[Federal Register Volume 69, Number 237 (Friday, December 10, 2004)]
[Rules and Regulations]
[Pages 71697-71701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27159]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005, 1006, and 1007

[Docket No. AO-388-A16, AO-356-A38, and AO-366-A45; DA-04-07]


Milk in the Appalachian, Florida, and Southeast Marketing Areas; 
Order Amending the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final Rule.

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SUMMARY: This final rule amends the Appalachian, Florida, and Southeast 
Federal milk marketing orders (Orders 5, 6, and 7). Specifically, the 
final rule implements a temporary supplemental charge on Class I milk 
that will be disbursed to handlers who incurred extraordinary 
transportation costs for bulk milk movements in and to Orders 5, 6, and 
7 as a result of hurricanes Charley, Frances, Ivan and Jeanne. The 
amendments are based on record evidence of a public hearing held on 
October 7, 2004. More than the required number of dairy farmers 
approved the issuance of the amended orders.

DATES: Effective Date: December 10, 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 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.
    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.

[[Page 71698]]

    During August 2004, the most recent representative month, the milk 
of 7,239 dairy farmers was pooled under the Appalachian (Order 5), 
Florida (Order 6), and Southeast (Order 7) milk orders (3,400 Order 5 
dairy farmers, 267 Order 6 dairy farmers, and 3,572 Order 7 dairy 
farmers, respectively). Of the 7,239 dairy farmers, 80 percent met the 
definition of small business. Specifically, the number of dairy farmers 
considered small businesses for Order 5, Order 6, and Order 7 were 
3,230 or 95 percent, 134 or 50 percent, and 3,407 or 95 percent, 
respectively.
    During August 2004, there were 65 fully regulated plants under 
Orders 5, 6, and 7. Of the 65 plants, 7 were considered small 
businesses. Specifically, there were 25 Order 5 plants (of which 2 were 
small businesses), 12 Order 6 plants (of which 3 were small 
businesses), and 28 Order 7 plants (of which 2 were small businesses).
    The amendments in this final rule will provide temporary 
reimbursement to handlers (cooperative associations and proprietary 
handlers) who incurred extraordinary transportation expenses for bulk 
milk movements resulting from the impact of hurricanes Charley, 
Frances, Ivan, and Jeanne on the Southeastern United States, 
particularly the State of Florida. The proposed amendments were 
requested by Dairy Farmers of America, Inc., Lone Star Milk Producers, 
Inc., Maryland & Virginia Milk Producers Cooperative Association, Inc., 
and Southeast Milk, Inc. The dairy farmer members of these four 
cooperatives supply the majority of the milk pooled under the 
Appalachian, Florida, and Southeast orders. The final rule will 
implement, for a 3-month period beginning January 1, 2005, a 
supplemental increase in the Class I milk price at a rate not to exceed 
$.04 per hundredweight of milk in the Appalachian and Southeast orders, 
and a rate not to exceed $.09 per hundredweight of milk in the Florida 
order. The amount generated through the Class I milk increase will be 
disbursed during February 2005 through April 2005 to qualifying 
handlers who incurred extraordinary transportation costs as a result of 
the hurricanes. The reimbursement for extraordinary transportation 
costs will be disbursed to qualifying handlers on an actual 
transportation costs basis or at a rate of $2.25 per loaded mile, 
whichever is less.
    The aforementioned hurricanes occurred during a 7-week period of 
time and disrupted the orderly flow of milk movements in and to the 
Appalachian, Florida, and Southeast marketing areas. The four 
hurricanes caused handlers in the southeastern markets, particularly in 
the Florida marketing area, to experience disruptions in moving bulk 
milk to supply the Class I (fluid milk) needs of the individual 
marketing areas.
    One of the functions of the Federal milk order program is to 
provide for the orderly exchange of milk between the dairy farmer and 
the handler (first buyer) to ensure the Class I needs of the market are 
met. The record evidence clearly reveals that the movements of bulk 
milk for Orders 5 and 7, and particularly Order 6 were disrupted due to 
the hurricanes. Accordingly, the amendments adopted in this final rule 
will provide temporary transportation cost reimbursement to handlers 
who incurred additional transportation expenses for bulk milk movements 
that were disrupted as a result of extraordinary weather conditions in 
Orders 5, 6, and 7.
    The amendments will provide reimbursement to handlers for 
transportation expenses totaling over $1.6 million for movements of 
bulk milk due to the hurricanes. The supplemental increase in the 
minimum price of Class I milk at a maximum rate of $.09 per 
hundredweight for Order 6 is anticipated to increase the price of a 
gallon of milk by not more than $0.0078 (i.e., less than 1-cent) during 
each month of the 3-month period. Likewise, a supplemental increase at 
a maximum rate of $.04 per hundredweight for Orders 5 and 7 is 
anticipated to increase the price of a gallon of milk by not more than 
$0.0034 (i.e., less than 1-cent) during each month of the 3-month 
period. The estimated impact on the price per gallon of milk was 
calculated by converting the hundredweight value to gallons using 8.62 
pounds of milk per gallon.
    Handlers in Orders 5, 6, and 7 should not be placed at a 
competitive disadvantage because of the temporary and limited 
supplemental increase in the minimum Class I milk price. The amendments 
also are not expected to impact the blend price of dairy farmers. 
Accordingly, the adopted amendments should not significantly impact 
producers or handlers due to the limited implementation period and the 
minimum increase in the Class I milk price.

Paperwork Reduction Act

    A review of reporting requirements was completed under the 
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). As such, the 
information collection requirements in this final rule do not require 
clearance by the Office of Management and Budget (OMB) beyond the 
currently approved information collections. This final rule will impose 
only minimal reporting requirements on handlers applying for 
reimbursement of additional transportation expenses incurred due to the 
aforementioned hurricanes.
    Prior documents in this proceeding:
    Notice of Hearing: Issued September 28, 2004; published September 
30, 2004 (69 FR 58368).
    Final Decision: Issued November 15, 2004; published November 19, 
2004 (69 FR 67670).

Findings and Determinations

    The following findings and determinations hereinafter set forth 
supplement those that were made when the Appalachian, Florida, and 
Southeast 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 specified 
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 aforesaid marketing areas. 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 regulates the handling of 
milk in the same manner as, and is applicable only to persons in the 
respective classes of industrial or commercial activity specified in, 
marketing agreements upon which a hearing has been held.

[[Page 71699]]

    (b) Additional Findings. It is necessary and in the public interest 
to make these amendments to the Appalachian, Florida, and Southeast 
orders effective December 10, 2004. This effective date will ensure the 
timely implementation of the amendments.
    The amendments to these orders are known to handlers. The final 
decision containing the proposed amendments to these orders was issued 
on November 15, 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 theses amendments 
effective December 10, 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(d), 
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 Section 8c(9) of the Act) of more than 50 
percent of the milk that 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 order amending the Appalachian, Florida, 
and Southeast orders are the only practical means pursuant to the 
declared policy of the Act of advancing the interests of producers as 
defined in the orders as hereby amended;
    (3) The issuance of the order amending the Appalachian, Florida, 
and Southeast orders are favored by at least two-thirds of the 
producers who were engaged in the production of milk for sale in each 
of the marketing areas.

List of Subjects in 7 CFR Parts 1005, 1006, and 1007

    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 Appalachian, Florida, and Southeast 
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:

PARTS 1005, 1006, and 1007--[AMENDED]

0
1. The authority citation for 7 CFR parts 1005, 1006, and 1007 
continues to read as follows:

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

PART 1005--MILK IN THE APPALACHIAN MARKETING AREA

0
2. Section 1005.60 is amended by revising paragraph (a) and adding a 
new paragraph (g) to read as follows:


Sec.  1005.60  Handler's value of milk.

* * * * *
    (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; except that for the months of January 2005 through March 2005, 
the Class I skim milk price for this purpose shall be the Class I skim 
milk price as determined in Sec.  1000.50(b) plus $0.04 per 
hundredweight, and the Class I butterfat price for this purpose shall 
be the Class I butterfat price as determined in Sec.  1000.50(c) plus 
$0.0004 per pound. The adjustments to the Class I skim milk and 
butterfat prices provided herein may be reduced by the market 
administrator for any month if the market administrator determines that 
the payments yet unpaid computed pursuant to paragraphs (g)(1) through 
(5) and paragraph (g)(7) of this section will be less than the amount 
computed pursuant to paragraph (g)(6) of this section. The adjustments 
to the Class I skim milk and butterfat prices provided herein during 
the months of January 2005 through March 2005 shall be announced along 
with the prices announced in Sec.  1000.53(b);
* * * * *
    (g) For the months of January 2005 through March 2005 for handlers 
who have submitted proof satisfactory to the market administrator to 
determine eligibility for reimbursement of transportation costs, 
subtract an amount equal to:
    (1) The cost of transportation on loads of producer milk delivered 
or rerouted to a pool distributing plant which were delivered as a 
result of hurricanes Charley, Frances, Ivan, and Jeanne;
    (2) The cost of transportation on loads of producer milk delivered 
or rerouted to a pool supply plant that was then transferred to a pool 
distributing plant which were delivered as a result of hurricanes 
Charley, Frances, Ivan, and Jeanne;
    (3) The cost of transportation on loads of bulk milk delivered or 
rerouted to a pool distributing plant from a pool supply plant which 
were delivered as a result of hurricanes Charley, Frances, Ivan, and 
Jeanne;
    (4) The cost of transportation on loads of bulk milk delivered or 
rerouted to a pool distributing plant from another order plant which 
were delivered as a result of hurricanes Charley, Frances, Ivan, and 
Jeanne; and
    (5) The cost of transportation on loads of bulk milk transferred or 
diverted to a plant regulated under another Federal order or to other 
nonpool plants which were delivered as a result of hurricanes Charley, 
Frances, Ivan, and Jeanne.
    (6) The total amount of payment to all handlers under this section 
shall be limited for each month to an amount determined by multiplying 
the total Class I producer milk for all handlers pursuant to Sec.  
1000.44(c) times $0.04 per hundredweight.
    (7) If the cost of transportation computed pursuant to paragraphs 
(g)(1) through (5) of this section exceeds the amount computed pursuant 
to paragraph (g)(6) of this section, the market administrator shall 
prorate such payments to each handler based on the handler's proportion 
of transportation costs submitted pursuant to paragraphs (g)(1) through 
(5) of this section. Transportation costs submitted pursuant to 
paragraphs (g)(1) through (5) of this section which are not paid as a 
result of such a proration shall be included in each subsequent month's 
transportation costs submitted pursuant to paragraphs (g)(1) through 
(5) of this section until paid, or until the time period for such 
payments is concluded.
    (8) The reimbursement of transportation costs pursuant to this 
section shall be the actual demonstrated cost of such transportation of 
bulk milk delivered or rerouted as described in paragraphs (g)(1) 
through (5) of this section, or the miles of transportation on loads of 
bulk milk delivered or rerouted as described in paragraphs (g)(1) 
through (5) of this section multiplied by $2.25 per loaded mile, 
whichever is less.
    (9) For each handler, the reimbursement of transportation costs 
pursuant to paragraph (g) of this section for bulk milk delivered or 
rerouted as described in paragraphs (g)(1) through (5) of this section 
shall be reduced by the amount of payments received for such milk 
movements from the transportation credit balancing fund pursuant to 
Sec.  1005.82.

[[Page 71700]]

PART 1006--MILK IN THE FLORIDA MARKETING AREA

0
3. Section 1006.60 is amended by revising paragraph (a) and adding a 
new paragraph (g) to read as follows:


Sec.  1006.60  Handler's value of milk.

* * * * *
    (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; except that for the months of January 2005 through March 2005, 
the Class I skim milk price for this purpose shall be the Class I skim 
milk price as determined in Sec.  1000.50(b) plus $0.09 per 
hundredweight, and the Class I butterfat price for this purpose shall 
be the Class I butterfat price as determined in Sec.  1000.50(c) plus 
$0.0009 per pound. The adjustments to the Class I skim milk and 
butterfat prices provided herein may be reduced by the market 
administrator for any month if the market administrator determines that 
the payments yet unpaid computed pursuant to paragraphs (g)(1) through 
(5) and paragraph (g)(7) of this section will be less than the amount 
computed pursuant to paragraph (g)(6) of this section. The adjustments 
to the Class I skim milk and butterfat prices provided herein during 
the months of January 2005 through March 2005 shall be announced along 
with the prices announced in Sec.  1000.53(b);
* * * * *
    (g) For the months of January 2005 through March 2005 for handlers 
who have submitted proof satisfactory to the market administrator to 
determine eligibility for reimbursement of transportation costs 
subtract an amount equal to:
    (1) The cost of transportation on loads of producer milk delivered 
or rerouted to a pool distributing plant which were delivered as a 
result of hurricanes Charley, Frances, Ivan, and Jeanne;
    (2) The cost of transportation on loads of producer milk delivered 
or rerouted to a pool supply plant that was then transferred to a pool 
distributing plant which were delivered as a result of hurricanes 
Charley, Frances, Ivan, and Jeanne;
    (3) The cost of transportation on loads of bulk milk delivered or 
rerouted to a pool distributing plant from a pool supply plant which 
were delivered as a result of hurricanes Charley, Frances, Ivan, and 
Jeanne;
    (4) The cost of transportation on loads of bulk milk delivered or 
rerouted to a pool distributing plant from another order plant which 
were delivered as a result of hurricanes Charley, Frances, Ivan, and 
Jeanne; and
    (5) The cost of transportation on loads of bulk milk transferred or 
diverted to a plant regulated under another Federal order or to other 
nonpool plants which were delivered as a result of hurricanes Charley, 
Frances, Ivan, and Jeanne.
    (6) The total amount of payment to all handlers under this section 
shall be limited for each month to an amount determined by multiplying 
the total Class I producer milk for all handlers pursuant to Sec.  
1000.44(c) times $0.09 per hundredweight.
    (7) If the cost of transportation computed pursuant to paragraphs 
(g)(1) through (5) of this section exceeds the amount computed pursuant 
to paragraph (g)(6) of this section, the market administrator shall 
prorate such payments to each handler based on each handler's 
proportion of transportation costs submitted pursuant to paragraphs 
(g)(1) through (5) of this section. Transportation costs submitted 
pursuant to paragraphs (g)(1) through (5) of this section which are not 
paid as a result of such a proration shall be included in each 
subsequent month's transportation costs submitted pursuant to 
paragraphs (g)(1) through (5) of this section until paid, or until the 
time period for such payments has concluded.
    (8) The reimbursement of transportation costs pursuant to this 
section shall be the actual demonstrated cost of such transportation of 
bulk milk delivered or rerouted as described in paragraphs (g)(1) 
through (5) of this section, or the miles of transportation on loads of 
bulk milk delivered or rerouted as described in paragraphs (g)(1) 
through (5) of this section multiplied by $2.25 per loaded mile, 
whichever is less.

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA

0
4. Section 1007.60 is amended by revising paragraph (a) and adding a 
new paragraph (g) to read as follows:


Sec.  1007.60  Handler's value of milk

* * * * *
    (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; except that for the months of January 2005 through March 2005, 
the Class I skim milk price for this purpose shall be the Class I skim 
milk price as determined in Sec.  1000.50(b) plus $0.04 per 
hundredweight, and the Class I butterfat price for this purpose shall 
be the Class I butterfat price as determined in Sec.  1000.50(c) plus 
$0.0004 per pound. The adjustments to the Class I skim milk and 
butterfat prices provided herein may be reduced by the market 
administrator for any month if the market administrator determines that 
the payments yet unpaid computed pursuant to paragraphs (g)(1) through 
(5) and paragraph (g)(7) of this section will be less than the amount 
computed pursuant to paragraph (g)(6) of this section. The adjustments 
to the Class I skim milk and butterfat prices provided herein during 
the months of January 2005 through March 2005 shall be announced along 
with the prices announced in Sec.  1000.53(b);
* * * * *
    (g) For the months of January 2005 through March 2005 for handlers 
who have submitted proof satisfactory to the market administrator to 
determine eligibility for reimbursement of transportation costs, 
subtract an amount equal to:
    (1) The cost of transportation on loads of producer milk delivered 
or rerouted to a pool distributing plant which were delivered as a 
result of hurricanes Charley, Frances, Ivan, and Jeanne;
    (2) The cost of transportation on loads of producer milk delivered 
or rerouted to a pool supply plant that was then transferred to a pool 
distributing plant which were delivered as a result of hurricanes 
Charley, Frances, Ivan, and Jeanne;
    (3) The cost of transportation on loads of bulk milk delivered or 
rerouted to a pool distributing plant from a pool supply plant which 
were delivered as a result of hurricanes Charley, Frances, Ivan, and 
Jeanne;
    (4) The cost of transportation on loads of bulk milk delivered or 
rerouted to a pool distributing plant from another order plant which 
were delivered as a result of hurricanes Charley, Frances, Ivan, and 
Jeanne; and
    (5) The cost of transportation on loads of bulk milk transferred or 
diverted to a plant regulated under another Federal order or to other 
nonpool plants which were delivered as a result of hurricanes Charley, 
Frances, Ivan, and Jeanne.
    (6) The total amount of payment to all handlers under this section 
shall be limited for each month to an amount determined by multiplying 
the total Class I producer milk for all handlers pursuant to Sec.  
1000.44(c) times $0.04 per hundredweight.
    (7) If the cost of transportation computed pursuant to paragraphs 
(g)(1) through (5) of this section exceeds the amount computed pursuant 
to paragraph (g)(6) of this section, the market administrator shall 
prorate such

[[Page 71701]]

payments to each handler based on each handler's proportion of 
transportation costs submitted pursuant to paragraphs (g)(1) through 
(5) of this section. Transportation costs submitted pursuant to 
paragraphs (g)(1) through (5) of this section which are not paid as a 
result of such a proration shall be included in each subsequent month's 
transportation costs submitted pursuant to paragraphs (g)(1) through 
(5) of this section until paid, or until the time period for such 
payments has concluded.
    (8) The reimbursement of transportation costs pursuant to this 
section shall be the actual demonstrated cost of such transportation of 
bulk milk delivered or rerouted as described in paragraphs (g)(1) 
through (5) of this section, or the miles of transportation on loads of 
bulk milk delivered or rerouted as described in paragraphs (g)(1) 
through (5) of this section multiplied by $2.25 per loaded mile, 
whichever is less.
    (9) For each handler, the reimbursement of transportation costs 
pursuant to paragraph (g) of this section for bulk milk delivered or 
rerouted as described in paragraphs (g)(1) through (5) of this section 
shall be reduced by the amount of payments received for such milk 
movements from the transportation credit balancing fund pursuant to 
Sec.  1007.82.

    Dated: December 7, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-27159 Filed 12-7-04; 2:54 pm]
BILLING CODE 3410-02-U