[Federal Register Volume 71, Number 209 (Monday, October 30, 2006)]
[Rules and Regulations]
[Pages 63215-63217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18176]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1032

[Docket No. AO-313-A48; DA-04-06]


Milk in the Central Marketing Area; Order Amending the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends regulations pertaining to the Central 
Federal milk order. More than the required number of producers for the 
Central marketing area approved the issuance of the final order 
amendments.

DATES: Effective Date: December 1, 2006.

FOR FURTHER INFORMATION CONTACT: Jack Rower, Marketing Specialist, 
Order Formulation and Enforcement Branch, USDA/AMS/Dairy Programs, STOP 
0231-Room 2971, 1400 Independence Avenue, SW., Washington, DC 20250-
0231, (202) 720-2357, e-mail address: [email protected].

SUPPLEMENTARY INFORMATION: This document amends the pooling provisions 
of the Central Federal milk order. Specifically, this final rule adopts 
provisions that: (1) Increase supply plant performance standards to 25 
percent for the months of August through February and to 20 percent for 
the months of March through July; (2) Require the non-pool side of a 
split plant to maintain nonpool status for 12 months; (3) Amend the 
``touch-base'' feature of the order to require that at least one day's 
production of the milk of a dairy farmer be received at a pool plant in 
each of the months of January, February, and August through November, 
to be eligible for diversion to non-pool plants; (4) Lower the 
diversion limit standards by five percentage points, from 80 percent to 
75 percent, for the months of August through February, and by five 
percentage points, from 85 percent to 80 percent for the months of 
March through July; and (5) Establish provisions that limit the volume 
of milk a handler may pool in a month to 125 percent of the volume of 
milk pooled in the prior month.
    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. The 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, 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 Secretary 
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 Secretary 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 
final rule will not have a significant economic impact on a substantial 
number of small entities.
    For the purpose of the Regulatory Flexibility Act, a dairy farm is 
considered a ``small business'' if it has an annual gross revenue of 
less than $750,000, and a dairy products manufacturer is a ``small 
business'' if it has fewer than 500 employees.
    For the purposes of determining which dairy farms are ``small 
businesses,'' the $750,000 per year criterion was used to establish a 
production guideline of 500,000 pounds per month. Although this 
guideline does not factor in additional monies that may be received by 
dairy producers, it should be an inclusive standard for most ``small'' 
dairy farmers. For purposes of determining a handler's size, if the 
plant is part of a larger company operating multiple plants that 
collectively exceed the 500-employee limit, the plant will be 
considered a large business even if the local plant has fewer than 500 
employees.
    During January 2005, the time of the hearing, there were 5,778 
dairy producers pooled on, and 23 handlers regulated by, the Central 
order. Approximately 5,365 producers, or 92.9 percent, were considered 
``small businesses'' based on the above criteria. Of the 23 handlers 
regulated by the Central order during January 2005, 11 handlers, or 
47.8 percent, were considered ``small businesses.''
    The adopted amendments regarding the pooling standards serve to 
revise established criteria that determine those producers, producer 
milk, and plants that have a reasonable association with and 
consistently serve the fluid needs of the Central milk marketing area. 
Criteria for pooling milk are established on the basis of performance 
standards that are considered adequate to meet the Class I fluid needs 
of the market and, by doing so, to determine those producers who are 
eligible to share in the revenue that

[[Page 63216]]

arises from the classified pricing of milk.
    Criteria for pooling are established without regard to the size of 
any dairy industry organization or entity. Therefore, the 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 amendments would have no impact on reporting, 
recordkeeping, or other compliance requirements because they would 
remain identical to the current requirements. No new forms are proposed 
and no additional reporting requirements would be necessary.
    This action does not require additional information collection that 
requires clearance by the Office of Management and Budget (OMB) beyond 
currently approved information collection. The primary sources of data 
used to complete the approved forms are routinely used in most business 
transactions. The 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.
    No other burdens are expected to fall on the dairy industry as a 
result of overlapping Federal rules. This rulemaking proceeding does 
not duplicate, overlap, or conflict with any existing Federal rules.

Prior Documents in This Proceeding

    Notice of Hearing: Issued September 17, 2004; published September 
22, 2004 (69 FR 56725).
    Notice of Hearing Delay: Issued October 18, 2004; published October 
13, 2004 (69 FR 61323).
    Recommended Decision: Issued February 15, 2006; published February 
22, 2006 (71 FR 9015).
    Final Decision: Issued September 1, 2006; published September 13, 
2006 (71 FR 54152).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the Central order was first issued and when 
it was 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 Mideast 
order:
    (a) Findings upon the basis of the hearing record: A public hearing 
was held upon certain proposed amendment to the tentative marketing 
agreement and to the order regulating the handling of milk in the 
Central marketing area. The hearing was held pursuant to the provisions 
of the Agricultural Marketing Agreement act of 1937, as amended (7 
U.S.C. 601-604), the applicable rules of practice and procedure (7 CFR 
part 900).
    Upon the basis of the evidence introduced at such hearing and the 
record thereof, will tend to effectuate the declared policy of the Act;
    (1) The Central order as hereby amended, and all of the terms and 
conditions thereof, will tend to effectuate the declared policy of the 
Act;
    (2) The parity prices of milk as determined pursuant to Section 2 
of the Act are not reasonable in view of the price of feeds, available 
supplies of feeds, and other economic conditions which affect market 
supply and demand for milk in the marketing area, and the minimum 
prices specified in the tentative marketing agreement and the order, as 
hereby proposed to be 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 Central order 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, a 
marketing agreement upon which a hearing has been held.
    (b) Additional Findings: It is necessary and in the public interest 
to make these amendments to the Central order effective December 1, 
2006. Any delay beyond that date would tend to disrupt the orderly 
marketing of milk in the aforesaid marketing area.
    The amendments to the Central order are known to handlers. The 
final decision containing the proposed amendments to the order was 
issued on September 1, 2006.
    The changes that result from these amendments will not require 
extensive preparation or substantial alteration in the method of 
operation for handlers. In view of the foregoing, it is hereby found 
and determined that good cause exists for making these order amendments 
effective December 1, 2006.
    (c) Determinations: It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in Sec. 8c(9) of the Act) of more than 50 
percent of the milk that is marketed within the specified marketing 
area to sign a proposed marketing agreement tends to prevent the 
effectuation of the declared policy of the Act;
    (2) The issuance of this order amending the Central order is the 
only practical means pursuant to the declared policy of the Act of 
advancing the interests of producers as defined by the order as hereby 
amended;
    (3) The issuance of the order amending the Central order is favored 
by at least two-thirds of the producers who were engaged in the 
production of milk for sale in the marketing area.

List of Subjects in 7 CFR Part 1032

    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 Central marketing area shall be in 
conformity to and in compliance with the terms and conditions of the 
order, as amended, and as hereby amended, as follows:

PART 1032--MILK IN THE CENTRAL MARKETING AREA

0
1. The authority citation for 7 CFR part 1032 is amended to read as 
follows:

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


0
2. Section 1032.7 is amended by revising paragraph (c) introductory 
text and paragraph (h)(7), to read as follows:


Sec.  1032.7  Pool plant.

* * * * *
    (c) A supply plant from which the quantity of bulk fluid milk 
products shipped to (and physically unloaded into) plants described in 
paragraph (c)(1) of this section is not less than 25 percent during the 
months of August through February and 20 percent in all other months of 
the Grade A milk received from dairy farmers (except dairy farmers 
described in Sec.  1032.12(b)) and from handlers described in Sec.  
1000.9(c), including milk diverted pursuant to Sec.  1032.13, subject 
to the following conditions:
* * * * *
    (h) * * *
    (7) That portion of a regulated plant designated as a nonpool plant 
that is physically separate and operated separately from the pool 
portion of such plant. The designation of a portion of a plant must be 
requested in advance and in writing by the handler and must be approved 
by the market administrator. Such nonpool status shall be effective on 
the first day of the month following approval of the request by the 
market administrator and thereafter for the longer of twelve (12) 
consecutive months or until notification of the

[[Page 63217]]

desire to requalify as a pool plant, in writing, is received by the 
market administrator. Requalification will require deliveries to a pool 
distributing plant(s) as provided for in Sec.  1032.7(c). For 
requalification, handlers may not use milk delivered directly from 
producer's farms pursuant to Sec.  1000.9(c) or Sec.  1032.13(c) for 
the first month.

0
3. Section 1032.13 is amended by:
0
a. Revising paragraph (d)(1);
0
b. Redesignating paragraphs (d)(2) through (d)(6) as paragraphs (d)(4) 
through (d)(8);
0
c. Adding new paragraphs (d)(2) and (d)(3);
0
d. Revising newly redesignated paragraph (d)(4); and
0
e. Adding a new paragraph (f).
    The revisions and additions read as follows:


Sec.  1032.13  Producer milk.

* * * * *
    (d) * * *
    (1) Milk of a dairy farmer shall not be eligible for diversion 
until milk of such dairy farmer has been physically received as 
producer milk at a pool plant and the dairy farmer has continuously 
retained producer status since that time. If a dairy farmer loses 
producer status under the order in this part (except as a result of a 
temporary loss of Grade A approval), the dairy farmer's milk shall not 
be eligible for diversion until milk of the dairy farmer has been 
physically received as producer milk at a pool plant;
    (2) The equivalent of at least one day's milk production is caused 
by the handler to be physically received at a pool plant in each of the 
months of January and February, and August through November;
    (3) The equivalent of at least one day's milk production is caused 
by the handler to be physically received at a pool plant in each of the 
months of March through July and December if the requirement of 
paragraph (d)(2) of this section (Sec.  1032.13) in each of the prior 
months of August through November and January through February are not 
met, except in the case of a dairy farmer who marketed no Grade A milk 
during each of the prior months of August through November or January 
through February.
    (4) Of the quantity of producer milk received during the month 
(including diversions, but excluding the quantity of producer milk 
received from a handler described in Sec.  1000.9(c)) the handler 
diverts to nonpool plants not more than 75 percent during the months of 
August through February, and not more than 80 percent during the months 
of March through July, provided that not less than 25 percent of such 
receipts in the months of August through February and 20 percent of the 
remaining months' receipts are delivered to plants described in Sec.  
1032.7(a), (b), or (i).;
* * * * *
    (f) The quantity of milk reported by a handler pursuant to Sec.  
1032.30(a)(1) and/or Sec.  1032.30(c)(1) for the current month may not 
exceed 125 percent of the producer milk receipts pooled by the handler 
during the prior month. Milk diverted to nonpool plants reported in 
excess of this limit shall be removed from the pool. Milk received at 
pool plants in excess of the 125 percent limit, other than pool 
distributing plants, shall be classified pursuant to Sec.  
1000.44(a)(3)(v). The handler must designate, by producer pick-up, 
which milk is to be removed from the pool. If the handler fails to 
provide this information the provisions of paragraph (d)(5) of this 
section shall apply. The following provisions apply:
    (1) Milk shipped to and physically received at pool distributing 
plants shall not be subject to the 125 percent limitation;
    (2) Producer milk qualified pursuant to Sec.  ----.13 of any other 
Federal Order in the previous month shall not be included in the 
computation of the 125 percent limitation; provided that the producers 
comprising the milk supply have been continuously pooled on any Federal 
Order for the entirety of the most recent three consecutive months.
    (3) The market administrator may waive the 125 percent limitation:
    (i) For a new handler on the order, subject to the provisions of 
paragraph (f)(3) of this section, or
    (ii) For an existing handler with significantly changed milk supply 
conditions due to unusual circumstances;
    (4) A bloc of milk may be considered ineligible for pooling if the 
market administrator determines that handlers altered the reporting of 
such milk for the purpose of evading the provisions of this paragraph.

    Dated: October 25, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-18176 Filed 10-27-06; 8:45 am]
BILLING CODE 3410-02-P