[Federal Register Volume 67, Number 148 (Thursday, August 1, 2002)]
[Proposed Rules]
[Pages 49887-49891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19390]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1001

[Docket Nos. AO-14-A70; DA-02-01]


Milk in the Northeast 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 Northeast 
order. Proposals include establishing marketwide service payments to 
offset the costs of balancing the market's Class I needs and modifying 
the pooling standards of the order. Pooling proposals include 
establishing year-round shipping standards for supply plant pool 
qualification, adding a ``touch-base'' provision that would establish a 
standard that at least two-days' milk production of a dairy farmer be 
physically received at a pool plant in order to be eligible for 
diversion, establishing limits on the amount of milk that a pool plant 
may divert, eliminating the ``split plant'' provision, and revising 
certain reporting and payment date provisions. Testimony will be taken 
to determine if any of the proposals should be handled on an emergency 
basis.

DATES: The hearing will convene at 8:30 a.m. on Tuesday, September 10, 
2002.

ADDRESSES: The hearing will be held at the Embassy Suites Hotel 
Alexandria, 1900 Diagonal Road, Alexandria, VA 22314 Telephone: 703-
236-5900.
    Persons requiring a sign language interpreter or other special 
accommodations should contact Erik F. Rasmussen, Market Administrator, 
at 617-542-8966; e-mail: [email protected] prior to the hearing.

FOR FURTHER INFORMATION CONTACT: Gino Tosi, Marketing Specialist, Order 
Formulation and Enforcement Branch, USDA/AMS/Dairy Programs, Stop 
0231--Room 2968, 1400 Independence Avenue, SW., Washington, DC 20250-
0231, (202)690-1366, e-mail [email protected].

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 
Embassy Suites Hotel Alexandria, beginning at 8:30 a.m., on September 
10, 2002, with respect to proposed amendments to the tentative 
marketing agreement and to the order regulating the handling of milk in 
the Northeast 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 agreements and to the order.
    Evidence also will be taken to determine whether emergency

[[Page 49888]]

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 Proposals No. 1 through 13.
    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 a petition with the Department 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 
Department 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 Department'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 (4) 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 1001

    Milk marketing orders.

PART 1001--[Amended]

    The authority citation for 7 CFR Part 1001 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 Department.
    Submitted by New York State Dairy Foods, Inc.:

Proposal No. 1:

    1. Amend Sec. 1001.30 by revising introductory text to read as 
follows:


Sec. 1001.30  Reports of receipts and utilization.

    Each handler shall report monthly so that the market 
administrator's office receives the report on or before the 10th day 
after the end of the month, in the detail and on prescribed forms, as 
follows:
* * * * *
    2. Amend Sec. 1001.62 by revising the reference to the ``13th day'' 
in the introductory text to the ``14th day'' and by adding a new 
paragraph (h) to read as follows:


Sec. 1001.62  Announcement of producer prices.

* * * * *
    (h) If the 14th falls on a Saturday, Sunday, or national holiday, 
the market administrator may have up to two additional days to announce 
the producer price differential and the statistical uniform price.
    3. Amend Sec. 1001.71 by revising the introductory text to read as 
follows:


Sec. 1001.71  Payments to the producer settlement fund.

    Each handler shall make payment to the producer-settlement fund in 
a manner that provides receipt of the funds by the market administrator 
no later than two days after the announcement of the producer price 
differential and the statistical uniform price pursuant to Sec. 1001.62 
(except as provided for in Sec. 1000.90). Payment shall be the amount, 
if any, by which the amount specified in paragraph (a) of this section 
exceeds the amount specified in paragraph (b) of this section:
* * * * *
    4. Amend Sec. 1001.73 by revising paragraphs (a)(1) and (a)(2) 
introductory text to read as follows:


Sec. 1001.73  Payments to producers and to cooperative associations.

* * * * *
    (a) * * *
    (1) Partial payment. For each producer who has not discontinued 
shipments as of the 23rd day of the month, payment shall be made so 
that it is received by the producer on or before the 30th day of the 
month (except as provided in Sec. 1000.90) for milk received during the 
first 15 days of the month at not less than the lowest announced class 
price for the preceding month, less proper deductions authorized in 
writing by the producer.
    (2) Final payment. For milk received during the month, payment 
shall be made so it is received by each producer no later than the day 
after the required date of payment by the market administrator the 
following month, pursuant to Sec. 1001.72, in an amount computed as 
follows:
* * * * *

Proposal No. 2:

    1. Amend Sec. 1001.7 by removing paragraph (h)(7) and revising 
paragraphs (c)(1) and (c)(2) to read as follows:


Sec. 1001.7  Pool plant.

* * * * *
    (1) In each of the months of August and December, such shipments 
must equal not less than 15 percent of the total quantity of milk that 
is received at the plant or diverted from it pursuant to Sec. 1001.13 
during the month;
    (2) In each of the months of September through November, such 
shipments must equal not less than 25 percent of the total quantity of 
milk that is received at the plant or diverted from it pursuant to 
Sec. 1001.13 during the month;
* * * * *

Proposal No. 3:
    1. Amend Sec. 1001.13 by adding new paragraphs (d)(3) through 
(d)(6) to read as follows:


Sec. 1001.13  Producer Milk.

* * * * *
    (d) * * *
    (3) The equivalent of at least two days' milk production of a dairy 
farmer is caused by the handler to be physically received at a pool 
plant in each of the months of August through December;
    (4) Of the total quantity of producer receipts during the month 
(including diversions), the handler diverts to non-pool plants not more 
than 60 percent of such receipts in each of the months August through 
December and not more than 75 percent in each of the months January 
through July;
    (5) Any milk diverted in excess of the limits set forth in 
paragraph (d)(4) of this section shall not be producer milk. The 
diverting handler shall designate

[[Page 49889]]

the dairy farmer deliveries that shall not be producer milk. If the 
handler fails to designate the dairy farmer deliveries which are 
ineligible, producer milk status shall be forfeited with respect to all 
milk diverted to nonpool plants by such handler; and
    (6) The delivery requirements and the diversion percentages in 
paragraphs (d)(3) and (d)(4) of this section may be increased or 
decreased by the market administrator if the administrator finds that 
such revision is necessary to assure orderly marketing and efficient 
handling of milk in the marketing area. Before making such a finding, 
the market administrator shall investigate the need for the revision 
either on the market administrator's own initiative or at the request 
of interested persons if the request is made in writing at least 15 
days prior to the month for which the requested revision is to be 
effective. If the investigation shows that a revision might be 
appropriate, the market administrator shall issue a notice stating that 
the revision is being considered and inviting written data, views, and 
arguments. Any decision to revise an applicable percentage must be 
issued in writing at least one day before the effective date.
    Submitted by the Market Administrator, New York State Dairy Foods, 
Inc.,and Association of Dairy Cooperatives in the Northeast (ADCNE):


Proposal No. 4:

    1. Revise Sec. 1001.72 to read as follows:


Sec. 1001.72  Payments from the producer-settlement fund.

    No later than the day after the due date required for payment to 
the Market Administrator pursuant to Sec. 1001.71 (except as provided 
in Sec. 1000.90), the market administrator shall pay to each handler 
the amount, if any, by which the amount computed pursuant to 
Sec. 1001.71(b) exceeds the amount computed pursuant to 
Sec. 1001.71(a). If, at such time, the balance in the producer-
settlement fund is insufficient to make all payments pursuant to this 
section, the market administrator shall reduce uniformly such payments 
and shall complete the payments as soon as the funds are available.
    Submitted by Association of Dairy Cooperatives in the Northeast 
(ADCNE):


Proposal No. 5:

    1. Amend Sec. 1001.7 by revising paragraphs (c)(1) and (g), 
removing paragraphs (c)(3) and (h)(7), and redesignating paragraphs 
(c)(4) and (c)(5) as paragraphs (c)(3) and (c)(4) to read as follows:


Sec. 1001.7  Pool plant.

* * * * *
    (c) * * *
    (1) In each of the months of January through August and December, 
such shipments must equal not less than 10 percent of the total 
quantity of milk that is received at the plant or diverted from it 
pursuant to Sec. 1001.13 during the month;
* * * * *
    (g) The applicable shipping percentages of paragraphs (c) and (f) 
of this section may be increased or decreased by the market 
administrator if the market administrator finds that such adjustment is 
necessary to encourage needed shipments or to prevent uneconomic 
shipments. Before making such a finding, the market administrator shall 
investigate the need for adjustment either on the market 
administrator's own initiative or at the request of interested parties 
if the request is made in writing at least 15 days prior to the month 
for which the requested revision is to be effective. If the 
investigation shows that an adjustment of shipping percentages might be 
appropriate, the market administrator shall issue a notice stating that 
an adjustment is being considered and invite data, views, and 
arguments. Any decision to revise an applicable shipping percentage 
must be issued in writing at least one day before the effective date. 
The market administrator may limit the applicability of any revisions 
hereunder to handlers receiving marketwide service payments pursuant to 
Sec. 1001.74.
* * * * *

Proposal No. 6:

    1. Amend Sec. 1001.13 by revising paragraph (d)(1), redesignating 
paragraph (d)(2) as paragraph (d)(3), and adding new paragraphs (d)(2), 
(d)(4), (d)(5) and (e) to read as follows:


Sec. 1001.13  Producer milk.

* * * * *
    (d) * * *
    (1) Milk of a dairy farmer shall not be eligible for diversion 
unless milk of such dairy farmer was physically received as producer 
milk at a pool plant during the month 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), 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 
during this month;
    (2) Of the total quantity of producer milk received during the 
month (including diversion but excluding the quantity of producer milk 
received from a handler described in Sec. 1000.9(c) or which is 
diverted to another pool plant), the handler diverted to nonpool plants 
not more than 80 percent during the months of September through 
November and 90 percent during the months of January through August and 
December;
    (3) * * *
    (4) Any milk diverted in excess of the limits set forth in 
paragraph (d)(2) of this section shall not be producer milk. The 
diverting handler shall designate the dairy farmer deliveries that 
shall not be producer milk. If the handler fails to designate the dairy 
farmer deliveries which are ineligible, producer milk status shall be 
forfeited with respect to all milk diverted to nonpool plants by such 
handler; and
    (5) The diversion percentages in paragraph (d)(2) of this section 
may be increased or decreased by the market administrator if the market 
administrator finds that such revision is necessary to assure orderly 
marketing and efficient handling of milk in the marketing area. Before 
making such a finding, the market administrator shall investigate the 
need for the revision either on the market administrator's own 
initiative or at the request of interested persons if the request is 
made in writing at least 15 days prior to the month for which the 
requested revision is to be effective. If the investigation shows that 
a revision might be appropriate, the market administrator shall issue a 
notice stating that the revision is being considered and inviting 
written data, views, and arguments. Any decision to revise an 
applicable percentage must be issued in writing at least one day before 
the effective date. The market administrator may limit the 
applicability of any revision hereunder to handlers receiving 
marketwide service payments pursuant to Sec. 1001.74.
    (e) Milk that is pooled under a state marketing order that has 
classified pricing and marketwide pooling provisions, other than 
provisions pertaining to marketwide pooling of premiums, is ineligible 
to be pooled under the Order unless such milk is physically received at 
a distributing plant under this order.

Proposal No. 7:

    1. Establish a marketwide service payment to provide compensation 
from a marketwide pool to those who perform a service in balancing the 
Class I market by adding a new Sec. 1001.74 to read as follows:

[[Page 49890]]

Sec. 1001.74  Marketwide service payments.

    Payments shall be made to qualifying handlers as set forth 
hereafter for their performance of marketwide services which benefit 
all producers:
    (a) Qualification for payments. Each handler shall qualify for 
marketwide service payments if during the month the handler:
    (1) Pools a quantity of milk equal to 3 percent of the total volume 
of milk pooled on the order for the month or pools 1,000,000 pounds of 
milk per day and either operates a plant which manufactures Class III 
or Class IV products which is located in the states of the marketing 
area or operates a pool distributing plant as defined in 
Sec. 1001.7(a); and
    (2) Transfers or diverts to pool distributing plants (as defined in 
Sec. 1001.7(a)) not more than 65 percent of the total quantity of 
producer milk which such handler pools. In determining whether the 
handler has met this percentage requirement, the market administrator 
shall make the percentage calculations after applying the following 
procedures:
    (i) Deduct from transfers or diversions any quantities of shipments 
received by the handler from the operator of a distributing plant to 
which qualifying deliveries have been made; and
    (ii) If the handler is the operator of a distributing plant, all 
milk pooled by the handler shall be assumed to have been delivered to 
the handler's distributing plant, up to the quantity of such plant's 
full receipts.
    (b) Additional performance required. In making any adjustments 
upward in the shipping requirements pursuant to Sec. 1001.7(g), the 
market administrator may impose such additional shipping requirements 
only upon handlers qualified for and receiving marketwide service 
payments pursuant to this Section.
    (c) Rate and timing of payments. The market administrator, on the 
same date as payments from the producer settlement fund are due, shall 
make payment out of the producer settlement fund, or issue equivalent 
credit therefore, to each handler that qualifies for the month. Such 
payment or credit shall be at the rate of 6 cents per hundredweight of 
producer milk pooled by the handler, except that there shall be no 
payments made to cooperative associations with respect to milk of 
producers who are not members of any qualified cooperative association 
and no payment made to non-cooperative handlers with respect to milk of 
any producer who is a member of a qualified cooperative association.
    (d) Reports. The handler shall make such reports to the market 
administrator as may be reasonably requested for the administration of 
the provisions of this section.
    Submitted by Friendship Dairies:


Proposal 8:

    1. Amend Sec. 1001.7 by revising paragraphs (c)(1) through (c)(3) 
to read as follows:


Sec. 1001.7  Pool plant.

* * * * *
    (c) * * *
    (1) In each of the months of August and December, such shipments 
must equal not less than 10 percent of the total quantity of milk that 
is received at the plant from dairy farmers (except dairy farmers 
described in Sec. 1001.12(b) and handlers described in Sec. 1000.9(c)), 
including milk diverted pursuant to Sec. 1001.13 during the month;
    (2) In each of the months of September through November, such 
shipments must equal not less than 20 percent of the total quantity of 
milk that is received at the plant from dairy farmers (except dairy 
farmers described in Sec. 1001.12(b) and handlers described in 
Sec. 1000.9(c)), including milk diverted pursuant to Sec. 1001.13 
during the month;
    (3) A plant which meets the shipping requirements of this paragraph 
in each of the months of August through December shall be a pool plant 
in each of the following months of January through July unless the milk 
received at the plant fails to meet the requirements of a duly 
constituted regulatory agency, the plant fails to meet a shipping 
requirement instituted pursuant to paragraph (f) of this section, or 
the plant operator requests nonpool status for the plant. The shipping 
requirement for any plant which has not met the requirements of 
paragraphs (c)(1) and (c)(2) of this section must equal not less than 
10 percent of the total quantity of milk that is received at the plant 
from dairy farmers (except dairy farmers described in Sec. 1001.12(b) 
and handlers described in Sec. 1000.9(c)), including milk diverted 
pursuant to Sec. 1001.13, in each of the months of January through July 
in order for the plant to be a pool plant in each of these months;
* * * * *

Proposal No. 9:

    1. Amend Sec. 1001.7 by revising paragraphs (c)(1) through (c)(3) 
to read as follows:


Sec. 1001.7  Pool plant.

* * * * *
    (c) * * *
    (1) In each of the months of August and December, such shipments, 
plus the amount of route distribution from the plant pursuant to 
Sec. 1000.3 and transfers in the form of packaged fluid milk products 
to distributing plants, must equal not less than 10 percent of the 
total quantity of milk that is received at the plant or diverted from 
it pursuant to Sec. 1001.13 during the month;
    (2) In each of the months of September through November, such 
shipments, plus the amount of route distribution from the plant 
pursuant to Sec. 1000.3 and transfers in the form of packaged fluid 
milk products to distributing plants, must equal not less than 20 
percent of the total quantity of milk that is received at the plant or 
diverted from it pursuant to Sec. 1001.13 during the month;
    (3) A plant which meets the shipping requirements of this paragraph 
in each of the months of August through December shall be a pool plant 
in each of the following months of January through July unless the milk 
received at the plant fails to meet the requirements of a duly 
constituted regulatory agency, the plant fails to meet a shipping 
requirement instituted pursuant to paragraph (f) of this section, or 
the plant operator requests nonpool status for the plant. The shipping 
requirement, plus the amount of route distribution from the plant 
pursuant Sec. 1000.3 and transfers in the form of packaged fluid milk 
products to distributing plants, for any plant which has not met the 
requirements of paragraphs (c)(1) and (c)(2) of this section, must 
equal not less than 10 percent of the total quantity of milk that is 
received at the plant during the month, or diverted from it pursuant to 
Sec. 1001.13 during each of the months of January through July, in 
order for the plant to be a pool plant in each of these months;
* * * * *

Proposal No. 10:

    1. Amend Sec. 1001.7 by revising paragraphs (c)(1) through (c)(3) 
to read as follows:


Sec. 1001.7  Pool plant.

* * * * *
    (c) * * *
    (1) In each of the months of August and December, such shipments 
must equal not less than 5 percent of the total quantity of milk that 
is received at the plant during the month or diverted from it pursuant 
to Sec. 1001.13;
    (2) In each of the months of September through November, such 
shipments must equal not less than 10 percent of the total quantity of 
milk that is received at the plant during the month or diverted from it 
pursuant to Sec. 1001.13;

[[Page 49891]]

    (3) A plant which meets the shipping requirements of this paragraph 
in each of the months of August through December shall be a pool plant 
in each of the following months of January through July unless the milk 
received at the plant fails to meet the requirements of a duly 
constituted regulatory agency, the plant fails to meet a shipping 
requirement instituted pursuant to paragraph (f) of this section, or 
the plant operator requests nonpool status for the plant. The shipping 
requirements for any plant which has not met the requirements of 
paragraphs (c)(1) and (c)(2) of this section must equal not less than 5 
percent of the total quantity of milk that is received at the plant 
during the month or diverted from it pursuant to Sec. 1001.13;
* * * * *

Proposal No. 11:

    1. Amend Sec. 1001.12 by revising paragraphs (b)(5) and (b)(6) to 
read as follows:


Sec. 1001.12  Producer.

* * * * *
    (b) * * *
    (5) For any month of January through July, any dairy farmer whose 
milk is received at a pool plant or by a cooperative association 
handler described in Sec. 1000.9(c) if the pool plant operator or the 
cooperative association caused milk from the same farm to be delivered 
to any plant as other than producer milk, as defined under this order 
or any other Federal milk order, during the same month or during any of 
the preceding months of August through December; and
    (6) For any month of August through December, any dairy farmer 
whose milk is received at a pool plant or by a cooperative association 
handler described in Sec. 1000.9(c) if the pool plant operator or the 
cooperative association caused milk from the same farm to be delivered 
to any plant as other than producer milk under this order or any other 
Federal milk order during the same month.
    Proposed by Northeast Market Administrator:

Proposal No. 12:

    1. Amend Sec. 1001.73 by revising the introductory text of 
paragraph (e) to read as follows:


Sec. 1001.73  Payments to producers and cooperative associations.

* * * * *
    (e) In making payments to producers pursuant to this section, each 
handler shall furnish each producer, except for a producer whose milk 
was received from a cooperative association handler described in 
Sec. 1000.9(a) or (c)), a supporting statement in such form that it may 
be retained by the recipient which shall show:
* * * * *
    Proposed by Dairy Programs, Agricultural Marketing Service:

Proposal No. 13:

    Make such changes as may be necessary to make the entire marketing 
agreements and the orders 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 for the Northeast 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 Northeast Market Administrator.
    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.

    Dated: July 26, 2002.
A. J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-19390 Filed 7-31-02; 8:45 am]
BILLING CODE 3410-02-P