[Federal Register Volume 79, Number 85 (Friday, May 2, 2014)]
[Rules and Regulations]
[Pages 25003-25006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10031]



[[Page 25003]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005 and 1007

[Doc. No. AMS-DA-09-0001; AO-388-A17 and AO-366-A46; DA-05-06-A]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the transportation credit balancing 
fund provisions and pooling provisions of the Appalachian and Southeast 
orders. More than the required number of producers for the Appalachian 
and Southeast marketing areas approved the issuance of the orders as 
amended.

DATES: Effective Date: May 5, 2013.

FOR FURTHER INFORMATION CONTACT: William G. Francis, Order Formulation 
and Enforcement Branch, USDA/AMS/Dairy Programs, STOP 0231--Room 2971, 
1400 Independence Avenue SW., Washington, DC 20250-0231, (202) 720-
7183, email: [email protected].

SUPPLEMENTARY INFORMATION: This final rule amends the transportation 
credit balancing fund provisions and pooling provisions of the 
Appalachian and Southeast orders. The transportation credit assessment 
rate for the Southeast order, adopted on an interim basis in this 
proceeding (71 FR 62377) was subsequently increased in a separate 
proceeding (73 FR 14153).\1\ Accordingly, increases to the Southeast 
order transportation credit assessment rate considered in this 
proceeding are no longer addressed.
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    \1\ Official Notice is taken of the subsequent proceeding (73 FR 
14153).
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    Specifically, this decision adopts provisions that:
    (1) Establish a variable transportation credit mileage rate factor 
which uses a fuel cost adjustor in both orders;
    (2) Increase the Appalachian order's maximum transportation credit 
assessment rate to $0.15 per hundredweight (cwt); and
    (3) Establish a zero diversion limit standard on loads of milk 
requesting transportation credits.

Executive Orders 12866 and 13563

    This administrative rule is governed by the provisions of sections 
556 and 557 of Title 5 of the United States Code and, therefore, is 
excluded from the requirements of Executive Orders 12866 and 13563.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. The Agricultural Marketing Agreement Act of 1937, as amended 
(Act) (7 U.S.C. 601-674), provides that administrative proceedings must 
be exhausted before parties may file suit in court. Under section 
608c(15)(A) of the Act, any handler subject to an order may request 
modification or exemption from such order by filing with the Department 
of Agriculture (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 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 
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.

Executive Order 13175

    This rule has been reviewed in accordance with Executive Order 
13175, Consultation and Coordination with Indian Tribal Governments. 
The review reveals that this rule will not have substantial and direct 
effects on Tribal Governments and will not have significant Tribal 
implications.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Agricultural Marketing Service (AMS) 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 
marketing guideline of 500,000 pounds per month. Although this 
guideline does not factor in additional monies that may be received by 
dairy producers, it should be an inclusive standard for most ``small'' 
dairy farmers. For purposes of determining a handler's size, if the 
plant is part of a larger company operating multiple plants that 
collectively exceed the 500-employee limit, the handler will be 
considered a large business even if the local plant has fewer than 500 
employees.
    During January 2006, the time of the hearing, there were 3,055 
dairy farms pooled on the Appalachian order (Order 5) and 3,367 dairy 
farms pooled on the Southeast order (Order 7). Of these, 2,889 dairy 
farms (95 percent) in Order 5 and 3,218 dairy farms (96 percent) in 
Order 7 were considered small businesses.
    During January 2006, the time of the hearing, there were a total of 
37 handlers operating plants associated with the Appalachian order (22 
fully regulated plants, 11 partially regulated plants, 2 producer-
handlers and 2 exempt plants). A total of 52 plants were associated 
with the Southeast order (31 fully regulated plants, 9 partially 
regulated plants and 12 exempt plants). The number of plants meeting 
the small business criteria under the Appalachian and Southeast orders 
were 9 (24 percent) and 18 (35 percent), respectively.
    The amendments adopted in this rule revise the transportation 
credit provisions of the Appalachian and Southeast orders. The 
Appalachian and Southeast orders contain provisions for a 
transportation credit balancing fund. To partially offset the costs of 
transporting supplemental milk into each marketing area to meet fluid 
milk demand at distributing plants during the months of July through 
December, handlers are charged an assessment year-round to generate 
revenue used to make payments to qualified handlers.
    The adopted amendments establish a variable mileage rate factor 
that will be adjusted monthly by changes in the price of diesel fuel (a 
fuel cost adjustor) as reported by the Department of Energy for paying 
claims from the transportation credit balancing funds of the 
Appalachian and Southeast orders. Prior to their interim adoption, the 
mileage rate of both orders was fixed at $0.35 per cwt per mile.
    The adopted amendments increase the transportation credit 
assessment rate for the Appalachian order. Specifically, the maximum 
assessment rate for the Appalachian order is increased to $0.15 per 
cwt. The transportation credit assessment rate for the Southeast order 
is increased by actions taken in a separate rulemaking (73 FR 14153). 
The higher assessment rate is intended to minimize the proration and 
depletion of

[[Page 25004]]

the order's transportation credit balancing fund during those months 
when supplemental milk is needed. The higher assessment rate for the 
Appalachian order adopted in this decision is necessary due to expected 
higher mileage reimbursement rates arising from escalating fuel costs, 
the transporting of milk over longer distances and the expected 
continuing need to rely on supplemental milk supplies arising from 
declining local milk production in the marketing areas.
    The transportation credit assessment rate for the Southeast order 
was increased from $0.10 per cwt to $0.20 per cwt on an interim basis 
(71 FR 62377). Subsequent to this increase, a separate rulemaking 
affecting the Southeast order proposed an additional increase in the 
assessment rate to $0.30 per cwt. A final decision (79 FR 12985), 
published March 7, 2014, describes the record evidence supporting a 
$0.30 per cwt transportation credit assessment rate. The $0.30 per cwt 
assessment rate was adopted on an interim basis (73 FR 14153) effective 
March 18, 2008. Since these separate decisions address the higher 
assessment rate, there is no further consideration to this issue in 
this proceeding.
    The adopted amendments also amend the Producer milk provisions of 
the Appalachian and Southeast orders by eliminating the pooling of 
diverted milk associated with supplemental milk receiving a 
transportation credit payment. Prior to amendments adopted on an 
interim basis, the Appalachian and Southeast orders provided 
transportation credits on supplemental shipments of milk for Class I 
use provided the milk was from dairy farmers who are not defined as a 
``producer'' under the orders. A producer under the order is defined as 
a dairy farmer who: (1) During the immediately preceding months of 
March through May and not more than 50 percent of the milk production 
of the dairy farmer, in aggregate, is received as producer milk by 
either order during those 3 months; and (2) produced milk on a farm not 
located within the specified marketing areas of either order. The 
provisions of each order provide the market administrator the 
discretionary authority to adjust the 50 percent milk production 
standard to assure orderly marketing and efficient handling of milk in 
the marketing areas.
    Adoption of the amendments will be applied to all Appalachian and 
Southeast order handlers and producers, which consist of both large and 
small businesses. The adopted amendments will affect all producers and 
handlers equally regardless of their size. Accordingly, 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.

E-Government Act

    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 increase opportunities for citizen 
access to Government information and services, and for other purposes.

Prior Documents in This Proceeding

    Notice of Hearing: Issued December 22, 2005; published December 28, 
2005 (70 FR 76718).
    Tentative Partial Decision: Issued September 1, 2006; published 
September 13, 2006 (71 FR 54118).
    Interim Final Rule: Issued October 19, 2006; published October 25, 
2006 (71 FR 62377).
    Final Partial Decision: Issued February 25, 2014; published March 
7, 2014 (79 FR 12985).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the Appalachian and Southeast orders were 
first issued and when they were amended. The previous findings and 
determinations are hereby ratified and confirmed, except where they may 
conflict with those set forth herein.
    The following findings are hereby made with respect to the 
Appalachian and Southeast orders:
    (a) Findings upon the basis of the hearing record. Pursuant to the 
provisions of the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), and the applicable rules of practice and 
procedure governing the formulation of marketing agreements and 
marketing orders (7 CFR part 900), a public hearing was held in regard 
to certain proposed amendments to the tentative marketing agreement and 
to the order regulating the handling of milk in the Appalachian and 
Southeast marketing areas.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof it is found that:
    (1) The Appalachian and Southeast orders, 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 feed, available 
supplies of feed, and other economic conditions which affect market 
supply and demand for milk in the marketing area, and 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; and
    (3) The Appalachian and Southeast orders, as hereby amended, 
regulate the handling of milk in the same manner as, and is applicable 
only to persons in the respective classes of industrial and commercial 
activity specified in, a marketing agreement upon which a hearing has 
been held.
    The amendments to these orders are known to handlers. A final 
partial decision containing the proposed amendments to these orders was 
issued on February 25, 2014. An interim final rule adopting these 
transportation credit balancing fund and diversion limit standards on 
an interim basis was issued on October 19, 2006, and published on 
October 25, 2006 (71 FR 62377).
    Accordingly, 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 May 5, 2014. It would be contrary to the public interest to 
delay the effective date of these amendments for 30 days after their 
publication in the Federal Register. (Sec. 553(d), Administrative 
Procedure 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 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 the order amending the Appalachian and 
Southeast orders is the only practical means pursuant to the declared 
policy of the Act of advancing the interests of producers as defined in 
the order as hereby amended;

[[Page 25005]]

    (3) The issuance of the order amending the Appalachian and 
Southeast orders is favored by at least two-thirds of the producers who 
were engaged in the production of milk for sale in the marketing area.

List of Subjects in 7 CFR Parts 1005 and 1007

    Milk marketing orders.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, the handling of milk in the Southeast and Appalachian 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
1. The authority citation for 7 CFR parts 1005 and 1007 continues to 
read as follows:

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

PART 1005--MILK IN THE APPALACHIAN MARKETING AREA

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


Sec.  1005.13  Producer milk.

* * * * *
    (d) * * *
    (3) The total quantity of milk so diverted during the month by a 
cooperative association shall not exceed 25 percent during the months 
of July through November, January, and February, and 35 percent during 
the months of December and March through June, of the producer milk 
that the cooperative association caused to be delivered to, and 
physically received at, pool plants during the month, excluding the 
total pounds of bulk milk received directly from producers meeting the 
conditions as described in Sec.  1005.82(c)(2)(ii) and (iii), and for 
which a transportation credit is requested;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 25 percent during the months of July 
through November, January, and February, and 35 percent during the 
months of December and March through June, of the producer milk 
physically received at such plant (or such unit of plants in the case 
of plants that pool as a unit pursuant to Sec.  1005.7(e)) during the 
month, excluding the quantity of producer milk received from a handler 
described in Sec.  1000.9(c) of this chapter and excluding the total 
pounds of bulk milk received directly from producers meeting the 
conditions as described in Sec.  1005.82(c)(2)(ii) and (iii), and for 
which a transportation credit is requested;
* * * * *

0
3. Section 1005.81 is revised to read as follows:


Sec.  1005.81  Payments to the transportation credit balancing fund.

    (a) On or before the 12th day after the end of the month (except as 
provided in Sec.  1000.90 of this chapter), each handler operating a 
pool plant and each handler specified in Sec.  1000.9(c) shall pay to 
the market administrator a transportation credit balancing fund 
assessment determined by multiplying the pounds of Class I producer 
milk assigned pursuant to Sec.  1005.44 by $0.15 per hundredweight or 
such lesser amount as the market administrator deems necessary to 
maintain a balance in the fund equal to the total transportation 
credits disbursed during the prior June-February period. In the event 
that during any month of the June-February period the fund balance is 
insufficient to cover the amount of credits that are due, the 
assessment should be based upon the amount of credits that would had 
been disbursed had the fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90) the 
assessment pursuant to paragraph (a) of this section for the following 
month.

0
4. Section 1005.82 is amended by revising paragraphs (d)(2)(ii) and 
(d)(3)(iv) to read as follows:


Sec.  1005.82  Payments from the transportation credit balancing fund.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Multiply the number of miles so determined by the mileage rate 
for the month computed pursuant to Sec.  1005.83(a)(6);
* * * * *
    (3) * * *
    (iv) Multiply the remaining miles so computed by the mileage rate 
for the month computed pursuant to Sec.  1005.83(a)(6);
* * * * *

0
5. Revise Sec.  1005.83 to read as follows:


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

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

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA

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


Sec.  1007.13  Producer milk.

* * * * *
    (d) * * *
    (3) The total quantity of milk diverted during the month by a 
cooperative association shall not exceed 25 percent during the months 
of July through November, January, and February, and 35 percent during 
the months of December and March through June, of the producer milk 
that the cooperative association caused to be delivered to, and 
physically received at, pool plants during the month, excluding the 
total pounds of bulk milk received directly from producers meeting the 
conditions as described in Sec.  1007.82(c)(2)(ii) and (iii), and for 
which a transportation credit is requested;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 25 percent during the months of July 
through

[[Page 25006]]

November, January and February, and 35 percent during the months of 
December and March through June of the producer milk physically 
received at such plant (or such unit of plants in the case of plants 
that pool as a unit pursuant to Sec.  1007.7(e)) during the month, 
excluding the quantity of producer milk received from a handler 
described in Sec.  1000.9(c) of this chapter, excluding the total 
pounds of bulk milk received directly from producers meeting the 
conditions as described in Sec.  1007.82(c)(2)(ii) and (iii), and for 
which a transportation credit is requested.
* * * * *

0
7. Section 1007.81 is amended by revising paragraph (b) to read as 
follows:


Sec.  1007.81  Payments to the transportation credit balancing fund.

* * * * *
    (b) The market administrator shall announce publicly on or before 
the 23rd day of the month (except as provided in Sec.  1000.90 of this 
chapter) the assessment pursuant to paragraph (a) of this section for 
the following month.

0
8. Section 1007.82 is amended by revising paragraphs (d)(2)(ii) and 
(d)(3)(iv) to read as follows:


Sec.  1007.82  Payments from the transportation credit balancing fund.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Multiply the number of miles so determined by the mileage rate 
for the month computed pursuant to Sec.  1007.83(a)(6);
* * * * *
    (3) * * *
    (iv) Multiply the remaining miles so computed by the mileage rate 
for the month computed pursuant to Sec.  1007.83(a)(6);
* * * * *

0
9. Revise Sec.  1007.83 to read as follows:


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

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

    Dated: April 28, 2014.
Rex A. Barnes,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2014-10031 Filed 5-1-14; 8:45 am]
BILLING CODE 3410-02-P