[Federal Register Volume 72, Number 27 (Friday, February 9, 2007)]
[Proposed Rules]
[Pages 6179-6184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-570]


 ========================================================================
 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.
 
 ========================================================================
 

  Federal Register / Vol. 72, No. 27 / Friday, February 9, 2007 / 
Proposed Rules  

[[Page 6179]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1124, 
1126, and 1131

[Docket No. AO-14-A77, et al.; DA-07-02]


Milk in the Northeast and Other Marketing Areas; Notice of 
Hearing on Proposed Amendments to Tentative Marketing Agreements and 
Orders

------------------------------------------------------------------------
     7 CFR Part            Marketing area              AO numbers
------------------------------------------------------------------------
1001................  Northeast...............  AO-14-A77.
1005................  Appalachian.............  AO-388-A21.
1006................  Florida.................  AO-356-A42.
                  10  Southeast...............  AO-366-A50.
                   0
                   7.
1030................  Upper Midwest...........  AO-361-A43.
1032................  Central.................  AO-313-A52.
1033................  Mideast.................  AO-166-A76.
1124................  Pacific Northwest.......  AO-368-A38.
1126................  Southwest...............  AO-231-A71.
1131................  Arizona.................  AO-271-A43.
------------------------------------------------------------------------

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; Notice of public hearing on proposed rulemaking.

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

SUMMARY: A national public hearing is being held to consider and take 
evidence on proposals seeking to amend the Class III and Class IV 
product price formulas applicable to all Federal milk marketing orders.

DATES: The hearing will convene at 9 a.m., Monday, February 26, 2007.

ADDRESSES: The hearing will be held at the Holiday Inn Select--
Strongsville, 15471 Royalton Road, Strongsville, Ohio 44136, phone 
(440) 238-8800.

FOR FURTHER INFORMATION CONTACT: Jack Rower, Marketing Specialist, 
Order Formulation and Enforcement, USDA/AMS/Dairy Programs, Stop 0231--
Room 2971, 1400 Independence Avenue, SW., Washington, DC 20250-0231, 
(202) 720-2357, e-mail address: [email protected].
    Persons requiring a sign language interpreter or other special 
accommodations should contact Paul Huber, Assistant Market 
Administrator, at (330) 225-4758; e-mail: [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 
Holiday Inn Select, Strongsville, Ohio, beginning at 9 a.m. on Monday, 
February 26, 2007, with respect to proposed amendments to the tentative 
marketing agreements and to the orders regulating the handling of milk 
in the Northeast and other 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 which relate to the proposed 
amendments, hereinafter set forth, and any appropriate modifications 
thereof, to the tentative marketing agreements and to the orders.

Initial Regulatory Flexibility Analysis

    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 information collection 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 (13 CFR 121.201). Most 
parties subject to a milk order are considered as a small business.
    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.
    USDA has identified that during 2005 approximately 51,060 of the 
54,652 dairy producers whose milk is pooled on Federal orders are small 
businesses. Small businesses represent about 93 percent of the dairy 
farmers who participate in the Federal milk order program.
    On the processing side, during June 2005 there were approximately 
350 fully regulated plants (of which 149 or 43 percent were small 
businesses) and 110 partially regulated plants (of which 50 or 45 
percent were small businesses.) In addition, there were 48 producer-
handlers, of which 29 were considered small businesses for the purposes 
of this initial regulatory flexibility analysis, who submitted reports 
under the Federal milk order program during this period.
    The fluid use of milk represented about 45.0 percent of total 
Federal milk marketing order producer deliveries during January 2006. 
Almost 237 million Americans, approximately 80 percent of the total 
U.S. population reside within the geographical boundaries of the 10 
Federal milk marketing areas.
    In order to accomplish the goal of imposing no additional 
regulatory burdens on the industry, a review of the current reporting 
requirements was completed pursuant to the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.). In light of that review, it was 
determined that these proposed amendments would have little or no 
impact on reporting, record keeping, or other compliance requirements 
because these requirements would remain identical to those currently in 
effect under the Federal order program. No new or additional reporting 
would be necessary.
    This notice does not require additional information collection that 
requires clearance by the OMB beyond the currently approved information 
collection. Information currently

[[Page 6180]]

collected through the use of OMB-approved forms and the primary sources 
of data used to complete the forms are routinely used in business 
transactions. The forms require only a minimal amount of information 
that can be provided without data processing equipment or trained 
statistical staff. Thus, the information collection burden is 
relatively small. Requiring the same reports from all handlers does not 
disadvantage any handler that is smaller than the industry average.
    No other burdens are expected to fall upon the dairy industry as a 
result of overlapping Federal rules. This proposed rulemaking does not 
duplicate, overlap, or conflict with any existing Federal rules.
    To ensure that small businesses are not unduly or 
disproportionately burdened based on these proposed amendments 
consideration was given to mitigating any negative impacts. It is 
expected that small producers would not experience any particular 
disadvantage compared to larger producers as a result of the proposed 
amendments. Similarly, it is expected that small handlers would not 
experience any particular disadvantage compared to larger handlers as a 
result of the proposed amendments. Possible changes to the Class III 
and Class IV price formulas should not have any special impacts on 
small handler entities. All handlers manufacturing dairy products from 
milk classified as Class III or Class IV would remain subject to the 
same minimum prices regardless of the size of their operations. Minimum 
prices should not raise barriers regarding the ability of small 
handlers to compete in the marketplace.
    Interested parties are invited to present evidence on the probable 
regulatory and information collection impact of the hearing proposals 
on small businesses. Also, such parties may suggest modifications of 
the proposal for tailoring its applicability to small businesses.

Preliminary Economic Analysis and Detailed Analysis Information

    A preliminary economic analysis as well as additional detailed 
analysis, data and information used in developing the preliminary 
economic analysis are presented at the AMS Dairy Programs Web site, 
http://www.ams.usda.gov/dairy.

Executive Order 12988, Civil Justice Reform

    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 (7 U.S.C. 608c 
(15)(A)), 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.
    Interested parties who wish to introduce exhibits should provide 
the Presiding Officer at the hearing with (6) 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 1000, 1001, 1005, 1006, 1007, 1030, 
1032, 1033, 1124, 1126, and 1131

    Milk marketing orders.

    The authority citation for 7 CFR Parts 1000, 1001, 1005, 1006, 
1007, 1030, 1032, 1033, 1124, 1126, and 1131 read as follows:

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

    The proposed amendments, as set forth below, have not received the 
approval of the Department.

Proposed by Agri-Mark Dairy Cooperative

Proposal 1

    This proposal seeks to amend the manufacturing allowances for Class 
III and Class IV product formulas, as enumerated in Sec.  1000.50 that 
may include the most current plant cost survey information available. 
Specifically, this proposal seeks to amend Sec.  1000.50 milk price 
formulas by revising the existing manufacturing allowances for butter, 
nonfat dry milk, cheese, and whey powder based upon evidence obtained 
from the hearing record. Amendments to these manufacturing allowances 
would directly affect the milk component values used in Federal order 
milk price formulas for all classes of milk.

Proposal 2

    This proposal seeks to amend the Class III and Class IV product 
formulas to annually update the manufacturing allowances using an 
annual manufacturing cost survey of cheese, whey powder, butter and 
nonfat dry milk plants (located outside of California.) The proposed 
amendments would grant authority to the Market Administrator to 
administer the survey, select the sample plants, and collect, audit and 
assemble cost information. The proposal seeks to use the annual 
manufacturing cost survey data to annually update manufacturing 
allowances at a level that is the higher of the following:
    (1) Manufacturing costs would be set at a level that would allow 
minimum percentages of milk volume used and plants in the entire Class 
III and Class IV manufacturing plant population outside of California 
to cover their costs; or
    (2) Manufacturing allowances would be set at a level that would 
allow minimum percentages of the milk used by Class III and Class IV 
manufacturing plants and the number of plants in any specific Federal 
order pooling at least 2 billion pounds of milk annually to cover their 
costs.

Proposed by Dairy Producers of New Mexico

Proposal No. 3

    This proposal seeks to amend the manufacturing allowances contained 
in the Class III and Class IV product price formulas. Specifically, 
this proposal seeks to change the butter make allowance butter from 
11.5 cents to 11.08 cents, change the nonfat dry milk make allowance 
from 14 cents to 14.10 cents, change the cheese make allowance from 
16.5 cents to 16.38 cents, and change the dry whey make allowance from 
15.9 cents to 14.98 cents.
    1. Amend Sec.  1000.50 by:
    (a) revising paragraph (l);
    (b) revising paragraph (m);
    (c) revising paragraph (n)(2) and (n)(3)(i);
    (d) revising paragraph (o); and
    (e) revising paragraph (q)(3).
    The revisions read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *

[[Page 6181]]

    (l) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the U.S. average NASS AA butter 
survey price reported by the Department for the month less 11.08 cents, 
with the result multiplied by 1.20.
    (m) Nonfat solids price. The nonfat solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the U.S. average NASS 
nonfat dry milk survey price reported by the Department for the month 
less 14.10 cents and multiplying the result by 0.99.
    (n) * * *
    (2) Subtract 16.38 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.383;
    (3) * * *
    (i) Subtract 16.38 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.572; and
* * * * *
    (o) Other solids price. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the U.S. average NASS dry 
whey survey price reported by the Department for the month minus 14.98, 
with the result multiplied by 1.03.
* * * * *
    (q) * * *
    (3) An advanced butterfat price per pound, rounded to the nearest 
one-hundredth cent, shall be calculated by computing a weighted average 
of the 2 most recent U.S. average NASS AA butter survey prices 
announced before the 24th day of the month, subtracting 11.08 cents 
from this average, and multiplying the result by 1.20.

Proposed by Dairy Producers of New Mexico

Proposal No. 4

    This proposal seeks to amend the Class III and Class IV product 
price formulas by establishing a Class III butterfat price that would 
be based on the Chicago Mercantile Exchange (CME) price for 40-lb. 
block cheese.
    1. Amend Sec.  1000.50 by revising paragraph (l) and removing 
paragraph (n)(3) to read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (l) Butterfat Price. The butterfat price shall be as follows:
    (1) The Class IV butterfat price per pound, rounded to the nearest 
one-hundredth cent, shall be the CME AA Butter price reported by the 
Department's Dairy Market News for the month less 11.5 cents, with the 
result multiplied by 1.20.
    (2) The Class III butterfat price per pound, rounded to the nearest 
one-hundredth cent shall be the AA Butter price reported by the 
Department's Dairy Market News for 40-lb. block cheese for the month, 
less 16.5 cents and multiply the result by 1.572.
* * * * *

Proposed by Dairy Farmers of America

Proposal No. 5

    This proposal seeks to amend the butterfat shrink adjustment 
contained in the Class III and Class IV product price formulas by 
adjusting the yield factor contained in the butterfat price computation 
from 1.20 to 1.215.
    1. Amend Sec.  1000.50 by revising paragraphs (l) and (q)(3), to 
read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (l) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the U.S. average NASS AA butter 
survey price reported by the Department for the month less 11.5 cents, 
with the result multiplied by 1.215.
* * * * *
    (q) * * *
    (3) An advanced butterfat price per pound, rounded to the nearest 
one-hundredth cent, shall be calculated by computing a weighted average 
of the 2 most recent U.S. average NASS AA butter survey prices 
announced before the 24th day of the month, subtracting 11.5 cents from 
this average, and multiplying the result by 1.215.

Proposed by Dairy Producers of New Mexico

Proposal No. 6

    This proposal seeks to amend the Class III and Class IV product 
price formulas by changing the butterfat shrink adjustment and yield 
factor from 1.20 to 1.211, and the butterfat recovery percentage from 
90 percent to 94 percent.
    1. Amend Sec.  1000.50 by:
    a. revising paragraph (l);
    b. revising paragraph (n)(3)(i) and (n)(3)(ii); and
    c. revising paragraph (q)(3).
    The revisions read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (l) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the U.S. average NASS AA butter 
survey price reported by the Department for the month less 11.5 cents, 
with the result multiplied by 1.211.
* * * * *
    (n) * * *
    (3) * * *
    (i) Subtract 16.5 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result from 1.653; 
and
    (ii) Subtract 0.94 times the butterfat price computed pursuant to 
paragraph (1) of this section from the amount computed pursuant to 
paragraph (n)(3)(i) of this section; and
* * * * *
    (q) * * *
    (3) An advanced butterfat price per pound, rounded to the nearest 
one-hundredth cent, shall be calculated by computing a weighted average 
of the 2 most recent U.S. average NASS AA butter survey prices 
announced before the 24th day of the month, subtracting 11.5 cents from 
this average, and multiplying the result by 1.211.

Proposal No. 7

    This proposal seeks to amend the Class III and Class IV product 
price formulas by eliminating the farm-to-plant shrink and butterfat 
shrink adjustments to the yield factors.

Proposal No. 8

    This proposal seeks to amend the Class III and Class IV product 
price formulas by changing the nonfat solids yield factor from 0.99 to 
1.02 and changing the protein price yield factors for cheese from 1.383 
to 1.405 and for butter from 1.572 to 1.653.
    1. Amend Sec.  1000.50 by revising paragraphs (m), (n)(2), and 
(n)(3)(i) to read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (m) Nonfat solids price. The nonfat solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the U.S. average nonfat dry 
milk survey price reported by the Department for the month less 14 
cents and multiplying the result by 1.02.
    (n) * * *
    (2) Subtract 16.5 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.405;
    (3) * * *
    (i) Subtract 16.5 cents from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.653;
* * * * *

[[Page 6182]]

Proposed by International Dairy Foods Association

Proposal No. 9

    This proposal seeks to amend the Class III and Class IV product 
price formulas by adjusting the protein price formula to reflect the 
lower value and reduced volume of butterfat recoverable as whey cream.

Proposed by Agri-Mark Dairy Cooperative

Proposal No. 10

    This proposal seeks to amend the Class III and Class IV product 
price formulas by reducing the protein price to reflect the lower price 
of whey butter.
    2. Amend Sec.  1000.50 by adding a new paragraph (n)(4), to read as 
follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (n) * * *
    (4) Subtract the difference between the per pound value of AA 
butter and whey butter from the price computed in paragraph (n)(3) of 
this section.
* * * * *

Proposal No. 11

    This proposal seeks to amend the Class III and Class IV product 
price formulas by reducing the adjustment for cheese manufactured in 
500-pound barrels contained in the protein price formula from 3 cents 
to 1.5 cents.
    1. Amend Sec.  1000.50 by revising paragraph (n)(1)(ii), to read as 
follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (n) * * *
    (1) * * *
    (ii) The U.S. average NASS survey price for 500-pound barrel 
cheddar cheese (38 percent moisture) reported by the Department for the 
month plus 1.5 cents;
* * * * *

Proposed by International Dairy Foods Association

Proposal No. 12

    This proposal seeks to amend the Class III and Class IV product 
price formulas by eliminating the 3-cent cost adjustment for cheese 
manufactured in 500-pound barrels contained in the protein price 
formula.
    1. Amend Sec.  1000.50 by revising paragraph (n)(1)(ii), to read as 
follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (n) * * *
    (1) * * *
    (ii) The U.S. average NASS survey price for 500-pound barrel 
cheddar cheese (38 percent moisture) reported by the Department for the 
month;
* * * * *

Proposed by Dairy Farmers of America and Northwest Dairy Association

Proposal No. 13

    This proposal seeks to amend the Class III and Class IV product 
price formulas by removing the barrel cheese price as a cost component 
of the protein price formula.
    1. Amend Sec.  1000.50 by:
    (a) revising paragraph (n) introductory text; and
    (b) removing paragraphs (n)(1), (n)(1)(i) and (n)(1)(ii).
    The revision reads as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (n) The U.S. average NASS survey price for 40-lb. block cheese 
reported by the Department for the month;
* * * * *

Proposed by Agri-Mark Dairy Cooperative

Proposal No. 14

    This proposal seeks to amend the Class III and Class IV product 
price formulas by using a combination of the weekly NASS and CME cheese 
price series to determine the cheese price to be used in the Class III 
and Class IV product price formulas.

Proposed by Dairy Producers of New Mexico

Proposal No. 15

    This proposal seeks to use a combination of the NASS price series 
and the CME price series to determine the price of butter, cheese, 
nonfat dry milk and dry whey to be used in the Class III and Class IV 
product price formulas. In addition, this proposal would direct NASS to 
survey total milk components purchased and their prices during the NASS 
Dairy Product Price Survey.
    1. Amend Sec.  1000.50 by:
    (a) revising the introductory text;
    (b) revising paragraph (l);
    (c) revising paragraph (m);
    (d) revising paragraph (n)(1); and
    (e) revising paragraphs (q) introductory text, (q)(1)(i), 
(q)(2)(ii), and (q)(3).
    The revisions read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

    Class prices per hundredweight of milk containing 3.5 percent 
butterfat, component prices, and advanced pricing factors shall be as 
follows. The prices and pricing factors described in paragraphs (a), 
(b), (c), (e), (f) and (q) of this section shall be based on a simple 
average of the most recent 2 weekly prices announced by the Chicago 
Mercantile Exchange (CME) as reported in Dairy Market News and the 
prices described in paragraph (o) of this section shall be based on a 
weighted average for the preceding month of the weekly prices announced 
by the National Agricultural Statistical Service (NASS) before the 24th 
day of the month. These prices shall be announced on or before the 23rd 
day of the month and shall apply to milk received during the following 
month. The prices described in paragraphs (g) through (n) and (p) of 
this section shall be based on a simple daily average for the preceding 
month of weekly prices announced by the CME as reported in Dairy Market 
News and the prices described in paragraph (o) of this section shall be 
based on a weighted average for the preceding month of the weekly 
prices announced by NASS. These prices shall be announced on or before 
the 5th day of the month and shall apply to milk received during the 
preceding month. The price described in paragraph (d) of this section 
shall be derived from the Class II skim milk price announced on or 
before the 23rd day of the month preceding the month to which it 
applies and the butterfat price announced on or before the 5th day of 
the month following the month to which it applies.
* * * * *
    (l) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be the simply daily average AA Butter 
survey price reported by the CME as reported in Dairy Market News for 
the month less 11.5 cents, with the result multiplied by 1.20.
    (m) Nonfat solids price. The nonfat solids price per pound, rounded 
to the nearest one-hundredth cent, shall be the simply daily average 
nonfat dry milk survey price reported by the CME as reported in Dairy 
Market News for the month less 14 cents and multiplying the result by 
0.99.
    (n) * * *
    (1) Compute a simple daily average of the amounts described in 
paragraphs (n)(1)(i) and (ii) of this section:
    (i) The U.S. average NASS survey price for 40-lb. block cheese 
reported by the CME as reported in Dairy Market News for the month; and
    (ii) The U.S. average NASS survey price for 500-pound barrel 
cheddar

[[Page 6183]]

cheese (38 percent moisture) reported by the CME for the month plus 3 
cents;
* * * * *
    (q) Advanced pricing factors. For the purpose of computing the 
Class I skim milk price, the Class II skim milk price, the Class II 
nonfat solids price and the Class I butterfat price for the following 
month, the following pricing factors shall be computed using the simple 
daily average of the 2 most recent CME average prices for butterfat, 
cheese, and nonfat dry milk as reported in Dairy Market News and the 
NASS weighted average dry whey price from weekly survey prices 
announced before the 24th day of the month:
    (1) * * *
    (i) Following the procedure set forth in paragraphs (n) and (o) of 
this section, but using the simple daily average of the 2 most recent 
weeks' CME prices for cheese and butter and the weighted average of the 
2 most recent average weekly survey prices for dry whey announced 
before the 24th day of the month, compute a protein price and an other 
solids price;
* * * * *
    (2) * * *
    (i) Following the procedure set forth in paragraph (m) of this 
section, but using the simple daily average prices of the 2 most recent 
weeks CME prices as reported in Dairy Market News before the 24th day 
of the month, compute a nonfat solids price; and
* * * * *
    (3) An advanced butterfat price per pound, rounded to the nearest 
one-hundredth cent, shall be calculated by computing a simple daily 
average of the 2 most recent weeks' CME AA Butter prices as reported in 
Dairy Market News announced before the 24th day of the month, 
subtracting 11.5 cents from this average, and multiplying the result by 
1.20.

Proposed by National All-Jersey Inc.

Proposal No. 16

    This proposal would amend the Class III and Class IV product price 
formulas by eliminating the other solids price and adding the 
equivalent value of dry whey to the protein price formula.
    1. Amend Sec.  1000.50 by:
    (a) revising paragraph (i);
    (b) adding new paragraph (n)(4);
    (c) removing paragraph (o);
    (d) revising paragraph (q)(1)(i); and
    (e) removing paragraphs (q)(1)(ii) and (q)(1)(iv).
    The additions and revisions read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (i) Class III skim milk price. The Class III skim milk price per 
hundredweight, rounded to the nearest cent, shall be the protein price 
per pound times 3.1.
* * * * *
    (n) * * *
    (4) Add to the amount computed pursuant to paragraph (n)(3) of this 
section the U.S. average NASS dry whey survey price reported by the 
Department for the month minus 19.56 cents, with the result multiplied 
by 1.96, rounded to the nearest one-hundredth cent.
* * * * *
    (q) * * *
    (1) * * *
    (i) Following the procedure set forth in paragraph (n) of this 
section, but using the weighted average of the 2 most recent NASS U.S. 
average weekly survey prices announced before the 24th day of the 
month, compute a protein price;
* * * * *
    2. Amend Sec.  1000.53 by removing paragraph (a)(10) and 
redesignating paragraph (a)(11) as (a)(10).

Proposed by National Milk Producers Federation

Proposal No. 17

    This proposal seeks to amend the Class III and Class IV product 
price formulas to incorporating a monthly energy cost adjustment based 
on monthly changes in the producer price indices for industrial natural 
gas and industrial electricity as published by the Bureau of Labor 
Statistics.
    1. Amend Sec.  1000.50 by:
    (a) revising paragraph (l);
    (b) revising paragraph (m);
    (c) revising paragraph (n)(2); and
    (d) revising paragraphs (n)(3) introductory text, (n)(3)(i) and 
(o).
    The revisions and additions read as follows:


Sec.  1000.50  Class prices, component prices, and advanced pricing 
factors.

* * * * *
    (l) Butterfat price. The butterfat price per pound, rounded to the 
nearest one-hundredth cent, shall be:
    (1) The U.S. average NASS AA Butter survey price reported by the 
Department for the month,
    (2) Less a manufacturing cost allowance equal to:
    (i) 12.02 cents plus,
    (ii) 0.5 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Natural Gas reported by the Bureau of Labor 
Statistics minus 201.7 and divided by 201.7 plus,
    (iii) 0.9 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Electricity reported by the Bureau of Labor 
Statistics minus 147.2 and divided by 147.2;
    (3) With the result multiplied by 1.20.
    (m) Nonfat solids price. The nonfat solids price per pound, rounded 
to the nearest one-hundredth cent, shall be:
    (1) The U.S. average NASS nonfat dry milk survey price reported by 
the Department for the month,
    (2) Less a manufacturing cost allowance equal to:
    (i) 15.7 cents plus
    (ii) 3.0 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Natural Gas reported by the Bureau of Labor 
Statistics minus 201.7 and divided by 201.7, plus
    (iii) 1.5 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Electricity reported by the Bureau of Labor 
Statistics minus 147.2 and divided by 147.2;
    (3) With the result multiplied by 0.99.
    (n) * * *
    (2) From the price computed pursuant to paragraph (n)(1) of this 
section subtract a manufacturing cost allowance equal to:
    (i) 16.82 cents, plus
    (ii) 0.7 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Natural Gas reported by the Bureau of Labor 
Statistics minus 201.7 and divided by 201.7 plus,
    (iii) 0.8 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Electricity reported by the Bureau of Labor 
Statistics minus 147.2 and divided by 147.2;
    (3) Multiply the amount computed to paragraph (n)(2) of this 
section by 1.383, then an amount computed as follows:
    (i) Subtract the manufacturing cost allowance computed pursuant to 
paragraph (n)(2) of this section from the price computed pursuant to 
paragraph (n)(1) of this section and multiply the result by 1.572;
* * * * *
    (o) Other solids price. The other solids price per pound, rounded 
to the nearest one-hundredth cent, shall be:
    (1) The U.S. average NASS dry whey survey price reported by the 
Department for the month,
    (2) Less a manufacturing cost allowance equal to:
    (i) 19.56 cents plus,
    (ii) 2.3 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Natural Gas reported by the Bureau of Labor 
Statistics minus 201.7 and divided by 201.7 plus,
    (iii) 1.5 cents times a figure equal to the latest monthly Producer 
Price Index for Industrial Electricity reported by the Bureau of Labor 
Statistics minus 147.2 and divided by 147.2;

[[Page 6184]]

    (3) With the result multiplied by 1.03.
* * * * *

Proposed by Maine Dairy Industry Association

Proposal No. 18

    This proposal seeks to incorporate a factor to account for any 
monthly spread between component price calculations for milk and a 
competitive pay price for equivalent Grade A milk.
    The proposal seeks to derive a factor by using an updated version 
of the Department's 1994-1996 simulated analysis of a competitive pay 
price for Grade A milk. The proposal would modify the previously used 
survey to adapt it to regulatory changes, specifically related to 
component pricing. The proposal seeks an outcome whereby a survey of 
plants located in nine States, including California, as performed to 
develop a competitive Grade A price series, would be used to identify a 
spread, if any between the component and competitive values of Grade A 
raw milk. That spread, in whole or in part, would be incorporated into 
Federal order minimum prices.

Proposed by Dairy Programs, Agricultural Marketing Service

Proposal No. 19

    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, United States Department of Agriculture, 
STOP 9200--Room 1031, 1400 Independence Avenue, SW., Washington, DC 
20250-9200, 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: February 5, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 07-570 Filed 2-6-07; 11:54 am]
BILLING CODE 3410-02-P