[Federal Register Volume 71, Number 206 (Wednesday, October 25, 2006)]
[Rules and Regulations]
[Pages 62377-62380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17819]



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  Federal Register / Vol. 71, No. 206 / Wednesday, October 25, 2006 / 
Rules and Regulations  

[[Page 62377]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005 and 1007

[Docket No. AO-388-A17 and AO-366-A46; DA-05-6]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule.

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

SUMMARY: This order amends certain features of the transportation 
credit provisions of the Appalachian and Southeast marketing orders on 
an interim basis. More than the required number of producers in the 
Appalachian and Southeast marketing areas have approved the issuance of 
the interim order as amended.

DATES: Effective Date: December 1, 2006.

FOR FURTHER INFORMATION CONTACT: Gino M. Tosi, Associate Deputy 
Administrator, USDA/AMS/Dairy Programs, Order Formulation and 
Enforcement Branch, STOP 0231--Room 2971, 1400 Independence Ave., SW., 
Washington, DC 20250-0231, (202) 690-1366, e-mail address: 
[email protected].

SUPPLEMENTARY INFORMATION: Specifically, this decision adopts 
provisions that will: (1) Establish a transportation credit mileage 
rate factor by using a fuel cost adjustor; (2) Increase the Appalachian 
order's maximum transportation credit assessment rate to $0.15 per 
hundredweight, and the Southeast order's maximum transportation credit 
assessment rate to $0.20 per hundredweight; and (3) Establish a zero 
diversion limit standard on loads of milk requesting transportation 
credits.
    This administrative rule is governed by the provisions of Sections 
556 and 557 of Title 5 of the United States Code and, therefore, is 
excluded from the requirements of Executive Order 12866.
    This interim rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have a retroactive 
effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Agricultural Marketing Agreement Act of 1937 (the Act), 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 
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.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
interim 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 
marketing 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 January 2006, the time of hearing, there were 3,055 dairy 
farmers pooled on the Appalachian order (Order 5). For the Southeast 
order (Order 7), 3,367 dairy farmers were pooled on the order. Of 
these, 2,889 dairy farmers in Order 5 (or 95) percent and 3,218 dairy 
farmers in Order 7 (or 96 percent) were considered small businesses.
    During January 2006, there were a total of 37 plants associated 
with the Appalachian order (22 fully regulated plants, 11 partially 
regulated plants, 2 producer-handler plants and 2 exempt plants). A 
total of 51 plants were associated with the Southeast order (31 fully 
regulated plants, 9 partially regulated plants and 12 exempt plants). 
The number of plants meeting the small business criteria under the 
Appalachian and Southeast orders were 9 (or 24 percent) and 18 (or 35 
percent), respectively.
    The adoption of the proposed amendments will establish a mileage 
rate factor using a fuel cost adjustor for the transportation credit 
balancing funds for the Appalachian and Southeast orders. The proposed 
mileage rate factor will be calculated monthly and adjusted monthly 
based on current diesel fuel prices as reported by the Department of 
Energy. Currently, the transportation credit provisions of the 
Appalachian and Southeast marketing orders provide a mileage rate 
factor of 0.35 cents per hundredweight (cwt) per mile.
    The adoption of the proposed amendments will increase the maximum 
rates of the transportation credit assessments for the Appalachian and 
Southeast orders. Specifically, the maximum transportation credit 
assessment rate for the Appalachian order will be increased by 5.5 
cents per cwt, from the current 9.5 cents per cwt to 15 cents per cwt. 
The maximum transportation credit assessment rate for the Southeast 
order will be increased by

[[Page 62378]]

10 cents per cwt, from the current 10 cents per cwt to 20 cents per 
cwt.
    The increase in the maximum transportation credit assessment rates 
is intended to minimize the proration and depletion of each order's 
transportation credit balancing fund when supplemental milk is needed 
to service the fluid needs of both marketing areas. The increases in 
the maximum rates of assessment for the Appalachian and Southeast 
orders adopted in this rule are necessary because of escalating fuel 
costs coupled with the continued decline in milk production in the 
southeastern region of the United States.
    This Interim Final Rule also adopts the elimination of the ability 
for diversions on loads of milk requesting transportation credit 
payments.
    Adoption of the proposed amendments will be applied to all 
Appalachian and Southeast orders' participants (producers and 
handlers), which consist of both large and small businesses. Since the 
proposed amendments will be subject to all the orders' producers and 
handlers regardless of their size the proposed amendments will not have 
a significant economic impact on a substantial number of small 
entities.
    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 adopted amendments will have no impact on 
reporting, recordkeeping, or other compliance requirements because they 
will remain identical to the current requirements. No new forms are 
proposed and no additional reporting requirements will 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 December 22, 2005; published December 28, 
2005 (70 FR 76718).
    Tentative Partial Decision: Issued September 1, 2006; published 
September 13, 2006 (71 FR 54118).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the Appalachian and Southeast marketing 
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 the 
Appalachian and Southeast marketing 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 agreement and to 
the orders regulating the handling of milk in the Appalachian and 
Southeast orders.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof it found that:
    (1) The Appalachian and Southeast orders, as hereby amended on an 
interim basis, and all of the terms and conditions thereof, will tend 
to effectuate the declared policy of the Act;
    (2) The parity prices of milk, as determined pursuant to Section 2 
of the Act, are not reasonable in view of the price of feeds, available 
supplies of feeds, and other economic conditions which affect market 
supply and demand for milk in the marketing area, and the minimum 
prices specified in the order, as hereby amended on an interim basis, 
are such prices as will reflect the aforesaid factors, insure a 
sufficient quantity of pure and wholesome milk, and be in the public 
interest; and
    (3) The Appalachian and Southeast orders, as hereby amended on an 
interim basis, regulates the handling of milk in the same manner as, 
and is applicable only to persons in the respective classes of 
industrial and commercial activity specified in, a marketing agreement 
upon which a hearing has been held.
    (b) Additional Findings. It is necessary and in the public interest 
to make these interim amendments to the Appalachian and Southeast 
orders effective December 1, 2006. Any delay beyond that date would 
tend to disrupt the orderly marketing of milk in the aforesaid 
marketing areas.
    The interim amendments to this order are known to handlers. The 
tentative partial decision containing the proposed amendments to this 
order was issued on September 1, 2006.
    The changes that result from these interim amendments will not 
require extensive preparation or substantial alteration in the method 
of operation for handlers. In view of the foregoing, it is hereby found 
and determined that good cause exists for making these interim order 
amendments effective on December 1, 2006.
    (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, which is marketed within the specified marketing 
areas, to sign a proposed marketing agreement, tends to prevent the 
effectuation of the declared policy of the Act;
    (2) The issuance of this interim order amending the Appalachian and 
Southeast orders is the only practical means pursuant to the declared 
policy of the Act of advancing the interests of producers as defined in 
the orders as hereby amended;
    (3) The issuance of the interim orders amending the Appalachian and 
Southeast orders is favored by at least two-thirds of the producers who 
were engaged in the production of milk for sale in the respective 
marketing areas.

List of Subjects in 7 CFR Parts 1005 and 1007

    Milk marketing orders.

Orders Relative to Handling

0
It is therefore ordered, that on and after the effective date hereof, 
the handling of milk in the Appalachian and Southeast marketing areas 
shall be in conformity and in compliance with the terms and conditions 
of the orders, as amended, and as hereby further amended on an interim 
basis, as follows:
0
1. The authority citation for 7 CFR parts 1005 and 1007 read as 
follows:

    Authority: 7 U.S.C. 601-674, and 7253.

PART 1005--MILK IN THE APPALACHIAN MARKETING AREA

0
1A. Section 1005.13 is amended by revising paragraphs (d)(3) and (d)(4) 
to read as follows:


Sec.  1005.13  Producer milk.

* * * * *
    (d) * * *
    (3) The total quantity of milk diverted during the month by a 
cooperative association shall not exceed 25 percent during the months 
of July through November, January, and February, and

[[Page 62379]]

40 percent during the months of December and March through June, of the 
producer milk that the cooperative association caused to be delivered 
to, and physically received at, pool plants during the month, excluding 
the total pounds of bulk milk received directly from producers meeting 
the conditions as described in Sec.  1005.82(c)(2)(ii) and (iii), and 
for which a transportation credit is requested;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 25 percent during the months of July 
through November, January, and February, and 40 percent during the 
months of December and March through June, of the producer milk 
physically received at such plant(or such unit of plants in the case of 
plants that pool as a unit pursuant to Sec.  1005.7(d)) during the 
month, excluding the quantity of producer milk received from a handler 
described in Sec.  1000.9(c) and excluding the total pounds of bulk 
milk received directly from producers meeting the conditions as 
described in Sec.  1005.82(c)(2)(ii) and (iii), and for which a 
transportation credit is requested.
* * * * *

0
2. Section 1005.81 is revised 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.

0
3. Section 1005.82 is amended 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 
for the month computed pursuant to Sec.  1005.83(a)(6).
* * * * *
    (3) * * *
    (iv) Multiply the remaining miles so computed by the mileage rate 
for the month computed pursuant to Sec.  1005.83(a)(6).
* * * * *

0
4. Add a new Sec.  1005.83 to read as follows:


Sec.  1005.83  Mileage rate for the transportation credit balancing 
fund.

    (a) The market administrator shall compute a mileage rate each 
month as follows:
    (1) Compute the simple average rounded down to three decimal places 
for the most recent 4 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.
    (2) From the result in paragraph (a)(1) in this section subtract 
$1.42 per gallon;
    (3) Divide the result in paragraph (a)(2) of this section by 5.5, 
and round down to three decimal places to compute the fuel cost 
adjustment factor;
    (4) Add the result in paragraph (a)(3) of this section to $1.91;
    (5) Divide the result in paragraph (a)(4) of this section by 480;
    (6) Round the result in paragraph (a)(5) of this section down to 
five decimal places to compute the mileage rate.
    (b) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
mileage rate pursuant to paragraph (a) of this section for the 
following month.

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA

0
5. Section 1007.13 is amended by revising paragraphs (d)(3) and (d)(4) 
to read as follows:


Sec.  1007.13  Producer milk.

* * * * *
    (d) * * *
    (3) The total quantity of milk diverted during the month by a 
cooperative association shall not exceed 33 percent during the months 
of July through December, and 50 percent during the months of January 
through June, of the producer milk that the cooperative association 
caused to be delivered to, and physically received at, pool plants 
during the month; excluding the total pounds of bulk milk received 
directly from producers meeting the conditions as described in Sec.  
1007.82(c)(2)(ii) and (iii), and for which a transportation credit is 
requested;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 33 percent during the months of July 
through December, or 50 percent during the months of January through 
June, of the producer milk physically received at such plant (or such 
unit of plants in the case of plants that pool as a unit pursuant to 
Sec.  1007.7(e)) during the month, excluding the quantity of producer 
milk received from a handler described in Sec.  1000.9(c) and excluding 
the total pounds of bulk milk received directly from producers meeting 
the conditions as described in Sec.  1007.82(c)(2)(ii) and (iii), and 
for which a transportation credit is requested.
* * * * *

0
6. Section 1007.81 is revised 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

[[Page 62380]]

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 had 
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 
mileage rate pursuant to paragraph (a) of this section for the 
following month.

0
7. Section 1007.82 is amended 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 
for the month computed pursuant to Sec.  1007.83(a)(6).
* * * * *
    (3) * * *
    (iv) Multiply the remaining miles so computed by the mileage rate 
for the month computed pursuant to Sec.  1007.83(a)(6).
* * * * *

0
8. Add a new Sec.  1007.83 to read as follows:


Sec.  1007.83  Mileage rate for the transportation credit balancing 
fund.

    (a) The market administrator shall compute the mileage rate each 
month as follows:
    (1) Compute the simple average rounded down to three decimal places 
for the most recent 4 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.
    (2) From the result in paragraph (a)(1) in this section subtract 
$1.42 per gallon;
    (3) Divide the result in paragraph (a)(2) of this section by 5.5, 
and round down to three decimal places to compute the fuel cost 
adjustment factor;
    (4) Add the result in paragraph (a)(3) of this section to $1.91;
    (5) Divide the result in paragraph (a)(4) of this section by 480;
    (6) Round the result in paragraph (a)(5) of this section down to 
five decimal places to compute the MRF.
    (b) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
mileage rate pursuant to paragraph (a) of this section for the 
following month.

    Dated: October 19, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-17819 Filed 10-24-06; 8:45 am]
BILLING CODE 3410-02-P