[Federal Register Volume 62, Number 128 (Thursday, July 3, 1997)]
[Proposed Rules]
[Pages 36022-36024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17609]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1011

[DA-97-09]


Milk in the Tennessee Valley Marketing Area; Proposed Termination 
of Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; termination.

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SUMMARY: This document invites written comments on the proposed 
termination of the order regulating the handling of milk in the 
Tennessee Valley marketing area. A proposed amended Tennessee Valley 
order modifying interim transportation credit provisions failed to 
receive the required two-thirds approval in a recent polling of 
cooperatives in the marketing area. Since the Department has determined 
that the provisions of the proposed amended order are necessary to 
effectuate the declared policy of the applicable statutory authority, 
it is necessary to consider terminating the present Tennessee Valley 
order.

DATES: Comments must be submitted on or before July 10, 1997.

ADDRESSES: Comments (two copies) should be filed with the USDA/AMS/
Dairy Division, Order Formulation Branch, Room 2971, South Building,

[[Page 36023]]

P.O. Box 96456, Washington, DC 20090-6456.

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__M[email protected].

SUPPLEMENTARY INFORMATION: The Department is issuing this proposed 
action in conformance with Executive Order 12866.
    This proposed termination of a rule has been reviewed under 
Executive Order 12988, Civil Justice Reform. This action is not 
intended to have a retroactive effect. If adopted, this proposed action 
will not preempt any state or local laws, regulations, or policies, 
unless they present an irreconcilable conflict with the action.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), provides that administrative proceedings must be 
exhausted before parties may file suit in court. Under section 
608c(15)(A) of the Act, any handler subject to an order may request 
modification or exemption from such order by filing with the Secretary 
a petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with the law. A handler is afforded the opportunity for a hearing on 
the petition. After a hearing, the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has its 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.

Small Business Consideration

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
proposed action will not have a significant economic impact on a 
substantial number of small entities. For the purpose of the Regulatory 
Flexibility Act, a dairy farm is considered a ``small business'' if it 
has an annual gross revenue of less than $500,000, and a dairy products 
manufacturer is a ``small business'' if it has fewer than 500 
employees. For the purposes of determining which dairy farms are 
``small businesses,'' the $500,000 per year criterion was used to 
establish a production guideline of 326,000 pounds per month. Although 
this guideline does not factor in additional monies that may be 
received by dairy producers, it should be an inclusive standard for 
most ``small'' dairy farmers. For purposes of determining a handler's 
size, if the plant is part of a larger company operating multiple 
plants that collectively exceed the 500-employee limit, the plant will 
be considered a large business even if the local plant has fewer than 
500 employees.
    During the representative month of February 1997, the milk of 1,469 
producers was pooled on the Tennessee Valley order. Of these producers, 
1,442 are considered as small businesses.
    There were 7 handlers operating 8 pool distributing plants 
regulated under the Tennessee Valley milk order for February 1997. Of 
these handlers, 3 are considered small businesses.
    If the Tennessee Valley order is terminated, it is likely that all 
but 2 of the handlers currently regulated under the order will become 
regulated under the Carolina, Southeast, or Louisville-Lexington-
Evansville Federal milk orders. The regulations under these other 
orders are, for the most part, comparable to those of the Tennessee 
Valley order, but each of these 4 orders has a different price 
structure and a unique uniform price to producers that is computed each 
month. The impact of these regulatory changes on producers will depend 
upon which order the former Tennessee Valley handlers become regulated 
under. In some cases, the uniform price paid to producers will be 
somewhat higher, but in other cases it will be a little lower.
    Those handlers who will become regulated under other Federal orders 
will continue to be responsible for the recordkeeping, reporting, and 
compliance requirements.
    Interested parties are invited to submit comments on the probable 
regulatory and informational impact of this proposed action on small 
entities. Also, parties may suggest modifications of this proposal for 
the purpose of tailoring their applicability to small businesses.

Proposed Termination of Rule

    Notice is hereby given that, pursuant to the provisions of the 
Agricultural Marketing Agreement Act, the termination of the order 
regulating the handling of milk in the Tennessee Valley marketing area 
is being considered.
    All persons who want to send written data, views, or arguments 
about the proposed termination should send two copies of them to the 
USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South 
Building, P.O. Box 96456, Washington, DC 20090-6456, by the 7th day 
after the publication of this notice in the Federal Register. The 
period for filing comments is limited to 7 days because a longer period 
would not provide the time needed to complete the required procedures 
before the requested termination is to be effective.
    The comments that are received will be made available for public 
inspection in the Dairy Division during normal business hours (7 CFR 
1.27(b)).

Preliminary Statement

    Interested parties are invited to submit comments on all issues 
concerning the proposed termination of the Tennessee Valley milk order. 
In addition to commenting on the merits of terminating the order, 
interested parties should specifically address the handling of the 
disbursement of the current Tennessee Valley Transportation Credit 
Balancing Fund (TCBF).
    If the Tennessee Valley order is terminated, it is likely that all 
but 2 of the handlers currently regulated under the order will become 
fully regulated handlers under the Carolina, Southeast, or Louisville-
Lexington-Evansville milk orders. Since these orders, like the 
Tennessee Valley order, have provisions to reimburse handlers for the 
expense of transporting supplemental milk to the market (i.e., 
transportation credit provisions) and, consequently, maintain a 
transportation credit balancing fund (TCBF) for this purpose, a 
question arises concerning the disbursement of the balance in the 
Tennessee Valley TCBF.
    All of the Tennessee Valley handlers who will become regulated 
under Orders 5, 7, or 46, will be eligible for transportation credits 
under the provisions of those orders. In view of this, it would be 
unfair to return the money that Tennessee Valley handlers have 
contributed to the Order 11 TCBF and then permit these handlers to draw 
credits out of the TCBF in Orders 5, 7, or 46 without ever having 
contributed to such funds. For this reason, the Department recommends 
that the funds accumulated in the Tennessee Valley TCBF be transferred 
prorata (based on each handler's contribution to the Order 11 TCBF) to 
each of the TCBFs of the respective orders where such handlers become 
regulated. This transfer of funds, the Department believes, is the most 
``equitable'' means for disbursement of the TCBF in accordance with 7 
CFR Part 1000, General Provisions of Federal Milk Marketing Orders. In 
the case of 2 Order 11 handlers who will likely not be regulated under 
any of the other 3

[[Page 36024]]

orders, the Department recommends returning these handlers' pro rata 
share of the TCBF to these handlers. The terms of 7 CFR 1000.4(d)(2) 
direct the market administrator or the ``liquidating agent'' to 
distribute outstanding funds connected with a terminated order to 
handlers ``in an equitable manner.'' The Department invites interested 
parties to comment on this proposal and/or to suggest any alternative 
way to dispose of these funds in an equitable manner.
    At least one additional question arises with the possible 
termination of the Tennessee Valley order. The transportation credit 
provisions for Orders 5, 7, 11, and 46 were adopted simultaneously for 
these 4 orders. Because of the overlap in supply areas for these 
markets, producers in any of the marketing areas of the 4 orders are 
ineligible for transportation credits under any of the other 3 orders. 
With the possible termination of Order 11, a question may arise 
concerning the interpretation of Section 82(c)(2)(ii) in the interim 
amendments or Section 82(c)(2)(iii) in the final decision amendments as 
set forth in the Federal Register of May 20, 1997, at 62 FR 27525. In 
either case, the language of those paragraphs in Orders 5, 7, and 46 
states that ``the farm on which the milk was produced is not located 
within the specified marketing areas of this order or the marketing 
areas of'' the other 3 orders involved in this proceeding. Thus, Orders 
5, 7, and 46 refer to ``the Order 11 marketing area.''
    If Order 11 is terminated, the question that arises is whether a 
producer located in the former Tennessee Valley marketing area is still 
ineligible for a transportation credit under Orders 5, 7, and 46. The 
Department maintains that the reference to the Order 11 marketing area 
was merely a convenient geographic reference used in lieu of repeating 
a lengthy list of counties and cities. Accordingly, the language 
referring to the marketing area of Federal Order 11 will continue to be 
interpreted as the territory defined in the Tennessee Valley order.
    Interested parties are invited to submit comments on this proposed 
interpretation of the order as well as the other issues raised in this 
notice.

Statement of Consideration

    The proposed action would terminate the order regulating the 
handling of milk in the Tennessee Valley marketing area. On May 12, 
1997, the Department issued a partial final decision on proposed 
amendments to the Carolina, Southeast, Tennessee Valley, and 
Louisville-Lexington-Evansville milk orders which was published on May 
20, 1997 (62 FR 27525). The final decision document contained proposed 
amended orders for the 4 southeast marketing areas, including the 
Tennessee Valley order, and directed the respective market 
administrators of the 4 orders to ascertain whether producers approved 
the issuance of the amended orders. The final decision concluded that 
amended orders were needed to effectuate the declared policy of the 
applicable statutory authority.
    Less than two-thirds of the producers whose milk is pooled in the 
Tennessee Valley approved the issuance of the proposed amended order. 
In these circumstances, where it has been concluded that the order 
should be amended to effectuate the declared policy of the Act, and the 
Act requires two-thirds of the producers to vote affirmatively, it 
appears that continuation of the existing Tennessee Valley order would 
not be in conformity with the applicable statutory authority. 
Therefore, it is necessary to consider terminating the present order.

List of Subjects in 7 CFR Part 1011

    Milk marketing orders.

    The authority citation for 7 CFR Part 1011 continues to read as 
follows:
    Authority: 7 U.S.C. 601-674.

    Dated: June 30, 1997.
Lon Hatamiya,
Administrator, Agricultural Marketing Service.
[FR Doc. 97-17609 Filed 7-2-97; 8:45 am]
BILLING CODE 3410-02-P