[Federal Register Volume 69, Number 227 (Friday, November 26, 2004)]
[Rules and Regulations]
[Pages 68764-68767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26123]


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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; Order Amending 
the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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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

[[Page 68765]]

 
1124.........................  Pacific          AO-368-A33
                                Northwest.
1126.........................  Southwest......  AO-231-A66
1131.........................  Arizona-Las      AO-271-A38
                                Vegas.
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SUMMARY: This document adopts as a final rule order language contained 
in the final decision published in the Federal Register on September 
24, 2004, concerning the reclassification of milk used to produce 
evaporated or sweetened condensed milk in consumer-type packages from 
Class III to Class IV. These provisions are applicable to all Federal 
milk marketing orders. More than the required number of producers in 
each of the 10 Federal orders approved the issuance of the amended 
orders.

DATES: Effective December 1, 2004.

FOR FURTHER INFORMATION CONTACT: Antoinette M. Carter, Marketing 
Specialist, USDA/AMS/Dairy Programs, Order Formulation and Enforcement 
Branch, 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 final 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

    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 
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 at the time 
of the hearing--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 represented 73.5 percent of the milk 
marketed in the United States during June 2003. 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 final rule implements proposals that reclassify milk used to 
produce evaporated milk in consumer-type packages or sweetened 
condensed milk in consumer-type packages from Class III to Class IV in 
all Federal milk orders. This rule 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.
    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 manufacturing 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

[[Page 68766]]

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. This rule references 
``Class I products,'' ``Class II products,'' ``Class III products,'' 
and ``Class IV products'' to simplify the findings and conclusions.
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    Evaporated milk and sweetened condensed milk in consumer-type 
packages are now classified as Class IV because their product 
characteristics and yields are tied directly to the solids content of 
the raw milk used to make these products as opposed to the protein 
content as for Class III 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., dry whole milk or 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 in this final rule will 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 will 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 hearing 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.

Paperwork Reduction Act

    A review of reporting requirements was completed under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). It was 
determined that these proposed amendments would 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.
    This action does not require additional information collection that 
requires clearance by the Office of Management and Budget (OMB) beyond 
currently approved information collection. The primary sources of data 
used to complete the 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 to 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).
    Interim Final Rule: Issued April 19, 2004; published April 23, 2004 
(69 FR 21950).
    Final Decision: Issued September 20, 2004; published September 24, 
2004 (69 FR 57233).

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 order regulating the handling of milk in the respective 
marketing areas.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof it is found that:
    (1) The said orders, as hereby amended, and all of the terms and 
conditions thereof, will tend to effectuate the declared policy of the 
Act;
    (2) The parity prices of milk, as determined pursuant to section 2 
of the Act, are not reasonable in view of the price of feeds, available 
supplies of feeds, and other economic conditions which affect market 
supply and demand for milk in the marketing area, and the minimum 
prices specified in the orders, as hereby amended, are such prices as 
will reflect the aforesaid factors, insure a sufficient quantity of 
pure and wholesome milk, and be in the public interest; and
    (3) The said orders, as hereby amended, regulate the handling of 
milk in the same manner as, and are applicable only to persons in the 
respective classes of industrial and commercial activity specified in, 
marketing agreement upon which a hearing has been held.
    (b) Additional Findings. It is necessary in the public interest to 
make these amendments to the Northeast and other orders effective 
December 1, 2004. Any delay beyond that date would tend to disrupt the 
orderly marketing of milk in the aforesaid marketing areas.
    The amendments to these orders are known to handlers. The final 
decision containing the proposed amendments to these orders was issued 
on September 20, 2004.
    The changes that result from these amendments will not require 
extensive preparation or substantial alteration in the method of 
operation for handlers. In view of the foregoing, it is hereby found 
and determined that good cause exists for making these order amendments 
effective for milk marketed on or after December 1, 2004.
    (c) Determinations. It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in Sec. 8c(9) of the Act) of more than 50 
percent of the milk, which is marketed within the specified marketing 
area, to sign a proposed marketing agreement, tends to prevent the 
effectuation of the declared policy of the Act;
    (2) The issuance of this 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;

[[Page 68767]]

    (3) The issuance of the order amending the Northeast and other 
orders is favored by at least two-thirds of the producers who were 
engaged in the production of milk for sale in the marketing area.
    Specifically, this final rule permanently adopts classification of 
milk use provisions that reclassify milk used to produce evaporated or 
sweetened condensed milk products in consumer type-packages from Class 
III to Class IV.

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, as follows:
0
Parts 1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1124, 1126, and 
1131--General Provisions and Milk in the Northeast and other Milk 
Marketing Areas.
0
The interim final rule amending 7 CFR parts 1000, 1001, 1005, 1006, 
1007, 1030, 1032, 1033, 1124, 1126, and 1131 which was published at 69 
FR 21950 on April 23, 2004, is adopted as a final rule without change.

    Dated: November 19, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Serivce.
[FR Doc. 04-26123 Filed 11-24-04; 8:45 am]
BILLING CODE 3410-02-U