[Federal Register Volume 66, Number 205 (Tuesday, October 23, 2001)]
[Proposed Rules]
[Pages 53551-53554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26593]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1032

[Docket No. AO-313-A44; DA-01-07]


Milk in the Central Marketing Area; Notice of Hearing on Proposed 
Amendments to Tentative Marketing Agreement and Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; Notice of public hearing on proposed rulemaking.

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SUMMARY: A public hearing is being held to consider proposals that 
would amend certain pooling and related provisions of the Central 
order. Proposals include amending the pool supply plant and pool supply 
plant system provisions of the order, eliminating the provision for a 
cooperative supply plant and amending the portion of the producer milk 
definition that specifies the percentage of a handler's milk that may 
be diverted to nonpool plants. Another proposed amendment to the 
order's pooling provisions would allow milk diverted to a nonpool plant 
before the producer's milk is delivered to a pool plant to be 
considered producer milk and allow the producer's milk to retain its 
association with the market for any months during which the handler 
fails to pool the producer's milk under any order. Other proposals 
would provide for establishing separate pooling provisions by state of 
origin for milk from areas outside the Central order marketing area, 
preventing the pooling of milk that is already pooled on a State 
marketwide order and increasing minimum partial payments to producers 
and cooperative associations. Proponents have requested that these 
issues be handled on an emergency basis.

DATES: The hearing will convene at 8:30 a.m. on Wednesday, November 14, 
2001.

ADDRESSES: The hearing will be held at the Hilton Hotel-Kansas City 
Airport, 8801 N.W. 112th Street, Kansas City, Missouri 64153; (816) 
891-8900.

FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing 
Specialist, Order Formulation Branch, USDA/AMS/Dairy Programs, Room 
2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, 
(202)720-2357, e-mail address [email protected].
    Persons requiring a sign language interpreter or other special 
accommodations should contact Bob

[[Page 53552]]

Vander Linden at 913-495-9313 or Dave Stukenberg at 913-495-9326; email 
[email protected] before the hearing begins.

SUPPLEMENTARY INFORMATION: This administrative action 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.
    Notice is hereby given of a public hearing to be held at the Hilton 
Hotel--Kansas City Airport, 8801 N.W. 112th Street, Kansas City, 
Missouri 64164; (816) 891-8900; beginning at 8:30 a.m., on Wednesday, 
November 14, 2001, with respect to proposed amendments to the tentative 
marketing agreement and to the order regulating the handling of milk in 
the Central marketing area.
    The hearing is called 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).
    The purpose of the hearing is to receive evidence with respect to 
the economic and marketing conditions which relate to the proposed 
amendments, hereinafter set forth, and any appropriate modifications 
thereof, to the tentative marketing agreement and to the order.
    Evidence also will be taken to determine whether emergency 
marketing conditions exist that would warrant omission of a recommended 
decision under the rules of practice and procedure (7 CFR 900.12(d)) 
with respect to any of the proposed amendments.
    Actions under the Federal milk order program are subject to the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This Act seeks to 
ensure that, within the statutory authority of a program, the 
regulatory and informational requirements are tailored to the size and 
nature of small businesses. For the purpose of the Act, a dairy farm is 
a ``small business'' if it has an annual gross revenue of less than 
$750,000, and a dairy products manufacturer is a ``small business'' if 
it has fewer than 500 employees. Most parties subject to a milk order 
are considered as a small business. Accordingly, interested parties are 
invited to present evidence on the probable regulatory and 
informational impact of the hearing proposals on small businesses. 
Also, parties may suggest modifications of these proposals for the 
purpose of tailoring their applicability to small businesses.
    The amendments to the rules proposed herein have been reviewed 
under Executive Order 12988, Civil Justice Reform. They are not 
intended to have a retroactive effect. If adopted, the proposed 
amendments would not preempt any state or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Agricultural Marketing Agreement Act provides that 
administrative proceedings must be exhausted before parties may file 
suit in court. Under section 8c(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.
    Interested parties who wish to introduce exhibits should provide 
the Presiding Officer at the hearing with three copies of such exhibits 
for the Official Record. Also, it would be helpful if additional copies 
are available for the use of other participants at the hearing.

List of Subjects in 7 CFR Part 1032

    Milk marketing orders.

PART 1032--[Amended]

    The authority citation for 7 CFR Part 1032 continues to read as 
follows:

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

    The proposed amendments, as set forth below, have not received the 
approval of the Secretary of Agriculture.

Proposed by: Dairy Farmers of America, Prairie Farms Cooperative, 
and Swiss Valley Farms:

Proposal No. 1

    Amend the pool supply plant provision to reduce the percentage of 
milk physically received at a supply plant that must be shipped to 
distributing plants during the fall months from 35 to 25 percent and 
from 25 to 20 percent during all other months of the year, with the 
fall months changed from September through November and January to 
August through November. In addition, handlers would not be able to use 
shipments under Sec. 1000.9(c) or Sec. 1032.13(c) to qualify plants 
located outside the marketing area. While qualifying shipments would be 
expanded to include shipments to any plant that is part of a 
distributing plant unit, they would also be limited by excluding 
shipments to distributing plants regulated under other Federal orders. 
These provisions are proposed to be amended to read as follows:


Sec. 1032.7  Pool Plant.

* * * * *
    (c) A supply plant from which the quantity of bulk fluid milk 
products shipped to (and physically unloaded into) plants described in 
paragraph (c)(1) of this section is not less than 25 percent during the 
months of August through November and 20 percent in all other months of 
the Grade A milk received from dairy farmers (except dairy farmers 
described in Sec. 1032.12(b)) and handlers described in Sec. 1000.9(c), 
including milk diverted pursuant to Sec. 1032.13, subject to the 
following conditions:
    (1) Qualifying shipments may be made to plants described in 
paragraphs (a), (b) or (e) of this section.
    (2) The operator of a pool plant located in the marketing area may 
include as qualifying shipments milk delivered directly from producer's 
farms pursuant to Sec. 1000.9(c) or Sec. 1032.13(c). Handlers may not 
use shipments pursuant to Sec. 1000.9(c) or Sec. 1032.13(c) to qualify 
plants located outside the marketing area.
    (3) Concentrated milk transferred from the supply plant to a 
distributing plant for an agreed-upon use other than Class I shall be 
excluded from the supply plant's shipments in computing the supply 
plant's shipping percentage.
    (4) No plant may qualify as a pool plant due to a reduction in the 
shipping percentage pursuant to paragraph (g) of this section unless it 
has been a pool supply plant during each of the immediately preceding 3 
months.
* * * * *

Proposal No. 2

    Remove the provision for a cooperative supply plant, as follows:


Sec. 1032.7  Pool Plant.

* * * * *
    (d) Removed and reserved.
* * * * *

Proposal No. 3

    Revise the provision for a system of supply plants by providing for 
increased shipping percentages (5 percent higher than for individual 
supply plants in the

[[Page 53553]]

months of August through November and 3 percent higher in all other 
months) by adding a new paragraph (f)(1) and redesignating paragraphs 
Sec. 1032.7(f)(1) through (4) as paragraphs Sec. 1032.7(f)(2) through 
(5) to read as follows:


Sec. 1032.7  Pool plant.

* * * * *
    (f) * * *
    (1) The applicable percentage requirements for each unit shall be 
30 percent for the months of August through November, and 23 percent in 
all other months.
* * * * *

Proposal No. 4

    Amend the provision authorizing the market administrator to adjust 
shipping percentages to remove the reference to paragraph (d) by 
revising the first sentence of paragraph (g) to read as follows:


Sec. 1032.7  Pool Plant.

* * * * *
    (g) The applicable shipping percentages of paragraphs (c) and (f) 
of this section may be increased or decreased, for all or part of the 
marketing area, by the market administrator if the market administrator 
finds that such adjustment is necessary to encourage needed shipments 
or to prevent uneconomic shipments.
* * * * *

Proposal No. 5

    Relax the diversion limits for the fall months from 65 to 75 
percent of producer receipts and change those months by including 
August and removing January; relax the diversion limits for the rest of 
the year from 75 to 80 percent of producer receipts. Diversion limits 
would apply to all months. Paragraph (d)(2) would read as follows:


Sec. 1032.13  Producer Milk.

* * * * *
    (d) * * *
    (2) The quantity of milk diverted to a nonpool plant by a pool 
plant operator or by a cooperative association pursuant to 
Sec. 1000.9(c) may not exceed 75 percent of the producer milk receipts 
reported by the handler pursuant to Sec. 1032.30 for the months of 
August through November and 80 percent of the remaining months' 
producer milk receipts reported by the handler pursuant to Sec. 1032.30 
provided that not less than 25 percent of such receipts in the months 
of August through November and 20 percent of the remaining months' 
receipts are delivered to plants described in Sec. 1032.7(a), (b) and 
(e). These percentages are subject to any adjustments that may be made 
pursuant to Sec. 1032.13(d)(5);
* * * * *

Proposal No. 6

    Increase the partial payment rate to producers and cooperative 
associations from the lowest class price for the preceding month to 110 
percent of that price in paragraphs (a)(1) and (c)(1) of Sec. 1032.73 
to read as follows:


Sec. 1032.73  Payments to producers and to cooperative associations.

    (a) * * *
    (1) Partial Payment. For each producer who has not discontinued 
shipments as of the date of this partial payment, payment shall be made 
so that it is received by each producer on or before the 26th day of 
the month (except as provided in Sec. 1000.90) for milk received during 
the first 15 days of the month from the producer at not less than 110 
percent times the lowest announced class price for the preceding month, 
less proper deductions authorized in writing by the producer.
* * * * *
    (c) * * *
    (1) For bulk fluid milk products and bulk fluid cream products 
received from a cooperative association in its capacity as the operator 
of a pool plant and for milk received from a cooperative association in 
its capacity as a handler pursuant to Sec. 1000.9(c) during the first 
15 days of the month, at not less than 110 percent times the lowest 
announced class prices per hundredweight for the preceding month;
* * * * *

Proposed by: Dairy Farmers of America:

Proposal No. 7

    Amend the pool supply plant and producer milk definitions to 
require milk from ``distant'' locations to be reported by individual 
state units that would each be subject to the performance standards 
applicable to supply plants and producer milk in the applicable 
paragraphs in Secs. 1032.7 and 1032.13 to read as follows:


Sec. 1032.7  Pool Plant.

* * * * *
    (c) * * *
    (4) If milk is delivered to a plant physically located outside the 
States of Colorado, Illinois, Iowa, Kansas, Minnesota (or certain 
designated counties), Missouri, Nebraska, Oklahoma, South Dakota and 
Wisconsin (or certain designated counties) by producers also located 
outside the area specified in this paragraph, producer receipts at such 
plant shall be organized by individual state units and each unit shall 
be subject to the following requirements:
    (i) Each unit shall be reported separately pursuant to 
Sec. 1032.30.
    (ii) At least the required minimum percentage specified in 
Sec. 1032.7(c) of the producer milk of each unit of the handler shall 
be delivered to plants described in Sec. 1032.7 (a), (b) or (e), and 
such deliveries shall not be used by the handler in meeting the minimum 
shipping percentages required pursuant to Sec. 1032.7(f); and
    (iii) The percentages of 1032.7(c)(4) are subject to any 
adjustments that may be made pursuant to Sec. 1032.7(g).
* * * * *


Sec. 1032.13  Producer Milk.

    Subject to the conditions of paragraph (e) of this section, 
``producer milk'' means the skim milk (or the skim equivalent of 
components of skim milk), including nonfat components, and butterfat in 
milk of a producer that is:
* * * * *
    (e) Milk receipts from producers whose farms that are physically 
located outside the States of Colorado, Illinois, Iowa, Kansas, 
Minnesota (or certain designated counties), Missouri, Nebraska, 
Oklahoma, South Dakota and Wisconsin (or certain designated counties) 
such producers shall be organized by individual state units and each 
unit shall be subject to the following requirements:
    (1) Each unit shall be reported separately pursuant to 
Sec. 1032.30.
    (2) For pooling purposes, each reporting unit must satisfy the 
shipping standards specified for a supply plant pursuant to 
Sec. 1032.7(c), and such deliveries shall not be used by the handler in 
meeting the minimum shipping percentages required pursuant to 
Sec. 1032.13(d)(2); and
    (3) The percentages of Sec. 1032.13(d)(2) are subject to any 
adjustments that may be made pursuant to Sec. 1032.13(d)(5).

Proposed by: Anderson-Erickson Dairy Company, Associated Milk 
Producers, Inc., Family Dairies USA, First District Association, 
Foremost Farms, Swiss Valley Dairy, Milwaukee Cooperative Milk 
Producers, Manitowoc Milk Producers Cooperative, and Mid-West 
Dairymen's Company:

Proposal No. 8

    Amend paragraph (d)(6) of the ``Producer Milk'' definition to 
exclude

[[Page 53554]]

milk that is pooled under any other marketwide equalization pool to 
read as follows:


Sec. 1032.13  Producer milk.

* * * * *
    (d) * * *
    (6) Provided, however, that diverted milk pursuant to this 
paragraph shall not include milk subject to the minimum pricing 
provisions of another federal order or milk which qualifies for 
inclusion and participation in a marketwide equalization pool under a 
milk classification and pricing program imposed under the authority of 
a State government.

Proposed by: Associated Milk Producers Inc., Foremost Farms USA, 
Land O'Lakes, First District Association, Family Dairies USA, 
Midwest Dairymen's Co., Manitowoc Milk Producers Cooperative, and 
Milwaukee Cooperative Milk Producers:

Proposal No. 9

    Amend paragraph (d)(1) of the ``Producer Milk'' definition to allow 
milk diverted to a nonpool plant before the producer's milk is 
delivered to a pool plant to be considered producer milk and allow the 
producer's milk to retain its association with the market for any 
months during which the handler fails to pool the producer's milk under 
any order to read as follows:


Sec. 1032.13  Producer Milk.

* * * * *
    (d) * * *
    (1) Milk of a dairy farmer shall not be eligible for diversion 
unless at least one day's production of such dairy farmer has been 
physically received as producer milk at a pool plant during the first 
month the dairy farmer is a producer and the dairy farmer has 
continuously retained producer status since that time. If a dairy 
farmer loses producer status under the order in this part (except as a 
result of a temporary loss of Grade A approval or as a result of the 
handler of the dairy farmer's milk failing to pool the milk under any 
order), the dairy farmer's milk shall not be eligible for diversion 
unless milk of the dairy farmer has been physically received as 
producer milk at a pool plant.

Proposed by: Dairy Programs, Agricultural Marketing Service:

Proposal No. 10

    Make such changes as may be necessary to make the entire marketing 
agreement and the order conform with any amendments thereto that may 
result from this hearing.
    Copies of this notice of hearing and the order may be procured from 
the Market Administrator of the Central Marketing Area or from the 
Hearing Clerk, Room 1083, South Building, United States Department of 
Agriculture, Washington, DC 20250, or may be inspected there.
    Copies of the transcript of testimony taken at the hearing will not 
be available for distribution through the Hearing Clerk's Office. If 
you wish to purchase a copy, arrangements may be made with the reporter 
at the hearing.
    From the time that a hearing notice is issued and until the 
issuance of a final decision in a proceeding, Department employees 
involved in the decision-making process are prohibited from discussing 
the merits of the hearing issues on an ex parte basis with any person 
having an interest in the proceeding. For this particular proceeding, 
the prohibition applies to employees in the following organizational 
units:

Office of the Secretary of Agriculture
Office of the Administrator, Agricultural Marketing Service
Office of the General Counsel
Dairy Programs, Agricultural Marketing Service (Washington office) and 
the Office of the Market Administrator of the Central Milk Marketing 
Area

    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.

    Dated: October 17, 2001.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 01-26593 Filed 10-22-01; 8:45 am]
BILLING CODE 3410-02-P