[Federal Register Volume 69, Number 79 (Friday, April 23, 2004)]
[Rules and Regulations]
[Pages 21950-21952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9261]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

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

[Docket No. AO-14-A72, et al.; DA-03-08]


Milk in the Northeast and Other Marketing Areas; Interim Order 
Amending the Order

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        7 CFR part                  Marketing area             AO Nos.
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1001.....................  Northeast.......................    AO-14-A72
1005.....................  Appalachian.....................   AO-388-A13
1006.....................  Florida.........................   AO-356-A36
1007.....................  Southeast.......................   AO-366-A42
1030.....................  Upper Midwest...................   AO-361-A37
1032.....................  Central.........................   AO-313-A46
1033.....................  Mideast.........................   AO-166-A70
1124.....................  Pacific Northwest...............   AO-368-A33
1126.....................  Southwest.......................   AO-231-A66
1131.....................  Arizona-Las Vegas...............   AO-271-A38
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AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule.

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SUMMARY: This order amends certain classification of milk provisions in 
all Federal milk marketing orders. Specifically, this interim order 
reclassifies milk used to produce evaporated milk in consumer-type 
packages or sweetened condensed milk in consumer-type packages from 
Class III to Class IV. More than the required number of producers in 
each Federal milk order have approved the issuance of the interim order 
as amended.

EFFECTIVE DATE: May 1, 2004.

FOR FURTHER INFORMATION CONTACT: Antoinette M. Carter, Marketing 
Specialist, Order Formulation and Enforcement Branch, USDA/AMS/Dairy 
Programs, STOP 0231--Room 2971, 1400 Independence Avenue, SW., 
Washington, DC 20250-0231, (202) 690-3465, e-mail address: 
[email protected].

SUPPLEMENTARY INFORMATION: This administrative rule is governed by the 
provisions of Sections 556 and 557 of Title 5 of the United States Code 
and, therefore, is excluded from the requirements of Executive Order 
12866.
    This interim rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have a retroactive 
effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with the rule.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), provides that administrative proceedings must be 
exhausted before parties may file suit in court. Under Section 
608c(15)(A) of the Act, any handler subject to an order may request 
modification or exemption from such order by filing with the Department 
a petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with the law. A handler is afforded the opportunity for a hearing on 
the petition. After a hearing, the Department would rule on the 
petition. The Act provides that the District Court of the United States 
in any district in which the handler is an inhabitant, or has its 
principal place of business, has jurisdiction in equity to review the 
Department's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
proposed 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.
    During June 2003--the most recent representative period used to 
determine the number of small entities associated with Federal milk 
orders--there were a total of 60,096 dairy producers whose milk was 
pooled under Federal milk orders. Of the total, 56,818 dairy 
producers--or about 95 percent--were considered small businesses based 
on the above criteria. During this same period, there were about 1,622 
plants associated with Federal milk orders. Specifically, there were 
approximately 387 fully regulated plants (of which 143 were small 
businesses), 92 partially regulated plants (of which 41 were small 
businesses), 44 producer-handlers (of which 23 were considered small 
businesses), and 108 exempt plants (of which 98 were considered small 
businesses). Consequently, 950 of the 1,622 plants meet the definition 
of a small business.
    Total pounds of milk pooled under all Federal milk orders was 
10.498 billion for June 2003 which represents 73.5 percent of the milk 
marketed in the United States. Of the 10.498 billion pounds of milk 
pooled under Federal milk orders during June 2003, 1.78 million 
pounds--or 1.7 percent--was used to produce evaporated milk and 
sweetened condensed milk products in consumer-type packages. 
Additionally, during this same period, total pounds of Class I milk 
pooled under Federal milk orders was 3.475 billion pounds, which 
represents 82.3 percent of the milk used in Class I products (mainly 
fluid milk products) that were sold in the United States.
    This interim final rule will reclassify milk used to produce 
evaporated milk or sweetened condensed milk in consumer-type packages 
from Class III to Class IV in all Federal milk orders. This decision is 
consistent with the Agricultural Agreement Act of 1937 (Act), which 
authorizes Federal milk marketing orders. The Act specifies that 
Federal milk orders classify milk ``in accordance with the form for 
which or purpose for which it is used.''
    Currently, the Federal milk order system provides for the uniform 
classification of milk in provisions that define four classes of use 
for milk (Class I, Class II, Class III, and Class IV). Each Federal 
milk order sets minimum prices that processors must pay for milk based 
on how it is used and computes weighted average or uniform prices that 
dairy producers receive.

[[Page 21951]]

    Under the milk classification provisions of all Federal milk 
orders, Class I consists of those products that are used as beverages 
(whole milk, low fat milk, skim milk, flavored milk products like 
chocolate milk, etc.) \1\ Class II includes soft or spoonable products 
such as cottage cheese, sour cream, ice cream, yogurt, and milk that is 
used in the manufacture of other food products. Class III includes all 
skim milk and butterfat used to make hard cheeses--types that may be 
grated, shredded, or crumbled; cream cheese; other spreadable cheeses; 
plastic cream; anhydrous milkfat; and butteroil. Class III also 
consists of evaporated milk and sweetened condensed milk in consumer-
type packages. Class IV includes, among other things, butter and any 
milk product in dried form such as nonfat dry milk.
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    \1\ Federal milk orders do not classify products but instead 
classify the milk (skim milk and butterfat) disposed of in the form 
of a product or used to produce a product. For simplification, this 
interim final rule references Class I products, Class II products, 
Class III products, and Class IV products.
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    Evaporated milk and sweetened condensed milk in consumer-type 
packages should be classified as Class IV because of their product 
characteristics and because their product yields are tied directly to 
the raw milk used to make these products. Like other Class IV products, 
evaporated milk and sweetened condensed milk in consumer-type packages 
have a relatively long shelf-life (i.e., the products can be stored for 
more than one year without refrigeration). These products also may be 
substituted for other Class IV products (e.g., nonfat dry milk) and 
compete over a wide geographic area with products made from non-
Federally regulated milk. Additionally, like other Class IV products, 
evaporated milk and sweetened condensed milk in consumer-type packages 
are competitive outlets for milk surplus to the Class I needs of the 
market.
    The amendments should not have a significant economic impact on 
dairy producers or handlers associated with Federal milk orders. Since 
the reclassification of evaporated milk and sweetened condensed milk in 
consumer-type packages will be uniform in all Federal milk orders, 
dairy producers and handlers associated with the orders will be subject 
to the same provisions. The classification change should have only a 
minimal impact on the price dairy producers receive for their milk due 
to the small quantity of milk pooled under Federal milk orders that is 
used to produce evaporated milk or sweetened condensed milk in 
consumer-type packages. For example, using the Department's production 
data provided in the record for milk, skim milk, and cream used to 
produce evaporated milk and sweetened condensed milk in consumer-type 
packages by handlers regulated under Federal milk orders for the three 
years of 2000 through 2002, the reclassification of the milk used to 
produce these products from Class III to Class IV would have affected 
the statistical uniform price for all Federal milk orders combined by 
only $0.0117 per hundredweight.
    Under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), 
these amendments will have no impact on reporting, recordkeeping, or 
other compliance requirements because they would remain identical to 
the current requirements. No new forms are proposed and no additional 
reporting requirements would be necessary.
    The primary sources of data used to complete the current forms are 
routinely used in most business transactions. Forms require only a 
minimal amount of information which can be supplied without data 
processing equipment or a trained statistical staff. Thus, the 
information collection and reporting burden is relatively small. 
Requiring the same reports for all handlers does not significantly 
disadvantage any handler that is smaller than the industry average.
    Prior documents in this proceeding:
    Notice of Hearing: Issued September 2, 2003; published September 8, 
2003 (68 FR 52860).
    Correction of Notice of Hearing: Issued October 9, 2003; published 
October 16, 2003 (68 FR 59554).
    Tentative Final Decision: Issued February 27, 2004; published March 
2, 2004 (69 FR 9763).

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 agreements and 
to the orders regulating the handling of milk in the Northeast and 
other 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 are hereby amended on an interim basis, and all 
of the terms and conditions thereof, will tend to effectuate the 
declared policy of the Act;
    (2) The parity prices of milk, as determined pursuant to Section 2 
of the Act, are not reasonable in view of the price of feeds, available 
supplies of feeds, and other economic conditions which affect market 
supply and demand for milk in the respective marketing areas, and the 
minimum prices specified in the orders, as hereby amended on an interim 
basis, are such prices as will reflect the aforesaid factors, insure a 
sufficient quantity of pure and wholesome milk, and be in the public 
interest; and
    (3) The said orders, as hereby amended on an interim basis, 
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 and in the public interest 
to make these interim amendments to the Northeast and other orders 
effective May 1, 2004. Any delay beyond that date would tend to disrupt 
the orderly marketing of milk in the aforesaid marketing areas.
    The interim amendments to these orders are known to handlers. The 
tentative final decision containing the proposed amendments to these 
orders was issued on February 27, 2004.
    The changes that result from these interim amendments will not 
require extensive preparation or substantial alteration in the method 
of operation for handlers. In view of the foregoing, it is hereby found 
and determined that good cause exists for making these interim order 
amendments effective on May 1, 2004. It would be contrary to the public 
interest to delay the effective date of these amendments for 30 days 
after their publication in the Federal Register. (Sec. 553, 
Administrative Procedure Act, 5 U.S.C. 551-559.)
    (c) Determinations. It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in Sec. 8c(9) of the Act) of

[[Page 21952]]

more than 50 percent of the milk, which is marketed within 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 interim 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 interim 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 the marketing area.

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

    Milk marketing orders.

Order Relative to Handling

0
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 on an interim 
basis, as follows:
0
1. The authority citation for 7 CFR Parts 1000, 1001, 1005, 1006, 1007, 
1030, 1032, 1033, 1124, 1126, and 1131 reads as follows:

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

PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS

0
2. In Sec.  1000.40, revise paragraph (c)(1)(ii), remove paragraph 
(c)(1)(iii), redesignate paragraph (d)(1)(ii) as paragraph (d)(1)(iii), 
and add new paragraph (d)(1)(ii) to read as follows:


Sec.  1000.40  Classes of utilization.

* * * * *
    (c) * * *
    (1) * * *
    (ii) Plastic cream, anhydrous milkfat, and butteroil; and
* * * * *
    (d) * * *
    (1) * * *
    (ii) Evaporated or sweetened condensed milk in a consumer-type 
package; and
* * * * *

    Dated: April 19, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-9261 Filed 4-22-04; 8:45 am]
BILLING CODE 3410-02-P