspended; eff. 10-1-97 through 9-30-
        99.........................................................50486
1160.108  (a) revised...............................................3983
1160.112  Revised...................................................3983
1160.113  Revised...................................................3983
1160.116  Removed...................................................3983
1160.200  (a) amended...............................................3983
1160.201  (b) revised...............................................3983
1160.209  (b) revised...............................................3983
1160.211  (a)(1) and (2) revised....................................3983
1160.501  (a) removed; (b), (c) and (d) redesignated as (a), (b) 
        and (c); new (a) and new (b)(2) revised; new (c) amended 
                                                                    3983
1160.604  (a) amended...............................................3984
1160.605  Revised...................................................3984