[Federal Register Volume 75, Number 78 (Friday, April 23, 2010)]
[Rules and Regulations]
[Pages 21157-21161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9402]



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  Federal Register / Vol. 75, No. 78 / Friday, April 23, 2010 / Rules 
and Regulations  

[[Page 21157]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

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

[Doc. No. AMS-DA-09-0007; AO-14-A78, et al.; DA-09-02]


Milk in the Northeast and Other Marketing Areas; Order Amending 
the Orders

AGENCY: Agricultural Marketing Service, USDA

ACTION: Final rule.

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

SUMMARY: This final rule amends the producer-handler definitions of all 
Federal milk marketing orders to limit exemption from pooling and 
pricing provisions to those with total route disposition and sales of 
packaged fluid milk products to other plants of 3 million pounds or 
less per month. The exempt plant definition will continue to limit 
disposition of Class I milk products to 150,000 pounds or less per 
month. A referendum was held and the required number of producers 
approved the issuance of the orders as amended.

DATES: Effective Date: June 1, 2010.

FOR FURTHER INFORMATION CONTACT: Gino M. Tosi or Jack Rower, Senior 
Marketing Specialists, 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 addresses: 
[email protected] and [email protected].

SUPPLEMENTARY INFORMATION: This final rule amends the producer-handler 
provisions of all Federal milk marketing orders to limit exemption from 
pooling and pricing to those with total route disposition and packaged 
sales of fluid milk products to other plants of 3 million pounds or 
less per month. The exempt plant definition will continue to limit 
disposition of Class I milk products to 150,000 pounds or less per 
month.
    Accordingly, this final rule adopts proposed amendments detailed in 
the final decision (75 FR 10122).
    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. This rule is not intended to have a retroactive 
effect.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674) (AMAA), provides that administrative proceedings must 
be exhausted before parties may file suit in court. Under section 
608c(15)(A) of the AMAA, any handler subject to an order may request 
modification or exemption from such order by filing with the Department 
of Agriculture (USDA) 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, USDA would rule on the 
petition. The AMAA 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 
USDA'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-
612), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
rule would not have a significant economic impact on a substantial 
number of small entities. For the purposes 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 farms. 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 dairy farms that process their own milk 
production. These entities must operate one or more dairy farms as a 
pre-condition to operating processing plants as producer-handlers. The 
size of the dairy farm(s) determines the production level of the 
operation and is a 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 is therefore dependent on the capacity of its dairy 
farm(s), where a producer-handler with annual gross revenue in excess 
of $750,000 is considered a large business.
    The amendments to the producer-handler provisions will obligate 
some large producer-handlers under the Federal milk marketing order 
system to the same terms as other fully regulated handlers of their 
respective orders provided they meet the criteria for qualification as 
fully regulated plants. Entities currently defined as producer-handlers 
under the terms of their order will be subject to the pooling and 
pricing provisions of the order if their total route disposition of 
fluid milk products and sales of packaged fluid milk products to other 
plants exceeds 3 million pounds per month.
    Producer-handlers with total route disposition and sales of 
packaged fluid milk products to other plants of 3 million pounds or 
less during the month will not be subject to the pooling and pricing 
provisions of any order as a result of this rulemaking. To the extent 
that current producer-handlers have route disposition of fluid milk 
products and sales of packaged fluid milk products to other plants 
outside of the order's marketing areas, such route disposition and 
sales to other plants will be subject to the pooling and pricing 
provisions of the orders if total

[[Page 21158]]

route disposition and sales to other plants cause them to become fully 
regulated.
    If current producer-handlers have total route disposition and 
packaged sales of fluid milk products of more than 3 million pounds 
during a month, such producer-handlers will be regulated under the 
pooling and pricing provisions of the orders like other fully regulated 
handlers. Such large producer-handlers will account to the pool for 
their uses of milk at the applicable minimum class prices and pay the 
difference between their use-value of milk and the blend price of the 
order to that order's producer-settlement fund.
    While this may cause an economic impact on those entities with more 
than three million pounds of route sales and sales to other plants that 
are currently considered producer-handlers under the Federal order 
system, the impact is offset by the benefit to other small businesses. 
With respect to dairy farms whose milk is pooled on Federal marketing 
orders, such dairy farms who have not heretofore shared in the 
additional revenue that accrues from the marketwide pooling of Class I 
sales by producer-handlers will share in such revenue. All producer-
handlers who dispose of more than three million pounds of fluid milk 
products per month will account to all market participants at the 
announced Federal order Class I price for such use.
    To the extent that some large producer-handlers become subject to 
the pooling and pricing provisions of Federal milk marketing orders, 
such will be determined by their capacity as handlers. Such entities 
will no longer face the restrictions necessary to maintain producer-
handler status and the resulting exemption from the pooling and pricing 
provisions of the orders. In general, this includes being able to buy 
or acquire any quantity of milk from dairy farmers or other handlers 
instead of being limited by the current constraints of the orders. 
Additionally, the burden of balancing their milk production is 
relieved. Milk production in excess of what is needed to satisfy their 
Class I route disposition and sales to other plants may receive the 
minimum price protection established under the terms of the Federal 
milk marketing orders. The burden of balancing milk supplies will be 
borne by all producers and handlers under the terms of the orders.
    During May 2009, the month in which the public hearing was held, 
the Northeast order had 57 pool distributing plants, 10 pool supply 
plants, 16 partially regulated distributing plants, 13 producer-handler 
plants and 40 exempt plants. Of the 83 regulated plants, 49 plants or 
59 percent were considered large businesses. Of the 13,050 dairy 
farmers whose milk was pooled on the order, 628 farms or 5 percent were 
considered large businesses and 12,422 farms or 95 percent of dairy 
farms in the Northeast order were considered small businesses. Most of 
these dairy farms, large and small, could benefit by receiving a higher 
blend price, if the monthly limit of 3 million pounds of total Class I 
route disposition and sales of packaged fluid milk to other plants is 
adopted for producer-handlers.
    During May 2009, the Appalachian order had 21 pool distributing 
plants, 1 pool supply plant, 2 partially regulated distributing plants, 
1 producer-handler plant and 4 exempt plants. Of the 24 regulated 
plants, 21 plants or 88 percent were considered large businesses. Of 
the 2,516 dairy farmers whose milk was pooled on the order, 159 farms 
or 6 percent were considered large businesses and 2,357 farms or 94 
percent of dairy farms in the Appalachian order were considered small 
businesses. Most of these dairy farms, large and small, could benefit 
by receiving a higher blend price, if the monthly limit of 3 million 
pounds of total Class I route disposition and sales of packaged fluid 
milk to other plants is adopted for producer-handlers.
    During May 2009, the Florida order had 11 pool distributing plants, 
5 partially regulated distributing plants and 2 exempt plants. The 
order had no pool supply plants or producer-handler plants as of May 
2009. Of the 16 regulated plants, 12 plants or 75 percent were 
considered large businesses. Of the 249 dairy farmers whose milk was 
pooled on the order, 105 farms or 42 percent were considered large 
businesses and 144 farms or 58 percent of dairy farms in the Florida 
order were considered small businesses. Most of these dairy farms, 
large and small, could benefit by receiving a higher blend price, if 
the monthly limit of 3 million pounds of total Class I route 
disposition and sales of packaged fluid milk to other plants is adopted 
for producer-handlers.
    During May 2009, the Southeast order had 22 pool distributing 
plants, 3 pool supply plants, 6 partially regulated distributing plants 
and 12 exempt plants. The order had no producer-handler plants as of 
May 2009. Of the 31 regulated plants, 28 plants or 90 percent were 
considered large businesses. Of the 2,992 dairy farmers whose milk was 
pooled on the order, 187 farms or 6 percent were considered large 
businesses and 2,805 farms or 94 percent of dairy farms in the 
Southeast order were considered small businesses. Most of these dairy 
farms, large and small, could benefit by receiving a higher blend 
price, if the monthly limit of 3 million pounds of total Class I route 
disposition and sales of packaged fluid milk to other plants is adopted 
for producer-handlers.
    During May 2009, the Upper Midwest order had 24 pool distributing 
plants, 53 pool supply plants, 2 partially regulated distributing 
plants, 5 producer-handler plants and 11 exempt plants. Of the 79 
regulated plants, 37 plants or 47 percent were considered large 
businesses. Of the 15,336 dairy farmers whose milk was pooled on the 
order, 1,001 farms or 7 percent were considered large businesses and 
14,335 farms or 93 percent of dairy farms in the Upper Midwest order 
were considered small businesses. Most of these dairy farms, large and 
small, could benefit by receiving a higher blend price, if the monthly 
limit of 3 million pounds of total Class I route disposition and sales 
of packaged fluid milk to other plants is adopted for producer-
handlers.
    During May 2009, the Central order had 30 pool distributing plants, 
12 pool supply plants, 1 partially regulated distributing plant, 7 
producer-handler plants and 19 exempt plants. Of the 43 regulated 
plants, 35 plants or 81 percent were considered large businesses. Of 
the 3,600 dairy farmers whose milk was pooled on the order, 413 farms 
or 11 percent were considered large businesses and 3,187 farms or 89 
percent of dairy farms in the Central order were considered small 
businesses. Most of these dairy farms, large and small, could benefit 
by receiving a higher blend price, if the monthly limit of 3 million 
pounds of total Class I route disposition and sales of packaged fluid 
milk to other plants is adopted for producer-handlers.
    During May 2009, the Mideast order had 22 pool distributing plants, 
2 pool supply plants, 4 partially regulated distributing plants, 1 
producer-handler plant and 17 exempt plants. Of the 28 regulated 
plants, 8 plants or 29 percent were considered large businesses. Of the 
7,238 dairy farmers whose milk was pooled on the order, 504 farms or 7 
percent were considered large businesses and 6,734 farms or 93 percent 
of dairy farms in the Mideast order were considered small businesses. 
Most of these dairy farms, large and small, could benefit by receiving 
a higher blend price, if the monthly limit of 3 million pounds of total 
Class I route disposition and sales of packaged fluid milk to other 
plants is adopted for producer-handlers.

[[Page 21159]]

    During May 2009, the Pacific Northwest order had 15 pool 
distributing plants, 8 pool supply plants, 13 partially regulated 
distributing plants, 5 producer-handler plants and 2 exempt plants. Of 
the 36 regulated plants, 20 plants or 56 percent were considered large 
business. Of the 657 dairy farmers whose milk was pooled on the order, 
326 farms or 50 percent were considered large businesses. Because the 
Pacific Northwest order already fully regulates producer-handlers with 
monthly route distribution in excess of three million pounds per month, 
the action will have a minimal effect on small farmers whose milk is 
pooled on the order.
    During May 2009, the Southwest order had 19 pool distributing 
plants, 2 pool supply plants, 1 partially regulated distributing plant, 
5 producer-handler plants and 2 exempt plants. Of the 79 regulated 
plants, 19 plants or 86 percent were considered large businesses. Of 
the 588 dairy farmers whose milk was pooled on the order, 318 farms or 
54 percent were considered large businesses and 270 farms or 46 percent 
of dairy farms in the Southeast order were considered small businesses. 
Most of these dairy farms, large and small, could benefit by receiving 
a higher blend price, if the monthly limit of 3 million pounds of total 
Class I route disposition and sales of packaged fluid milk to other 
plants is adopted for producer-handlers.
    During May 2009, the Arizona order had 5 pool distributing plants, 
1 pool supply plant, 15 partially regulated distributing plants and 1 
exempt plant. The order had no producer-handler plants as of May 2009. 
Of the 21 regulated plants, 13 plants or 62 percent were considered 
large businesses. Of the 100 dairy farmers whose milk was pooled on the 
order, 95 farms or 95 percent were considered large businesses. Because 
the Arizona order already fully regulates producer-handlers with 
monthly route distribution in excess of 3 million pounds, the action 
will have a minimal effect on small farmers whose milk is pooled on the 
order.
    As of May 2009, in their capacity as producers, 15 producer-
handlers would be considered large producers as their annual marketings 
exceed 6 million pounds of milk (500,000 pounds per month). During the 
same month, 22 producer-handlers would be considered small producers. 
Record evidence indicates that as of March 2009, seven large producer-
handlers had total route sales of two million pounds or more per month. 
Therefore, seven or fewer large producer-handlers could potentially 
become subject to the pooling and pricing provisions of Federal milk 
marketing orders because of route disposition of more than three 
million pounds per month.
    This final rule amends the producer-handler provisions of all 
Federal milk marketing orders to limit exemption from pooling and 
pricing to those with total route disposition and packaged sales of 
fluid milk products to other plants of 3 million pounds or less per 
month. The exempt plant definition continues to limit disposition of 
Class I milk products to 150,000 pounds or less per month. Based on the 
above analysis, USDA has concluded that the amendments will not have a 
negative impact on small entities and may in fact benefit small and 
large dairy producers.
    The Agricultural Marketing Service (AMS) is committed to complying 
with the E-Government Act, to promote the use of the Internet and other 
information technologies to provide increased opportunities for citizen 
access to Government information and services, and for other purposes.
    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 minimal impact on 
reporting, recordkeeping, or other compliance requirements for entities 
currently considered producer-handlers under Federal milk marketing 
orders because they would remain identical to the current requirements 
applicable to all other regulated handlers who are subject to the 
pooling and pricing provisions. No new forms are proposed and no 
additional reporting requirements would be necessary.
    This notice does not require additional information collection that 
needs 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 that 
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 April 3, 2009; published April 9, 2009 
(74 FR 16296).
    Recommended Decision: Issued October 15, 2009; published October 
21, 2009 (74 FR 54383).
    Final Decision: Issued February 18, 2010; published March 4, 2010 
(75 FR 10122).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the 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 
Northeast and other marketing orders:

(a) Findings Upon the Basis of the Hearing Record

    A public hearing was held with regard to certain 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 was held pursuant to the provisions of the AMAA and 
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, it is found that:
    (1) The said orders as hereby amended, and all of the terms and 
conditions thereof, will tend to effectuate the declared policy of the 
AMAA;
    (2) The parity prices of milk, as determined pursuant to section 2 
of the AMAA, 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 aforesaid marketing areas. The 
minimum prices specified in the orders as hereby 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;
    (3) The said orders, as hereby amended, regulate the handling of 
milk in the same manner as, and are applicable only to persons in the 
respective classes of industrial or commercial activity specified in, 
the marketing agreements upon which a hearing has been held; and
    (4) All milk and milk products handled by handlers, as defined in 
the tentative marketing agreements and the orders as hereby amended, 
are in the current of interstate commerce or directly burden, obstruct, 
or affect interstate commerce in milk or its products.

[[Page 21160]]

(b) Additional Findings

    The amendments to these orders are known to handlers. The final 
decision containing the proposed amendments to this order was issued on 
February 18, 2010 and published in the Federal Register on March 4, 
2010 (75 FR 10122).
    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 amendments 
effective following June 1, 2010. (Section 553(d), Administrative 
Procedures Act, 5 U.S.C. 551-559.)

(c) Determinations

    It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in section 8c(9) of the AMAA) 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 AMAA;
    (2) The issuance of this order amending the Northeast and other 
orders is the only practical means pursuant to the declared policy of 
the AMAA of advancing the interests of producers as defined in the 
orders as hereby amended; and
    (3) The issuance of this order amending the Northeast and other 
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 1001, 1005, 1006, 1007, 1030, 1032, 
1033, 1124, 1126, and 1131

    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 Northeast and other marketing areas shall 
be in conformity to and in compliance with the terms and conditions of 
the orders, as amended, and as hereby amended, as follows:
0
For reasons set forth in the preamble, 7 CFR parts 1001, 1005, 1006, 
1007, 1030, 1032, 1033, 1124, 1126, and 1131 are amended as follows:
0
1. The authority citation for 7 CFR parts 1001, 1005, 1006, 1007, 1030, 
1032, 1033, 1124, 1126, and 1131 continues to read as follows:

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

PART 1001--MILK IN THE NORTHEAST MARKETING AREA

0
2. Amend Sec.  1001.10 by revising paragraph (a) to read as follows:


Sec.  1001.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1005--MILK IN THE APPALACHIAN MARKETING AREA

0
3. Amend Sec.  1005.10 by revising paragraph (a) to read as follows:


Sec.  1005.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1006--MILK IN THE FLORIDA MARKETING AREA

0
4. Amend Sec.  1006.10 by revising paragraph (a) to read as follows:


Sec.  1006.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA

0
5. Amend Sec.  1007.10 by revising paragraph (a) to read as follows:


Sec.  1007.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1030--MILK IN THE UPPER MIDWEST MARKETING AREA

0
6. Amend Sec.  1030.10 by revising paragraph (a) to read as follows:


Sec.  1030.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1032--MILK IN THE CENTRAL MARKETING AREA

0
7. Amend Sec.  1032.10 by revising paragraph (a) to read as follows:


Sec.  1032.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1033--MILK IN THE MIDEAST MARKETING AREA

0
8. Amend Sec.  1033.10 by revising paragraph (a) to read as follows:


Sec.  1033.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA

0
9. Revise Sec.  1124.10 introductory text to read as follows:


Sec.  1124.10  Producer-handler.

    Producer-handler means a person who operates a dairy farm and a 
distributing plant from which there is route disposition in the 
marketing area, from which total route disposition and

[[Page 21161]]

packaged sales of fluid milk products to other plants during the month 
does not exceed 3 million pounds, and who the market administrator has 
designated a producer-handler after determining that all of the 
requirements of this section have been met.
* * * * *

PART 1126--MILK IN THE SOUTHWEST MARKETING AREA

0
10. Amend Sec.  1126.10 by revising paragraph (a) to read as follows:


Sec.  1126.10  Producer-handler.

* * * * *
    (a) Operates a dairy farm and a distributing plant from which there 
is route disposition in the marketing area, and from which total route 
disposition and packaged sales of fluid milk products to other plants 
during the month does not exceed 3 million pounds;
* * * * *

PART 1131--MILK IN THE ARIZONA MARKETING AREA

0
11. Revise Sec.  1131.10 introductory text to read as follows:


Sec.  1131.10  Producer-handler.

    Producer-handler means a person who operates a dairy farm and a 
distributing plant from which there is route disposition in the 
marketing area, from which total route disposition and packaged sales 
of fluid milk products to other plants during the month does not exceed 
3 million pounds, and who the market administrator has designated a 
producer-handler after determining that all of the requirements of this 
section have been met.
* * * * *

    Dated: April 19, 2010.
David R. Shipman,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2010-9402 Filed 4-22-10; 8:45 am]
BILLING CODE P