[Federal Register Volume 62, Number 149 (Monday, August 4, 1997)]
[Rules and Regulations]
[Pages 41810-41812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20458]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1126

[DA-97-06]


Milk in the Texas Marketing Area; Suspension of Certain 
Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule; suspension.

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SUMMARY: This document continues the suspension of segments of the pool 
plant and producer milk definitions of the Texas order for a two-year 
period. Associated Milk Producers, Inc., a cooperative association that 
represents producers who supply milk to the market, requested 
continuation of the current suspension with a change to the producer 
diversion provision. Continuation of the suspension currently in effect 
is necessary to ensure that dairy farmers who have historically 
supplied the Texas market will continue to have their milk priced under 
the Texas order without incurring costly and inefficient movements of 
milk.

EFFECTIVE DATE: August 1, 1997, through July 31, 1999.

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 May 7, 1997; published May 
13, 1997 (62 FR 26255).
    Notice of Revised Proposed Suspension: Issued June 23, 1997; 
published June 27, 1997 (62 FR 34676).
    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.), 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 March 1997, the milk of 1,805 producers was pooled 
on the Texas Federal milk order. Of these producers, 1,350 producers 
were below the 326,000-pound production guideline and are considered 
small businesses. During this same period, there were 24 handlers 
operating pool plants under the Texas order. Five of these handlers 
would be considered small businesses.
    This rule continues the suspension of segments of the pool plant 
and producer milk definitions under the Texas order. This rule lessens 
the regulatory impact of the order on certain milk handlers and tends 
to ensure that dairy farmers continue to have their milk priced under 
the order and thereby receive the benefits that accrue from such 
pricing. Additionally, this rule will not increase the regulatory 
burden on handlers since the suspension has been in effect during the 
prior two-year period. The suspension will continue to provide handlers 
the flexibility needed to move milk supplies in the most efficient 
manner and to eliminate costly and inefficient movements of milk that 
would be made solely for the purpose of pooling the milk of dairy 
farmers who have historically supplied the market.

Preliminary Statement

    This order of suspension is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act and of the order regulating 
the handling of milk in the Texas marketing area.
    Notice of proposed rulemaking was published in the Federal Register 
on May 7, 1997 (62 FR 26255), concerning a proposed suspension of 
certain provisions of the order. A revised proposed suspension was 
issued on June 23, 1997, and published in the Federal Register on June 
27, 1997 (62 FR 34676). Interested persons were

[[Page 41811]]

afforded opportunity to file written data, views and arguments thereon.
    Two comments in opposition to the revised proposed suspension and 
in support of the continuance of the existing suspension, one comment 
in opposition to the proposed suspension, and one comment in support of 
the revised proposed suspension were received.
    After consideration of all relevant material, including the 
proposal in the notice, the comments received, and other available 
information, it is hereby found and determined that for the months of 
August 1, 1997, through July 31, 1999, the following provisions of the 
order do not tend to effectuate the declared policy of the Act:
    1. In Sec. 1126.7(d) introductory text, the words ``during the 
months of February through July'' and the words ``under paragraph (b) 
or (c) of this section''.
    2. In Sec. 1126.7(e) introductory text, the words ``and 60 percent 
or more of the producer milk of members of the cooperative association 
(excluding such milk that is received at or diverted from pool plants 
described in paragraphs (b), (c), and (d) of this section) is 
physically received during the month in the form of a bulk fluid milk 
product at pool plants described in paragraph (a) of this section 
either directly from farms or by transfer from plants of the 
cooperative association for which pool plant status under this 
paragraph has been requested''.
    3. In Sec. 1126.13(e)(1), the words ``and further, during each of 
the months of September through January not less than 15 percent of the 
milk of such dairy farmer is physically received as producer milk at a 
pool plant''.
    4. In Sec. 1126.13, paragraph (e)(2).
    5. In Sec. 1126.13(e)(3), the sentence ``The total quantity of milk 
so diverted during the month shall not exceed one-third of the producer 
milk physically received at such pool plant during the month that is 
eligible to be diverted by the plant operator;'.

Statement of Consideration

    This rule continues the suspension of segments of the pool plant 
and producer milk provisions under the Texas order. This suspension 
will be in effect from August 1, 1997, through July 31, 1999. The 
current suspension will expire on July 31, 1997. This rule continues 
the suspension of: (1) The 60 percent delivery standard for pool plants 
operated by cooperatives; (2) the diversion limitation applicable to 
cooperative associations; (3) the limits on the amount of milk that a 
pool plant operator may divert to nonpool plants; (4) the shipping 
standards that must be met by supply plants to be pooled under the 
order; and (5) the individual producer performance standards that must 
be met in order for a producer's milk to be eligible for diversion to a 
nonpool plant.
    A comment received from Associated Milk Producers Inc. (AMPI) to 
the May 7, 1997, proposed suspension supports the continuation of the 
suspension with a change to the producer milk diversion provision. 
AMPI, a cooperative association that represents a substantial number of 
dairy farmers who supply the Texas market, states that the change to 
the current suspension is necessary to achieve orderly marketing 
conditions within the Texas marketing area. The suspension currently in 
effect eliminates any diversion limit on the Texas market. However, 
according to the cooperative, by modifying the existing suspension as 
noticed in the revised proposed suspension, cooperative diversions 
would be limited to an amount equal to deliveries made to pool plants 
by these associations. The cooperative argues that this assures a more 
distinct association with the Class I market than the current 
suspension and limits ``pool riding.'' Furthermore, AMPI states that as 
the New Mexico/West Texas and Texas markets coalesce, inter-market 
movements create the need for pooling requirements that are 
unrestrictive. However, these requirements must also allow reserve 
locations to serve their function in the marketplace and also preserve 
the integrity of the market.
    Comments opposing the modification of the current suspension and in 
support of the existing suspension were submitted by Premier Milk, 
Inc., and Lone Star Milk Producers, L.C., two small cooperative 
associations representing producers who pool their milk on the Texas 
order. The cooperatives state that AMPI's revised proposal increases 
the difficulty of marketing milk on the Texas order because the 
proposed diversion limitation would reduce Premier's and Lone Star's 
opportunities to divert milk. The two cooperatives contend that 
presently in the Texas order a very limited amount of milk can be sold 
to pool plants by small cooperatives because the larger cooperatives 
either own or have full supply contracts with almost all of the pool 
plants in the Texas order.
    A comment submitted by The Kroger Co. (Kroger), a handler operating 
a pool distributing plant regulated under the Texas order, opposes a 
continuance of the suspension of the pool plant and producer 
definitions which are currently in effect. Kroger states that the 
current suspension has eliminated the need for producers and pool 
supply plants to service the fluid milk market and continue to enjoy 
the benefits of association with the Texas order. Furthermore, the 
handler contends that current marketing conditions justify the denial 
of continuation of the suspension. Kroger argues that current supply 
conditions indicate that local milk supplies will be needed to meet the 
demand of fluid milk sales and states that the suspended provisions 
discourage the availability of local milk to meet the needs of fluid 
milk handlers. Therefore, in order to assure consumers an adequate 
supply of milk at a reasonable cost, according to the handler, the 
suspension should not be continued.
    Continuation of the current suspension is necessary to ensure that 
dairy farmers who have historically supplied the Texas market will 
continue to have their milk priced under the Texas order, thereby 
receiving the benefits that accrue from such pooling. In addition, the 
suspension will continue to provide handlers the flexibility needed to 
move milk supplies in the most efficient manner and to eliminate costly 
and inefficient movements of milk that would be made solely for the 
purpose of pooling the milk of dairy farmers who have historically 
supplied the market.
    Marketing conditions have not significantly changed since 1995 when 
the current suspension was issued. There is no indication that adequate 
local fluid milk supplies will not be available to service the needs of 
handlers in the Texas marketing area. Although the Class I utilization 
of producer milk has increased to 51.73% for the July 1996 through June 
1997 period as compared to 45.38% in the previous July through June 
period, this Class I utilization has not increased to the level where 
it is difficult to obtain an adequate supply of milk.
    Currently the Federal milk marketing order program is undergoing an 
extensive review as mandated by the Federal Agriculture Improvement and 
Reform Act of 1996. All provisions of milk orders, including the 
producer and pool plant definitions, are being examined as part of 
Federal order reform. However, while this process is underway, 
marketing conditions in the Texas order warrant the continuance of the 
existing suspension to ensure the orderly marketing of milk.
    Accordingly, it is appropriate to suspend the aforesaid provisions 
beginning August 1, 1997, through July 31, 1999.

[[Page 41812]]

    It is hereby found and determined that thirty days' notice of the 
effective date hereof is impractical, unnecessary and contrary to the 
public interest in that:
    (a) The suspension is necessary to reflect current marketing 
conditions and to assure orderly marketing conditions in the marketing 
area, in that such rule is necessary to permit the continued pooling of 
the milk of dairy farmers who have historically supplied the market 
without the need for making costly and inefficient movements of milk;
    (b) This suspension does not require of persons affected 
substantial or extensive preparation prior to the effective date; and
    (c) Notice of proposed rulemaking was given interested parties and 
they were afforded opportunity to file written data, views or arguments 
concerning this suspension. Two comments supporting the current 
suspension and opposing the revised proposed suspension, one comment 
supporting the revised proposed suspension, and one comment opposing 
the proposed suspension were received.
    Therefore, good cause exists for making this order effective less 
than 30 days from the date of publication in the Federal Register.

List of Subjects in 7 CFR Part 1126

    Milk marketing orders.

    For the reasons set forth in the preamble, 7 CFR Part 1126 is 
amended as follows:

PART 1126--MILK IN THE TEXAS MARKETING AREA

    1. The authority citation for 7 CFR part 1126 continues to read as 
follows:

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


Sec. 1126.7  [Suspended in part]

    2. In Sec. 1126.7(d) introductory text, the words ``during the 
months of February through July'' and the words ``under paragraph (b) 
or (c) of this section'' are suspended.
    3. In Sec. 1126.7(e) introductory text, the words ``and 60 percent 
or more of the producer milk of members of the cooperative association 
(excluding such milk that is received at or diverted from pool plants 
described in paragraphs (b), (c), and (d) of this section) is 
physically received during the month in the form of a bulk fluid milk 
product at pool plants described in paragraph (a) of this section 
either directly from farms or by transfer from plants of the 
cooperative association for which pool plant status under this 
paragraph has been requested'' are suspended.


Sec. 1126.13  [Suspended in part]

    4. In Sec. 1126.13(e)(1), the words ``and further, during each of 
the months of September through January not less than 15 percent of the 
milk of such dairy farmer is physically received as producer milk at a 
pool plant'' are suspended.
    5. Section 1126.13(e)(2) is suspended.
    6. In Sec. 1126.13(e)(3), the sentence ``The total quantity of milk 
so diverted during the month shall not exceed one-third of the producer 
milk physically received at such pool plant during the month that is 
eligible to be diverted by the plant operator;'' is suspended.

    Dated: July 29, 1997.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 97-20458 Filed 8-1-97; 8:45 am]
BILLING CODE 3410-02-U