[Federal Register Volume 69, Number 15 (Friday, January 23, 2004)]
[Proposed Rules]
[Pages 3278-3288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1402]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005, 1007, and 1094

[Docket No. AO-388-A15 and AO-366-A44; DA-03-11]


Milk in the Appalachian and Southeast Marketing Areas; Notice of 
Hearing on Proposed Amendments to Tentative Marketing Agreements and 
Orders

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 in response to industry 
requests to consider proposals to amend the Appalachian and Southeast 
Federal milk marketing orders. A proposal by Southern Marketing Agency, 
Inc. (SMA), would merge the Appalachian and Southeast milk marketing 
areas into a single milk marketing area. A separate SMA proposal and a 
proposal by The Kroger Company would expand the proposed merged order 
to include certain currently unregulated counties and cities in the 
State of Virginia. Also, a proposal submitted by Prairie Farms and Dean 
Foods Company would create a ``Mississippi Valley'' milk marketing area 
by breaking the Southeast order into two orders. Additional proposals 
that seek to amend certain other terms and provisions of the orders 
also will be considered at the hearing.

DATES: The hearing will convene at 1 p.m. on Monday, February 23, 2004.

ADDRESSES: The hearing will be held at the Westin Atlanta Airport 
Hotel, 4736 Best Road, Atlanta, GA 30337; (404) 762-7676.

FOR FURTHER INFORMATION CONTACT: Antoinette M. Carter, Marketing 
Specialist, Order Formulation and Enforcement, USDA/AMS/Dairy Programs, 
Room 2971-Stop 0231, 1400 Independence Avenue, SW, Washington, DC 
20250-0231, (202) 690-3465, e-mail address: [email protected].
    Persons requiring a sign language interpreter or other special 
accommodations should contact Sue L. Mosley, Market Administrator, at 
(770) 682-2501; e-mail [email protected] before the hearing 
begins.

SUPPLEMENTARY INFORMATION: This administrative action is governed by 
the provisions of sections 556 and 557 of Title 5 of the United States 
Code and, therefore, is excluded from the requirements of Executive 
Order 12866.
    Notice is hereby given of a public hearing to be held at the Westin 
Atlanta Airport Hotel, 4736 Best Road, Atlanta, GA 30337, (404) 762-
7676, beginning at 1 p.m., on Monday, February 23, 2004, with respect 
to proposed amendments to the tentative marketing agreements and to the 
orders regulating the handling of milk in the Appalachian and Southeast 
milk marketing areas.
    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 that relate to the proposed 
amendments, hereinafter set forth, and any appropriate modifications 
thereof, to the tentative marketing agreements and to the orders.
    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

[[Page 3279]]

present an irreconcilable conflict with this rule.
    The Agricultural Marketing Agreement Act provides that 
administrative proceedings must be exhausted before parties may file 
suit in court. Under section 8c(15)(A) of the Act, any handler subject 
to an order may request modification or exemption from such order by 
filing with the Department of Agriculture (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.
    This public hearing is being conducted to collect evidence for the 
record concerning merging the Appalachian and Southeast milk marketing 
areas, expanding the proposed merged marketing area, splitting the 
current Southeast marketing area, or retention of the current 
Appalachian and Southeast milk marketing areas, or any combination of 
the above. At the hearing, evidence also will be collected to consider 
certain proposed amendments to the current orders and all terms and 
provisions that would be included in a proposed order(s) including 
definitions, pricing, pooling, reporting, payment dates, transportation 
credits, and administrative provisions including disposition of 
administrative funds accumulated under the Appalachian and Southeast 
milk marketing orders.
    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 Parts 1005, 1007 and 1094

    Milk marketing orders.

    The authority citation for 7 CFR parts 1005 and 1007 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.
    Proposed by Southern Marketing Agency, Inc.:

Proposal No. 1

    This proposal seeks to merge the Appalachian and Southeast milk 
marketing areas to form a new Southeast milk marketing area (part 1007) 
by revising provisions of the Southeast milk marketing order.
    1. Amend Sec.  1007.2 by revising the Southeast marketing area to 
read as follows:


Sec.  1007.2  Southeast marketing area.

* * * * *

Alabama, Arkansas, Georgia, Louisiana, North Carolina, Mississippi, 
South Carolina, and Tennessee

    All of the States of Alabama, Arkansas, Georgia, Louisiana, 
Mississippi, North Carolina, South Carolina, and Tennessee.

Florida Counties

    Escambia, Okaloosa, Santa Rosa, and Walton.

Indiana Counties

    Clark, Crawford, Daviess, Dubois, Floyd, Gibson, Greene, Harrison, 
Knox, Martin, Orange, Perry, Pike, Posey, Scott, Spencer, Sullivan, 
Vanderburgh, Warrick, and Washington.

Kentucky Counties

    All of the State of Kentucky except for the counties of Boone, 
Boyd, Bracken, Campbell, Floyd, Grant, Greenup, Harrison, Johnson, 
Kenton, Lawrence, Lewis, Magoffin, Martin, Mason, Pendleton, Pike, and 
Robertson.

Missouri Counties

    Barry, Barton, Bollinger, Butler, Cape Girardeau, Carter, Cedar, 
Christian, Crawford, Dade, Dallas, Dent, Douglas, Dunklin, Greene, 
Howell, Iron, Jasper, Laclede, Lawrence, Madison, McDonald, 
Mississippi, New Madrid, Newton, Oregon, Ozark, Pemiscot, Perry, Polk, 
Reynolds, Ripley, Scott, Shannon, St. Francois, Stoddard, Stone, Taney, 
Texas, Vernon, Washington, Wayne, Webster, and Wright.

Virginia Counties and Cities

    Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, Washington, and 
Wise; and the cities of Bristol and Norton.

West Virginia Counties

    McDowell and Mercer.
    2. Amend Sec.  1007.7 by revising paragraph (d) and adding a new 
paragraph (g)(6) to read as follows:


Sec.  1007.7  Pool Plant.

* * * * *
    (d) A plant located within the marketing area or in the State of 
Virginia that is operated by a cooperative association if pool plant 
status under this paragraph is requested for such plant by the 
cooperative association and during the month at least 60 percent of the 
producer milk of members of such cooperative association is delivered 
directly from farms to pool distributing plants or is transferred to 
such plants as a fluid milk product (excluding concentrated milk 
transferred to a distributing plant for an agreed-upon use other than 
Class I) from the cooperative's plant.
* * * * *
    (g) * * *
    (6) That portion of a pool plant designated as a ``nonpool plant'' 
that is physically separate and operated separately from the pool 
portion of such plant. The designation of a portion of a regulated 
plant as a nonpool plant must be requested in writing by the handler 
and must be approved by the market administrator.
    3. Amend Sec.  1007.13 by revising paragraphs (d)(1) and (d)(2), 
redesignating paragraph (d)(7) as paragraph (d)(8), redesignating 
paragraph (d)(6) as paragraph (d)(7), adding a new paragraph (d)(6), 
and revising newly designated paragraph (d)(8) to read as follows:


Sec.  1007.13  Producer milk.

* * * * *
    (d) * * *
    (1) In any month of January through June, not less than 15 percent 
of the production of the producer whose milk is diverted is physically 
received at a pool plant during the month;
    (2) In any month of July through December, not less than 33 percent 
of the production of the producer whose milk is diverted is physically 
received at a pool plant during the month;
* * * * *
    (6) Milk of a dairy farmer shall be eligible for diversion the 
first day of the month during which the milk of such dairy farmer was 
physically received as producer milk at a pool plant and the dairy 
farmer meets the delivery requirements as specified in paragraphs 
(d)(1) or (2) of this section;
* * * * *
    (8) The delivery percentage requirements and the diversion 
percentages in paragraphs (d)(1) through (4) 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

[[Page 3280]]

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 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.
    4. Amend Sec.  1007.82 by revising paragraphs (c)(1), (c)(2)(ii), 
and (c)(2)(iii) to read as follows:


Sec.  1007.82  Payments from the transportation credit balancing fund.

* * * * *
    (c) * * *
    (1) Bulk milk received from a plant regulated under another Federal 
order and allocated to Class I milk pursuant to Sec.  1000.44(a)(9); 
and
    (2) * * *
    (ii) The dairy farmer was not a ``producer'' under this order 
during more than 2 of the immediately preceding months of February 
through May and not more than 50 percent of the production of the dairy 
farmer during those 2 months, in aggregate, was received as producer 
milk under this order during those 2 months; Provided, from the 
inception of this amendment, any dairy farmer who qualified for 
payments under the provisions of the former Appalachian Federal Order 
1005 or the Southeast Federal Order 1007 shall continue to qualify 
under these provisions through the following January; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of this order.
* * * * *
    Proposed by Southern Marketing Agency, Inc.:

Proposal No. 2

    This proposal seeks to combine for the proposed ``Southeast'' Order 
the remaining balances of the Producer Settlement Funds, the 
Transportation Credit Balancing Funds, the Administrative Assessment 
Funds, and the Marketing Service Funds of the current Appalachian and 
Southeast milk marketing orders.
    Proposed by Southern Marketing Agency, Inc.:

Proposal No. 3

    This proposal seeks to expand the proposed ``Southeast'' marketing 
area in Proposal No. 1 to include certain currently unregulated 
counties and independent cities in the State of Virginia.
    1. Amend Sec.  1007.2 by revising the Virginia counties and cities 
in the proposed Southeast marketing area to read as follows:


Sec.  1007.2  Southeast marketing area.

* * * * *

Virginia Counties and Cities

    Alleghany, Amherst, Augusta, Bath, Bedford, Bland, Botetourt, 
Buchanan, Campbell, Carroll, Craig, Dickenson, Floyd, Franklin, Giles, 
Grayson, Henry, Highland, Lee, Montgomery, Patrick, Pittsylvania, 
Pulaski, Roanoke, Rockbridge, Rockingham, Russell, Scott, Smyth, 
Tazewell, Washington, Wise, and Wythe; and the cities of Bedford, 
Bristol, Buena Vista, Clifton Forge, Covington, Danville, Galax, 
Harrisonburg, Lexington, Lynchburg, Martinsville, Norton, Radford, 
Roanoke, Salem, and Staunton.
* * * * *
    Proposed by The Kroger Company:

Proposal No. 4

    This proposal seeks to expand the proposed ``Southeast'' marketing 
area in Proposal No. 1 to include two currently unregulated counties 
and two currently unregulated cities in the State of Virginia, and 
include the current Appalachian marketing area pool plant order 
language in Proposal No. 1.
    1. Amend Sec.  1007.2 by revising the proposed ``Southeast'' 
marketing area to read as follows:


Sec.  1007.2  Southeast marketing area.

* * * * *

Alabama, Arkansas, Georgia, Louisiana, North Carolina, Mississippi, 
South Carolina, and Tennessee

    All of the States of Alabama, Arkansas, Georgia, Louisiana, 
Mississippi, North Carolina, South Carolina, and Tennessee.

Florida Counties

    Escambia, Okaloosa, Santa Rosa, and Walton.

Indiana Counties

    Clark, Crawford, Daviess, Dubois, Floyd, Gibson, Greene, Harrison, 
Knox, Martin, Orange, Perry, Pike, Posey, Scott, Spencer, Sullivan, 
Vanderburgh, Warrick, and Washington.

Kentucky Counties

    Adair, Allen, Anderson, Ballard, Barren, Bath, Bell, Bourbon, 
Boyle, Breathitt, Breckinridge, Bullitt, Butler, Caldwell, Calloway, 
Carlisle, Carroll, Carter, Casey, Christian, Clark, Clay, Clinton, 
Crittenden, Cumberland, Daviess, Edmonson, Elliott, Estill, Fayette, 
Fleming, Franklin, Fulton, Gallatin, Garrard, Graves, Grayson, Green, 
Hancock, Hardin, Harlan, Hart, Henderson, Henry, Hickman, Hopkins, 
Jackson, Jefferson, Jessamine, Knott, Knox, Larue, Laurel, Lee, Leslie, 
Letcher, Lincoln, Livingston, Logan, Lyon, Madison, Marion, Marshall, 
McCracken, McCreary, McLean, Meade, Menifee, Mercer, Metcalfe, Monroe, 
Montgomery, Morgan, Muhlenberg, Nelson, Nicholas, Ohio, Oldham, Owen, 
Owsley, Perry, Powell, Pulaski, Rockcastle, Rowan, Russell, Scott, 
Shelby, Simpson, Spencer, Taylor, Todd, Trigg, Trimble, Union, Warren, 
Washington, Wayne, Webster, Whitley, Wolfe, and Woodford.

Missouri Counties

    Barry, Barton, Bollinger, Butler, Cape Girardeau, Carter, Cedar, 
Christian, Crawford, Dade, Dallas, Dent, Douglas, Dunklin, Greene, 
Howell, Iron, Jasper, Laclede, Lawrence, Madison, McDonald, 
Mississippi, New Madrid, Newton, Oregon, Ozark, Pemiscot, Perry, Polk, 
Reynolds, Ripley, Scott, Shannon, St. Francois, Stoddard, Stone, Taney, 
Texas, Vernon, Washington, Wayne, Webster, and Wright.

Virginia Counties and Cities

    Buchanan, Campbell, Dickenson, Lee, Pittsylvania, Russell, Scott, 
Tazewell, Washington, and Wise; and the cities of Bristol, Danville, 
Lynchburg and Norton.

West Virginia Counties

    McDowell and Mercer.
    2. Amend Sec.  1007.7 by revising paragraph (d) and adding a new 
paragraph (g)(6) to read as follows:


Sec.  1007.7  Pool plant.

* * * * *
    (d) A plant located within the marketing area or in the State of 
Virginia that is operated by a cooperative association if pool plant 
status under this paragraph is requested for such plant by the 
cooperative association and during the month at least 60 percent of the 
producer milk of members of such cooperative association is delivered 
directly from farms to pool distributing plants or is transferred to 
such plants as a fluid milk product (excluding concentrated milk 
transferred to a distributing plant for an agreed-upon use other than 
Class I) from the cooperative's plant.
* * * * *
    (g) * * *
    (6) That portion of a pool plant designated as a ``nonpool plant'' 
that is

[[Page 3281]]

physically separate and operated separately from the pool portion of 
such plant. The designation of a portion of a regulated plant as a 
nonpool plant must be requested in writing by the handler and must be 
approved by the market administrator.
    Proposed by Prairie Farms and Dean Foods:

Proposal No. 5

    Create a new ``Mississippi Valley'' marketing area (part 1094) to 
include Mississippi, Louisiana, Arkansas, western Tennessee, and 
southern Missouri, with terms and provisions to read as follows:

PART 1094--MILK IN MISSISSIPPI VALLEY MARKETING AREA

Subpart--Order Regulating Handling

General Provisions


Sec.  1094.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
apply to this part 1094. In this part 1094, all references to sections 
in part 1000 refer to part 1000 of this chapter.

Definitions


Sec.  1094.2  Mississippi Valley marketing area.

    The marketing area means all territory within the bounds of the 
following states and political subdivisions, including all piers, docks 
and wharves connected therewith and all craft moored thereat, and all 
territory occupied by government (municipal, State or Federal) 
reservations, installations, institutions, or other similar 
establishments if any part thereof is within any of the listed states 
or political subdivisions:

Arkansas, Louisiana, and Mississippi

    All of the States of Arkansas, Louisiana, and Mississippi.

Missouri Counties

    Barry, Barton, Bollinger, Butler, Cape Girardeau, Carter, Cedar, 
Christian, Crawford, Dade, Dallas, Dent, Douglas, Dunklin, Greene, 
Howell, Iron, Jasper, Laclede, Lawrence, Madison, McDonald, 
Mississippi, New Madrid, Newton, Oregon, Ozark, Pemiscot, Perry, Polk, 
Reynolds, Ripley, Scott, Shannon, St. Francois, Stoddard, Stone, Taney, 
Texas, Vernon, Washington, Wayne, Webster, and Wright.

Tennessee Counties

    Benton, Carroll, Chester, Crockett, Decatur, Dyer, Fayette, Gibson, 
Hardeman, Hardin, Haywood, Henderson, Henry, Lake, Lauderdale, McNairy, 
Madison, Obion, Shelby, Tipton, and Weakley.


Sec.  1094.3  Route disposition.

    See Sec.  1000.3.


Sec.  1094.4  Plant.

    See Sec.  1000.4.


Sec.  1094.5  Distributing plant.

    See Sec.  1000.5.


Sec.  1094.6  Supply plant.

    See Sec.  1000.6.


Sec.  1094.7  Pool plant.

    Pool plant means a plant specified in paragraphs (a) through (d) of 
this section, or a unit of plants as specified in paragraph (e) of this 
section, but excluding a plant specified in paragraph (g) of this 
section. The pooling standards described in paragraphs (c) and (d) of 
this section are subject to modification pursuant to paragraph (f) of 
this section:
    (a) A distributing plant, other than a plant qualified as a pool 
plant pursuant to paragraph (b) of this section or Sec.  ---- .7(b) of 
any other Federal milk order, from which during the month 50 percent or 
more of the fluid milk products physically received at such plant 
(excluding concentrated milk received from another plant by agreement 
for other than Class I use) are disposed of as route disposition or are 
transferred in the form of packaged fluid milk products to other 
distributing plants. At least 25 percent of such route disposition and 
transfers must be to outlets in the marketing area.
    (b) Any distributing plant located in the marketing area which 
during the month processed at least 50 percent of the total quantity of 
fluid milk products physically received at the plant (excluding 
concentrated milk received from another plant by agreement for other 
than Class I use) into ultra-pasteurized or aseptically-processed fluid 
milk products.
    (c) A supply plant from which 50 percent or more of the total 
quantity of milk that is physically received during the month from 
dairy farmers and handlers described in Sec.  1000.9(c), including milk 
that is diverted from the plant, is transferred to pool distributing 
plants. Concentrated milk transferred from the supply plant to a 
distributing plant for an agreed-upon use other than Class I shall be 
excluded from the supply plant's shipments in computing the plant's 
shipping percentage.
    (d) A plant located within the marketing area that is operated by a 
cooperative association if pool plant status under this paragraph is 
requested for such plant by the cooperative association and during the 
month at least 60 percent of the producer milk of members of such 
cooperative association is delivered directly from farms to pool 
distributing plants or is transferred to such plants as a fluid milk 
product (excluding concentrated milk transferred to a distributing 
plant for an agreed-upon use other than Class I) from the cooperative's 
plant.
    (e) Two or more plants operated by the same handler and located 
within the marketing area may qualify for pool status as a unit by 
meeting the total in-area route disposition requirements specified in 
paragraph (a) of this section and the following additional 
requirements:
    (1) At least one of the plants in the unit must qualify as a pool 
plant pursuant to paragraph (a) of this section;
    (2) Other plants in the unit must process only Class I or Class II 
products and must be located in a pricing zone providing the same or a 
lower Class I price than the price applicable at the distributing plant 
included in the unit pursuant to paragraph (e)(1) of this section; and
    (3) A written request to form a unit, or to add or remove plants 
from a unit, must be filed with the market administrator prior to the 
first day of the month for which it is to be effective.
    (f) The applicable shipping percentages 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 shipment 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 date 
for which the requested revision is desired 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.
    (g) The term pool plant shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) An exempt plant as defined in Sec.  1000.8(e);
    (3) A plant qualified pursuant to paragraph (a) of this section 
which is not located within any Federal order marketing area, meets the 
pooling

[[Page 3282]]

requirements of another Federal order, and has had greater route 
disposition in such other Federal order marketing area for 3 
consecutive months;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which is located in another Federal order marketing area, meets the 
pooling standards of the other Federal order, and has not had a 
majority of its route disposition in this marketing area for 3 
consecutive months or is locked into pool status under such other 
Federal order without regard to its route disposition in any other 
Federal order marketing area; and
    (5) A plant qualified pursuant to paragraph (c) of this section 
which also meets the pooling requirements of another Federal order and 
from which greater qualifying shipments are made to plants regulated 
under such other order than are made to plants regulated under the 
order in this part, or such plant has automatic pooling status under 
such other order.


Sec.  1094.8  Nonpool plant.

    See Sec.  1000.8.


Sec.  1094.9  Handler.

    See Sec.  1000.9.


Sec.  1094.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a dairy farm and a distributing plant from which there 
is monthly route disposition in the marketing area;
    (b) Receives no fluid milk products, and acquires no fluid milk 
products for route disposition, from sources other than own farm 
production;
    (c) Disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from own farm production;
    (d) Provides proof satisfactory to the market administrator that 
the care and management of the dairy animals and other resources 
necessary to produce all Class I milk handled, and the processing and 
packaging operations, are the producer-handler's own enterprise and are 
operated at the producer-handler's own risk;
    (e) Has total route disposition and transfers in the form of 
packaged fluid milk products to other distributing plants during the 
month that does not exceed 3 million pounds; and
    (f) Does not distribute fluid milk products to a wholesale customer 
who also is serviced by a plant described in Sec.  1094.7(a), (b), or 
(e), or a handler described in Sec.  1000.8(c) that supplied the same 
product in the same-sized package with a similar label to the wholesale 
customer during the month.


Sec.  1094.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for fluid consumption as Grade A milk and whose milk 
(or components of milk) is:
    (1) Received at a pool plant directly from the producer or diverted 
by the plant operator in accordance with Sec.  1094.13; or
    (2) Received by a handler described in Sec.  1000.9(c).
    (b) Producer shall not include:
    (1) A producer-handler as defined in any Federal order;
    (2) A dairy farmer whose milk is received at an exempt plant, 
excluding producer milk diverted to the exempt plant pursuant to Sec.  
1094.13(d);
    (3) A dairy farmer whose milk in received by diversion at a pool 
plant from a handler regulated under another Federal order if the other 
Federal order designates the dairy farmer as a producer under that 
order and that milk is allocated by request to a utilization other than 
Class I; and
    (4) A dairy farmer whose milk is reported as diverted to a plant 
fully regulated under another Federal order with respect to that 
portion of the milk so diverted that is assigned to Class I under the 
provisions of such other order.


Sec.  1094.13  Producer milk.

    Producer milk means the skim milk (or the skim equivalent of 
components of skim milk) and butterfat contained in milk of a producer 
that is:
    (a) Received by the operator of a pool plant directly from a 
producer or a handler described in Sec.  1000.9(c). All milk received 
pursuant to this paragraph shall be priced at the location of the plant 
where it is first physically received;
    (b) Received by a handler described in Sec.  1000.9(c) in excess of 
the quantity delivered to pool plants;
    (c) Diverted by a pool plant operator to another pool plant. Milk 
so diverted shall be priced at the location of the plant to which 
diverted; or
    (d) Diverted by the operator of a pool plant or a handler described 
in Sec.  1000.9(c) to a nonpool plant, subject to the following 
conditions:
    (1) In any month of January through June, not less than 4 days' 
production of the producer whose milk is diverted is physically 
received at a pool plant during the month;
    (2) In any month of July through December, not less than 10 days' 
production of the producer whose milk is diverted is physically 
received at a pool plant during the month;
    (3) The total quantity of milk so diverted during the month by a 
cooperative association shall not exceed 33 percent during the months 
of July through December, and 50 percent during the months of January 
through June, of the producer milk that the cooperative association 
caused to be delivered to, and physically received at, pool plants 
during the month;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 33 percent during the months of July 
through December, or 50 percent during the months of January through 
June, of the producer milk physically received at such plant (or such 
unit of plants in the case of plants that pool as a unit pursuant to 
Sec.  1094.7(e)) during the month, excluding the quantity of producer 
milk received from a handler described in Sec.  1000.9(c);
    (5) Any milk diverted in excess of the limits prescribed in 
paragraphs (d)(3) and (4) of this section shall not be producer milk. 
If the diverting handler or cooperative association fails to designate 
the dairy farmers' deliveries that will not be producer milk, no milk 
diverted by the handler or cooperative association shall be producer 
milk;
    (6) Diverted milk shall be priced at the location of the plant to 
which diverted; and
    (7) The delivery day requirements and the diversion percentages in 
paragraphs (d)(1) through (4) 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 
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 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 by issued in writing at least one day before 
the effective date.
    (e) Producer milk shall not include milk of a producer that is 
subject to inclusion and participation in a

[[Page 3283]]

marketwide equalization pool under a milk classification and pricing 
program imposed under the authority of a State government maintaining 
marketwide pooling of returns.


Sec.  1094.14  Other source milk.

    See Sec.  1000.14.


Sec.  1094.15  Fluid milk product.

    See Sec.  1000.15.


Sec.  1094.16  Fluid cream product.

    See Sec.  1000.16.


Sec.  1094.18  Cooperative association.

    See Sec.  1000.18.


Sec.  1094.19  Commercial food processing establishment.

    See Sec.  1000.19.


Sec.  1094.30  Reports of receipts and utilization.

    Each handler shall report monthly so that the market 
administrator's office receives the report on or before the 7th day 
after the end of the month, in the detail and on prescribed forms, as 
follows:
    (a) With respect to each of its pool plants, the quantities of skim 
milk and butterfat contained in or represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the reporting handler, from sources other than handlers described in 
Sec.  1000.9(c);
    (2) Receipts of milk from handlers described in Sec.  1000.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order, except Federal orders 1005 and 1007, for which a 
transportation credit is requested pursuant to Sec.  1094.82;
    (6) Receipts of producer milk described in Sec.  1094.82(c)(2), 
including the identity of the individual producers whose milk is 
eligible for the transportation credit pursuant to that paragraph and 
the date that such milk was received;
    (7) For handlers submitting transportation credit requests, 
transfers of bulk milk to nonpool plants, including the dates that such 
milk was transferred;
    (8) Inventories at the beginning and end of the month of fluid milk 
products and bulk fluid cream products; and
    (9) The utilization or disposition of all milk and milk products 
required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as 
prescribed for reports required by paragraphs (a)(1), (a)(2), (a)(3), 
(a)(4), and (a)(8) of this section. Receipts of milk that would have 
been producer milk if the plant had been fully regulated shall be 
reported in lieu of producer milk. The report shall show also the 
quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec.  1000.9(c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers;
    (2) The utilization or disposition of all such receipts; and
    (3) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec.  1094.82, all of 
the information required in paragraphs (a)(5), (a)(6), and (a)(7) of 
this section.
    (d) Each handler not specified in paragraphs (a) through (c) of 
this section shall report with respect to its receipts and utilization 
of milk and milk products in such manner as the market administrator 
may prescribe.


Sec.  1094.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler that operates a pool plant pursuant to Sec.  1094.7 and each 
handler described in Sec.  1000.9(c) shall report to the market 
administrator its producer payroll for the month, in detail prescribed 
by the market administrator, showing for each producer the information 
specified in Sec.  1094.73(e).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec.  1000.76(b) shall report 
for each dairy farmer who would have been a producer if the plant had 
been fully regulated in the same manner as prescribed for reports 
required by paragraph (a) of this section.


Sec.  1094.32  Other reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec.  1000.9(a) and (c) shall report to the market 
administrator any adjustments to transportation credit requests as 
reported pursuant to Sec.  1094.30(a)(5), (6), and (7).
    (b) In addition to the reports required pursuant to Sec. Sec.  
1094.30, 1094.31 and 1094.32(a), each handler shall report any 
information the market administrator deems necessary to verify or 
establish each handler's obligation under the order.

Classification of Milk


Sec.  1094.40  Classes of utilization.

    See Sec.  1000.40.


Sec.  1094.42  Classification of transfers and diversion.

    See Sec.  1000.42.


Sec.  1094.43  General classification rules.

    See Sec.  1000.43.


Sec.  1094.44  Classification of producer milk.

    See Sec.  1000.44.


Sec.  1094.45  Market administrator's reports and announcements 
concerning classification.

    See Sec.  1000.45.

Class Prices


Sec.  1094.50  Class prices, component prices, and advanced pricing 
factors.

    See Sec.  1000.50.


Sec.  1094.51  Class I differential and price.

    The Class I differential shall be the differential established for 
Orleans Parish, Louisiana, which is reported in Sec.  1000.52. The 
Class I price shall be the price computed pursuant to Sec.  1000.50(a) 
for Orleans Parish, Louisiana.


Sec.  1094.52  Adjusted Class I differentials.

    See Sec.  1000.52.


Sec.  1094.53  Announcement of class prices, component prices, and 
advanced pricing factors.

    See Sec.  1000.53.


Sec.  1094.54  Equivalent price.

    See Sec.  1000.54.

Uniform Prices


Sec.  1094.60  Handler's value of milk.

    For the purpose of computing a handler's obligation for producer 
milk, the market administrator shall determine for each month the value 
of milk of each handler with respect to each of the handler's pool 
plants and of each handler described in Sec.  1000.9(c) with respect to 
milk that was not received at a pool plant by adding the amounts 
computed in paragraphs (a) through (e) of this section and subtracting 
from that total amount the value computed in paragraph (f) of this 
section. Receipts of nonfluid milk products that are distributed as 
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec.  1000.76(a)(4) or 
(d) shall be excluded from pricing under this section.
    (a) Multiply the pounds of skim milk and butterfat in producer milk 
that were classified in each class pursuant to Sec.  1000.44(c) by the 
applicable skim milk and butterfat prices, and add the resulting 
amounts;
    (b) Multiply the pounds of skim milk and butterfat overage assigned 
to each class pursuant to Sec.  1000.44(a)(11) by the

[[Page 3284]]

respective skim milk and butterfat prices applicable at the location of 
the pool plant;
    (c) Multiply the difference between the Class IV price for the 
preceding month and the current month's Class I, II, or III price, as 
the case may be, by the hundredweight of skim milk and butterfat 
subtracted from Class I, II, or III, respectively, pursuant to Sec.  
1000.44(a)(7) and the corresponding step of Sec.  1000.44(b);
    (d) Multiply the difference between the Class I price applicable at 
the location of the pool plant and the Class IV price by the 
hundredweight of skim milk and butterfat assigned to Class I pursuant 
to Sec.  1000.43(d) and the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec.  1000.44(a)(3)(i) through (vi) 
and the corresponding step of Sec.  1000.44(b), excluding receipts of 
bulk fluid cream products from a plant regulated under other Federal 
orders and bulk concentrated fluid milk products from pool plants, 
plants regulated under other Federal orders, and unregulated supply 
plants;
    (e) Multiply the Class I skim milk and Class I butterfat prices 
applicable at the location of the nearest unregulated supply plants 
from which an equivalent volume was received 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; and
    (f) For reconstituted milk made from receipts of nonfluid milk 
products, multiply $1.00 (but not more than the difference between the 
Class I price applicable at the location of the pool plant and the 
Class IV price) by the hundredweight of skim milk and butterfat 
contained in receipts of nonfluid milk products that are allocated to 
Class I use pursuant to Sec.  1000.43(d).


Sec.  1094.61  Computation of uniform prices.

    On or before the 11th day of each month, the market administrator 
shall compute a uniform butterfat price, a uniform skim milk price, and 
a uniform price for producer milk receipts reported for the prior 
month. The report of any handler who has not made payments required 
pursuant to Sec.  1094.71 for the preceding month shall not be included 
in the computation of these prices, 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.
    (a) Uniform butterfat price. The uniform butterfat price per pound, 
rounded to the nearest one-hundredth cent, shall be computed by:
    (1) Multiplying the pounds of butterfat in producer milk allocated 
to each class pursuant to Sec.  1000.44(b) by the respective class 
butterfat prices;
    (2) Adding the butterfat value calculated in Sec.  1094.60(e) for 
other source milk allocated to Class I pursuant to Sec.  1000.43(d) and 
the steps of Sec.  1000.44(b) that correspond to Sec.  1000.44(a)(3)(i) 
and Sec.  1000.44(a)(8) by the Class I price; and
    (3) Dividing the sum of paragraphs (a)(1) and (a)(2) of this 
section by the sum of the pounds of butterfat in producer milk and 
other source milk used to calculate the values in paragraphs (a)(1) and 
(a)(2) of this section.
    (b) Uniform skim milk price. The uniform skim milk price per 
hundredweight, rounded to the nearest cent, shall be computed as 
follows:
    (1) Combine into one total the values computed pursuant to Sec.  
1094.60 for all handlers;
    (2) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1094.75;
    (3) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (4) Subtract the value of total pounds of butterfat for all 
handlers. The butterfat value shall be computed by multiplying the sum 
of the pounds of butterfat in producer milk and other source milk used 
to calculate the values in paragraphs (a)(1) and (a)(2) of this section 
by the butterfat price computed in paragraph (a) of this section;
    (5) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (i) The total skim pounds of producer milk; and
    (ii) The total skim pounds for which a value is computed pursuant 
to Sec.  1094.60(e); and
    (6) Subtract not less than 4 cents and not more than 5 cents.
    (c) Uniform price. The uniform price per hundredweight, rounded to 
the nearest cent, shall be the sum of the following:
    (1) Multiply the uniform butterfat price for the month pursuant to 
paragraph (a) of this section times 3.5 pounds of butterfat; and
    (2) Multiply the uniform skim milk price for the month pursuant to 
paragraph (b) of this section times 96.5 pounds of skim milk.


Sec.  1094.62  Announcement of uniform prices.

    On or before the 11th day after the end of the month, the market 
administrator shall announce the uniform prices for the month computed 
pursuant to Sec.  1094.61.

Payments for Milk


Sec.  1094.70  Producer-settlement fund.

    See Sec.  1000.70.


Sec.  1094.71  Payments to the producer-settlement fund.

    Each handler shall make a payment to the producer-settlement fund 
in a manner that provides receipt of the funds by the market 
administrator no later than the 12th day after the end of the month 
(except as provided 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:
    (a) The total value of milk of the handler for the month as 
determined pursuant to Sec.  1094.60; and
    (b) The sum of the value at the uniform prices for skim milk and 
butterfat, adjusted for plant location, of the handler's receipts of 
producer milk; and the value at the uniform price, as adjusted pursuant 
to Sec.  1094.75, applicable at the location of the plant from which 
received of other source milk for which a value is computed pursuant to 
Sec.  1094.60(e).


Sec.  1094.72  Payments from the producer-settlement fund.

    No later than one day after the date of payment receipt required 
under Sec.  1094.71, the market administrator shall pay to each handler 
the amount, if any, by which the amount computed pursuant to Sec.  
1094.71(b) exceeds the amount computed pursuant to Sec.  1094.71(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.

[[Page 3285]]

Sec.  1094.73  Payments to producers and to cooperative associations.

    (a) Each handler that is not paying a cooperative association for 
producer milk shall pay each producer as follows:
    (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 26th 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 90 percent of the 
preceding month's uniform price, adjusted for plant location pursuant 
to Sec.  1094.75 and proper deductions authorized in writing by the 
producer.
    (2) Final payment. For milk received during the month, a payment 
computed as follows shall be made so that it is received by each 
producer one day after the payment date required in Sec.  1094.72:
    (i) Multiply the hundredweight of producer skim milk received times 
the uniform skim milk price for the month;
    (ii) Multiply the pounds of butterfat received times the uniform 
butterfat price for the month;
    (iii) Multiply the hundredweight of producer milk received times 
the plant location adjustment pursuant to Sec.  1094.75; and
    (iv) Add the amounts computed in paragraph (a)(2)(i), (ii), and 
(iii) of this section, and from that sum:
    (A) Subtract the partial payment made pursuant to paragraph (a)(1) 
of this section;
    (B) Subtract the deduction for marketing services pursuant to Sec.  
1000.86;
    (C) Add or subtract for errors made in previous payments to the 
producer; and
    (D) Subtract proper deductions authorized in writing by the 
producer.
    (b) One day before partial and final payments are due pursuant to 
paragraph (a) of this section, each handler shall pay a cooperative 
association for milk received as follows:
    (1) Partial payment to a cooperative association for bulk milk 
received directly from producers' farms. For bulk milk (including the 
milk of producers who are not members of such association and who the 
market administrator determines have authorized the cooperative 
association to collect payment for their milk) received during the 
first 15 days of the month from a cooperative association in any 
capacity, except as the operator of a pool plant, the payment shall be 
equal to the hundredweight of milk received multiplied by 90 percent of 
the preceding month's uniform price, adjusted for plant location 
pursuant to Sec.  1094.75.
    (2) Partial payment to a cooperative association for milk 
transferred from its pool plant. For bulk fluid milk products and bulk 
fluid cream products received during the first 15 days of the month 
from a cooperative association in its capacity as the operator of a 
pool plant, the partial payment shall be at the pool plant operator's 
estimated use value of the milk using the most recent class prices 
available for skim milk and butterfat at the receiving plant's 
location.
    (3) Final payment to a cooperative association for milk transferred 
from its pool plant. For bulk fluid milk products and bulk fluid cream 
products received during the month from a cooperative association in 
its capacity as the operator of a pool plant, the final payment shall 
be the classified value of such milk as determined by multiplying the 
pounds of skim milk and butterfat assigned to each class pursuant to 
Sec.  1000.44 by the class prices for the month at the receiving 
plant's location, and subtracting from this sum the partial payment 
made pursuant to paragraph (b)(2) of this section.
    (4) Final payment to a cooperative association for bulk milk 
received directly from producers' farms. For bulk milk received from a 
cooperative association during the month, including the milk of 
producers who are not members of such association and who the market 
administrator determines have authorized the cooperative association to 
collect payment for their milk, the final payment for such milk shall 
be an amount equal to the sum of the individual payments otherwise 
payable for such milk pursuant to paragraph (a)(2) of this section.
    (c) If a handler has not received full payment from the market 
administrator pursuant to Sec.  1094.72 by the payment date specified 
in paragraph (a) or (b) of this section, the handler may reduce 
payments pursuant to paragraphs (a) and (b) of this section, but by not 
more than the amount of the underpayment. The payments shall be 
completed on the next scheduled payment date after receipt of the 
balance due from the market administrator.
    (d) If a handler claims that a required payment to a producer 
cannot be made because the producer is deceased or cannot be located, 
or because the cooperative association or its lawful successor or 
assignee is no longer in existence, the payment shall be made to the 
producer-settlement fund, and in the event that the handler 
subsequently locates and pays the producer or a lawful claimant, or in 
the event that the handler no longer exists and a lawful claim is later 
established, the market administrator shall make the required payment 
from the producer-settlement fund to the handler or to the lawful 
claimant as the case may be.
    (e) In making payments to producers pursuant to this section, each 
pool plant operator shall furnish each producer, except a producer 
whose milk was received from a cooperative association 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:
    (1) The name, address, Grade A identifier assigned by a duly 
constituted regulatory agency, and the payroll number of the producer;
    (2) The month and dates that milk was received from the producer, 
including the daily and total pounds of milk received;
    (3) The total pounds of butterfat in the producer's milk;
    (4) The minimum rate or rates at which payment to the producer is 
required pursuant to the order in this part;
    (5) The rate used in making payment if the rate is other than the 
applicable minimum rate;
    (6) The amount, or rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to the producer or cooperative 
association.


Sec.  1094.75  Plant location adjustments for producer milk and nonpool 
milk.

    For purposes of making payments for producer milk and nonpool milk, 
a plant location adjustment shall be determined by subtracting the 
Class I price specified in Sec.  1094.51 from the Class I price at the 
plant's location. The difference, plus or minus as the case may be, 
shall be used to adjust the payments required pursuant to Sec. Sec.  
1094.73 and 1094.76.


Sec.  1094.76  Payments by a handler operating a partially regulated 
distributing plant.

    See Sec.  1000.76.


Sec.  10094.77  Adjustment of accounts.

    See Sec.  1000.77.


Sec.  1094.78  Charges on overdue accounts.

    See Sec.  1000.78.

Marketwide Service Payments


Sec.  1094.80  Transportation credit balancing fund.

    The market administrator shall maintain a separate fund known as 
the Transportation Credit Balancing Fund into which shall be deposited 
the payments made by handlers pursuant to Sec.  1094.81 and out of 
which shall be made payments due handlers pursuant

[[Page 3286]]

to Sec.  1094.82. Payments due a handler shall be offset against 
payments due from the handler.


Sec.  1094.81  Payments to the transportation credit balancing fund.

    (a) On or before the 12th day after the end of the month (except as 
provided in Sec.  1000.90), each handler operating a pool plant and 
each handler specified in Sec.  1000.9(c) shall pay to the market 
administrator a transportation credit balancing fund assessment 
determined by multiplying the pounds of Class I producer milk assigned 
pursuant to Sec.  1000.44 by $0.07 per hundredweight or such lesser 
amount as the market administrator deems necessary to maintain a 
balance in the fund equal to the total transportation credits disbursed 
during the prior June-January period. In the event that during any 
month of the June-January period the fund balance is insufficient to 
cover the amount of credits that are due, the assessment should be 
based upon the amount of credits that would have been disbursed had the 
fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 5th day of the month (except as provided in Sec.  1000.90) the 
assessment pursuant to paragraph (a) of this section for the following 
month.


Sec.  1094.82  Payments from the transportation credit balancing fund.

    (a) Payments from the transportation credit balancing fund to 
handlers and cooperative associations requesting transportation credits 
shall be made as follows:
    (1) On or before the 13th day (except as provided in Sec.  1000.90) 
after the end of each of the months of July through December and any 
other month in which transportation credits are in effect pursuant to 
paragraph (b) of this section, the market administrator shall pay to 
each handler that received, and reported pursuant to Sec.  
1094.30(a)(5), bulk milk transferred from a plant fully regulated under 
another Federal order as described in paragraph (c)(1) of this section 
or that received, and reported pursuant to Sec.  1094.30(a)(6), milk 
directly from producers' farms as specified in paragraph (c)(2) of this 
section, a preliminary amount determined pursuant to paragraph (d) of 
this section to the extent that funds are available in the 
transportation credit balancing fund. If an insufficient balance exists 
to pay all the credits computed pursuant to this section, the market 
administrator shall distribute the balance available in the 
transportation credit balancing fund by reducing payments pro rata 
using the percentage derived by dividing the balance in the fund by the 
total credits that are due for the month. The amount of credits 
resulting from this initial proration shall be subject to audit 
adjustment pursuant to paragraph (a)(2) of this section;
    (2) The market administrator shall accept adjusted requests for 
transportation credits on or before the 20th day of the month following 
the month for which such credits were requested pursuant to Sec.  
1094.32(a). After such date, a preliminary audit will be conducted by 
the market administrator, who will recalculate any necessary proration 
of transportation credit payments for the preceding month pursuant to 
paragraph (a) of this section. Handlers will be promptly notified of an 
overpayment of credits based upon this final computation and remedial 
payments to or from the transportation credit balancing fund will be 
made on or before the next payment date for the following month;
    (3) Transportation credits paid pursuant to paragraphs (a)(1) and 
(2) of this section shall be subject to final verification by the 
market administrator pursuant to Sec.  1000.77. Adjusted payments to or 
from the transportation credit balancing fund will remain subject to 
the final proration established pursuant to paragraph (a)(2) of this 
section; and
    (4) In the event that a qualified cooperative association is the 
responsible party for whose account such milk is received and written 
documentation of this fact is provided to the market administrator 
pursuant to Sec.  1094.30(c)(3) prior to the date payment is due, the 
transportation credits for such milk computed pursuant to this section 
shall be made to such cooperative association rather than to the 
operator of the pool plant at which the milk was received.
    (b) The market administrator may extend the period during which 
transportation credits are in effect (i.e., the transportation credit 
period) to the months of January and June if a written request to do so 
is received 15 days prior to the beginning of the month for which the 
request is made and, after conducting an independent investigation, 
finds that such extension is necessary to assure the market of an 
adequate supply of milk for fluid use. Before making such a finding, 
the market administrator shall notify the Director of the Dairy 
Division and all handlers in the market that an extension is being 
considered and invite written data, view, and arguments. Any decision 
to extend the transportation credit period must be issued in writing 
prior to the first day of the month for which the extension is to be 
effective.
    (c) Transportation credits shall apply to the following milk:
    (1) Bulk milk received from a plant regulated under another Federal 
order, except Federal orders 1005 and 1007, and allocated to Class I 
milk pursuant to Sec.  1000.44(a)(9); and
    (2) Bulk milk received directly from the farms of dairy farmers at 
pool distributing plants subject to the following conditions:
    (i) The quantity of such milk that shall be eligible for the 
transportation credit shall be determined by multiplying the total 
pounds of milk received from producers meeting the conditions of this 
paragraph by the lower of:
    (A) The marketwide estimated Class I utilization of all handlers 
for the month pursuant to Sec.  1000.45(a); or
    (B) The Class I utilization of all producer milk of the pool plant 
operator receiving the milk after the computations described in Sec.  
1000.44;
    (ii) The dairy farmer was not a ``producer'' under the order in 
this part during more than 2 of the immediately preceding months of 
February through May and not more than 50 percent of the production of 
the dairy farmer during those 2 months, in aggregate, was received as 
producer milk under the order in this part during those 2 months; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of the order in this part or the marketing 
area of Federal order 1005 (7 CFR part 1005) or Federal order 1007 (7 
CFR part 1007).
    (d) Transportation credits shall be computed as follows:
    (1) The market administrator shall subtract from the pounds of milk 
described in paragraphs (c)(1) and (2) of this section the pounds of 
bulk milk transferred from the pool plant receiving the supplemental 
milk if milk was transferred to a nonpool plant on the same calendar 
day that the supplemental milk was received. For this purpose, the 
transferred milk shall be subtracted from the most distant load of 
supplemental milk received, and then in sequence with the next most 
distant load until all of the transfers have been offset;
    (2) With respect to the pounds of milk described in paragraph 
(c)(1) of this section that remain after the computations described in 
paragraph (d)(1) of this section, the market administrator shall:
    (i) Determine the shortest hard-surface highway distance between 
the shipping plant and the receiving plant;

[[Page 3287]]

    (ii) Multiply the number of miles so determined by 0.35 cent;
    (iii) Subtract the applicable Class I differential in Sec.  1000.52 
for the county in which the shipping plant is located from the Class I 
differential applicable for the county in which the receiving plant is 
located;
    (iv) Subtract any positive difference computed in paragraph 
(d)(2)(iii) of this section from the amount computed in paragraph 
(d)(2)(ii) of this section; and
    (v) Multiply the remainder computed in paragraph (d)(2)(iv) of this 
section by the hundredweight of milk described in paragraph (d)(2) of 
this section.
    (3) For the remaining milk described in paragraph (c)(2) of this 
section after computations described in paragraph (d)(1) of this 
section, the market administrator shall:
    (i) Determine an origination point for each load of milk by 
locating the nearest city to the last producer's farm from which milk 
was picked up for delivery to the receiving pool plant;
    (ii) Determine the shortest hard-surface highway distance between 
the receiving pool plant and the origination point;
    (iii) Subtract 85 miles from the mileage so determined;
    (iv) Multiply the remaining miles so computed by 0.35 cent;
    (v) Subtract the Class I differential specified in Sec.  1000.52 
applicable for the county in which the origination point is located 
from the Class I differential applicable at the receiving pool plant's 
location;
    (vi) Subtract any positive difference computed in paragraph 
(d)(3)(v) of this section from the amount computed in paragraph 
(d)(3)(iv) of this section; and
    (vii) Multiply the remainder computed in paragraph (d)(3)(vi) of 
this section by the hundredweight of milk described in paragraph (d)(3) 
of this section.

Administrative Assessment and Marketing Service Deduction


Sec.  1094.85  Assessment for order administration.

    See Sec.  1000.85.


Sec.  1094.86  Deduction for marketing services.

    See Sec.  1000.86.
    Proposed by Prairie Farms and Dean Foods:

Proposal No. 6

    This proposal seeks to amend the Producer milk provision of the 
Appalachian and Southeast marketing areas to prevent producers who 
share in the proceeds of a state marketwide pool from simultaneously 
sharing in the proceeds of a Federal marketwide pool on the same milk 
in the same month.
    1. Amend Sec.  1005.13 by adding a new paragraph (e), to read as 
follows:


Sec.  1005.13  Producer milk.

* * * * *
    (e) Producer milk shall not include milk of a producer that is 
subject to inclusion and participation in a marketwide equalization 
pool under a milk classification and pricing program imposed under the 
authority of a State government maintaining marketwide pooling of 
returns.
    2. Amend Sec.  1007.13 by adding a new paragraph (e), to read as 
follows:


Sec.  1007.13  Producer milk.

* * * * *
    (e) Producer milk shall not include milk of a producer that is 
subject to inclusion and participation in a marketwide equalization 
pool under a milk classification and pricing program imposed under the 
authority of a State government maintaining marketwide pooling of 
returns.
    Proposed by Prairie Farms and Dean Foods:

Proposal No. 7

    This proposal seeks to amend the Producer-handler provision of the 
Appalachian and Southeast milk marketing areas.
    1. Amend Sec.  1005.10 by revising paragraphs (c) and (d), and 
adding new paragraphs (e) and (f), to read as follows:


Sec.  1005.10  Producer-handler.

* * * * *
    (c) Disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from own farm production;
    (d) Provides proof satisfactory to the market administrator that 
the care and management of the dairy animals and other resources 
necessary to produce all Class I milk handled, and the processing and 
packaging operations are the producer-handler's own enterprise and are 
operated at the producer-handler's own risk;
    (e) Has total route disposition and transfers in the form of 
packaged fluid milk products to other distributing plants during the 
month that does not exceed 3 million pounds; and
    (f) Does not distribute fluid milk products to a wholesale customer 
who also is serviced by a plant described in Sec.  1005.7(a), (b), or 
(e), or a handler described in Sec.  1000.8(c) that supplied the same 
product in the same-sized package with a similar label to the wholesale 
customer during the month.
    2. Amend Sec.  1007.10 by revising paragraphs (c) and (d) , and 
adding new paragraphs (e) and (f), to read as follows:


Sec.  1007.10  Producer-handler.

* * * * *
    (c) Disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from own farm production;
    (d) Provides proof satisfactory to the market administrator that 
the care and management of the dairy animals and other resources 
necessary to produce all Class I milk handled, and the processing and 
packaging operations are the producer-handler's own enterprise and are 
operated at the producer-handler's own risk;
    (e) Has total route disposition and transfers in the form of 
packaged fluid milk products to other distributing plants during the 
month that does not exceed 3 million pounds; and
    (f) Does not distribute fluid milk products to a wholesale customer 
who also is serviced by a plant described in Sec.  1005.7(a), (b), or 
(e), or a handler described in Sec.  1000.8(c) that supplied the same 
product in the same-sized package with a similar label to the wholesale 
customer during the month.
    Proposed by Michael Sumners, Dairy Producer, Paris, TN:

Proposal No. 8

    Amend the Producer-handler definition in the current Appalachian 
and Southeast orders to allow producer-handlers to purchase a regulated 
amount of milk to balance their supply--ten percent of the producer's 
monthly milk production during December through May and 30 percent 
during June through November.
    Proposed by Dairy Programs, Agricultural Marketing Service:

Proposal No. 9

    For all Federal Milk Marketing Orders, 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 orders may be procured 
from the Market Administrator of each of the aforesaid marketing areas, 
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.

[[Page 3288]]

    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 Offices of all Market Administrators.
    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.

    Dated: January 16, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-1402 Filed 1-20-04; 10:30 am]
BILLING CODE 3410-02-P