[Federal Register Volume 74, Number 48 (Friday, March 13, 2009)]
[Proposed Rules]
[Pages 10842-10843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5414]


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 Proposed Rules
                                                 Federal Register
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 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. 74, No. 48 / Friday, March 13, 2009 / 
Proposed Rules  

[[Page 10842]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005 and 1007

[Doc. Nos. AMS-DA-07-0133; AO-388-A15; AO-366-A44; DA-03-11-B]


Milk in the Appalachian and Southeast Marketing Areas; Order To 
Terminate Proceeding on Proposed Amendments to Marketing Agreements and 
Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Termination of proceeding.

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SUMMARY: This action terminates a rulemaking proceeding on two proposed 
amendments that sought to amend the producer-handler provisions of the 
Appalachian and Southeast milk marketing orders. Other proposed 
amendments considered as part of the rulemaking proceeding were 
addressed in previously issued decisions.

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

SUPPLEMENTARY INFORMATION: This administrative action is governed by 
the provisions of Sections 556 and 557 of Title 5 of the United States 
Code and, therefore, is excluded from the requirements of Executive 
Order 12866.
    This action terminates the rulemaking proceeding concerning 
proposed amendments to the producer-handler provisions of the 
Appalachian and Southeast orders. The proposals were considered at a 
public hearing held February 23-26, 2004. Other proposed amendments 
considered at the public hearing were addressed in a partial 
recommended decision issued May 13, 2005, and published May 20, 2005 
(70 FR 29410), and a partial final decision issued September 15, 2005, 
and published September 21, 2005 (70 FR 55458). A partial final rule 
was published October 12, 2005 (70 FR 59221), making the amendments 
adopted in these decisions effective November 1, 2005.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
rule will not have a significant economic impact on a substantial 
number of small entities. For the purpose of the Regulatory Flexibility 
Act, a dairy farm is considered a small business if it has an annual 
gross revenue of less than $750,000, and a dairy products manufacturer 
is a small business if it has fewer than 500 employees.
    For the purposes of determining which dairy farms are small 
businesses, the $750,000 per year criterion was used to establish a 
production guideline of 500,000 pounds per month. Although this 
guideline does not factor in additional monies that may be received by 
dairy producers, it should be an inclusive standard for most small 
dairy farmers. For purposes of determining a handler's size, if the 
plant is part of a larger company operating multiple plants that 
collectively exceed the 500-employee limit, the plant will be 
considered a large business even if the local plant has fewer than 500 
employees.
    Producer-handlers are defined as dairy farmers that process only 
their own milk production. These entities must be dairy farmers as a 
pre-condition to operating processing plants as producer-handlers. The 
size of the dairy farm determines the production level of the operation 
and is the controlling factor in the capacity of the processing plant 
and possible sales volume associated with the producer-handler entity. 
Determining whether a producer-handler is considered a small or large 
business must depend on its capacity as a dairy farm where a producer-
handler with annual gross revenue in excess of $750,000 is considered a 
large business.
    During February 2004, the month the hearing was held, the milk of 
7,311 dairy farmers was pooled on the Appalachian (Order 5) and 
Southeast (Order 7) milk orders (3,395 Order 5 dairy farmers and 3,916 
Order 7 dairy farmers). Of the total, 3,252 dairy farmers (or 96 
percent) and 3,764 dairy farmers (or 96 percent) were considered small 
businesses on the Appalachian and Southeast orders, respectively.
    During February 2004, there were a total of 36 plants associated 
with the Appalachian order (25 fully regulated plants, 7 partially 
regulated plants, 1 producer-handler, and 3 exempt plants) and a total 
of 51 plants associated with the Southeast order (32 fully regulated 
plants, 6 partially regulated plants, and 13 exempt plants). The number 
of plants meeting the small business criteria under the Appalachian and 
Southeast orders were 13 (or 36 percent) and 13 (or 25 percent), 
respectively.
    Two proposals that would amend the producer-handler provisions of 
the Appalachian and Southeast orders were considered at the public 
hearing. A proposal published in the hearing notice as Proposal 7 
sought to apply the pooling and pricing provisions of the Southeast or 
Appalachian orders to producer-handlers with more than 3 million pounds 
of fluid route disposition during the month. A dairy farmer who is a 
producer-handler with fluid route disposition above the proposed 3-
million pounds per month threshold would be considered a ``large'' 
business.
    A second proposal published in the hearing notice as Proposal 8 
sought to allow producer-handlers to purchase a limited amount of 
supplemental milk without losing their status as producer-handlers. As 
proposed, a producer-handler would be allowed to purchase up to 10 
percent of the producer's monthly milk production during the months of 
December through May, and 30 percent during the months of June through 
November from other sources.
    Because this action terminates the rulemaking proceeding without 
amending the existing rules applicable to producer-handlers in the 
Appalachian and Southeast orders, the economic conditions of small 
entities remain unchanged. This action does not change reporting, 
record keeping, or other compliance requirements.
    Prior documents in this proceeding:
    Notice of Hearing: Issued January 16, 2004; published January 23, 
2004 (69 FR 3278).
    Partial Recommended Decision: Issued May 13, 2005; published May 
20, 2005 (70 FR 29410).

[[Page 10843]]

    Partial Final Decision: Issued September 15, 2005; published 
September 21, 2005 (70 FR 55458).
    Partial Final Rule: Issued October 7, 2005; published October 12, 
2005 (70 FR 59221).

Preliminary Statement

    A public hearing was held upon proposed amendments to the marketing 
agreements and orders regulating the handling of milk in the 
Appalachian and Southeast marketing areas. The hearing was held, 
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), at Atlanta, Georgia, 
on February 23-26, 2004, pursuant to a notice of hearing issued January 
16, 2004, and published in the Federal Register on January 20, 2004 (69 
FR 3278).

Producer-Handler Provisions

    This action terminates the rulemaking proceeding concerning 
proposed amendments to the producer-handler provisions of the 
Appalachian and Southeast orders. A proposal published in the hearing 
notice as Proposal 7 sought to apply the Appalachian and Southeast 
orders' pooling and pricing provisions to producer-handlers with fluid 
route disposition in excess of 3 million pounds per month. A second 
proposal, published in the hearing notice as Proposal 8, sought to 
allow producer-handlers to purchase up to 10 percent of the producer's 
monthly milk production during December through May and 30 percent 
during June through November from other sources.
    The Appalachian and the Southeast milk orders provide identical 
definitions that describe and define a category of handlers known as 
producer-handlers. Both orders require producer-handlers to operate 
their businesses at their own enterprise and risk, meaning that the 
care and management of the dairy animals and other resources necessary 
for the production, processing, and distribution of fluid milk products 
are the sole responsibility of the handler.
    The Appalachian and Southeast orders prohibit producer-handlers 
from purchasing any amount of supplemental milk from pool sources or 
from any other source. Producer-handlers bear the entire burden of 
balancing their own milk production. Any fluctuation in a producer-
handler's daily and seasonal milk needs must be met through their own 
farm production and any excess milk supplies must be disposed of at 
their own expense.
    Producer-handlers are exempt from the pooling and pricing 
provisions of the Appalachian and Southeast orders. Exemption from the 
pooling and pricing provisions of the orders means that the minimum 
class prices established under the orders that handlers must pay for 
milk are not applicable to producer-handlers, and producer-handlers 
receive no minimum price protection for their milk production not 
disposed of for fluid uses.
    While producer-handlers are exempt from the pooling and pricing 
provisions of the Appalachian and Southeast orders, they are required 
to submit reports to the Market Administrator who monitors producer-
handler operations to ensure that they are in compliance with the 
conditions for such exemption status.
    The Secretary is in the process of receiving proposals to initiate 
a new rulemaking proceeding to consider the elimination of the 
producer-handler provision in all Federal milk marketing orders. Two 
such proposals have been received and the Secretary has invited the 
submission of additional proposals. Such proposals must be received by 
Dairy Programs by March 16, 2009. (See Dairy Programs Web site at 
http://www.ams.usda.gov/dairy.)
    Given this development and the substance of the two proposals 
considered herein, the review of the producer-handler exemption under 
all Federal milk marketing orders would be a more comprehensive review. 
Therefore, the Secretary has determined that this rulemaking proceeding 
should be terminated.

Termination of Proceeding

    In view of the foregoing, it is hereby determined that the 
proceeding with respect to proposed amendments to the Appalachian and 
Southeast orders regarding the regulation of producer-handlers should 
be and is hereby terminated.

List of Subjects in 7 CFR Parts 1005 and 1007

    Milk marketing orders.

    The authority citation for 7 CFR Parts 1005 and 1007 continues to 
read as follows:

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

    Dated: March 9, 2009.
Robert C. Keeney,
Acting Associate Administrator.
[FR Doc. E9-5414 Filed 3-12-09; 8:45 am]
BILLING CODE 3410-02-P