[Federal Register Volume 68, Number 29 (Wednesday, February 12, 2003)]
[Rules and Regulations]
[Pages 7063-7070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3442]



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  Federal Register / Vol. 68, No. 29 / Wednesday, February 12, 2003 / 
Rules and Regulations  

[[Page 7063]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1124, 
1126, 1131, and 1135

[Docket No. AO-14-A69, et al.: DA-00-03]


Milk in the Northeast and Other Marketing Areas: Order Amending 
the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

------------------------------------------------------------------------
    7 CFR Part            Marketing area                AO nos.
------------------------------------------------------------------------
1001..............  Northeast................  AO-14-A69
1005..............  Appalachian..............  AO-388-A11
1006..............  Florida..................  AO-356-A34
1007..............  Southeast................  AO-366-A40
1030..............  Upper Midwest............  AO-361-A34
1032..............  Central..................  AO-313-A43
1033..............  Mideast..................  AO-166-A67
1124..............  Pacific Northwest........  AO-368-A27
1126..............  Southwest................  AO-231-A65
1131..............  Arizona-Las Vegas........  AO-271-A35
1135..............  Western..................  AO-380-A17
------------------------------------------------------------------------

SUMMARY: This final rule implements revised product-price formulas for 
establishing Class III and Class IV milk prices. The formulas are 
applicable to all Federal milk marketing orders. Each of the amended 
orders was approved by producers who were eligible to have their milk 
pooled during the representative month for voting purposes. Referenda 
were conducted in two markets, and dairy farmer cooperatives were 
polled in the other nine markets to determine whether dairy farmers 
approve the issuance of the orders as amended.

EFFECTIVE DATE: April 1, 2003.

FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Associate Deputy 
Administrator, Order Formulation and Enforcement, USDA/AMS/Dairy 
Programs, Stop 0231-Room 2968, 1400 Independence Avenue, SW., 
Washington, DC 20250-0231, (202) 720-6274, e-mail: 
[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 final 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 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 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 (AMS) 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 $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.
    In consideration of the economic impact of changes to the Federal 
milk marketing order program implemented by this final rule on small 
entities, AMS prepared a regulatory flexibility analysis that was 
included in the final decision (67 FR 67906). The analysis indicates 
that the Department minimized the significant economic impact of the 
regulations on small entities to the fullest extent reasonably possible 
while adhering to the stated objectives. The Department reviewed the 
regulatory and financial burdens resulting from the regulations and 
determined, to the fullest extent possible, the impact on small 
businesses' abilities to compete in the market place. The Department 
reviewed the regulations from both the small producer and small 
processor perspectives, attempting to maintain a balance between these 
competing interests. Neither small producers nor small handlers should 
experience any particular disadvantage as a result of the order 
amendments.
    No additional information collection or reporting requirements will 
be necessitated by the amendments.
    An analysis of the economic effects of the alternatives selected 
was done and summarized in the final decision. A complete economic 
analysis is available upon request from Howard McDowell, Senior 
Economist, Office of the Chief Economist, USDA/AMS/Dairy Programs, Stop 
0229-Room 2753, 1400 Independence Avenue, SW., Washington, DC 20250-
0229, (202) 720-7091, e-mail: [email protected].

Civil Rights Impact Statement

    Pursuant to Departmental Regulation (DR) 4300-4, a comprehensive 
Civil Rights Impact Analysis (CRIA) was

[[Page 7064]]

conducted and published with the final decision on Federal milk order 
consolidation and reform. The conclusion of that analysis disclosed no 
potential for affecting dairy farmers in protected groups differently 
than the general population of dairy farmers. This issue was 
reconsidered in the Final Decision (67 FR 67906) with regard to the 
order amendments, and the conclusion has not changed.
    Copies of the Civil Rights Impact Analysis done for the Final 
Decision on Federal milk order consolidation and reform can be obtained 
from AMS Dairy Programs at (202) 720-4392; any Milk Market 
Administrator office; or via the Internet at: http://www.ams.usda.gov/dairy/.
    Prior documents in this proceeding:
    Notice of Hearing: Issued April 6, 2000; published April 14, 2000 
(65 FR 20094).
    Tentative Final Decision: Issued November 29, 2000; published 
December 7, 2000 (65 FR 76832).
    Interim Final Rule: Issued December 21, 2000; published December 
28, 2000 (65 FR 82832).
    Recommended Decision: Issued October 19, 2001; published November 
29, 2001 (66 FR 59546).
    Extension of Time: Issued November 26, 2001; published November 29, 
2001 (66 FR 59546).
    Final Decision: Issued October 25, 2002; published November 7, 2002 
(67 FR 67906).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the Northeast and other orders were first 
issued and when they were 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 each of the 
aforesaid orders:
    (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 orders regulating the handling of milk in the respective marketing 
areas.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof, for each of the aforesaid orders, it is found that:
    (1) The said orders, as hereby amended, 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 areas, and the minimum 
prices specified in the orders, as hereby amended, 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 said orders, as hereby amended, regulate the handling of 
milk in the same manner as, and are applicable only to persons in the 
respective classes of industrial and commercial activity specified in, 
marketing agreements upon which a hearing has been held.
    (b) Additional Findings. It is necessary in the public interest to 
make these amendments to the Northeast and other orders effective for 
milk marketed on or after April 1, 2003. Any delay beyond that date 
would tend to disrupt the orderly marketing of milk in the aforesaid 
marketing areas.
    The amendments to these orders are known to handlers. The final 
decision containing the proposed amendments to these orders was issued 
on October 25, 2002.
    The changes that result from these 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 order amendments 
effective for milk marketed on or after April 1, 2003.
    (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 each of the specified 
marketing areas, to sign a proposed marketing agreement, tends to 
prevent the effectuation of the declared policy of the Act;
    (2) The issuance of this order amending the Northeast and other 
orders is the only practical means pursuant to the declared policy of 
the Act of advancing the interests of producers as defined in the 
orders as hereby amended;
    (3) The issuance of the order amending the Northeast and other 
orders is favored by at least two-thirds of the producers who were 
engaged in the production of milk for sale in each marketing area.

List of Subjects in 7 CFR Parts 1000, 1001, 1005, 1006, 1007, 1030, 
1032, 1033, 1124, 1126, 1131, and 1135

    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 Northeast and other marketing areas 
shall be in conformity to and in compliance with the terms and 
conditions of the orders, as amended, and as hereby further amended, as 
follows:

    The authority citation for 7 CFR parts 1000, 1001, 1005, 1006, 
1007, 1030, 1032, 1033, 1124, 1126, 1131, and 1135 reads as follows:

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

PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS

    1. Section 1000.40 is amended by adding paragraph (c)(1)(ii) and 
revising paragraph (d)(1)(i) to read as follows:


Sec.  1000.40  Classes of utilization.

* * * * *
    (c) * * *
    (1) * * *
    (ii) Plastic cream, anhydrous milkfat, and butteroil; and
* * * * *
    (d) * * *
    (1) * * *
    (i) Butter; and
* * * * *

    2. Section 1000.50 is amended by revising the last sentence of the 
introductory text; by revising paragraphs (a), (b), (c), (g), (h), (j), 
(l), (m), (n), (o), (p)(1), and (q)(3); and by removing paragraph 
(q)(4) to read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

    * * * The price described in paragraph (d) of this section shall be 
derived from the Class II skim milk price announced on or before the 
23rd day of the month preceding the month to which it applies and the 
butterfat price announced on or before the 5th day of the month 
following the month to which it applies.
    (a) Class I price. The Class I price per hundredweight, rounded to 
the nearest cent, shall be 0.965 times the Class I skim milk price plus 
3.5 times the Class I butterfat price.
    (b) Class I skim milk price. The Class I skim milk price per 
hundredweight shall be the adjusted Class I differential

[[Page 7065]]

specified in Sec.  1000.52 plus the higher of the advanced pricing 
factors computed in paragraph (q)(1) or (2) of this section.
    (c) Class I butterfat price. The Class I butterfat price per pound 
shall be the adjusted Class I differential specified in Sec.  1000.52 
divided by 100, plus the advanced butterfat price computed in paragraph 
(q)(3) of this section.
* * * * *
    (g) Class II butterfat price. The Class II butterfat price per 
pound shall be the butterfat price plus $0.007.
    (h) Class III price. The Class III price per hundredweight, rounded 
to the nearest cent, shall be 0.965 times the Class III skim milk price 
plus 3.5 times the butterfat price.
* * * * *
    (j) Class IV price. The Class IV price per hundredweight, rounded 
to the nearest cent, shall be 0.965 times the Class IV skim milk price 
plus 3.5 times the butterfat price.
* * * * *
    (l) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the U.S. average NASS AA Butter 
survey price reported by the Department for the month less 11.5 cents, 
with the result multiplied by 1.20.
    (m) Nonfat solids price. The nonfat solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the U.S. average NASS 
nonfat dry milk survey price reported by the Department for the month 
less 14 cents and multiplying the result by 0.99.
    (n) Protein price. The protein price per pound, rounded to the 
nearest one-hundredth cent, shall be computed as follows:
    (1) Compute a weighted average of the amounts described in 
paragraphs (n)(1)(i) and (ii) of this section:
    (i) The U.S. average NASS survey price for 40-lb. block cheese 
reported by the Department for the month; and
    (ii) The U.S. average NASS survey price for 500-pound barrel 
cheddar cheese (38 percent moisture) reported by the Department for the 
month plus 3 cents;
    (2) Subtract 16.5 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.383;
    (3) Add to the amount computed pursuant to paragraph (n)(2) of this 
section an amount computed as follows:
    (i) Subtract 16.5 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.572; and
    (ii) Subtract 0.9 times the butterfat price computed pursuant to 
paragraph (l) of this section from the amount computed pursuant to 
paragraph (n)(3)(i) of this section; and
    (iii) Multiply the amount computed pursuant to paragraph (n)(3)(ii) 
of this section by 1.17.
    (o) Other solids price. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the U.S. average NASS dry 
whey survey price reported by the Department for the month minus 15.9 
cents, with the result multiplied by 1.03.
    (p) * * *
    (1) Multiply 0.0005 by the weighted average price computed pursuant 
to paragraph (n)(1) of this section and round to the 5th decimal place;
* * * * *
    (q) * * *
    (3) An advanced butterfat price per pound, rounded to the nearest 
one-hundredth cent, shall be calculated by computing a weighted average 
of the 2 most recent U.S. average NASS AA Butter survey prices 
announced before the 24th day of the month, subtracting 11.5 cents from 
this average, and multiplying the result by 1.20.

PART 1001--MILK IN THE NORTHEAST MARKETING AREA

    1. Section 1001.60 is amended by revising paragraphs (c)(3), 
(d)(2), and (h) to read as follows:


Sec.  1001.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (h) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1001.61 is revised to read as follows:


Sec.  1001.61  Computation of producer price differential.

    For each month, the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1001.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
in this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1001.60 for all handlers required to file reports prescribed in Sec.  
1001.30;
    (b) Subtract the total of the values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1001.60 by the protein price, other solids price, and the 
butterfat price, respectively;
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1001.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1001.60(h); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result, 
rounded to the nearest cent, shall be known as the producer price 
differential for the month.

    3. Section 1001.62 is amended by revising paragraphs (e) and (g) to 
read as follows:


Sec.  1001.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *

[[Page 7066]]

    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat computed by combining the Class III price and the producer 
price differential.
    4. Section 1001.71 is amended by revising paragraphs (b)(2) and 
(b)(3) to read as follows:


Sec.  1001.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively; and
    (3) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1001.60(h) 
by the producer price differential as adjusted pursuant to Sec.  
1001.75 for the location of the plant from which received.

    5. Section 1001.73 is amended by revising paragraphs (a)(2)(ii) and 
(b)(3)(vi) to read as follows:


Sec.  1001.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *
    (ii) Multiply the pounds of butterfat received by the butterfat 
price for the month;
* * * * *
    (b) * * *
    (3) * * *
    (vi) Multiply the pounds of butterfat in Class III and Class IV 
milk by the butterfat price for the month;
* * * * *

PART 1030--MILK IN THE UPPER MIDWEST MARKETING AREA

    1. Section 1030.60 is amended by revising paragraphs (c)(3), 
(d)(2), and (i) to read as follows:


Sec.  1030.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (i) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1030.61 is revised to read as follows:


Sec.  1030.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1030.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1030.60 for all handlers required to file reports prescribed in Sec.  
1030.30;
    (b) Subtract the total values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1030.60 by the protein price, other solids price, and the 
butterfat price, respectively, and the total value of the somatic cell 
adjustment pursuant to Sec.  1030.30(a)(1) and (c)(1);
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1030.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1030.60(i); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.

    3. Section 1030.62 is amended by revising paragraphs (e) and (h) to 
read as follows:


Sec.  1030.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *
    (h) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
butterfat price differential.

    4. Section 1030.71 is amended by revising paragraphs (b)(2) and 
(b)(4) to read as follows:


Sec.  1030.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively;
* * * * *
    (4) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1030.60(i) 
by the producer price differential as adjusted pursuant to Sec.  
1030.75 for the location of the plant from which received.

    5. Section 1030.73 is amended by revising paragraphs (a)(2)(ii), 
(c)(2)(v), and (c)(3)(ii) to read as follows:


Sec.  1030.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *
    (c) * * *
    (2) * * *
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
* * * * *
    (3) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *

[[Page 7067]]

PART 1032--MILK IN THE CENTRAL MARKETING AREA

    1. Section 1032.60 is amended by revising paragraphs (c)(3), 
(d)(2), and (i) to read as follows:


Sec.  1032.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (i) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1032.61 is revised to read as follows:


Sec.  1032.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1032.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1032.60 for all handlers required to file reports prescribed in Sec.  
1032.30;
    (b) Subtract the total values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1032.60 by the protein price, the other solids price, and the 
butterfat price, respectively, and the total value of the somatic cell 
adjustment pursuant to Sec.  1032.30(a)(1) and (c)(1);
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1032.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1032.60(i); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.

    3. Section 1032.62 is amended by revising paragraphs (e) and (h) to 
read as follows:


Sec.  1032.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *
    (h) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.

    4. Section 1032.71 is amended by revising paragraphs (b)(2) and 
(b)(4) to read as follows:


Sec.  1032.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively;
* * * * *
    (4) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1032.60(i) 
by the producer price differential as adjusted pursuant to Sec.  
1032.75 for the location of the plant from which received.

    5. Section 1032.73 is amended by revising paragraphs (a)(2)(ii), 
(c)(2)(v), and (c)(3)(ii) to read as follows:


Sec.  1032.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *
    (c) * * *
    (2) * * *
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
* * * * *
    (3) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *

PART 1033--MILK IN THE MIDEAST MARKETING AREA

    1. Section 1033.60 is amended by revising paragraphs (c)(3), 
(d)(2), and (i) to read as follows:


Sec.  1033.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (i) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1033.61 is revised to read as follows:

[[Page 7068]]

Sec.  1033.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1033.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1033.60 for all handlers required to file reports prescribed in Sec.  
1033.30;
    (b) Subtract the total values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1033.60 by the protein price, the other solids price, and the 
butterfat price, respectively, and the total value of the somatic cell 
adjustment pursuant to Sec.  1033.30(a)(1) and (c)(1);
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1033.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1033.60(i); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.

    3. Section 1033.62 is amended by revising paragraphs (e) and (h) to 
read as follows:


Sec.  1033.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *
    (h) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.

    4. Section 1033.71 is amended by revising paragraphs (b)(2) and 
(b)(4) to read as follows:


Sec.  1033.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices, respectively;
* * * * *
    (4) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1033.60(i) 
by the producer price differential as adjusted pursuant to Sec.  
1033.75 for the location of the plant from which received.

    5. Section 1033.73 is amended by revising paragraphs (a)(2)(ii) and 
(b)(3)(v) to read as follows:


Sec.  1033.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *
    (b) * * *
    (3) * * *
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
* * * * *

PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA

    1. Section 1124.60 is amended by revising paragraphs (c)(3), 
(d)(2), and (h) to read as follows:


Sec.  1124.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (h) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1124.61 is revised to read as follows:


Sec.  1124.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1124.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1124.60 for all handlers required to file reports prescribed in Sec.  
1124.30;
    (b) Subtract the total values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1124.60 by the protein price, the other solids price, and the 
butterfat price, respectively;
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1124.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1124.60(h); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.

[[Page 7069]]


    3. Section 1124.62 is amended by revising paragraphs (e) and (g) to 
read as follows:


Sec.  1124.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.

    4. Section 1124.71 is amended by revising paragraphs (b)(2) and 
(b)(3) to read as follows:


Sec.  1124.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively; and
    (3) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1124.60(h) 
by the producer price differential as adjusted pursuant to Sec.  
1124.75 for the location of the plant from which received.

    5. Section 1124.73 is amended by revising paragraphs (a)(2)(ii), 
(c)(2)(v), and (c)(3)(ii) to read as follows:


Sec.  1124.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *
    (c) * * *
    (2) * * *
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
* * * * *
    (3) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *

PART 1126--MILK IN THE SOUTHWEST MARKETING AREA

    1. Section 1126.60 is amended by revising paragraphs (c)(3), 
(d)(2), and (i) to read as follows:


Sec.  1126.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (i) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1126.61 is revised to read as follows:


Sec.  1126.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1126.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1126.60 for all handlers required to file reports prescribed in Sec.  
1126.30;
    (b) Subtract the total of the values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1126.60 by the protein price, other solids price, and the 
butterfat price, respectively, and the total value of the somatic cell 
adjustment pursuant to Sec.  1126.30(a)(1) and (c)(1);
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1126.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1126.60(i); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.

    3. Section 1126.62 is amended by revising paragraphs (e) and (h) to 
read as follows:


Sec.  1126.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *
    (h) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.
    4. Section 1126.71 is amended by revising paragraphs (b)(2) and 
(b)(4) to read as follows:


Sec.  1126.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively;
* * * * *
    (4) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1126.60(i) 
by the producer price differential as adjusted pursuant to Sec.  
1126.75 for the location of the plant from which received.

    5. Section 1126.73 is amended by revising paragraphs (a)(2)(ii) and 
(b)(3)(v) to read as follows:


Sec.  1126.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *

[[Page 7070]]

    (ii) Multiply the pounds of butterfat received times the butterfat 
price for the month;
* * * * *
    (b) * * *
    (3) * * *
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
* * * * *

PART 1135--MILK IN THE WESTERN MARKETING AREA

    1. Section 1135.60 is amended by revising paragraphs (c)(3), (d)(2) 
and (h) to read as follows:


Sec.  1135.60  Handler's value of milk.

* * * * *
    (c) * * *
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) * * *
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
* * * * *
    (h) Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec.  1000.43(d) and Sec.  
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
* * * * *

    2. Section 1135.61 is revised to read as follows:


Sec.  1135.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1135.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this paragraph, the market administrator shall compute the producer 
price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1135.60 for all handlers required to file reports prescribed in Sec.  
1135.30;
    (b) Subtract the total values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1135.60 by the protein price, the other solids price, and the 
butterfat price, respectively;
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1135.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1135.60(h); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.

    3. Section 1135.62 is amended by revising paragraphs (e) and (g) to 
read as follows:


Sec.  1135.62  Announcement of producer prices.

* * * * *
    (e) The butterfat price;
* * * * *
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat computed by combining the Class III price and the producer 
price differential.
* * * * *

    4. Section 1135.71 is amended by revising paragraph (b)(2) and 
removing and reserving paragraph (b)(3) to read as follows:


Sec.  1135.71  Payments to the producer-settlement fund.

* * * * *
    (b) * * *
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively; and
    (3) [Reserved]
* * * * *

    5. Section 1135.73 is amended by revising paragraphs (a)(2)(ii) and 
(b)(3)(v) to read as follows:


Sec.  1135.73  Payments to producers and to cooperative associations.

    (a) * * *
    (2) * * *
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
* * * * *
    (b) * * *
    (3) * * *
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
* * * * *

    Dated: February 6, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-3442 Filed 2-11-03; 8:45 am]
BILLING CODE 3410-02-P