[Federal Register Volume 70, Number 248 (Wednesday, December 28, 2005)]
[Proposed Rules]
[Pages 76718-76724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24543]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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. 70, No. 248 / Wednesday, December 28, 2005 / 
Proposed Rules  

[[Page 76718]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005 and 1007

[Docket No. AO-388-A17 and AO-366-A46; DA-05-06]


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.

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

SUMMARY: A public hearing is being held to consider proposals for the 
Appalachian and Southeast Federal milk orders to amend the current 
inter-market transportation credit provisions and to establish new 
intra-market transportation credit provisions. Evidence will be taken 
at the hearing 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)).

DATES: The hearing will convene at 8:30 a.m., on Tuesday, January 10, 
2006.

ADDRESSES: The hearing will be held at the Hyatt Regency Louisville, 
320 West Jefferson Street, Louisville, Kentucky 40202, (502) 581-1234 
or (800) 233-1234.

FOR FURTHER INFORMATION CONTACT: Antoinette M. Carter, Marketing 
Specialist, USDA/AMS/Dairy Programs, Order Formulation and Enforcement, 
1400 Independence Avenue, SW., STOP 0231, Room 2971, Washington, DC 
20250-0231, (202) 690-3465, e-mail address: [email protected].
    Persons requiring a sign language interpreter or other special 
accommodations should contact Harold Friedly, Market Administrator, at 
(502) 499-0040; email [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 Hyatt 
Regency Louisville, 320 West Jefferson Street, Louisville, Kentucky 
40202, (502) 581-1234, beginning at 8:30 a.m., on Tuesday, January 10, 
2006, 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 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 regarding increasing the maximum assessment rate of the 
transportation credit balancing funds of the Appalachian and Southeast 
orders. Evidence will be collected regarding the proposed establishment 
of an intra-market transportation credit balancing fund for movements 
of milk within the two marketing areas as well as the proposed 
establishment of a mileage rate factor adjusted for fuel costs for both 
inter-market and intra-market movements of milk. In addition, evidence 
will be collected on proposals seeking to amend the producer milk and 
transportation credit provisions which would limit the amounts paid on 
movements of milk within and outside the Appalachian and Southeast 
marketing areas.
    Evidence will be taken at the hearing 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. Also, since 
proponents of the proposed amendments have requested that the hearing 
be held on an expedited basis, under the rules of practice and

[[Page 76719]]

procedure (7 CFR 900.4(a)), it is determined that less than 15 days 
notice is reasonable in the circumstances.
    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 and 1007

    Milk marketing orders.

PARTS 1005 AND 1007--[AMENDED]

    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 Dairy Farmers of America, Inc.

Proposal No. 1

    This proposal seeks to increase the Appalachian and Southeast 
orders' maximum assessment rate of the transportation credit balancing 
funds.

    1. Revise Sec.  1005.81 to read as follows:


Sec.  1005.81  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.  1005.44 by $0.15 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, after adjusting the 
transportation credits disbursed during the prior June-January period 
to reflect any changes in the current mileage rate versus the mileage 
rate(s) in effect 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 23rd day of the month (except as provided in Sec.  1000.90) the 
assessment pursuant to paragraph (a) of this section for the following 
month.
    2. Revise Sec.  1007.81 to read as follows:


Sec.  1007.81  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.  1007.44 by $0.20 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, after adjusting the 
transportation credits disbursed during the prior June-January period 
to reflect any changes in the current mileage rate versus the mileage 
rate(s) in effect 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 23rd day of the month (except as provided in Sec.  1000.90) the 
assessment pursuant to paragraph (a) of this section for the following 
month.

Proposal No. 2

    This proposal seeks to establish transportation credit balancing 
funds on intra-market movements of milk within the Appalachian and 
Southeast marketing areas.

    1. In Sec.  1005.30, the introductory text is republished, 
paragraph (a)(6) is revised, and paragraph (c)(4) is added to read as 
follows:


Sec.  1005.30  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 detail and on prescribed forms, as 
follows:
    (a) * * *
    (6) Receipts of producer milk described in Sec.  1005.82(c)(2) or 
Sec.  1005.83(b)(3), including the identity of the individual producers 
whose milk is eligible for a transportation credit pursuant to the 
respective paragraphs and the date that such milk was received;
* * * * *
    (c) * * *
    (4) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec.  1005.83, all of 
the information required in paragraph (a)(6) of this section.
* * * * *
    2. In Sec.  1007.30, the introductory text is republished, 
paragraph (a)(6) is revised, and paragraph (c)(4) is added to read as 
follows:


Sec.  1007.30  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) * * *
    (6) Receipts of producer milk described in Sec.  1007.82(c)(2) or 
Sec.  1007.83(b)(3), including the identity of the individual producers 
whose milk is eligible for a transportation credit pursuant to the 
respective paragraphs and the date that such milk was received;
* * * * *
    (c) * * *
    (4) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec.  1007.83, all of 
the information required in paragraph (a)(6) of this section.
* * * * *
    3. Amend Sec.  1005.61 by redesignating paragraphs (b)(5) and 
(b)(6) as paragraphs (b)(6) and (b)(7), and adding a new paragraph 
(b)(5) to read as follows:


Sec.  1005.61  Computation of uniform prices.

* * * * *
    (b) * * *
    (5) Deduct the amount by which the amount due from the intra-market 
transportation credit fund pursuant to Sec.  1005.83 exceeds the 
available balance in the intra-market transportation credit fund 
pursuant to Sec.  1005.80(b);
* * * * *
    4. Amend Sec.  1007.61 by redesignating paragraph (b)(5) and (b)(6) 
as paragraphs (b)(6) and (b)(7), and adding a new paragraph (b)(5) to 
read as follows:


Sec.  1007.61  Computation of uniform prices.

* * * * *
    (b) * * *
    (5) Deduct the amount by which the amount due from the intra-market 
transportation credit fund pursuant to Sec.  1007.83 exceeds the 
available balance

[[Page 76720]]

in the intra-market transportation credit fund pursuant to Sec.  
1007.80(b);
* * * * *
    5. Amend Sec.  1005.80 by revising the section heading and 
designating the existing text as paragraph (a) and adding a new 
paragraph (b) to read as follows:


Sec.  1005.80  Transportation Credit Balancing Fund and Intra-market 
Transportation Credit Fund.

    (a) * * *
    (b) Intra-market Transportation Credit Fund. The market 
administrator shall maintain a separate fund known as the Intra-market 
Transportation Credit Fund into which shall be deposited the payments 
made by handlers pursuant to Sec.  1005.81(d) and from the producer-
settlement fund pursuant to Sec.  1005.61(b)(5) and out of which shall 
be made the payments due handlers pursuant to Sec.  1005.83. Payments 
due a handler shall be offset against payments due from the handler.
    6. Amend Sec.  1007.80 by revising the section heading, designating 
the existing text as paragraph (a) and adding a new paragraph (b) to 
read as follows:


Sec.  1007.80  Transportation Credit Balancing Fund and Intra-market 
Transportation Credit Fund.

    (a) * * *
    (b) Intra-market Transportation Credit Fund. The market 
administrator shall maintain a separate fund known as the Intra-market 
Transportation Credit Fund into which shall be deposited the payments 
made by handlers pursuant to Sec.  1007.81(d) and from the producer 
settlement fund pursuant to Sec.  1007.61(b)(5) and out of which shall 
be made the payments due handlers pursuant to Sec.  1007.83. Payments 
due a handler shall be offset against payments due from the handler.
    7. Amend Sec.  1005.81 as proposed in Proposal 1 by adding new 
paragraphs (c), (d), and (e) to read as follows:


Sec.  1005.81  Payments to the transportation credit balancing fund and 
the intra-market transportation credit fund.

* * * * *
    (c) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
fuel cost adjustment factor as determined in Sec.  1005.84(c) and the 
mileage rate factor as determined in Sec.  1005.84(f) for the following 
month.
    (d) 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 an intra-market transportation credit fund assessment 
determined by multiplying the pounds of Class I producer milk assigned 
pursuant to Sec.  1005.44 by $0.10 per hundredweight or such lesser 
amount as the market administrator deems necessary to maintain a 
balance in the fund equal to the total intra-market transportation 
credit fund credits disbursed during the most recent two-month period. 
Except during the first two months that this provision is effective, 
the market administrator shall estimate the amount of the intra-market 
transportation credits that would have existed in the two months 
immediately preceding this provision becoming effective.
    (e) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
assessment pursuant to paragraph (d) of this section for the following 
month.
    8. Amend Sec.  1007.81 as proposed in Proposal 1 by revising the 
section heading and adding new paragraphs (c), (d), and (e) to read as 
follows:


Sec.  1007.81  Payments to the transportation credit balancing fund and 
the intra-market transportation credit fund.

* * * * *
    (c) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
fuel cost adjustment factor as determined in Sec.  1007.84(c) and the 
mileage rate factor as determined in Sec.  1007.84(f) for the following 
month.
    (d) 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 an intra-market transportation credit fund assessment 
determined by multiplying the pounds of Class I producer milk assigned 
pursuant to Sec.  1007.44 by $0.15 per hundredweight or such lesser 
amount as the market administrator deems necessary to maintain a 
balance in the fund equal to the total intra-market transportation 
credit fund credits disbursed during the most recent two month period. 
Except during the first two months that this provision is effective, 
the market administrator shall estimate the amount of the intra-market 
transportation credits that would have existed in the two months 
immediately preceding this provision becoming effective.
    (e) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
assessment pursuant to paragraph (d) of this section for the following 
month.
    9. Add a new Sec.  1005.83 to read as follows:


Sec.  1005.83  Payments from the intra-market transportation credit 
fund.

    (a) Payments from the intra-market transportation credit balancing 
fund to handlers and cooperative associations requesting intra-market 
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 month, the market administrator shall pay to each 
handler that received milk directly from producers' farms as specified 
in paragraph (b) of this section, a preliminary amount determined 
pursuant to paragraph (c) of this section to the extent that funds are 
available in the intra-market transportation credit fund. If an 
insufficient balance exists to pay all of the credits computed pursuant 
to this section, the market administrator shall first reduce the 
producer-settlement fund by the lesser of the number of dollars 
necessary to pay the credits or an equal number of dollars that 
resulted from the funds collected by the assessment as described in 
Sec.  1005.81(d). If an insufficient balance remains, then the market 
administrator shall distribute the balance available in the intra-
market transportation credit 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) Intra-market transportation credits paid pursuant to paragraph 
(a)(1) of this section shall be subject to final verification by the 
market administrator pursuant to Sec.  1000.77. Adjusted payments to or 
from the intra-market transportation credit fund will remain subject to 
the proration established pursuant to paragraph (a)(1) of this section; 
and
    (3) 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.  1005.30(c)(3) prior to the date payment is due, the 
intra-market 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) Intra-market transportation credits shall apply to receipts of 
producer milk received at pool distributing plants directly from the 
farms of producers located within the marketing area or

[[Page 76721]]

producers located within the marketing area of Order 1007 (7 CFR part 
1007), and shall be determined as follows:
    (1) Determine for each producer located within the marketing area 
or located within the marketing area of Federal Order 1007 (7 CFR part 
1007) the pool distributing plant regulated pursuant to this Order or 
the pool distributing plant regulated pursuant to Federal Order 1007 (7 
CFR part 1007) which is nearest to the producer's farm. For purposes of 
this section, if the two or more plants are determined to be 
equidistant in determining the plant to which the producer is nearest, 
the plant with the highest Class I price shall be the used as the plant 
to which the producer is nearest.
    (2) Determine the total pounds of producer milk physically received 
from the farms of producers located within the marketing area of Order 
1007 (7 CFR part 1007) at each pool distributing plant;
    (3) Subtract from the pounds of milk described in paragraph (b)(2) 
of this section the pounds of bulk unpasteurized milk transferred or 
diverted from the pool plant receiving the milk if milk was transferred 
from the pool distributing plant operator on the same calendar day that 
the milk for which an intra-market transportation credit may be 
applicable was received. For this purpose, the transferred or diverted 
milk shall be subtracted from the most distant load of intra-market 
transportation credit eligible milk received, and then in sequence with 
the next most distant load until all of the transfers or diversions 
have been offset. For this purpose, transferred or diverted milk to be 
offset against milk for which the pool plant or the handler described 
in Sec.  1005.9(c), respectively, is the responsible party for receipt 
of intra-market transportation credit; and,
    (4) Multiply the remaining pounds determined in paragraph (b)(3) of 
this section by the producer milk Class I utilization percentage of all 
producer milk received by all pool distributing plants during the 
month. The resulting pounds are the pounds upon which intra-market 
transportation credits, as determined in paragraph (c) of this section, 
may be applicable.
    (c) Intra-market transportation credits for pool distributing plant 
deliveries shall be computed as follows:
    (1) Determine the distance from the farm of each producer located 
within the marketing area or located within the marketing area of Order 
1007 (7 CFR part 1007) to each pool distributing plant regulated 
pursuant to this Order to which the producer's milk was actually 
delivered.
    (2) Subtract the distance from each producer's farm to the 
producer's nearest distributing plant as determined in paragraph (b)(2) 
of this section, from the distance or distances as the case may be 
determined in paragraph (c)(1) of this section.
    (3) Multiply the remaining miles for deliveries to each pool 
distributing plant as computed in paragraph (c)(2) of this section by 
the mileage rate for the month computed pursuant to Sec.  1005.84.
    (4) Subtract the Class I differential specified in Sec.  1000.52 
applicable at the producer's nearest distributing plant as determined 
in paragraph (b)(1) of this section from the Class I differential 
specified in Sec.  1000.52 applicable at each distributing plant at 
which the producer's milk was actually received as determined in 
paragraph (c)(1) of this section.
    (5) If the value in paragraph (c)(4) of this section is greater 
than or equal to zero, subtract the result computed in paragraph (c)(4) 
of this section from the result in paragraph (c)(3) of this section. 
Multiply the resulting amount by the number of hundredweights 
determined in paragraph (b)(4) of this section. The resulting amount 
shall be the intra-market transportation credits for each such plant of 
delivery.
    (6) If the value in paragraph (c)(4) of this section is negative, 
multiply the amount in paragraph (c)(3) of this section by the number 
of hundredweights determined in paragraph (b)(4) of this section. The 
resulting amount shall be the intra-market transportation credits for 
each such plant of delivery.
    (d) For purposes of this section, the distances to be computed 
shall be determined by the market administrator using the shortest 
available state and/or Federal highway mileage. Mileage determinations 
are subject to re-determination at all times. In the event a handler 
requests a re-determination of the mileage pertaining to any plant or 
producer, the market administrator shall notify the handler of such re-
determination within 30 days after the receipt of such request. Any 
financial obligation resulting from a change in mileage shall not be 
retroactive for any periods prior to the re-determination by the market 
administrator.
    10. Add a new Sec.  1007.83 to read as follows:


Sec.  1007.83  Payments from the intra-market transportation credit 
fund.

    (a) Payments from the intra-market transportation credit balancing 
fund to handlers and cooperative associations requesting intra-market 
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 month, the market administrator shall pay to each 
handler that received milk directly from producers' farms as specified 
in paragraph (b) of this section, a preliminary amount determined 
pursuant to paragraph (c) of this section to the extent that funds are 
available in the intra-market transportation credit fund. If an 
insufficient balance exists to pay all of the credits computed pursuant 
to this section, the market administrator shall first reduce the 
producer-settlement fund by the lesser of the number of dollars 
necessary to pay the credits or an equal number of dollars that 
resulted from the funds collected by the assessment as described in 
Sec.  1007.81(d). If an insufficient balance remains, then the market 
administrator shall distribute the balance available in the intra-
market transportation credit 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) Intra-market transportation credits paid pursuant to paragraph 
(a)(1) of this section shall be subject to final verification by the 
market administrator pursuant to Sec.  1000.77. Adjusted payments to or 
from the intra-market transportation credit fund will remain subject to 
the proration established pursuant to paragraph (a)(1) of this section; 
and
    (3) 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.  1007.30(c)(3) prior to the date payment is due, the 
intra-market 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) Intra-market transportation credits shall apply to receipts of 
producer milk received at pool distributing plants directly from the 
farms of producers located within the marketing area or producers 
located within the marketing area of Order 1005 (7 CFR part 1005), and 
shall be determined as follows:
    (1) Determine for each producer located within the marketing area 
or located within the marketing area of Federal Order 1005 (7 CFR part 
1005) the pool distributing plant regulated pursuant to this Order or 
the pool distributing plant regulated pursuant to

[[Page 76722]]

Federal Order 1005 (7 CFR part 1005) which is nearest to the producer's 
farm. For purposes of this section, if the two or more plants are 
determined to be equidistant in determining the plant to which the 
producer is nearest, the plant with the highest Class I price shall be 
the used as the plant to which the producer is nearest.
    (2) Determine the total pounds of producer milk physically received 
from the farms of producers located within the marketing area of Order 
1005 at each pool distributing plant;
    (3) Subtract from the pounds of milk described in paragraph (b)(2) 
of this section the pounds of bulk unpasteurized milk transferred or 
diverted from the pool plant receiving the milk if milk was transferred 
from the pool distributing plant operator on the same calendar day that 
the milk for which an intra-market transportation credit may be 
applicable was received. For this purpose, the transferred or diverted 
milk shall be subtracted from the most distant load of intra-market 
transportation credit eligible milk received, and then in sequence with 
the next most distant load until all of the transfers or diversions 
have been offset. For this purpose, transferred or diverted milk to be 
offset against milk for which the pool plant or the handler described 
in Sec.  1007.9(c), respectively, is the responsible party for receipt 
of intra-market transportation credit; and
    (4) Multiply the remaining pounds determined in paragraph (b)(3) of 
this section by the producer milk Class I utilization percentage of all 
producer milk received by all pool distributing plants during the 
month. The resulting pounds are the pounds upon which intra-market 
transportation credits, as determined in paragraph (c) of this section, 
may be applicable.
    (c) Intra-market transportation credits for pool distributing plant 
deliveries shall be computed as follows:
    (1) Determine the distance from the farm of each producer located 
within the marketing area or located within the marketing area of Order 
1005 (7 CFR part 1005) to each pool distributing plant regulated 
pursuant to this Order to which the producer's milk was actually 
delivered.
    (2) Subtract the distance from each producer's farm to the 
producer's nearest distributing plant as determined in paragraph (b)(2) 
of this section from the distance or distances as the case may be 
determined in paragraph (c)(1) of this section.
    (3) Multiply the remaining miles for deliveries to each pool 
distributing plant as computed in paragraph (c)(2) of this section by 
the mileage rate for the month computed pursuant to Sec.  1007.84.
    (4) Subtract the Class I differential specified in Sec.  1000.52 
applicable at the producer's nearest distributing plant as determined 
in paragraph (b)(1) of this section from the Class I differential 
specified in Sec.  1000.52 applicable at each distributing plant at 
which the producer's milk was actually received as determined in 
paragraph (c)(1) of this section.
    (5) If the value in paragraph (c)(4) of this section is greater 
than or equal to zero, subtract the result computed in paragraph (c)(4) 
of this section from the result in paragraph (c)(3) of this section. 
Multiply the resulting amount by the number of hundredweights 
determined in paragraph (b)(4) of this section. The resulting amount 
shall be the intra-market transportation credits for each such plant of 
delivery.
    (6) If the value in paragraph (c)(4) of this section is negative, 
multiply the amount in paragraph (c)(3) of this section by the number 
of hundredweights determined in paragraph (b)(4) of this section. The 
resulting amount shall be the intra-market transportation credits for 
each such plant of delivery.
    (d) For purposes of this section, the distances to be computed 
shall be determined by the market administrator using the shortest 
available state and/or Federal highway mileage. Mileage determinations 
are subject to re-determination at all times. In the event a handler 
requests a re-determination of the mileage pertaining to any plant or 
producer, the market administrator shall notify the handler of such re-
determination within 30 days after the receipt of such request. Any 
financial obligation resulting from a change in mileage shall not be 
retroactive for any periods prior to the re-determination by the market 
administrator.

Proposal No. 3

    This proposal seeks to calculate the mileage rate factor using a 
fuel cost adjustor for the current transportation credit balancing 
funds and the proposed intra-market transportation credit funds.
    1. Amend Sec.  1005.82 by revising paragraphs (d)(2)(ii) and 
(d)(3)(iv) to read as follows:


Sec.  1005.82  Payments from the transportation credit balancing fund.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Multiply the number of miles so determined by the mileage rate 
factor for the month computed pursuant to Sec.  1005.84(a)(6);
* * * * *
    (3) * * *
    (iv) Multiply the remaining miles so computed by the mileage rate 
factor for the month computed pursuant to Sec.  1005.84(a)(6);
* * * * *
    2. Amend Sec.  1007.82 by revising paragraphs (d)(2)(ii) and 
(d)(3)(iv) to read as follows:


Sec.  1007.82  Payments from the transportation credit balancing fund.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Multiply the number of miles so determined by the mileage rate 
factor for the month computed pursuant to Sec.  1007.84(a)(6);
* * * * *
    (3) * * *
    (iv) Multiply the remaining miles so computed by the mileage rate 
factor for the month computed pursuant to Sec.  1007.84(a)(6);
* * * * *
    3. Add a new Sec.  1005.84 to read as follows:


Sec.  1005.84  Mileage Rates for the Transportation Credit Balancing 
Fund and Intra-Market Transportation Credit Fund.

    The market administrator shall compute mileage rates each month as 
follows:
    (a) Compute the simple average for the most recent four weeks of 
the Diesel Price per Gallon as reported by the Energy Information 
Administration of the United States Department of Energy for the Lower 
Atlantic and Gulf Coast Districts combined.
    (b) From the result in paragraph (a) in this section subtract $1.42 
per gallon;
    (c) Divide the result in paragraph (b) of this section by 5.5, and 
round down to three decimal places to compute the fuel cost adjustment 
factor;
    (d) Add the result in paragraph (c) of this section to $1.91;
    (e) Divide the result in paragraph (d) of this section by 4.80;
    (f) Round the result in paragraph (e) of this section down to three 
decimal places to compute the mileage rate factor.
    4. Add a new Sec.  1007.84 to read as follows:


Sec.  1007.84  Mileage Rates for the Transportation Credit Balancing 
Fund and Intra-Market Transportation Credit Fund.

    The market administrator shall compute mileage rates each month as 
follows:
    (a) Compute the simple average for the most recent four weeks of 
the Diesel

[[Page 76723]]

Price per Gallon as reported by the Energy Information Administration 
of the United States Department of Energy for the Lower Atlantic and 
Gulf Coast Districts combined.
    (b) From the result in paragraph (a) in this section subtract $1.42 
per gallon;
    (c) Divide the result in paragraph (b) of this section by 5.5, and 
round down to three decimal places to compute the fuel cost adjustment 
factor;
    (d) Add the result in paragraph (c) of this section to $1.91;
    (e) Divide the result in paragraph (d) of this section by 4.80;
    (f) Round the result in paragraph (e) of this section down to three 
decimal places to compute the mileage rate factor.

Proposed by Dean Foods Company

Proposal No. 4

    This proposal seeks to reduce a handler's ability to utilize 
transportation credits to help broaden the number of producers that 
touch base.

    1. Amend Sec.  1005.82 by:
    (a) Revising paragraph (d)(2)(v);
    (b) Adding a new paragraph (d)(2)(vi);
    (c) Revising paragraph (d)(3)(vii); and
    (d) Adding a new paragraph (d)(3)(viii).


Sec.  1005.82  Payments from the transportation credit balancing fund.

* * * * *
    (d) * * *
    (2) * * *
    (v) Divide Z% (currently believed to be close to 30%, may provide 
evidence for a higher or lower number) by the percent of producer milk 
delivered to plants other than plants qualified pursuant to Sec.  
1005.7(a) and (b) and Sec.  1007.7(a) and (b) of this chapter; if the 
result is 100% or greater, then the percentage applicable in paragraph 
(d)(2)(vi) of this section shall be 100%.
    (vi) Compute the result of multiplying the remainder computed in 
paragraph (d)(2)(iv) of this section by the percentage computed in 
paragraph (d)(2)(v) of this section and by the hundredweight of milk 
described in paragraph (d)(2) of this section.
    (3) * * *
    (vii) Divide Z% (currently believed to be close to 30%, may provide 
evidence for a higher or lower number) by the percent of producer milk 
delivered to plants other than plants qualified pursuant to Sec.  
1005.7(a) and (b) and Sec.  1007.7(a) and (b) of this chapter; if the 
result is 100% or greater, then the percentage applicable in paragraph 
(d)(3)(viii) of this section shall be 100%.
    (viii) Compute the result of multiplying the remainder computed in 
paragraph (d)(3)(vi) of this section by the percentage computed in 
paragraph (d)(3)(vii) and by the hundredweight of milk described in 
paragraph (d)(3) of this section.
    2. Amend Sec.  1007.82 by:
    (a) Revising paragraph (d)(2)(v);
    (b) Adding a new paragraph (d)(2)(vi);
    (c) Revising paragraph (d)(3)(vii); and
    (d) Adding a new paragraph (d)(3)(viii).


Sec.  1007.82  Payments from the transportation credit balancing fund.

* * * * *
    (d) * * *
    (2) * * *
    (v) Divide Z% (currently believed to be close to 30%, may provide 
evidence for a higher or lower number) by the percent of producer milk 
delivered to plants other than plants qualified pursuant to Sec.  
1005.7(a) and (b) of this chapter; if the result is 100% or greater, 
then the percentage applicable in paragraph (d)(2)(vi) of this section 
shall be 100%.
    (vi) Compute the result of multiplying the remainder computed in 
paragraph (d)(2)(iv) of this section by the percentage computed in 
paragraph (d)(2)(v) of this section and by the hundredweight of milk 
described in paragraph (d)(2) of this section.
    (3) * * *
    (vii) Divide Z% (currently believed to be close to 30%, may provide 
evidence for a higher or lower number) by the percent of producer milk 
delivered to plants other than plants qualified pursuant to Sec.  
1005.7(a) and (b) of this chapter and Sec.  1007.7(a) and (b); if the 
result is 100% or greater, then the percentage applicable in paragraph 
(d)(3)(viii) of this section shall be 100%.
    (viii) Compute the result of multiplying the remainder computed in 
paragraph (d)(3)(vi) of this section by the percentage computed in 
paragraph (d)(3)(vii) and by the hundredweight of milk described in 
paragraph (d)(3) of this section.

Proposal No. 5

    This proposal seeks to reduce the amount paid to a producer for 
milk diverted to an out-of-area plant.

    1. Revise Sec.  1005.13(d)(6) to read as follows:


Sec.  1005.13  Producer milk.

* * * * *
    (d) * * *
    (6) Milk diverted to plants located in the marketing area described 
in 7 CFR parts 1005 and 1007, shall be priced at the location of the 
plant to which diverted; milk diverted to plants located outside the 
marketing area described in either Sec. Sec.  1005.2 or 1007.2, shall 
be priced at the location of the closest pool distributing plant 
located in the marketing area less an adjustment calculated by 
multiplying Y (currently believe this to be close to 4.0, but may 
provide evidence for a higher or lower number) cents per cwt. for each 
10 miles or fraction thereof (by the shortest hard surface highway as 
computed by the market administrator) between the plant to which the 
milk was diverted and the closest pool distributing plant located in 
the marketing area; and
* * * * *
    2. Revise Sec.  1005.75 to read as follows:


Sec.  1005.75  Plant location adjustments for producer milk and nonpool 
milk.

    For purposes of making payments for producer milk and nonpool milk: 
Except milk diverted to plants located outside the marketing area 
described in either Sec. Sec.  1005.2 or 1007.2 of this chapter, a 
plant location adjustment shall be determined by subtracting the Class 
I price specified in Sec.  1005.51 from the Class I price at the 
plant's location; for milk diverted to plants located outside the 
marketing area described in either Sec. Sec.  1005.2 or 1007.2 of this 
chapter, a plant location adjustment shall be determined by subtracting 
the Class I price specified in Sec.  1005.51 from the result of the 
formula found in Sec.  1005.13(d)(6) for such milk. The difference, 
plus or minus as the case may be, shall be used to adjust the payments 
require pursuant to Sec. Sec.  1005.73 and 1000.76.
    1. Revise Sec.  1007.13(d)(6) to read as follows:


Sec.  1007.13  Producer milk.

* * * * *
    (d) * * *
    (6) Milk diverted to plants located in the marketing area described 
in 7 CFR parts 1005 and 1007, shall be priced at the location of the 
plant to which diverted; milk diverted to plants located outside the 
marketing area described in either Sec. Sec.  1005.2 or 1007.2, shall 
be priced at the location of the closest pool distributing plant 
located in the marketing area less an adjustment calculated by 
multiplying Y (currently believe this to be close to 4.0, but may 
provide evidence for a higher or lower number) cents per cwt. for each 
10 miles or fraction there of (by the shortest hard surface highway as 
computed by the market administrator) between the plant to which the 
milk was diverted and the closest pool distributing plant located in 
the marketing area; and
* * * * *
    2. Revise Sec.  1007.75 to read as follows:

[[Page 76724]]

Sec.  1007.75  Plant location adjustments for producer milk and nonpool 
milk.

    For purposes of making payments for producer milk and nonpool milk: 
Except for milk diverted to plants located outside the marketing area 
described in Sec. Sec.  1005.2 and 1007.2, a plant location adjustment 
shall be determined by subtracting the Class I price specified in Sec.  
1007.51 from the Class I price at the plant's location; for milk 
diverted to plants located outside the marketing area described in 
either Sec. Sec.  1005.2 of this chapter or 1007.2, a plant location 
adjustment shall be determined by subtracting the Class I price 
specified in Sec.  1007.51 from the result of the formula found in 
Sec.  1007.13(d)(6) for such milk. The difference, plus or minus as the 
case may be, shall be used to adjust the payments require pursuant to 
Sec. Sec.  1007.73 and 1000.76.

Proposed by Dairy Programs, Agricultural Marketing Service

Proposal No. 6

    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 1031, 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.
    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: December 22, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-24543 Filed 12-23-05; 10:33 am]
BILLING CODE 3410-02-P