[Federal Register Volume 62, Number 134 (Monday, July 14, 1997)]
[Proposed Rules]
[Pages 37524-37525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18328]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1137

[DA-97-02]


Milk in the Eastern Colorado Marketing Area; Termination of 
Proceeding on Proposed Suspension/Termination of Certain Provisions of 
the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; termination of proceeding.

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SUMMARY: This document terminates the proceeding that was initiated to 
consider a proposal to suspend or terminate a portion of the 
performance standard for regulating a distributing plant under the 
Eastern Colorado Federal milk marketing order. Currently, the order 
specifies that a distributing plant disposing of 10 percent or more of 
its Grade A milk receipts, or 12,000 pounds per day, whichever is less, 
as route disposition in the marketing area is a fully regulated 
distributing plant. Brown-Swiss Gillette Dairy, a handler operating a 
distributing plant that is partially regulated under 3 Federal milk 
orders, requested the suspension or termination.

FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing 
Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room 
2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 
720-9368, e-mail address: Clifford__M__C[email protected].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
    Notice of Proposed Suspension: Issued April 2, 1997; published 
April 8, 1997 (62 FR 16737).

Small Business Consideration

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
rule will not have a significant economic impact on a substantial 
number of small entities. For the purpose of the Regulatory Flexibility 
Act, a dairy farm is considered a ``small business'' if it has an 
annual gross revenue of less than $500,000, and a dairy products 
manufacturer is a ``small business'' if it has fewer than 500 
employees. For the purposes of determining which dairy farms are 
``small businesses,'' the $500,000 per year criterion was used to 
establish a production guideline of 326,000 pounds per month. Although 
this guideline does not factor in additional monies that may be 
received by dairy producers, it should be an inclusive standard for 
most ``small'' dairy farmers. For purposes of determining a handler's 
size, if the plant is part of a larger company operating multiple 
plants that collectively exceed the 500-employee limit, the plant will 
be considered a large business even if the local plant has fewer than 
500 employees.
    For the month of January 1997, the milk of 426 producers was pooled 
on the Eastern Colorado Federal milk order. Of these producers, 323 
produced below the 326,000-pound production guideline and are 
considered as small businesses. A majority of these producers produce 
less than 100,000 pounds per month. Of the total number of producers 
whose milk was pooled during that month, 6 were non-member producers 
and 420 were members of either Mid-America

[[Page 37525]]

Dairymen or Western Dairymen Cooperative, Inc. For January 1997, 322 
cooperative members and one non-member producer met the small business 
criterion.
    For the month of January 1997, there were 10 handlers operating 11 
plants pooled or regulated under the Eastern Colorado milk order. Of 
these handlers, half have 500 or fewer employees and qualify as small 
businesses.
    Brown Swiss-Gillette Dairy (Gillette) receives its milk from Black 
Hills Milk Producers Cooperative. During the month of January 1997, 55 
of the 58 producers supplying milk to Black Hills Milk Producers 
Cooperative would be considered small businesses.
    This document terminates the proceeding to suspend or terminate 
part of a provision of the Eastern Colorado marketing order which makes 
a distributing plant disposing of 10 percent or more of its Grade A 
receipts, or 12,000 pounds per day, whichever is less, as route 
disposition in a marketing area a fully regulated plant. The 
termination of this proceeding will not have a significant economic 
impact on a substantial number of small entities because the order will 
continue to function as it has with no noticeable impact on producers 
and will not result in any additional regulatory burden on handlers in 
the Eastern Colorado marketing area. Handlers in the marketing area 
will continue to pay the minimum order prices to producers.

Preliminary Statement

    This termination of proceeding is issued pursuant to the provisions 
of the Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674). Notice of proposed rulemaking was published in the 
Federal Register on April 8, 1997 (62 FR 16737) concerning a proposed 
suspension of part of a provision of the Eastern Colorado milk order. 
The proposal would have suspended or terminated a portion of the 
provision which specifies that a distributing plant disposing of 10 
percent or more of its Grade A milk receipts, or 12,000 pounds per day, 
whichever is less, as route disposition in the marketing area be 
considered a fully regulated pool plant. Interested persons were 
afforded opportunity to file written data, views and arguments thereon. 
Five comments opposing the proposed suspension or termination were 
received. No supporting comments were received.

Statement of Consideration

    This document terminates the proceeding to suspend or terminate a 
portion of the performance standard for regulating a distributing plant 
under the Eastern Colorado milk order. Currently, the order specifies 
that a distributing plant disposing of 10 percent or more of its Grade 
A milk receipts, or 12,000 pounds per day, whichever is less, as route 
disposition in the marketing area is a fully regulated distributing 
plant.
    Gillette requested the termination or suspension of the 12,000-
pound limitation, contending that the limitation is unreasonable when 
considering the plant size which must be maintained in order for 
Gillette to survive financially and also maintain its status as a 
partially regulated plant. Gillette also states that the 12,000-pound 
limitation is unreasonable when compared to the amount of packaged 
products delivered in one truckload, which greatly exceeds this 
limitation. Gillette states that termination or suspension will assure 
equity among producers and among handlers.
    A comment filed on behalf of Western Dairymen Cooperative, Inc. 
(WDCI), a cooperative association marketing approximately 83% of the 
total amount of milk pooled on Order 137, opposes the proposed 
suspension as requested by Brown Swiss-Gillette Dairy. WDCI states that 
Gillette's route disposition in the Eastern Colorado marketing area is 
significant in the northern sections of the marketing area and contends 
that Gillette vigorously competes with fully regulated handlers serving 
the retail markets in that portion of the marketing area. Due to 
Gillette's partially regulated handler status that only obligates 
Gillette to pay into the producer-settlement fund the difference 
between Order 137's uniform price less $.58 and what it actually pays 
its producers, WDCI states that it is possible that Gillette already 
possesses a price advantage over fully regulated competing handlers in 
the Order 137 marketing area. WDCI also states that the 12,000-pound 
per day disposition criterion is a reasonable performance standard and 
any disposition in excess of this amount by a handler should result in 
such handler being fully regulated. WDCI opposes the proposed 
suspension contending that it would open the door for unequal costs 
among handlers and would result in harm to producers whose milk is 
pooled under Order 137.
    Borden/Meadow Gold Dairies, Inc., an Order 137 regulated handler, 
which competes for sales with Gillette, also opposes the proposed 
suspension or termination. Borden/Meadow Gold Dairies states that the 
12,000-pound per day route disposition limitation includes enough sales 
to cause competitive market pricing and that Gillette has a choice 
whether to increase their share of sales in the Eastern Colorado 
marketing area and become fully regulated or stay within the limitation 
and remain partially regulated. Furthermore, the commentor recommends 
that the Department should not suspend the 12,000-pound per day 
limitation while the Federal order reform process is under review.
    Sinton Dairy Foods Company, Dairy Gold Foods, and Robinson Dairy, 
handlers regulated under Order 137, also submitted comments in 
opposition to Gillette's request. The handlers state that removal of 
the 12,000-pound per day limitation would allow Gillette to expand 
their sales without being a fully regulated handler. Additionally, the 
handlers maintain that all handlers should be subject to the same 
provisions.
    The comments submitted in response to the proposed suspension or 
termination reveal that there is overwhelming opposition to Gillette's 
proposal. For January 1997, WDCI and the 4 handlers that submitted 
opposing comments represented a significant amount of Class I producer 
milk on such market. The comments indicate that the 12,000-pound per 
day limitation is reasonable for this market. The removal of the 
12,000-pound limitation would place fully regulated handlers at a 
competitive disadvantage. Any handler exceeding this limitation will be 
competing with fully regulated handlers and should be subject to the 
same order provisions. Gillette will remain a partially regulated pool 
plant or become fully regulated according to the standards of the 
Eastern Colorado milk order. Therefore, the proceeding to suspend or 
terminate part of the pool plant definition is terminated.

List of Subjects in 7 CFR Part 1137

    Milk marketing orders.

    The authority citation for 7 CFR Part 1137 continues to read as 
follows:

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

    Dated: July 8, 1997.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Services.
[FR Doc. 97-18328 Filed 7-11-97; 8:45 am]
BILLING CODE 3410-02-P