[Federal Register Volume 64, Number 170 (Thursday, September 2, 1999)]
[Rules and Regulations]
[Pages 48081-48083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22905]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1106

[DA-99-06]


Milk in the Southwest Plains Marketing Area; Suspension of 
Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final Rule; Suspension of rule.

-----------------------------------------------------------------------

SUMMARY: This document suspends certain provisions of the Southwest 
Plains Federal milk marketing order (Order 106) from September 1, 1999, 
through August 31, 2000, or until implementation of Federal order 
reform. The suspension removes a portion of the supply plant shipping 
standard and the producer delivery requirement. The action was 
requested by Kraft Foods, Inc. (Kraft), and is necessary to prevent the 
uneconomical and inefficient movement of milk and to ensure that 
producers historically associated with the market will continue to have 
their milk pooled under Order 106.

EFFECTIVE DATE: September 1, 1999, through August 31, 2000.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist, 
USDA/AMS/Dairy Programs, 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: Prior document in this proceeding:
    Notice of Proposed Suspension: Issued August 3, 1999; published 
August 6, 1999 (64 FR 42860).
    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

[[Page 48082]]

``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 June 1999, 2,045 dairy farmers were producers 
under Order 106. Of these producers, 2,001 producers (i.e., 98%) were 
considered small businesses. For the same month, there were 12 
regulated handlers under Order 106. Five of these handlers were 
considered small businesses.
    The supply plant shipping standard and the producer delivery 
requirement are designed to attract an adequate supply of milk to the 
market to meet fluid needs. This final rule will allow a supply plant 
that has been associated with the Southwest Plains market during the 
months of September 1998 through January 1999 to qualify as a pool 
plant without shipping any milk to a pool distributing plant during the 
following months of September 1999 through August 2000 or until 
implementation of Federal order reform. The rule also will suspend the 
requirement that a producer's milk must first be received at a pool 
distributing plant during the month before the milk is eligible to be 
diverted to an unregulated manufacturing plant.
    Marketing conditions in the Southwest Plains order indicate that 
there should be a sufficient amount of local milk available during the 
requested suspension period to supply the fluid needs of the market. 
Therefore, supplemental milk supplies should not be needed. The 
existing order provisions would require milk to be shipped longer 
distances than necessary for the sole purpose of fulfilling order 
standards. Thus, this rule lessens the regulatory impact of the order 
on certain milk handlers and tends to ensure that dairy farmers would 
continue to have their milk priced under the order and thereby receive 
the benefits that accrue from such pricing.
    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 Southwest Plains marketing area.

Statement of Consideration

    This rule suspends a portion of the supply plant shipping standard 
and the producer delivery requirement of the Southwest Plains order for 
the period of September 1999 through August 2000 or until Federal order 
reform is completed. The suspension will allow a supply plant that has 
been associated with the Southwest Plains order during the months of 
September 1998 through January 1999 to qualify as a pool plant without 
shipping any milk to a pool distributing plant during the following 
months of September 1999 through August 2000 or until completion of 
Federal order reform. Without the suspension, a supply plant would be 
required to ship 50 percent of its producer receipts to pool 
distributing plants during the months of September through January and 
20 percent of its producer receipts to pool distributing plants during 
the months of February through August to qualify as a pool plant under 
the order.
    The rule also suspends the requirement that a producer's milk must 
be received at a pool plant during the month before it is eligible for 
diversion to a unregulated manufacturing plant. By suspending this 
provision, producer milk would not be required to be delivered to pool 
plants before going to such plants.
    According to Kraft, the proponent of the suspension, supplemental 
milk supplies will not be needed to meet the fluid needs of 
distributing plants. Kraft anticipates that there will be an adequate 
supply of direct-ship producer milk located in the general area of 
distributing plants available to meet the Class I needs of the market. 
The handler notes that the supply plant shipping provision and the 
producer delivery requirement have been suspended since 1993 and 1992, 
respectively.
    Kraft states there is no need to require producers located some 
distance from pool distributing plants to deliver their milk to such 
plants when their milk can more economically be diverted directly to 
manufacturing plants in the production area. Thus, the handler contends 
the suspension is necessary to prevent the uneconomical and inefficient 
movement of milk and to ensure producers historically associated with 
Order 106 will continue to have their milk pooled under the order.
    A notice of proposed rulemaking was published in the Federal 
Register on August 6, 1999 (64 FR 42860), concerning the proposed 
suspension. Interested persons were afforded opportunity to file 
written data, views and arguments thereon. One comment supporting the 
proposed suspension was received. No comment was filed in opposition.
    Dairy Farmers of America (DFA), a cooperative association 
representing producers whose milk is the largest volume marketed under 
the Southwest Plains order, filed a comment in favor of the proposed 
suspension. DFA states that both the supply plant standard and producer 
delivery requirement have been suspended for a number of years. The 
cooperative contends that the market has had an adequate supply of milk 
available to meet the fluid needs of the market and that the existing 
order provisions would cause milk to be shipped longer distances than 
necessary for the sole purpose of meeting order requirements. Moreover, 
DFA notes, these provisions have been modified to reflect current 
industry needs under the proposed language for Federal order reform.
    As noted by Kraft and DFA, the supply plant shipping standard and 
the producer milk delivery requirement have been suspended for a number 
of years. Market conditions in the Order 106 marketing area indicate 
that there should be sufficient amounts of milk available in the local 
area to meet the fluid needs of the order for the requested time 
period. Therefore, supplemental milk supplies should not be needed.
    The suspension is found to be necessary for the purpose of assuring 
that producers' milk will not have to be moved in an uneconomic and 
inefficient manner to assure that producers whose milk has long been 
associated with the Southwest Plains marketing area will continue to 
benefit from pooling and pricing under the order. In addition, the 
provisions have been modified in the proposed language for Federal 
order reform.
    After consideration of all relevant material, including the 
proposal in the notice, the comment received, and other available 
information, it is hereby found and determined that for the months of 
September 1, 1999, through August 31, 2000, or until implementation of 
Federal order reform, the following provisions of the order do not tend 
to effectuate the declared policy of the Act:
    In Sec. 1106.6, the words ``during the month''.
    In Sec. 1106.7(b)(1), beginning with the words ``of February 
through August'' and continuing to the end of the paragraph.
    In Sec. 1106.13, paragraph (d)(1) in its entirety.
    It is hereby found and determined that thirty days' notice of the 
effective date hereof is impractical, unnecessary

[[Page 48083]]

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. One comment supporting the suspension was 
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 1106

    Milk marketing orders.
    For the reasons set forth in the preamble, 7 CFR Part 1106 is 
amended as follows for the period of September 1, 1999, through August 
31, 2000:

PART 1106--MILK IN THE SOUTHWEST PLAINS MARKETING AREA

    1. The authority citation for 7 CFR Part 1106 continues to read as 
follows:

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

Sec. 1106.6  [Suspended in part]

    2. In Sec. 1106.6, the words ``during the month'' are suspended.


Sec. 1106.7  [Suspended in part]

    3. In Sec. 1106.7 paragraph (b)(1), the words beginning with ``of 
February through August'' and continuing to the end of the paragraph 
are suspended.


Sec. 1106.13  [Suspended in part]

    4. In Sec. 1106.13, paragraph (d)(1) is suspended in its entirety.

    Dated: August 26, 1999.
Richard M. McKee,
Deputy Administrator, Dairy Programs.
[FR Doc. 99-22905 Filed 9-1-99; 8:45 am]
BILLING CODE 3410-02-P