[Federal Register Volume 67, Number 223 (Tuesday, November 19, 2002)]
[Rules and Regulations]
[Pages 69668-69670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29032]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1124

[Doc. No. AO-368-A29; DA-01-06]


Milk in the Pacific Northwest Marketing Area; Interim Order 
Amending the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule.

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SUMMARY: This order amends certain pooling provisions of the Pacific 
Northwest Federal milk order on an interim basis. This interim order 
implements amendments to the Pool plant provisions which establish a 
cooperative manufacturing plant provision and a procedure for ``system 
pooling'' by cooperative manufacturing plants. For the Producer milk 
provisions, this interim order implements amendments that establish a 
standard of at least 3 days' milk production for the number of days 
during the month that the milk of a producer needs to be delivered to a 
pool plant (a ``touch-base'' standard) in order for the rest of the 
milk of that producer to be eligible to be diverted to nonpool plants, 
provides authority to the Market Administrator to adjust the ``touch-
base'' standard, and establishes a year-round diversion limit of 80 
percent of total receipts for pool plants. More than the required 
number of producers in the Pacific Northwest marketing area have 
approved the issuance of the interim order as amended.

EFFECTIVE DATE: January 1, 2003.

FOR FURTHER INFORMATION CONTACT: Gino M. Tosi, Marketing Specialist, 
Order Formulation and Enforcement Branch, USDA/AMS/Dairy Programs, Stop 
0231-Room 2971, 1400 Independence Avenue, SW., Washington, DC 20250-
0231, (202) 690-1366, e-mail address [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 interim rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have 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 Department 
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 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.

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 
interim 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 $750,000, 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 $750,000 per year criterion was used to 
establish a production guideline of 500,000 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.
    Prior documents in this proceeding:
    Notice of Hearing: Issued November 14, 2001; published November 19, 
2001 (66 FR 57889).
    Tentative Final Decision: Issued August 30, 2002; published 
September 6, 2002 (67 FR 56936).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the Pacific Northwest order was first issued 
and when it was 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 Pacific 
Northwest order:
    (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 Pacific Northwest 
marketing area.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof it is found that:
    (1) The Pacific Northwest order, as hereby amended on an interim 
basis, 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 on an interim basis, 
are such prices as will reflect the aforesaid factors, insure a 
sufficient quantity of pure and wholesome milk, and be in the public 
interest; and
    (3) The Pacific Northwest order, as hereby amended on an interim 
basis, regulates the handling of milk in the same manner as, and is 
applicable only to persons in the respective classes of industrial and 
commercial activity specified in, a marketing agreement upon which a 
hearing has been held.
    (b) Additional Findings. It is necessary and in the public interest 
to make these interim amendments to the Pacific Northwest order 
effective January 1, 2003. Any delay beyond that date would tend to 
disrupt the orderly

[[Page 69669]]

marketing of milk in the aforesaid marketing area.
    The interim amendments to these orders are known to handlers. The 
final decision containing the proposed amendments to these orders was 
issued on August 30, 2002.
    The changes that result from these interim 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 interim order 
amendments effective on January 1, 2003. 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 sec. 8c(9) of the Act) of more than 50 
percent of the milk, which is marketed within the specified marketing 
area, to sign a proposed marketing agreement, tends to prevent the 
effectuation of the declared policy of the Act;
    (2) The issuance of this interim order amending the Pacific 
Northwest order is the only practical means pursuant to the declared 
policy of the Act of advancing the interests of producers as defined in 
the order as hereby amended;
    (3) The issuance of the interim order amending the Pacific 
Northwest order is favored by at least two-thirds of the producers who 
were engaged in the production of milk for sale in the marketing area.

List of Subjects in 7 CFR Part 1124

    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 Pacific Northwest marketing area 
shall be in conformity to and in compliance with the terms and 
conditions of the order, as amended, and as hereby further amended on 
an interim basis, as follows:
    The authority citation for 7 CFR part 1124 reads as follows:

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

PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA

    1. Section 1124.7 is amended by:
    a. Removing paragraphs (c)(2) and (c)(3);
    b. Redesignating paragraph (c)(4) as (c)(2);
    c. Adding new paragraphs (d) and (f); and
    d. Revising paragraph (g).
    The revisions and additions read as follows:


Sec.  1124.7  Pool plant.

* * * * *
    (d) A manufacturing plant located within the marketing area and 
operated by a cooperative association, or its wholly owned subsidiary, 
if, during the month, or the immediately preceding 12-month period 
ending with the current month, 20 percent or more of the producer milk 
of members of the association (and any producer milk of nonmembers and 
members of another cooperative association which may be marketed by the 
cooperative association) is physically received in the form of bulk 
fluid milk products (excluding concentrated milk transferred to a 
distributing plant for an agreed-upon use other that Class I) at plants 
specified in paragraph (a) or (b) of this section either directly from 
farms or by transfer from supply plants operated by the cooperative 
association, or its wholly owned subsidiary, and from plants of the 
cooperative association, or its wholly owned subsidiary, for which pool 
plant status has been requested under this paragraph subject to the 
following conditions:
    (1) The plant does not qualify as a pool plant under paragraph (a), 
(b), or (c) of this section or under comparable provisions of another 
Federal order; and
    (2) The plant is approved by a duly constituted regulatory agency 
for the handling of milk approved for fluid consumption in the 
marketing area.
    (3) A request is filed in writing with the market administrator 
before the first day of the month for which it is to be effective. The 
request will remain in effect until a cancellation request is filed in 
writing with the market administrator before the first day of the month 
for which the cancellation is to be effective.
* * * * *
    (f) A system of two or more plants identified in Sec.  1124.7(d) 
operated by one or more cooperative handlers may qualify for pooling by 
meeting the above shipping requirements subject to the following 
additional requirements:
    (1) The cooperative handler(s) establishing the system submits a 
written request to the market administrator on or before the first day 
of the month for which the system is to be effective requesting that 
such plants qualify as a system. Such request will contain a list of 
the plants participating in the system in the order, beginning with the 
last plant, in which the plants will be dropped from the system if the 
system fails to qualify. Each plant that qualifies as a pool plant 
within a system shall continue each month as a plant in the system 
until the handler(s) establishing the system submits a written request 
before the first day of the month to the market administrator that the 
plant be deleted from the system or that the system be discontinued. 
Any plant that has been so deleted from a system, or that has failed to 
qualify in any month, will not be part of any system. In the event of 
an ownership change or the business failure of a handler that is a 
participant in the system, the system may be reorganized to reflect 
such a change if a written request to file a new marketing agreement is 
submitted to the market administrator; and
    (2) If a system fails to qualify under the requirement of this 
paragraph, the handler responsible for qualifying the system shall 
notify the market administrator of which plant or plants will be 
deleted from the system so that the remaining plants may be pooled as a 
system. If the handler fails to do so, the market administrator shall 
exclude one or more plants, beginning at the bottom of the list of 
plants in the system and continue up the list as necessary until the 
deliveries are sufficient to qualify the remaining plants in the 
system.
    (g) The applicable shipping percentage of paragraphs (c) and (d) 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 desired to be effective. If the investigation shows that an 
adjustment of the 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.
* * * * *

    2. Section 1124.13 is amended by:
    a. Redesignating paragraphs (e)(1) through (5) as paragraphs (e)(2) 
through (6);
    b. Adding a new paragraph (e)(1); and

[[Page 69670]]

    c. Revising redesignated paragraphs (e)(2),(e)(5), and (e)(6).
    The revisions and additions read as follows:


Sec.  1124.13  Producer Milk.

* * * * *
    (e) * * *
    (1) Milk of a dairy farmer shall not be eligible for diversion 
unless at least 3 days' production of such dairy farmer's production is 
physically received at a pool plant during the month.
    (2) Of the quantity of producer milk received during the month 
(including diversions, but excluding the quantity of producer milk 
received from a handler described in Sec.  1000.9(c)) the handler 
diverts to nonpool plants not more than 80 percent.
* * * * *
    (5) Any milk diverted in excess of the limits prescribed in 
paragraph (e)(2) of this section shall not be producer milk. If the 
diverting handler or cooperative association fails to designate the 
dairy farmers' deliveries that are not to be producer milk, no milk 
diverted by the handler or cooperative association during the month to 
a nonpool plant shall be producer milk. In the event some of the milk 
of any producer is determined not to be producer milk pursuant to this 
paragraph, other milk delivered by such producer as producer milk 
during the month will not be subject to Sec.  1124.12(b)(5).
    (6) The delivery day requirement in paragraph (e)(1) of this 
section and the diversion percentage in paragraph (e)(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 the orderly marketing and efficient handling of milk in the 
marketing area. Before making such 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 desired 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 the delivery day requirement or the diversion 
percentage must be issued in writing at least one day before the 
effective date.

    Dated: November 8, 2002.
A. J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-29032 Filed 11-18-02; 8:45 am]
BILLING CODE 3410-02-P