[Federal Register Volume 69, Number 120 (Wednesday, June 23, 2004)]
[Proposed Rules]
[Pages 34963-34966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14059]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 69, No. 120 / Wednesday, June 23, 2004 / 
Proposed Rules  

[[Page 34963]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1030

[Docket No. AO-361-A39; DA-04-03]


Milk in the Upper Midwest Marketing Area; Notice of Hearing on 
Proposed Amendments to Tentative Marketing Agreement and Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; Notice of public hearing on proposed rulemaking.

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

SUMMARY: A public hearing is being held to consider proposals to amend 
the Upper Midwest Federal milk marketing order (Order 30). A proposal 
to limit the volume of distant milk pooled on Order 30 by changing the 
requirements for producer milk originating outside of the Upper Midwest 
will be heard. Another proposal would limit the pooling of producer 
milk normally associated with the market that was not pooled in a prior 
month(s) while also changing the pooling requirements for producer milk 
originating outside of the Upper Midwest. Other proposals would 
establish a dairy farmer for other markets provision and would amend 
the touch base requirements and the diversion limits for Order 30. 
Also, another proposal would change the maximum rate the market 
administrator may charge for the expense of administration of the order 
from 5 cents per hundredweight up to 8 cents.

DATES: The hearing will convene at 1 p.m. on Monday, July 19, 2004.

ADDRESSES: The hearing will be held at the Sofitel Minneapolis Hotel 
(I-494 and Highway 100), 5601 West 78th Street, Bloomington, Minnesota 
55439; (952) 835-1900.

FOR FURTHER INFORMATION CONTACT: Jack Rower, 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 H. Paul Kyburz, Upper Midwest Market 
Administrator, at (952) 831-5292; 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 
Sofitel Minneapolis Hotel (I-494 and Highway 100), 5601 West 78th 
Street, Bloomington, Minnesota 55439; (952) 835-1900, beginning at 1 
p.m., on Monday, July 19, 2004, with respect to proposed amendments to 
the tentative marketing agreement and to the order regulating the 
handling of milk in the Upper Midwest 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 agreement and to the order.
    Evidence also will be taken to determine whether emergency 
marketing conditions exist that would warrant omission of a recommended 
decision under the rules of practice and procedure (7 CFR 900.12(d)) 
with respect to any proposed amendments.
    Actions under the Federal milk order program are subject to the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This Act seeks to 
ensure that, within the statutory authority of a program, the 
regulatory and informational requirements are tailored to the size and 
nature of small businesses. For the purpose of the Act, a dairy farm is 
a ``small business'' if it has an annual gross revenue of less than 
$750,000, and a dairy products manufacturer is a ``small business'' if 
it has fewer than 500 employees. Most parties subject to a milk order 
are considered as a small business. Accordingly, interested parties are 
invited to present evidence on the probable regulatory and 
informational impact of the hearing proposals on small businesses. 
Also, parties may suggest modifications of these proposals for the 
purpose of tailoring their applicability to small businesses.
    The amendments to the rules proposed herein have been reviewed 
under Executive Order 12988, Civil Justice Reform. They are not 
intended to have a retroactive effect. If adopted, the proposed 
amendments would not preempt any state or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Agricultural Marketing Agreement Act provides that 
administrative proceedings must be exhausted before parties may file 
suit in court. Under section 8c(15)(A) of the Act, any handler subject 
to an order may request modification or exemption from such order by 
filing 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 the effect on the orderly marketing of fluid milk due 
to pooling of milk from producers so distant from the market that they 
cannot be considered viable suppliers and to consider inequities among 
producers caused by provisions that allow reserve milk, which is used 
in cheese or butter and nonfat dry milk production, to share in the 
benefits of pooling, but do not require such milk to pool when there is 
a cost (when the Class III price or Class IV price is above the blend 
price). At the hearing, evidence will also be collected to consider 
giving the

[[Page 34964]]

market administrator the discretion to increase the Administrative 
Assessment to a maximum of 8 cents per hundredweight.
    Interested parties who wish to introduce exhibits should provide 
the Presiding Officer at the hearing with (4) copies of such exhibits 
for the Official Record. Also, it would be helpful if additional copies 
are available for the use of other participants at the hearing.

List of Subjects in 7 CFR Part 1030

    Milk marketing orders.

    The authority citation for 7 CFR Part 1030 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 Associated Milk Producers, Inc. (AMPI), Bongards' 
Creameries, Ellsworth Cooperative Creamery, and First District 
Association (AMPI, et. al.):

Proposal No. 1

    This proposal would limit the pooling of milk located long 
distances from the Upper Midwest marketing area.
    1. Amend Sec. Sec.  1030.7 and 1030.13 by adding a new paragraph 
Sec.  1030.7(c)(1)(v), revising paragraph Sec.  1030.7(c)(2), and 
revising Sec.  1030.13(d) to read as follows:


Sec.  1030.7  Pool plant.

* * * * *
    (c) * * *
    (1) * * *
    (v) Qualifying shipments by plants located outside the States of 
Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin 
and the Upper Peninsula of Michigan may be made only to plants 
described in paragraphs (c)(1)(i) of this section.
    (2) The operator of a supply plant located within the States of 
Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin 
and the Upper Peninsula of Michigan may include as qualifying shipments 
under this paragraph milk delivered directly from producers' farms 
pursuant to Sec.  1000.9(c) or Sec.  1030.13(c) to plants described in 
paragraphs (a), (b) and (e) of this section. Handlers may not use 
shipments pursuant to Sec.  1000.9(c) or Sec.  1030.13(c) to qualify 
plants located outside the marketing area.
* * * * *


Sec.  1030.13  Producer milk.

* * * * *
    (d) Diverted by the operator of a pool plant or a cooperative 
association described in Sec.  1000.9(c) to a nonpool plant located in 
the States of Illinois, Iowa, Minnesota, North Dakota, South Dakota, 
and Wisconsin and the Upper Peninsula of Michigan or a distributing 
plant fully regulated under another Federal order, subject to the 
following conditions:
* * * * *
    2. Amend Sec.  1030.55 by revising paragraph (a)(2) to read as 
follows:


Sec.  1030.55  Transportation credits and assembly credits.

* * * * *
    (a) * * *
    (2) Multiply the hundredweight of milk eligible for the credit by 
.28 cents times the number of miles, not to exceed 400 miles, between 
the transferor plant and the transferee plant:
* * * * *
    Proposed by Cass-Clay Creamery Inc., Dairy Farmers of America, 
Foremost Farms USA, Land O'Lakes, Mid-West Dairymen's Company, 
Milwaukee Cooperative Milk Producers, Manitowoc Milk Producers 
Cooperative, Swiss Valley Farms, and Woodstock Progressive Milk 
Producers (Mid-West, et. al.):

Proposal No. 2

    This proposal would limit the pooling of producer milk normally 
associated with the market that was not pooled in a prior month(s), 
would change the pooling requirements for producer milk originating 
outside of the States where the Upper Midwest marketing area is 
located, and would limit the transportation and assembly credits not to 
exceed 400 miles.
    1. Amend Sec.  1030.13 by adding new paragraphs (f) through (f)(4) 
to read as follows:


Sec.  1030.13  Producer milk.

* * * * *
    (f) Except in the month of August, the quantity of milk reported by 
a handler pursuant to Sec.  1030.30(a)(1) and/or Sec.  1030.30(c)(1) 
for September through February and for April through July may not 
exceed 125 percent, and March may not exceed 135 percent of the 
producer milk receipts pooled by the handler during the prior month. 
Milk diverted to nonpool plants reported in excess of this limit shall 
be removed from the pool. Milk received at pool plants, other than pool 
distributing plants, shall be classified pursuant to Sec.  
1000.44(a)(3)(v) and Sec.  1000.44(b)(3)(v). The handler must 
designate, by producer pick-up, which milk is to be removed from the 
pool. If the handler fails to provide this information, the market 
administrator will make the determination. The following provisions 
apply:
    (1) Milk shipped to and physically received at pool distributing 
plants shall not be subject to the 125 or 135 percent limitation;
    (2) Producer milk qualified pursuant to Sec.  ----.13 of any other 
Federal Order and continuously pooled in any Federal Order for the 
previous six months shall not be included in the computation of the 125 
or 135 percent limitation;
    (3) The market administrator may waive the 125 or 135 percent 
limitation;
    (i) For a new handler on the order, subject to the provisions of 
Sec.  1030.13(f)(3), or
    (ii) For an existing handler with significantly changed milk supply 
conditions due to unusual circumstances;
    (4) A bloc of milk may be considered ineligible for pooling if the 
market administrator determines that handlers altered the reporting of 
such milk for the purpose of evading the provisions of this paragraph.
* * * * *
    2. Amend Sec. Sec.  1030.7 and 1030.13 by adding a new paragraph 
Sec.  1030.7(c)(1)(v), revising paragraph Sec.  1030.7(c)(2), and 
revising Sec.  1030.13(d) to read as follows:


Sec.  1030.7  Pool plant.

* * * * *
    (c) * * *
    (1) * * *
    (v) Qualifying shipments by plants located outside the States of 
Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin 
and the Upper Peninsula of Michigan may be made only to plants 
described in paragraphs (c)(1)(i) of this section.
    (2) The operator of a supply plant located within the States of 
Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin 
and the Upper Peninsula of Michigan may include as qualifying shipments 
under this paragraph milk delivered directly from producers' farms 
pursuant to Sec.  1000.9(c) or Sec.  1030.13(c) to plants described in 
paragraphs (a), (b) and (e) of this section. The operator of a supply 
plant located outside the area described above cannot include such 
shipments as qualifying shipments. Cooperative associations may not use 
shipments pursuant to Sec.  1000.9(c) to qualify plants located outside 
the marketing area.
* * * * *


Sec.  1030.13  Producer milk

* * * * *
    (d) Diverted by the operator of a pool plant or a cooperative 
association described in Sec.  1000.9(c) to a nonpool plant (except a 
distributing plant fully regulated under another Federal order),

[[Page 34965]]

located in the States of Illinois, Iowa, Minnesota, North Dakota, South 
Dakota, and Wisconsin and the Upper Peninsula of Michigan, subject to 
the following conditions:
* * * * *
    3. Amend Sec.  1030.55 by revising paragraph (a)(2) to read as 
follows:


Sec.  1030.55  Transportation credits and assembly credits.

* * * * *
    (a) * * *
    (2) Multiply the hundredweight of milk eligible for the credit by 
.28 cents times the number of miles, not to exceed 400 miles, between 
the transferor plant and the transferee plant:
* * * * *
    Proposed by Dean Foods Company:

Proposal No. 3

    This proposal to establish a dairy farmer for other markets 
provision would require a year round commitment in order for milk to be 
pooled.
    1. Amend Sec.  1030.12 by adding a new paragraph (b)(5) to read as 
follows:


Sec.  1030.12  Producer.

* * * * *
    (b) * * *
    (5) For any month, any dairy farmer whose milk is received at a 
pool plant or by a cooperative association handler described in Sec.  
1000.9(c) if the pool plant operator or the cooperative association 
caused milk from the same farm to be delivered to any plant as other 
than producer milk, as defined under the order in this part or any 
other Federal milk order, during the same month or any of the preceding 
11 months, unless the equivalent of at least ten days' milk production 
has been physically received otherwise as producer milk at a pool plant 
during the month.
    Proposed by Dean Foods Company:

Proposal No. 4

    This proposal to establish a dairy farmer for other markets 
provision would require a 2 to 4 month commitment in order for milk to 
be pooled.
    1. Amend Sec.  1030.12 by adding new paragraphs (b)(5) and (b)(6) 
to read as follows:


Sec.  1030.12  Producer.

* * * * *
    (b) * * *
    (5) For any month of December through June, any dairy farmer whose 
milk is received at a pool plant or by a cooperative association 
handler described in Sec.  1000.9(c) if the pool plant operator or the 
cooperative association caused milk from the same farm to be delivered 
to any plant as other than producer milk, as defined under the order in 
this part or any other Federal milk order, during the same month, any 
of the 3 preceding months, or during any of the preceding months of 
July through November, unless the equivalent of at least ten days' milk 
production has been physically received otherwise as producer milk at a 
pool plant during the month; and
    (6) For any month of July through November, any dairy farmer whose 
milk is received at a pool plant or by a cooperative association 
handler described in Sec.  1000.9(c) if the pool plant operator or the 
cooperative association caused milk from the same farm to be delivered 
to any plant as other than producer milk, as defined under the order in 
this part or any other Federal milk order, during the same or the 
preceding month, unless the equivalent of at least ten days' milk 
production has been physically received otherwise as producer milk at a 
pool plant during the month.
    Proposed by Dean Foods Company:

Proposal No. 5

    This proposal to establish a dairy farmer for other markets 
provision would require that only 115% of a prior month's milk could be 
pooled in a subsequent month and be considered pool milk.
    1. Amend Sec.  1030.13 by adding a new paragraph (f) to read as 
follows:


Sec.  1030.13  Producer Milk.

* * * * *
    (f) The quantity of milk reported by a handler pursuant to Sec.  
1030.30(a)(1) and/or Sec.  1030.30(c)(1) for July through November may 
not exceed 115 percent of the producer milk receipts pooled by the 
handler during the prior month. Milk diverted to nonpool plants 
reported in excess of this limit shall be removed from the pool by the 
market administrator. Milk received at pool plants, other than pool 
distributing plants, shall be classified pursuant to Sec.  
1000.44(a)(3)(v) and Sec.  1000.44(b)(3)(v). The handler must 
designate, by producer pick-up, which milk is to be removed from the 
pool. If the handler fails to provide this information, the market 
administrator will make the determination. The following provisions 
apply:
    (1) Milk shipped to and physically received at pool distributing 
plants shall not be subject to the 115 percent limitation;
    (2) Producer milk qualified pursuant to Sec.  ------.13 of any 
other Federal Order and continuously pooled in any Federal Order for 
the previous six months shall not be included in the computation of the 
115 percent limitation;
    (3) The market administrator may waive the 115 percent limitation 
utilizing;
    (i) For a new handler on the order, subject to the provisions of 
Sec.  1030.13(f)(3), or
    (ii) For an existing handler with significantly changed milk supply 
conditions due to unusual circumstances;
    (4) The market administrator may increase or decrease the 
applicable limitation for a month consistent with the procedures in 
Sec.  1030.7(g); and
    (5) A bloc of milk may be considered ineligible for pooling if the 
market administrator determines that handlers altered the reporting of 
such milk for the purpose of evading the provisions of this paragraph.
    Proposed by Dean Foods Company:

Proposal No. 6

    This proposal would establish a two day touch base requirement 
during the shorter months and diversion limitations of 65 and 75 
percent.
    1. Amend Sec.  1030.13 by adding new paragraphs (d)(1) through (4), 
and redesignating paragraph (d)(4) as paragraph (d)(5), to read as 
follows:
* * * * *
    (d) * * *
    (1) Milk of a dairy farmer shall not be eligible for diversion 
until milk of such dairy farmer has been physically received as 
producer milk at a pool plant and the dairy farmer has continuously 
retained producer status since that time. If a dairy farmer loses 
producer status under the order in this part (except as a result of a 
temporary loss of Grade A approval), the dairy farmer's milk shall not 
be eligible for diversion until milk of the dairy farmer has been 
physically received as producer milk at a pool plant;
    (2) The equivalent of at least two days' milk production is caused 
by the handler to be physically received at a pool plant in each of the 
months of July through November;
    (3) The equivalent of at least two days' milk production is caused 
by the handler to be physically received at a pool plant in each of the 
months of December through June if the requirement of paragraph (d)(2) 
of this section (Sec.  1030.13) in each of the prior months of July 
through November is not met, except in the case of dairy farmer who 
marketed no Grade A milk during each of the prior months of July 
through November.
    (4) Of the total quantity of producer milk received during the 
month

[[Page 34966]]

(including diversions but excluding the quantity of producer milk 
received from a handler described in Sec.  1000.9(c) of this chapter or 
which is diverted to another pool plant), the handler diverted to 
nonpool plants not more than 65 percent in each of the months of July 
through November and 75 percent in each of the months of December 
through June.
* * * * *
    Proposed by the Upper Midwest Market Administrator:

Proposal No. 7

    This proposal would increase the maximum administrative assessment 
rate for the Upper Midwest order from 5 cents to 8 cents per 
hundredweight.
    1. Revise Sec.  1030.85 to read as follows:


Sec.  1030.85  Assessment for order administration.

    On or before the payment receipt date specified under Sec.  
1030.71, each handler shall pay to the market administrator its pro 
rata share of the expense of administration of the order at a rate 
specified by the market administrator that is no more than 8 cents per 
hundredweight with respect to:
    (a) Receipts of producer milk (including the handler's own 
production) other than such receipts by a handler described in Sec.  
1000.9(c) that were delivered to pool plants of other handlers;
    (b) Receipts from a handler described in Sec.  1000.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class 
I use pursuant to Sec.  1000.43(d) and other source milk allocated to 
Class I pursuant to Sec.  1000.44(a)(3) and (8) and the corresponding 
steps of Sec.  1000.44(b), except other source milk that is excluded 
from the computations pursuant to Sec.  1030.60(h) and (i); and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec.  1000.76(a)(1)(i) and (ii).
    Proposed by Dairy Programs, Agricultural Marketing Service:

Proposal No. 8

    Make such changes as may be necessary to make the entire marketing 
agreement and the order 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 the aforesaid marketing area, or from 
the Hearing Clerk, United States Department of Agriculture, Room 1083--
STOP 9200, 1400 Independence Avenue, SW., Washington, DC 20250-9200, or 
may be inspected there.
    Copies of the transcript of testimony taken at the hearing will not 
be available for distribution through the Hearing Clerk's Office. If 
you wish to purchase a copy, arrangements may be made with the reporter 
at the hearing.
    From the time that a hearing notice is issued and until the 
issuance of a final decision in a proceeding, Department employees 
involved in the decision-making process are prohibited from discussing 
the merits of the hearing issues on an ex parte basis with any person 
having an interest in the proceeding. For this particular proceeding, 
the prohibition applies to employees in the following organizational 
units:

Office of the Secretary of Agriculture;
Office of the Administrator, Agricultural Marketing Service;
Office of the General Counsel;
Dairy Programs, Agricultural Marketing Service (Washington office) and
the Offices of all Market Administrators.

    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.

    Dated: June 16, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-14059 Filed 6-22-04; 8:45 am]
BILLING CODE 3410-02-P