[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Rules and Regulations]
[Pages 6395-6397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2587]



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[[Page 6396]]



DEPARTMENT OF AGRICULTURE
7 CFR Part 1011

[DA-95-02]


Milk in the Tennessee Valley Marketing Area; Temporary Revision 
of Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Revision of rule.

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SUMMARY: This document reduces the supply plant shipping requirement of 
the Tennessee Valley Federal milk order (Order 11) for the months of 
March through July 1995. The proposed action was requested by Armour 
Food Ingredients Company (Armour), which operates a proprietary supply 
plant pooled under Order 11. Armour contends the action is necessary to 
prevent the uneconomical movement of milk and to ensure that producer 
milk associated with the market in the fall will continue to be pooled 
in the spring and summer months.

EFFECTIVE DATE: March 1, 1995, through July 31, 1995.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist, 
USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South 
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932.

SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act (5 U.S.C. 
601-612) requires the Agency to examine the impact of a proposed rule 
on small entities. Pursuant to 5 U.S.C. 605(b), the Administrator of 
the Agricultural Marketing Service has certified that this rule will 
not have a significant economic impact on a substantial number of small 
entities. This rule lessens the regulatory impact of the order on 
certain milk handlers and tends to ensure that dairy farmers will 
continue to have their milk priced under the order and thereby receive 
the benefits that accrue from such pricing.
    The Department is issuing this final rule in conformance with 
Executive Order 12866.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is not intended to have a retroactive 
effect. This rule will not preempt any state or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), provides that administrative proceedings must be 
exhausted before parties may file suit in court. Under section 
608c(15)(A) of the Act, any handler subject to an order may file with 
the Secretary a petition stating that the order, any provisions of the 
order, or any obligation imposed in connection with the order is not in 
accordance with law and request a modification of the order or to be 
exempted from the order. A handler is afforded the opportunity for a 
hearing on the petition. After a hearing, the Secretary would rule on 
the petition. The Act provides that the district court of the United 
States in any district in which the handler is an inhabitant, or has 
its principal place of business, has jurisdiction in equity to review 
the Secretary's ruling on the petition, provided a bill in equity is 
filed not later than 20 days after the date of the entry of the ruling.
    This temporary revision is issued pursuant to the provisions of the 
Agricultural Marketing Agreement Act and the provisions of 
Sec. 1011.7(b) of the Tennessee Valley order.
    Notice of proposed rulemaking was issued on November 1, 1994, and 
published in the Federal Register on November 7, 1994 (59 FR 55377), 
concerning a proposed relaxation of the supply plant shipping 
requirement. The public was afforded the opportunity to comment on the 
proposed notice by submitting written data, views and arguments by 
December 7, 1994. One comment letter was received.
Statement of Consideration

    The temporary revision reduces the supply plant shipping 
requirement from 40 to 30 percent for the period of March through July 
1995. The Tennessee Valley order requires that a supply plant ship a 
minimum of 60 percent of the total quantity of milk physically received 
at the supply plant during the months of August through November, 
January, and February, and 40 percent in each of the other months. The 
order also provides authority for the Director of the Dairy Division to 
increase or decrease this supply plant shipping requirement by up to 10 
percentage points if such a revision is necessary to obtain needed 
shipments of milk or to prevent uneconomic shipments.
    Armour Food Ingredients states that it would have to make 
uneconomical shipments of milk from its Springfield, Kentucky, supply 
plant to meet the 40 percent shipping standard required for pool status 
under Order 11 during the months of March through July. Additionally, 
it states that the 40 percent requirement could jeopardize the 
continued association of producers who have supplied the Order 11 
market in the fall.
    At a hearing held in Charlotte, North Carolina, on January 4, 1995, 
Armour proposed an amendment to the Tennessee Valley order that would 
provide automatic pooling status for a supply plant during the months 
of March through July if the plant met the order's shipping 
requirements during the preceding months of August through February. 
There was no opposition to this proposal at the hearing.
    Purity Dairies, Inc., a Nashville, Tennessee, handler that is 
regulated under the Georgia order (Order 7), filed a comment opposing 
the proposed revision. Purity states that it cannot procure milk from 
its traditional supply area in central Kentucky in competition with 
Armour and other Order 11 handlers because its blend price in Nashville 
is no longer competitive with the Order 11 blend price. It states that 
Armour is attracting more milk than is needed and that ``this practice 
of hoarding milk supplies should not be tolerated.''
    There was no testimony on the record of the recently-concluded 
hearing to suggest that Armour is hoarding milk supplies. None of the 
plants which receive milk from Armour indicated that Armour was not 
shipping enough milk. In fact, the record showed that Armour 
consistently exceeded the order's 60- percent shipping requirement and 
that during certain short production months Armour shipped in excess of 
90 percent of its milk to distributing plants.
    While it is true that Purity's blend price under Order 7 and 
former1 Order 98 (Nashville, Tennessee) was frequently close to or 
below the Order 11 blend price during the period from December 1993 
through April 1994, data introduced into the record of the Charlotte 
hearing indicate that since July 1994 the Nashville-Springfield price 
relationship has returned to a more normal pattern, as shown in Table 
1.

    Table 1.--Comparison of Blend Prices: January 1992-November 1994,   
         Nashville, TN (Order 98/7)--Springfield, KY (Order 11)         
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                     Average blend                                      
                       price at         Average blend                   
                    Nashville, TN,        price at          Difference  
                    under order 98/   Springfield, KY,                  
                         7\1\          under order 11                   
------------------------------------------------------------------------
1/92-1/93........         13.85              13.58                .26   
12/93-/94........         14.22              14.33               -.11   
5/94-1/94........         14.01              13.72               .28    
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\1\The Nashville, Tennessee, order was terminated effective July 31,    
  1993.                                                                 

    If Purity has difficulty in attracting a milk supply, it should 
direct its concern 

[[Page 6397]]
to the open record for the proposed Southeast marketing area, which 
encompasses the Nashville area. Purity's opposition to Armour's request 
for a modest reduction in shipping requirements is insufficient basis 
for denying the request, particularly in light of the absence of any 
opposition to Armour's proposal at the Charlotte hearing for NO 
shipping requirements during the months of March through July.
    After consideration of all relevant material, including the 
proposal set forth in the aforesaid notice, and other available 
information, it is hereby found and determined that the supply plant 
shipping percentage set forth in Sec. 1011.7(b) should be reduced from 
40 to 30 percent for the months of March through July 1995.

List of Subjects in 7 CFR Part 1011

    Milk marketing orders.

    For the reasons set forth in the preamble, the following provision 
in Title 7, Part 1011, is amended as follows:

PART 1011--MILK IN THE TENNESSEE VALLEY MARKETING AREA

    1. The authority citation for 7 CFR part 1011 continues to read as 
follows:

    Authority: Secs. 1-9, 48 Stat. 31, as amended; 7 U.S.C. 601-674.


Sec. 1011.7  [Amended]

    2. In Sec. 1011.7(b), the phrase ``40 percent'' is revised to read 
``30 percent'' for the period of March 1, 1995, through July 31, 1995.

    Dated: January 27, 1995.
Richard M. McKee,
Director, Dairy Division.
[FR Doc. 95-2587 Filed 2-1-95; 8:45 am]
BILLING CODE 3410-02-P