[Federal Register Volume 62, Number 141 (Wednesday, July 23, 1997)]
[Rules and Regulations]
[Pages 39738-39745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19371]



[[Page 39737]]

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Part V





Department of Agriculture





_______________________________________________________________________



Agricultural Marketing Service



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7 CFR Parts 1005, 1007, and 1046



Milk in the Carolina and Certain Other Marketing Areas; Order Amending 
the Orders; Final Rule

  Federal Register / Vol. 62, No. 141 / Wednesday, July 23, 1997 / 
Rules and Regulations  

[[Page 39738]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005, 1007, and 1046

[Docket No. AO-388-A9, et al.; DA-96-08]


Milk in the Carolina and Certain Other Marketing Areas; Order 
Amending the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends three Federal milk orders in the 
Southeastern United States. The amendments modify certain provisions of 
the orders regarding transportation credits which were implemented on 
an interim basis in order to reimburse handlers for the cost of 
importing bulk milk into these markets for fluid use when local 
supplies are insufficient to meet fluid needs. More than two-thirds of 
the producers in the Carolina, Southeast, and Louisville-Lexington-
Evansville markets approved the adoption of the rules. Producers in the 
Tennessee Valley market disapproved the Tennessee Valley milk order as 
amended, resulting in the proposed termination of such milk order to be 
handled in a separate rulemaking action.

EFFECTIVE DATE: August 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, (Tel: 202/690-
1932; E-mail:[email protected]).

SUPPLEMENTARY INFORMATION: This administrative rule is governed by the 
provisions of Sections 556 and 557 of Title 5 of the United States Code 
and, therefore, is excluded from the requirements of 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 the 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.
    The transportation credit provisions, adopted on an interim basis 
effective August 10, 1996, were based upon proposals that were 
considered at a public hearing held May 15-16, 1996, in Charlotte, 
North Carolina. The proposed modifications to the interim amendments 
are based upon exceptions to the interim rules and additional testimony 
heard at a reopened hearing held December 17-18, 1996, in Atlanta, 
Georgia.

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.
    The milk of approximately 7,000 producers is pooled on the 
Carolina, Southeast, and Louisville-Lexington-Evansville milk orders. 
Of these producers, 95 percent produce below the 326,000-pound 
production guideline and are considered to be small businesses.
    There are 38 handlers operating pool plants under the three orders. 
Of these handlers, 19 have fewer than 500 employees and qualify as 
small businesses.
    The final rules amending the transportation credit provisions will 
promote orderly marketing of milk by producers and regulated handlers 
operating within the 3 marketing areas. This rule eliminates the 
provision which provides for the transfer of funds from the producer-
settlement fund to the transportation credit balancing fund when the 
latter is insufficient to cover the amount of credits to be distributed 
to handlers for a given month. Thus, the possibility of a reduction of 
uniform prices resulting from transportation credits will no longer 
exist.
    This final rule also modestly increases the handler assessment from 
6 cents to 6.5 cents per hundredweight of Class I producer milk in the 
Carolina market and to 7 cents per hundredweight in the Southeast 
market, but maintains the current 6-cent assessment in the Louisville-
Lexington-Evansville market. A 6-cent per hundredweight assessment 
translates to approximately one-half cent per gallon of milk. The one-
half to one cent assessment increase in Federal Orders 1005 and 1007 
will not negatively impact small businesses.
    At present, all handlers regulated under the 3 milk orders involved 
in this proceeding file a monthly report of receipts and utilization 
with the market administrator. The proposed amendments will not 
significantly add to the amount of information required to be reported 
by those handlers requesting transportation credits. The estimated time 
to collect, aggregate, and report this information will vary directly 
with the amount of milk for which credits are requested, but should not 
be significant.

Prior documents in This Proceeding

    Notice of Hearing: Issued May 1, 1996; published May 3, 1996 (61 FR 
19861).
    Tentative Partial Final Decision: Issued July 12, 1996; published 
July 18, 1996 (61 FR 37628).
    Interim Amendment of Orders: Issued August 2, 1996; published 
August 9, 1996 (61 FR 41488).
    Extension of Time for Filing Comments: Issued August 16, 1996; 
published August 23, 1996 (61 FR 43474).
    Extension of Time for Filing Comments: Issued October 18, 1996; 
published October 25, 1996 (61 FR 55229).
    Notice of Reopened Hearing: Issued November 19, 1996; published 
November 25, 1996 (61 FR 59843).

[[Page 39739]]

    Partial Final Decision: Issued May 12, 1997; published May 20, 1997 
(62 FR 27525).

Preliminary Statement

    The adoption of the amended orders is based on a producer 
referendum held in the Louisville-Lexington-Evansville market and a 
polling of cooperatives in the Carolina and Southeast markets. More 
than two-thirds of the producers in the Carolina, Southeast and 
Louisville-Lexington-Evansville markets approved the adoption of the 
orders as amended. In a poll of cooperatives conducted for the 
Tennessee Valley market, the order, as amended, was disapproved by more 
than one-third of the producers eligible to vote. Accordingly, a notice 
of proposed termination for the Tennessee Valley marketing area will be 
forthcoming as a result of the producers' vote of disapproval.
    A 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.

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the aforesaid orders were first issued and 
when they were amended. The previous findings and determinations are 
hereby ratified and confirmed, except where they may conflict with 
those set forth herein.
    The following findings are hereby made with respect to the 
aforesaid orders:
    (a) Findings upon the basis of the hearing record. Pursuant to the 
provisions of the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), and the applicable rules of practice and 
procedure governing the formulation of marketing agreements and 
marketing orders (7 CFR Part 900), a public hearing was held upon 
certain proposed amendments to the tentative marketing agreement and to 
the order regulating the handling of milk in the respective marketing 
areas.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof it is found that:
    (1) The said orders, as hereby amended, and all of the terms and 
conditions thereof, will tend to effectuate the declared policy of the 
Act;
    (2) The parity prices of milk, as determined pursuant to section 2 
of the Act, are not reasonable in view of the price of feeds, available 
supplies of feeds, and other economic conditions which affect market 
supply and demand for milk in the marketing area, and the minimum 
prices specified in the order, as hereby amended, are such prices as 
will reflect the aforesaid factors, ensure a sufficient quantity of 
pure and wholesome milk, and be in the public interest; and
    (3) The said orders, as hereby amended, regulate the handling of 
milk in the same manner as, and are applicable only to persons in the 
respective classes of industrial and commercial activity specified in, 
marketing agreements upon which a hearing has been held.
    (b) Additional Findings. It is necessary in the public interest to 
make these amendments to the Carolina, Southeast, and Louisville-
Lexington-Evansville orders effective August 1, 1997. Any delay beyond 
that date would tend to disrupt the orderly marketing of milk in the 
aforesaid marketing areas.
    The amendments to these orders are known to handlers. The partial 
final decision containing the proposed amendments to these orders was 
issued on May 12, 1997.
    The changes that result from these amendments will not require 
extensive preparation or substantial alteration in the method of 
operation for handlers. In view of the foregoing, it is hereby found 
and determined that good cause exists for making these order amendments 
effective August 1, 1997. It would be contrary to the public interest 
to delay the effective date of these amendments for 30 days after their 
publication in the Federal Register. (Sec. 553(d), Administrative 
Procedure Act, 5 U.S.C. 551-559.)
    (c) Determinations. It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in Section 8c(9) of the Act) of more than 50 
percent of the milk, which is marketed within each of the specified 
marketing areas, to sign a proposed marketing agreement, tends to 
prevent the effectuation of the declared policy of the Act;
    (2) The issuance of this order amending the Carolina, Southeast, 
and Louisville-Lexington-Evansville orders is the only practical means 
pursuant to the declared policy of the Act of advancing the interests 
of producers as defined in each of the respective orders as hereby 
amended;
    (3) The issuance of the order amending the Carolina, Southeast, and 
Louisville-Lexington-Evansville orders is favored by at least two-
thirds of the producers who were engaged in the production of milk for 
sale in the respective marketing areas.

List of Subjects in 7 CFR Parts 1005, 1007, and 1046

    Milk marketing orders.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, the handling of milk in the specified marketing areas shall be 
in conformity to and in compliance with the terms and conditions of the 
orders, as amended, and as hereby further amended, as follows:
    1. The authority citation for 7 CFR Parts 1005, 1007, and 1046 
reads as follows:

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

PART 1005--MILK IN THE CAROLINA MARKETING AREA

    2. In Sec. 1005.30, paragraphs (a)(7) and (a)(8) are redesignated, 
respectively, as paragraphs (a)(8) and (a)(9), new paragraph (a)(7) is 
added, and paragraphs (a)(5), (a)(6), and (c)(3) are revised to read as 
follows:


Sec. 1005.30  Reports of receipts and utilization.

* * * * *
    (a) * * *
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order,

[[Page 39740]]

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;
* * * * *
    (c) * * *
    (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.


Sec. 1005.32  [Amended]

    3. In Sec. 1005.32, a new paragraph (a) is added to read as 
follows:


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).
* * * * *


Sec. 1005.61  [Amended]

    4. In Sec. 1005.61, paragraph (a)(4) is removed and paragraphs 
(a)(5) and (a)(6) are redesignated as paragraphs (a)(4) and (a)(5), 
respectively.
    5. Sec. 1005.77 is revised to read as follows:


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 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.


Sec. 1005.78  [Amended]

    6. In the introductory text of Sec. 1005.78, the number 
``1005.81,'' is added following the number ``1005.77,''.
    7. In Sec. 1005.81, paragraph (c) is removed and paragraphs (a) and 
(b) are revised to read as follows:


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.
    8. Sec. 1005.82 is revised to read as follows:


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 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

[[Page 39741]]

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;
    (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
    (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.

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA

    9. In Sec. 1007.30, paragraphs (a)(7) and (a)(8) are redesignated, 
respectively, as paragraphs (a)(8) and (a)(9), new paragraph (a)(7) is 
added, and paragraphs (a)(5), (a)(6), and (c)(3) are revised to read as 
follows:


Sec. 1007.30  Reports of receipts and utilization.

* * * * *
    (a) * * *
    (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;
* * * * *

[[Page 39742]]

    (c) * * *
    (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.
* * * * *
    10. In Sec. 1007.32, a new paragraph (a) is added to read as 
follows:


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).
* * * * *


Sec. 1007.61  [Amended]

    11. In Sec. 1007.61, paragraph (a)(4) is removed and paragraphs 
(a)(5) and (a)(6) are redesignated as paragraphs (a)(4) and (a)(5), 
respectively.


Sec. 1007.78  [Amended]

    12. In the introductory text of Sec. 1007.78, the number 
``1007.81,'' is added following the number ``1007.78,''.


Sec. 1007.81  [Amended]

    13. In Sec. 1007.81, paragraph (c) is removed and paragraphs (a) 
and (b) are revised to read as follows:


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.


Sec. 1007.82  [Amended]

    14. Sec. 1007.82 is revised to read as follows:


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 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,

[[Page 39743]]

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 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.

PART 1046--MILK IN THE LOUISVILLE-LEXINGTON-EVANSVILLE MARKETING 
AREA

    21. In Sec. 1046.30, paragraphs (a)(7) and (a)(8) are redesignated, 
respectively, as paragraphs (a)(8) and (a)(9), new paragraph (a)(7) is 
added, and paragraphs (a)(5), (a)(6), and (c)(3) are revised to read as 
follows:


Sec. 1046.30  Reports of receipts and utilization.

* * * * *
    (a) * * *
    (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;
* * * * *
    (c) * * *
    (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.
* * * * *
    22. In Sec. 1046.32, paragraph (c) is redesignated as paragraph (d) 
and a new paragraph (c) is added to read as follows:


Sec. 1046.32  Other reports.

* * * * *
    (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).
* * * * *


Sec. 1046.61  [Amended]

    23. In Sec. 1046.61, paragraph (a)(4) is removed and paragraphs 
(a)(5) and (a)(6) are redesignated as paragraphs (a)(4) and (a)(5), 
respectively.
    24. Sec. 1046.77 is revised to read as follows:


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

[[Page 39744]]

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.


Sec. 1046.78  [Amended]

    25. In Sec. 1046.78, the number ``1046.81,'' is added following the 
number ``1046.77,''.
    26. In Sec. 1046.81, paragraph (c) is removed and paragraphs (a) 
and (b) are revised to read as follows:


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.
    27. Section 1046.82 is revised to read as follows:


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).
    (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:

[[Page 39745]]

    (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 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.

    Dated: July 17, 1997.
Michael V. Dunn,
Assistant Secretary for Marketing and Regulatory Programs.
[FR Doc. 97-19371 Filed 7-22-97; 8:45 am]
BILLING CODE 3410-02-P