[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Rules and Regulations]
[Pages 69016-69019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33000]
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DEPARTMENT OF AGRICULTURE
7 CFR Parts 1004, 1005, 1007, 1011, and 1046
[DA-96-15]
Milk in the Middle Atlantic, Carolina, Southeast, Tennessee
Valley and Louisville-Lexington-Evansville Marketing Areas; Termination
of Certain Provisions of the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This document terminates the base-excess payment plan
provisions of the Middle Atlantic, Carolina, Southeast, Tennessee
Valley, and Louisville-Lexington-Evansville Federal milk marketing
orders due to the expiration of legislative authority to incorporate
base-excess plans in Federal milk marketing orders on December 31,
1996.
EFFECTIVE DATE: January 1, 1997.
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, e-
mail address Nicholas__X__M[email protected].
SUPPLEMENTARY INFORMATION: The Department is issuing this final rule in
conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. This rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), provides that administrative proceedings must be
exhausted before parties may file suit in court. Under section
608c(15)(A) of the Act, any handler subject to an order may request
modification or exemption from such order by filing with the Secretary
a petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with the law. A handler is afforded the opportunity for a hearing on
the petition. After a hearing, the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has its
principal place of business, has jurisdiction in equity to review the
Secretary's ruling on the petition, provided a bill in equity is filed
not later than 20 days after the date of the entry of the ruling.
Small Business Consideration
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.), as amended, the Agricultural Marketing Service has considered
the economic impact of this action on small entities and believes that
this rule could have a significant economic impact on a substantial
number of small entities. For the purpose of the Regulatory Flexibility
Act, a dairy farm is considered a ``small business'' if it has an
annual gross revenue of less than $500,000, and a dairy products
manufacturer is a ``small business'' if it has fewer than 500
employees. For the purposes of determining which dairy farms are
``small businesses,'' the $500,000 per year criterion was used to
establish a production guideline of 326,000 pounds per month. Although
this guideline does not factor in additional monies that may be
received by dairy producers, it should be an inclusive standard for
most ``small'' dairy farmers. For purposes of determining a handler's
size, if the plant is part of a larger company operating multiple
plants that collectively exceed the 500 employee limit, the plant will
be considered a large business even if the local plant has fewer than
500 employees.
This rule terminates the base-excess plan provisions of five
Federal milk orders. Producers with earned base will no longer receive
base prices as in the past, but will be paid at least the uniform price
throughout the year for their hundredweight of milk.
Under a base-excess payment plan, a producer is paid a ``base
price'' for ``base milk'' and an ``excess price'' for production in
excess of base milk. During the base-paying period of a base- excess
plan, base prices are higher than the uniform prices computed for those
months, while the excess prices are below the uniform prices. Using a
representative period of May 1996, the difference between the base and
uniform prices in the five orders was not greater than $0.26/cwt.,
while the difference between the uniform and excess prices ranged from
$0.45 to $2.81/cwt.
[[Page 69017]]
The economic impact of the termination of base-excess plans is
likely to be threefold. First, for those producers who have been most
successful in shifting their herd's production from the spring to the
fall, there will be a reduction in total revenue. The loss in revenue
would be determined by multiplying the producer's total hundredweight
of milk by the uniform price and subtracting that figure from the
producer's base milk at the estimated base price plus the excess milk
at the estimated excess price. This calculation would have to be
computed for each month of the base-paying period. On the other hand,
for those producers who have made no effort to shift production from
the spring to the fall, there is likely to be an economic windfall at
the difference between the uniform price multiplied by their total
production and what the producer's milk would have earned using base
and excess prices.
A second economic impact for producers under Orders 5, 7, 11, and
46 will be experienced by those producers who were planning to go out
of business and sell their base at the end of the base-building period,
but before the start of the base-paying period. These producers will
lose the amount of money that they could have realized by selling their
base. For example, during the 1995 base-building period, 5500 producers
earned base in the Southeast market. The average daily base for a
single producer was 2,933 lbs. Based on the average price per pound for
base in 1995 ($1.62/lb. based on figures obtained from the Market
Administrator's office), an average producer in the Southeast could
have obtained $4,751.46 from the sale of such base in 1997.
The final effect of the base-excess plan termination is impossible
to measure in advance of the facts. Under the base and excess plans in
Orders 5, 7, 11 and 46, dairy farmers who were not on a market during
the base-building period are discouraged from pooling their milk on the
market during the base-paying period because they would only receive
the excess price for their milk. Without a base and excess plan,
however, there would be no such disincentive. Theoretically, therefore,
it is possible that producers who are not normally associated with
these markets will become associated with them during the flush
production months to take advantage of a price difference between these
generally deficit, high Class I utilization markets and the producers'
normal, lower utilization, lower-priced market. To what extent the
attachment of this additional milk will lower the uniform price in the
5 base-excess plan markets cannot be determined at this time.
Regardless of the possible economic effects which may result from
termination of seasonal base plans upon small entities, there is no
alternative to this termination action since the underlying statutory
authority expires on December 31, 1996.
In considering the impact of this action on small businesses, the
termination of seasonal base plans will also cause a reduction in
paperwork. Base-excess plans generate a large volume of paperwork for
the Market Administrator's office, as well as for cooperative
associations and handlers' with non-member supplies. Termination of
such plans will place less of a regulatory burden on those responsible
for recordkeeping, administration, and compliance with these
provisions.
Statement of Consideration
This order of termination is issued pursuant to the provisions of
the Agricultural Marketing Agreement Act and of the orders regulating
the handling of milk in the Middle Atlantic, Carolina, Southeast,
Tennessee Valley, and Louisville-Lexington-Evansville marketing areas.
It is determined that notice of proposed rulemaking and public
procedure thereon is impracticable, unnecessary and contrary to the
public interest. The expiration of authority to incorporate seasonal
base plans in Federal milk marketing orders on December 31, 1996,
necessitates the termination of base-excess plan provisions.
The Department received several letters requesting that seasonal
base plans be suspended, rather than terminated. While the Department
considered suspending the provisions, we concluded that an order
provision cannot be suspended once the underlying legislative authority
for that provision has expired. Nevertheless, should Congress pass
future legislation authorizing seasonal base plans, it could provide
for an expedited procedure to reinstate the order provisions.
After consideration of all relevant material, and other available
information, it is hereby found and determined that effective January
1, 1997, the provisions of each of the orders specified below do not
tend to effectuate the declared policy of the Act:
List of Subjects in 7 CFR Parts 1004, 1005, 1007, 1011, and 1046
Milk marketing orders.
For the reasons set forth in the preamble, 7 CFR Parts 1004, 1005,
1007, 1011, and 1046 are amended as follows.
1. The authority citation for 7 CFR Parts 1004, 1005, 1007, 1011,
and 1046 continues to read as follows:
Authority: 7 U.S.C. 601-674.
PART 1004--MILK IN THE MIDDLE ATLANTIC MARKETING AREA
Sec. 1004.61 [Amended]
2. In Sec. 1004.61, paragraph (b) is removed and reserved, and the
section heading and introductory text are revised to read as follows:
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:
* * * * *
Sec. 1004.63 [Amended]
3. In Sec. 1004.63, the words ``the weighted average differential
price for base milk and'' are removed, and the section heading is
revised to read as follows:
Sec. 1004.63 Announcement of weighted average differential price,
nonfat milk solids price and producer nonfat milk solids price.
* * * * *
Sec. 1004.73 [Amended]
4. In Sec. 1004.73, paragraph (a) introductory text is amended by
removing the word ``base'', paragraph (a)(1) is amended by removing the
phrase ``for base milk computed pursuant to Sec. 1004.61(b)'' and the
word ``base'', and paragraph (b) is removed.
Sec. 1004.75 [Amended]
5. In Sec. 1004.75, paragraph (a), the words ``for base milk
computed pursuant to Sec. 1004.61(b)'' are removed.
Secs. 1004.90, 1004.91, 1004.92, 1004.93, 1004.94 and
1004.95 [Removed]
6. Sec. 1004.90 and the undesignated centerheading preceding it,
and Secs. 1004.91 through 1004.95 are removed.
PART 1005--MILK IN THE CAROLINA MARKETING AREA
Sec. 1005.32 [Amended]
7. In Sec. 1005.32, paragraph (a) is removed and reserved.
Sec. 1005.61 [Amended]
8. In Sec. 1005.61, paragraph (a) introductory text is amended by
removing the words ``of June through January'', paragraph (a)(6) is
amended by removing the words ``for the months of June through
January'', paragraph (b)
[[Page 69018]]
is removed, and the section heading is revised to read as follows:
Sec. 1005.61 Computation of uniform price (including weighted average
price).
* * * * *
Sec. 1005.62 [Amended]
9. In Sec. 1005.62 paragraph (b) is revised to read as follows:
Sec. 1005.62 Announcement of uniform price and butterfat differential.
* * * * *
(b) The 11th day after the end of each month the uniform price
pursuant to Sec. 1005.61 for such month.
Sec. 1005.71 [Amended]
10. In Sec. 1005.71, paragraph (a)(2)(i), the letter ``(s)'' at the
end of the word ``price(s)'' is removed.
Sec. 1005.73 [Amended]
11. In Sec. 1005.73, paragraph (a)(2) introductory text is amended
by removing the letter ``(s)'' at the end of the word ``price(s)'' and
the words ``or base milk and excess milk'', paragraph (c)(2) is amended
by removing the word ``appropriate'' and the letter ``(s)'' at the end
of the word ``price(s)'', paragraphs (d)(4) and (5) are amended by
removing the letter ``(s)'' at the end of the word ``rate(s)''
everywhere it appears, and paragraph (d)(3) is removed and reserved.
Sec. 1005.74 [Amended]
12. Sec. 1005.74 is amended by removing the letter ``(s)'' at the
end of the word ``price(s)''.
Sec. 1005.75 [Amended]
13. In Sec. 1005.75, paragraph (a) is amended by removing the words
``and the uniform price for base milk''.
Secs. 1005.90, 1005.91, 1005.92, 1005.93, and 1005.94 [Removed]
14. Sec. 1005.90 and the undesignated centerheading preceding it,
and Secs. 1005.91 through 1005.94 are removed.
PART 1007--MILK IN THE SOUTHEAST MARKETING AREA
Sec. 1007.32 [Amended]
15. In Sec. 1007.32, paragraph (a) is removed and reserved.
Sec. 1007.61 [Amended]
16. In Sec. 1007.61, paragraph (a) introductory text is amended by
removing the words ``of June through January'', paragraph (a)(6) is
amended by removing the words ``for the months of June through
January'', paragraph (b) is removed, and the section heading is revised
to read as follows:
Sec. 1007.61 Computation of uniform price (including weighted average
price).
* * * * *
Sec. 1007.62 [Amended]
17. In Sec. 1007.62, paragraph (b) is amended by removing the word
``applicable'' and the letter ``(s)'' at the end of the word
``price(s)''.
Sec. 1007.71 [Amended]
18. In Sec. 1007.71, paragraph (a)(2)(i) is amended by removing the
letter ``(s)'' at the end of the word ``price(s)''.
Sec. 1007.73 [Amended]
19. In Sec. 1007.73, paragraph (a)(1) is amended by removing the
phrase ``or if the producer had no established base upon which to
receive payments during the base paying months of February through
May,'', paragraph (a)(2) introductory text is amended by removing the
letter ``(s)'' at the end of the word ``price(s)'' and the words ``or
base milk and excess milk'', paragraph (d)(2) is amended by removing
the word ``appropriate'' and the letter ``(s)'' at the end of the word
``price(s)'', paragraphs (f)(4) and (5) are amended by removing the
letter ``(s)'' at the end of the word ``rate(s)'' and the word
``(are)'' wherever they appear, and paragraph (f)(3) is removed and
reserved.
Sec. 1007.74 [Amended]
20. In Sec. 1007.74, the letter ``s'' at the end of the word
``prices'' and the words ``for base and excess milk'' are removed.
Sec. 1007.75 [Amended]
21. In Sec. 1007.75, paragraph (a) is amended by removing the
phrase ``and the uniform price for base milk''.
Secs. 1007.90, 1007.91, 1007.92, 1007.93, and 1007.94 [Removed]
22. Sec. 1007.90 and the undersignated centerheading preceding it,
and Secs. 1007.91 through 1007.94 are removed.
PART 1011--MILK IN THE TENNESSEE VALLEY MARKETING AREA
Sec. 1011.32 [Amended]
23. In Sec. 1011.32, paragraph (a) is removed and reserved.
Sec. 1011.61 [Amended]
24. In Sec. 1011.61, paragraph (a) introductory text is amended by
removing the words ``of July through February'', paragraph (b) is
removed, and the section heading is revised to read as follows:
Sec. 1011.61 Computation of uniform price (including weighted average
price).
* * * * *
Sec. 1011.62 [Amended]
25. In Sec. 1011.62 paragraph (b) is amended by removing the word
``applicable'' and the letter ``s'' at the end of the word ``prices''.
Sec. 1011.71 [Amended]
26. In Sec. 1011.71, paragraph (a)(2)(i) is amended by removing the
letter ``s'' at the end of the word ``prices''.
Sec. 1011.73 [Amended]
27. In Sec. 1011.73, paragraph (a)(2) introductory text is amended
by removing the phrase ``or base milk and excess milk'' and the letter
``(s)'' at the end of the word ``price(s)'', paragraph (c)(2) is
amended by removing the word ``appropriate'' and the letter ``(s)'' at
the end of the word ``price(s)'', paragraphs (d) (4) and (5) are
amended by removing the letter ``(s)'' at the end of the word
``rate(s)'' wherever it appears, and paragraph (d)(3) is removed and
reserved.
Sec. 1011.74 [Amended]
28. In Sec. 1011.74, the letter ``(s)'' at the end of the word
``price(s)'' is removed.
Sec. 1011.75 [Amended]
29. In Sec. 1011.75, paragraph (a) is amended by removing the words
``and the uniform price for base milk''.
Secs. 1011.90, 1011.91, 1011.92, 1011.93, and 1011.94 [Removed]
30. Sec. 1011.90 and the undesignated centerheading preceding it,
and Secs. 1011.91 through 1011.94 are removed.
PART 1046--MILK IN THE LOUISVILLE-LEXINGTON-EVANSVILLE MARKETING
AREA
Sec. 1046.32 [Amended]
31. In Sec. 1046.32, paragraph (d) is removed and reserved.
Sec. 1046.61 [Amended]
32. In Sec. 1046.61, paragraph (a) introductory text is amended by
removing the words ``of July through February'', paragraph (b) is
removed, and the section heading is revised to read as follows:
Sec. 1046.61 Computation of uniform price (including weighted average
price).
* * * * *
Sec. 1046.62 [Amended]
33. In Sec. 1046.62, paragraph (b) is amended by removing the word
``applicable'' and the letter ``(s)'' at the end of the word
``price(s)''.
Sec. 1046.71 [Amended]
34. In Sec. 1046.71, paragraph (a)(2)(i) is amended by removing the
word
[[Page 69019]]
``applicable'' and the letter ``(s)'' at the end of the word
``price(s)''.
Sec. 1046.73 [Amended]
35. In Sec. 1046.73, the last sentence in paragraph (a) is removed,
paragraph (b) introductory text is amended by removing the letter
``(s)'' at the end of the word ``price(s)'' and the words ``or base
milk and excess milk'', paragraphs (d) (4) and (5) are amended by
removing the letter ``(s)'' at the end of the word ``rate(s)''
everywhere it appears, and paragraph (d)(3) is removed and reserved.
Sec. 1046.74 [Amended]
36. In Sec. 1046.74, the letter ``(s)'' at the end of the word
``price(s)'' is removed.
Sec. 1046.75 [Amended]
37. In Sec. 1046.75, paragraph (a) is amended by removing the
phrase ``and the uniform price for base milk''.
Secs. 1046.90, 1046.91, 1046.92, 1046.93, and 1046.94 [Removed]
38. Sec. 1046.90 and the undesignated centerheading preceding it,
and Secs. 1046.91 through 1046.94 are removed.
Dated: December 23, 1996.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 96-33000 Filed 12-30-96; 8:45 am]
BILLING CODE 3410-02-P