[Federal Register Volume 83, Number 111 (Friday, June 8, 2018)]
[Rules and Regulations]
[Pages 26547-26556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12245]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 83, No. 111 / Friday, June 8, 2018 / Rules 
and Regulations  

[[Page 26547]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1051

[Doc. No. AO-15-0071; AMS-DA-14-0095]


Milk in California; Federal Milk Marketing Order Promulgation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule establishes a Federal Milk Marketing Order 
(FMMO) regulating the handling of milk in California. This final rule 
issues a marketing order incorporating the entire state of California 
and adopts the same dairy product classification and pricing provisions 
used throughout the current FMMO system. The California FMMO provides 
for the recognition of producer quota as administered by the California 
Department of Food and Agriculture. More than the required number of 
producers for the California marketing area have approved the issuance 
of the order. This final rule also announces AMS's intention to merge 
the information collection forms used to conduct the producer 
referendum with the reporting forms used in the other dairy marketing 
orders.

DATES: 
    Effective Date: This rule is effective October 17, 2018.
    Applicability Date: All provisions of this rule apply to affected 
parties as of November 1, 2018.

FOR FURTHER INFORMATION CONTACT: Erin C. Taylor, Order Formulation and 
Enforcement Division, USDA/AMS/Dairy Program, STOP 0231-Room 2963, 1400 
Independence Ave. SW, Washington, DC 20250-0231, (202) 720-7183, email 
address: [email protected].

SUPPLEMENTARY INFORMATION: This rule, in accordance with 7 CFR 
900.14(c), is the Secretary's final rule in this proceeding and issues 
a marketing order as defined in 7 CFR 900.2(j).
    Accordingly, this final rule adopts amendments detailed in the 
proposed rule (83 FR 14110), with one minor technical correction to 
paragraph numbering in Sec.  1051.73(c)(2). The proposed rule 
designated two consecutive paragraphs in that section as paragraph 
(c)(2)(vii). This final rule corrects the proposed rule by 
redesignating the second paragraph as paragraph (c)(2)(viii).
    This rule is effective with publication of the Announcement of 
Advanced Prices and Pricing Factors on October 17, 2018 (see Sec.  
1051.53). Affected parties must comply with all provisions of this rule 
beginning November 1, 2018.
    This administrative action is governed by the provisions of 
Sections 556 and 557 of Title 5 of the United States Code and is 
therefore excluded from the requirements of Executive Order 12866.
    This final rule is not considered an Executive Order 13771 
regulatory action because it does not meet the definition of a 
``regulation'' or ``rule'' under Executive Order 12866.
    The amendments adopted in this final rule have been reviewed under 
Executive Order 12988, Civil Justice Reform. This rule is not intended 
to have retroactive effect and will not preempt any state or local law, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    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.
    The Agricultural Marketing Agreement Act of 1937 (AMAA), as amended 
(7 U.S.C. 601-674 and 7253), 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 a marketing order may 
request modification or exemption from such order by filing with the 
U.S. 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 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

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing 
Service (AMS) considered the economic impact of this action on small 
entities. Accordingly, AMS prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Small dairy farm businesses have 
been defined by the Small Business Administration (SBA) (13 CFR 
121.601) as those businesses having annual gross receipts of less than 
$750,000. The SBA's definition of small agricultural service firms, 
which includes handlers that will be regulated under this marketing 
order, varies depending on the product manufactured. Small fluid milk 
and ice cream manufacturers are defined as having 1,000 or fewer 
employees. Small butter and dry or condensed dairy product 
manufacturers are defined as having 750 or fewer employees. Small 
cheese manufacturers are defined as having 1,250 or fewer employees.
    For the purpose of determining which California dairy farms are 
``small businesses,'' the $750,000 per year criterion was used to 
establish a production guideline that equates to approximately 315,000 
pounds of milk per month. Although this guideline does not factor in 
additional monies that may be received by dairy farmers, it is a 
standard encompassing most small dairy farms. For the purpose of 
determining a handler's size, if the plant is part of a larger company 
operating multiple plants that collectively exceed the employee limit 
for that type of manufacturing, the plant is considered a large 
business even if the local plant has fewer than the defined number of 
employees.
    Interested persons were invited to present evidence at the hearing 
on the

[[Page 26548]]

probable regulatory and informational impact of the California FMMO on 
small businesses. Specific evidence on the number of large and small 
dairy farms in California (above and below the threshold of $750,000 in 
annual sales) was not presented at the hearing. However, data compiled 
by CDFA\1\ suggests that between 5 and 15 percent of California dairy 
farms would be considered small business entities. No comparable data 
for dairy product manufacturers was available.
---------------------------------------------------------------------------

    \1\ Official Notice is taken of: CDFA, California Dairy Review, 
Volume 19, Issue 9, September 2015. https://www.cdfa.ca.gov/dairy/pdf/CDR/2015/CDR_SEPT_15.pdf.
---------------------------------------------------------------------------

    Record evidence indicates that implementing the California FMMO 
would not impose a disproportionate burden on small businesses. 
Currently, the California dairy industry is regulated by a California 
State Order (CSO) that is administered and enforced by CDFA. While the 
CSO and FMMOs have differences, they both maintain similar classified 
pricing and marketwide pooling functions. Therefore, it is not expected 
that the regulatory change will have a significant impact on California 
small businesses.
    The record evidence indicates that while the program is likely to 
impose some costs on the regulated parties, those costs would be 
outweighed by the benefits expected to accrue to the California dairy 
industry. In conjunction with the publication of the final decision (83 
FR 14110), AMS released a Regulatory Economic Impact Analysis (REIA) to 
study the possible impacts of the California FMMO. The analysis 
reflects the provisions of this FMMO and may be viewed at 
www.ams.usda.gov/caorder.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), this final rule also announces AMS's intention to merge 
the OMB Report Forms under a California Federal Milk Marketing Order 
(from Milk Handlers and Milk Marketing Cooperatives, 0581-0298), and 
the forms used to conduct the producer referendum (Referendum Ballots, 
0581-0300) with the reporting forms used in the rest of the dairy 
marketing orders (Report Forms Under the Federal Milk Marketing Order 
Program, 0581-0032). Any additional information collection and 
recordkeeping requirements that may be imposed under the order would be 
submitted to OMB for public comment and approval.

Prior Documents in This Proceeding

    Notice of Hearing: Issued July 27, 2015; published August 6, 2015 
(80 FR 47210);
    Notice to Reconvene Hearing: Issued September 25, 2015; published 
September 30, 2015 (80 FR 58636);
    Recommended Decision and Opportunity To File Written Exceptions: 
Issued February 6, 2017; published February 14, 2017 (82 FR 10634);
    Documents for Official Notice: Issued August 8, 2017; published 
August 14, 2017 (82 FR 37827);
    Information Collection--Producer Ballots: Issued September 27, 
2017; published October 2, 2017 (82 FR 45795);
    Delay of Rulemaking: Issued February 1, 2018; published February 6, 
2018 (83 FR 5215);
    Ratification of Record: Issued March 14, 2018; published March 19, 
2018 (83 FR 11903); and
    Final Decision: Issued March 23, 2018; published April 2, 2018 (83 
FR 14110).

Findings and Determinations

    The findings and determinations hereinafter set forth are hereby 
ratified and confirmed, except where they may conflict with those set 
forth herein.
    (1) Findings upon the basis of the hearing record.
    The promulgation of the marketing agreement and order is based on 
the record of a public hearing held September 22 through November 18, 
2015 in Clovis, California. The hearing was held to receive evidence on 
four proposals submitted by dairy farmers, handlers, and other 
interested parties. Notice of this hearing was published in the Federal 
Register on August 6, 2015 (80 FR 47210), 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 (7 CFR 
part 900).
    Upon the basis of the evidence introduced at the public hearing and 
its record, it is found that:
    (a) The order as hereby promulgated, and all of the terms and 
conditions thereof, will tend to effectuate the declared policy of the 
AMAA;
    (b) 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 that affect 
market supply and demand for milk in California. The minimum prices 
specified in the tentative marketing agreement and order, as hereby 
established, are prices that will reflect the aforesaid factors, ensure 
a sufficient quantity of pure and wholesome milk, and be in the public 
interest; and
    (c) The tentative marketing agreement and order, as hereby 
established, will regulate the handling of milk in the same manner as, 
and applies only to, persons in the respective classes of industrial 
and commercial activity specified in, marketing agreements upon which a 
hearing has been held.
    (2) Determinations.
    It is hereby determined that:
    (a) 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 marketed within the specified marketing areas to 
sign a proposed marketing agreement, tends to prevent the effectuation 
of the declared policy of the AMAA;
    (b) The issuance of this order establishing the California order is 
the only practical means pursuant to the declared policy of the AMAA of 
advancing the interests of producers as defined in the order as hereby 
promulgated; and
    (c) The issuance of this order establishing the California order 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 Part 1051

    Milk marketing orders.

Order Establishing the Order Regulating the Handling of Milk in the 
California Marketing Area

    It is therefore ordered, that on and after the effective date 
hereof, the handling of milk in the California marketing area shall be 
in conformity to and in compliance with the terms and conditions of the 
order.

0
For the reasons stated in the preamble, the Agricultural Marketing 
Service adds 7 CFR part 1051 to read as follows:

PART 1051--MILK IN THE CALIFORNIA MILK MARKETING AREA

Subpart A--Order Regulating Handling

General Provisions

Sec.
1051.1 General provisions.

Definitions

1051.2 California marketing area.
1051.3 Route disposition.
1051.4 Plant.
1051.5 Distributing plant.
1051.6 Supply plant.
1051.7 Pool plant.
1051.8 Nonpool plant.
1051.9 Handler.

[[Page 26549]]

1051.10 Producer-handler.
1051.11 California quota program.
1051.12 Producer.
1051.13 Producer milk.
1051.14 Other source milk.
1051.15 Fluid milk product.
1051.16 Fluid cream product.
1051.17 [Reserved].
1051.18 Cooperative association.
1051.19 Commercial food processing establishment.

Market Administrator, Continuing Obligations, and Handler 
Responsibilities

1051.25 Market administrator.
1051.26 Continuity and separability of provisions.
1051.27 Handler responsibility for records and facilities.
1051.28 Termination of obligations.

Handler Reports

1051.30 Reports of receipts and utilization.
1051.31 Payroll reports.
1051.32 Other reports.
Subpart B--Milk Pricing

Classification of Milk

1051.40 Classes of utilization.
1051.41 [Reserved].
1051.42 Classification of transfers and diversions.
1051.43 General classification rules.
1051.44 Classification of producer milk. 1051.45 Market 
administrator's reports and announcements concerning classification.

Class Prices

1051.50 Class prices, component prices, and advanced pricing 
factors.
1051.51 Class I differential and price.
1051.52 Adjusted Class I differentials.
1051.53 Announcement of class prices, component prices, and advanced 
pricing factors.
1051.54 Equivalent price.

Producer Price Differential

1051.60 Handler's value of milk.
1051.61 Computation of producer price differential.
1051.62 Announcement of producer prices.
Subpart C--Payments for Milk

Producer Payments

1051.70 Producer-settlement fund.
1051.71 Payments to the producer-settlement fund.
1051.72 Payments from the producer-settlement fund.
1051.73 Payments to producers and to cooperative associations.
1051.74 [Reserved].
1051.75 Plant location adjustments for producer milk and nonpool 
milk.
1051.76 Payments by a handler operating a partially regulated 
distributing plant.
1051.77 Adjustment of accounts.
1051.78 Charges on overdue accounts.

Administrative Assessment and Marketing Service Deduction

1051.85 Assessment for order administration.
1051.86 Deduction for marketing services.
Subpart D--Miscellaneous Provisions
1051.90 Dates.

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

Subpart A--Order Regulating Handling

General Provisions


Sec.  1051.1   General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
apply to this part unless otherwise specified. In this part, all 
references to sections in part 1000 refer to part 1000 of this chapter.

Definitions


Sec.  1051.2   California marketing area.

    The marketing area means all territory within the bounds of the 
following states and political subdivisions, including all piers, 
docks, and wharves connected therewith and all craft moored thereat, 
and all territory occupied by government (municipal, State, or Federal) 
reservations, installations, institutions, or other similar 
establishments if any part thereof is within any of the listed states 
or political subdivisions:

California

    All of the State of California.


Sec.  1051.3   Route disposition.

    See Sec.  1000.3.


Sec.  1051.4   Plant.

    See Sec.  1000.4.


Sec.  1051.5   Distributing plant.

    See Sec.  1000.5.


Sec.  1051.6   Supply plant.

    See Sec.  1000.6.


Sec.  1051.7   Pool plant.

    Pool plant means a plant, unit of plants, or system of plants as 
specified in paragraphs (a) through (f) of this section, but excluding 
a plant specified in paragraph (h) of this section. The pooling 
standards described in paragraphs (c) and (f) of this section are 
subject to modification pursuant to paragraph (g) of this section:
    (a) A distributing plant, other than a plant qualified as a pool 
plant pursuant to paragraph (b) of this section or Sec.  _____.7(b) of 
any other Federal milk order, from which during the month 25 percent or 
more of the total quantity of fluid milk products physically received 
at the plant (excluding concentrated milk received from another plant 
by agreement for other than Class I use) are disposed of as route 
disposition or are transferred in the form of packaged fluid milk 
products to other distributing plants. At least 25 percent of such 
route disposition and transfers must be to outlets in the marketing 
area.
    (b) Any distributing plant located in the marketing area which 
during the month processed at least 25 percent of the total quantity of 
fluid milk products physically received at the plant (excluding 
concentrated milk received from another plant by agreement for other 
than Class I use) into ultra-pasteurized or aseptically-processed fluid 
milk products.
    (c) A supply plant from which the quantity of bulk fluid milk 
products shipped to (and physically unloaded into) plants described in 
paragraph (c)(1) of this section is not less than 10 percent of the 
Grade A milk received from dairy farmers (except dairy farmers 
described in Sec.  1051.12(b)) and handlers described in Sec.  
1000.9(c), including milk diverted pursuant to Sec.  1051.13, subject 
to the following conditions:
    (1) Qualifying shipments may be made to plants described in 
paragraphs (c)(1)(i) through (iv) of this section, except that whenever 
shipping requirements are increased pursuant to paragraph (g) of this 
section, only shipments to pool plants described in paragraphs (a), 
(b), and (d) of this section shall count as qualifying shipments for 
the purpose of meeting the increased shipments:
    (i) Pool plants described in paragraphs (a), (b), and (d) of this 
section;
    (ii) Plants of producer-handlers;
    (iii) Partially regulated distributing plants, except that credit 
for such shipments shall be limited to the amount of such milk 
classified as Class I at the transferee plant; and
    (iv) Distributing plants fully regulated under other Federal 
orders, except that credit for shipments to such plants shall be 
limited to the quantity shipped to (and physically unloaded into) pool 
distributing plants during the month and credits for shipments to other 
order plants shall not include any such shipments made on the basis of 
agreed-upon Class II, Class III, or Class IV utilization.
    (2) Concentrated milk transferred from the supply plant to a 
distributing plant for an agreed-upon use other than Class I shall be 
excluded from the supply plant's shipments in computing the supply 
plant's shipping percentage.
    (d) Two or more plants operated by the same handler and located in 
the marketing area may qualify for pool status as a unit by meeting the 
total and in-area route disposition requirements of a pool distributing 
plant specified in paragraph (a) of this section and subject to the 
following additional requirements:

[[Page 26550]]

    (1) At least one of the plants in the unit must qualify as a pool 
plant pursuant to paragraph (a) of this section;
    (2) Other plants in the unit must process Class I or Class II 
products, using 50 percent or more of the total Grade A fluid milk 
products received in bulk form at such plant or diverted therefrom by 
the plant operator in Class I or Class II products; and
    (3) The operator of the unit has filed a written request with the 
market administrator prior to the first day of the month for which such 
status is desired to be effective. The unit shall continue from month-
to-month thereafter without further notification. The handler shall 
notify the market administrator in writing prior to the first day of 
any month for which termination or any change of the unit is desired.
    (e) A system of two or more supply plants operated by one or more 
handlers may qualify for pooling by meeting the shipping requirements 
of paragraph (c) of this section in the same manner as a single plant 
subject to the following additional requirements:
    (1) Each plant in the system is located within the marketing area. 
Cooperative associations or other handlers may not use shipments 
pursuant to Sec.  1000.9(c) to qualify supply plants located outside 
the marketing area;
    (2) The handler(s) establishing the system submits a written 
request to the market administrator on or before July 15 requesting 
that such plants qualify as a system for the period of August through 
July of the following year. Such request will contain a list of the 
plants participating in the system in the order, beginning with the 
last plant, in which the plants will be dropped from the system if the 
system fails to qualify. Each plant that qualifies as a pool plant 
within a system shall continue each month as a plant in the system 
through the following July unless the handler(s) establishing the 
system submits a written request to the market administrator that the 
plant be deleted from the system or that the system be discontinued. 
Any plant that has been so deleted from a system, or that has failed to 
qualify in any month, will not be part of any system for the remaining 
months through July. The handler(s) that have established a system may 
add a plant operated by such handler(s) to a system if such plant has 
been a pool plant each of the 6 prior months and would otherwise be 
eligible to be in a system, upon written request to the market 
administrator no later than the 15th day of the prior month. In the 
event of an ownership change or the business failure of a handler who 
is a participant in a system, the system may be reorganized to reflect 
such changes if a written request to file a new marketing agreement is 
submitted to the market administrator; and
    (3) If a system fails to qualify under the requirements of this 
paragraph (e), the handler responsible for qualifying the system shall 
notify the market administrator which plant or plants will be deleted 
from the system so that the remaining plants may be pooled as a system. 
If the handler fails to do so, the market administrator shall exclude 
one or more plants, beginning at the bottom of the list of plants in 
the system and continuing up the list as necessary until the deliveries 
are sufficient to qualify the remaining plants in the system.
    (f) Any distributing plant, located within the marketing area as 
described in Sec.  1051.2:
    (1) From which there is route disposition and/or transfers of 
packaged fluid milk products in any non-federally regulated marketing 
area(s) located within one or more States that require handlers to pay 
minimum prices for raw milk, provided that 25 percent or more of the 
total quantity of fluid milk products physically received at such plant 
(excluding concentrated milk received from another plant by agreement 
for other than Class I use) is disposed of as route disposition and/or 
is transferred in the form of packaged fluid milk products to other 
plants. At least 25 percent of such route disposition and/or transfers, 
in aggregate, are in any non-federally regulated marketing area(s) 
located within one or more States that require handlers to pay minimum 
prices for raw milk. Subject to the following exclusions:
    (i) The plant is described in paragraph (a), (b), or (e) of this 
section;
    (ii) The plant is subject to the pricing provisions of a State-
operated milk pricing plan which provides for the payment of minimum 
class prices for raw milk;
    (iii) The plant is described in Sec.  1000.8(a) or (e); or
    (iv) A producer-handler described in Sec.  1051.10 with less than 
three million pounds during the month of route disposition and/or 
transfers of packaged fluid milk products to other plants.
    (2) [Reserved]
    (g) The applicable shipping percentages of paragraphs (c) and (e) 
of this section and Sec.  1051.13(d)(2) and (3) may be increased or 
decreased, for all or part of the marketing area, by the market 
administrator if the market administrator finds that such adjustment is 
necessary to encourage needed shipments or to prevent uneconomic 
shipments. Before making such a finding, the market administrator shall 
investigate the need for adjustment either on the market 
administrator's own initiative or at the request of interested parties 
if the request is made in writing at least 15 days prior to the month 
for which the requested revision is desired effective. If the 
investigation shows that an adjustment of the shipping percentages 
might be appropriate, the market administrator shall issue a notice 
stating that an adjustment is being considered and invite data, views, 
and arguments. Any decision to revise an applicable shipping or 
diversion percentage must be issued in writing at least one day before 
the effective date.
    (h) The term pool plant shall not apply to the following plants:
    (1) A producer-handler as defined under any Federal order;
    (2) An exempt plant as defined in Sec.  1000.8(e);
    (3) A plant located within the marketing area and qualified 
pursuant to paragraph (a) of this section which meets the pooling 
requirements of another Federal order, and from which more than 50 
percent of its route disposition has been in the other Federal order 
marketing area for 3 consecutive months;
    (4) A plant located outside any Federal order marketing area and 
qualified pursuant to paragraph (a) of this section that meets the 
pooling requirements of another Federal order and has had greater route 
disposition in such other Federal order's marketing area for 3 
consecutive months;
    (5) A plant located in another Federal order marketing area and 
qualified pursuant to paragraph (a) of this section that meets the 
pooling requirements of such other Federal order and does not have a 
majority of its route disposition in this marketing area for 3 
consecutive months, or if the plant is required to be regulated under 
such other Federal order without regard to its route disposition in any 
other Federal order marketing area;
    (6) A plant qualified pursuant to paragraph (c) of this section 
which also meets the pooling requirements of another Federal order and 
from which greater qualifying shipments are made to plants regulated 
under the other Federal order than are made to plants regulated under 
the order in this part, or the plant has automatic pooling status under 
the other Federal order; and
    (7) That portion of a regulated plant designated as a nonpool plant 
that is physically separate and operated separately from the pool 
portion of such plant. The designation of a portion of a regulated 
plant as a nonpool plant must

[[Page 26551]]

be requested in advance and in writing by the handler and must be 
approved by the market administrator.
    (i) Any plant that qualifies as a pool plant in each of the 
immediately preceding 3 months pursuant to paragraph (a) of this 
section or the shipping percentages in paragraph (c) of this section 
that is unable to meet such performance standards for the current month 
because of unavoidable circumstances determined by the market 
administrator to be beyond the control of the handler operating the 
plant, such as a natural disaster (ice storm, wind storm, flood, fire, 
earthquake, breakdown of equipment, or work stoppage, shall be 
considered to have met the minimum performance standards during the 
period of such unavoidable circumstances, but such relief shall not be 
granted for more than 2 consecutive months.


Sec.  1051.8   Nonpool plant.

    See Sec.  1000.8.


Sec.  1051.9   Handler.

    See Sec.  1000.9.


Sec.  1051.10   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.
    (a) Requirements for designation. Designation of any person as a 
producer-handler by the market administrator shall be contingent upon 
meeting the conditions set forth in paragraphs (a)(1) through (5) of 
this section. Following the cancellation of a previous producer-handler 
designation, a person seeking to have their producer-handler 
designation reinstated must demonstrate that these conditions have been 
met for the preceding month:
    (1) The care and management of the dairy animals and the other 
resources and facilities designated in paragraph (b)(1) of this section 
necessary to produce all Class I milk handled (excluding receipts from 
handlers fully regulated under any Federal order) are under the 
complete and exclusive control, ownership, and management of the 
producer-handler and are operated as the producer-handler's own 
enterprise and at its sole risk.
    (2) The plant operation designated in paragraph (b)(2) of this 
section at which the producer-handler processes and packages, and from 
which it distributes, its own milk production is under the complete and 
exclusive control, ownership, and management of the producer-handler 
and is operated as the producer-handler's own enterprise and at its 
sole risk.
    (3) The producer-handler neither receives at its designated milk 
production resources and facilities nor receives, handles, processes, 
or distributes at or through any of its designated milk handling, 
processing, or distributing resources and facilities other source milk 
products for reconstitution into fluid milk products or fluid milk 
products derived from any source other than:
    (i) Its designated milk production resources and facilities (own 
farm production);
    (ii) Pool handlers and plants regulated under any Federal order 
within the limitation specified in paragraph (c)(2) of this section; or
    (iii) Nonfat milk solids which are used to fortify fluid milk 
products.
    (4) The producer-handler is neither directly nor indirectly 
associated with the business control or management of, nor has a 
financial interest in, another handler's operation; nor is any other 
handler so associated with the producer-handler's operation.
    (5) No milk produced by the herd(s) or on the farm(s) that supplies 
milk to the producer-handler's plant operation is:
    (i) Subject to inclusion and participation in a marketwide 
equalization pool under a milk classification and pricing program under 
the authority of a State government maintaining marketwide pooling of 
returns; or
    (ii) Marketed in any part as Class I milk to the non-pool 
distributing plant of any other handler.
    (b) Designation of resources and facilities. Designation of a 
person as a producer-handler shall include the determination of what 
shall constitute milk production, handling, processing, and 
distribution resources and facilities, all of which shall be considered 
an integrated operation, under the sole and exclusive ownership of the 
producer-handler.
    (1) Milk production resources and facilities shall include all 
resources and facilities (milking herd(s), buildings housing such 
herd(s), and the land on which such buildings are located) used for the 
production of milk which are solely owned, operated, and which the 
producer-handler has designated as a source of milk supply for the 
producer-handler's plant operation. However, for purposes of this 
paragraph (b)(1), any such milk production resources and facilities 
which do not constitute an actual or potential source of milk supply 
for the producer-handler's operation shall not be considered a part of 
the producer-handler's milk production resources and facilities.
    (2) Milk handling, processing, and distribution resources and 
facilities shall include all resources and facilities (including store 
outlets) used for handling, processing, and distributing fluid milk 
products which are solely owned by, and directly operated or controlled 
by the producer-handler or in which the producer-handler in any way has 
an interest, including any contractual arrangement, or over which the 
producer-handler directly or indirectly exercises any degree of 
management control.
    (3) All designations shall remain in effect until canceled pursuant 
to paragraph (c) of this section.
    (c) Cancellation. The designation as a producer-handler shall be 
canceled upon determination by the market administrator that any of the 
requirements of paragraphs (a)(1) through (5) of this section are not 
continuing to be met, or under any of the conditions described in 
paragraph (c)(1), (2), or (3) of this section. Cancellation of a 
producer-handler's status pursuant to this paragraph (c) shall be 
effective on the first day of the month following the month in which 
the requirements were not met or the conditions for cancellation 
occurred.
    (1) Milk from the milk production resources and facilities of the 
producer-handler, designated in paragraph (b)(1) of this section, is 
delivered in the name of another person as producer milk to another 
handler.
    (2) The producer-handler handles fluid milk products derived from 
sources other than the milk production facilities and resources 
designated in paragraph (b)(1) of this section, except that it may 
receive at its plant, or acquire for route disposition, fluid milk 
products from fully regulated plants and handlers under any Federal 
order if such receipts do not exceed 150,000 pounds monthly. This 
limitation shall not apply if the producer-handler's own-farm 
production is less than 150,000 pounds during the month.
    (3) Milk from the milk production resources and facilities of the 
producer-handler is subject to inclusion and participation in a 
marketwide equalization pool under a milk classification and pricing 
plan operating under the authority of a State government.

[[Page 26552]]

    (d) Public announcement. The market administrator shall publicly 
announce:
    (1) The name, plant location(s), and farm location(s) of persons 
designated as producer-handlers;
    (2) The names of those persons whose designations have been 
cancelled; and
    (3) The effective dates of producer-handler status or loss of 
producer-handler status for each. Such announcements shall be 
controlling with respect to the accounting at plants of other handlers 
for fluid milk products received from any producer-handler.
    (e) Burden of establishing and maintaining producer-handler status. 
The burden rests upon the handler who is designated as a producer-
handler to establish through records required pursuant to Sec.  1000.27 
that the requirements set forth in paragraph (a) of this section have 
been and are continuing to be met, and that the conditions set forth in 
paragraph (c) of this section for cancellation of the designation do 
not exist.
    (f) Payments subject to Order 1131. Any producer-handler with Class 
I route dispositions and/or transfers of packaged fluid milk products 
in the marketing area described in Sec.  1131.2 of this chapter shall 
be subject to payments into the Order 1131 producer settlement fund on 
such dispositions pursuant to Sec.  1000.76(a) and payments into the 
Order 1131 administrative fund, provided such dispositions are less 
than three million pounds in the current month and such producer-
handler had total Class I route dispositions and/or transfers of 
packaged fluid milk products from own farm production of three million 
pounds or more the previous month. If the producer-handler has Class I 
route dispositions and/or transfers of packaged fluid milk products 
into the marketing area described in Sec.  1131.2 of this chapter of 
three million pounds or more during the current month, such producer-
handler shall be subject to the provisions described in Sec.  1131.7 of 
this chapter or Sec.  1000.76(a).


Sec.  1051.11   California quota program.

    California Quota Program means the applicable provisions of the 
California Food and Agriculture Code, and related provisions of the 
pooling plan administered by the California Department of Food and 
Agriculture (CDFA).


Sec.  1051.12   Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for fluid consumption as Grade A milk and whose milk 
is:
    (1) Received at a pool plant directly from the producer or diverted 
by the plant operator in accordance with Sec.  1051.13; or
    (2) Received by a handler described in Sec.  1000.9(c).
    (b) Producer shall not include:
    (1) A producer-handler as defined in any Federal order;
    (2) A dairy farmer whose milk is received at an exempt plant, 
excluding producer milk diverted to the exempt plant pursuant to Sec.  
1051.13(d);
    (3) A dairy farmer whose milk is received by diversion at a pool 
plant from a handler regulated under another Federal order if the other 
Federal order designates the dairy farmer as a producer under that 
order and that milk is allocated by request to a utilization other than 
Class I; and
    (4) A dairy farmer whose milk is reported as diverted to a plant 
fully regulated under another Federal order with respect to that 
portion of the milk so diverted that is assigned to Class I under the 
provisions of such other order.


Sec.  1051.13   Producer milk.

    Except as provided for in paragraph (e) of this section, producer 
milk means the skim milk (or the skim equivalent of components of skim 
milk), including nonfat components, and butterfat in milk of a producer 
that is:
    (a) Received by the operator of a pool plant directly from a 
producer or a handler described in Sec.  1000.9(c). All milk received 
pursuant to this paragraph (a) shall be priced at the location of the 
plant where it is first physically received;
    (b) Received by a handler described in Sec.  1000.9(c) in excess of 
the quantity delivered to pool plants;
    (c) Diverted by a pool plant operator to another pool plant. Milk 
so diverted shall be priced at the location of the plant to which 
diverted; or
    (d) Diverted by the operator of a pool plant or a cooperative 
association described in Sec.  1000.9(c) to a nonpool plant located in 
the States of California, Arizona, Nevada, or Oregon, subject to the 
following conditions:
    (1) Milk of a dairy farmer shall not be eligible for diversion 
unless at least one day's production of such dairy farmer is physically 
received as producer milk at a pool plant during the first month the 
dairy farmer is a producer. If a dairy farmer loses producer status 
under the order in this part (except as a result of a temporary loss of 
Grade A approval or as a result of the handler of the dairy farmer's 
milk failing to pool the milk under any order), the dairy farmer's milk 
shall not be eligible for diversion unless at least one day's 
production of the dairy farmer has been physically received as producer 
milk at a pool plant during the first month the dairy farmer is re-
associated with the market;
    (2) The quantity of milk diverted by a handler described in Sec.  
1000.9(c) may not exceed 90 percent of the producer milk receipts 
reported by the handler pursuant to Sec.  1051.30(c) provided that not 
less than 10 percent of such receipts are delivered to plants described 
in Sec.  1051.7(c)(1)(i) through (iii). These percentages are subject 
to any adjustments that may be made pursuant to Sec.  1051.7(g); and
    (3) The quantity of milk diverted to nonpool plants by the operator 
of a pool plant described in Sec.  1051.7(a), (b) or (d) may not exceed 
90 percent of the Grade A milk received from dairy farmers (except 
dairy farmers described in Sec.  1051.12(b)) including milk diverted 
pursuant to this section. These percentages are subject to any 
adjustments that may be made pursuant to Sec.  1051.7(g).
    (4) Diverted milk shall be priced at the location of the plant to 
which diverted.
    (e) Producer milk shall not include milk of a producer that is 
subject to inclusion and participation in a marketwide equalization 
pool under a milk classification and pricing program imposed under the 
authority of a State government maintaining marketwide pooling of 
returns.
    (f) The quantity of milk reported by a handler pursuant to either 
Sec.  1051.30(a)(1) or (c)(1) for April through February may not exceed 
125 percent, and for March may not exceed 135 percent, of the producer 
milk receipts pooled by the handler during the prior month. Milk 
diverted to nonpool plants reported in excess of this limit shall be 
removed from the pool. Milk in excess of this limit received at pool 
plants, other than pool distributing plants, shall be classified 
pursuant to Sec.  1000.44(a)(3)(v) and (b). The handler must designate, 
by producer pick-up, which milk is to be removed from the pool. If the 
handler fails to provide this information, the market administrator 
will make the determination. The following provisions apply:
    (1) Milk shipped to and physically received at pool distributing 
plants in excess of the previous month's pooled volume shall not be 
subject to the 125 or 135 percent limitation;
    (2) Producer milk qualified pursuant to Sec.  _____.13 of any other 
Federal Order and continuously pooled in any

[[Page 26553]]

Federal Order for the previous six months shall not be included in the 
computation of the 125 or 135 percent limitation;
    (3) The market administrator may waive the 125 or 135 percent 
limitation:
    (i) For a new handler on the order, subject to the provisions of 
paragraph (f)(4) of this section; or
    (ii) For an existing handler with significantly changed milk supply 
conditions due to unusual circumstances; and
    (4) A bloc of milk may be considered ineligible for pooling if the 
market administrator determines that handlers altered the reporting of 
such milk for the purpose of evading the provisions of this paragraph 
(f).


Sec.  1051.14   Other source milk.

    See Sec.  1000.14.


Sec.  1051.15   Fluid milk product.

    See Sec.  1000.15.


Sec.  1051.16   Fluid cream product.

    See Sec.  1000.16.


Sec.  1051.17   [Reserved]


Sec.  1051.18   Cooperative association.

    See Sec.  1000.18.


Sec.  1051.19   Commercial food processing establishment.

    See Sec.  1000.19.

Market Administrator, Continuing Obligations, and Handler 
Responsibilities


Sec.  1051.25   Market administrator.

    See Sec.  1000.25.


Sec.  1051.26   Continuity and separability of provisions.

    See Sec.  1000.26.


Sec.  1051.27   Handler responsibility for records and facilities.

    See Sec.  1000.27.


Sec.  1051.28   Termination of obligations.

    See Sec.  1000.28.

Handler Reports


Sec.  1051.30   Reports of receipts and utilization.

    Each handler shall report monthly so that the market 
administrator's office receives the report on or before the 9th day 
after the end of the month, in the detail and on the prescribed forms, 
as follows:
    (a) Each handler that operates a pool plant shall report for each 
of its operations the following information:
    (1) Product pounds, pounds of butterfat, pounds of protein, and 
pounds of solids-not-fat other than protein (other solids) contained in 
or represented by:
    (i) Receipts of producer milk, including producer milk diverted by 
the reporting handler, from sources other than handlers described in 
Sec.  1000.9(c); and
    (ii) Receipts of milk from handlers described in Sec.  1000.9(c);
    (2) Product pounds and pounds of butterfat contained in:
    (i) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (ii) Receipts of other source milk; and
    (iii) Inventories at the beginning and end of the month of fluid 
milk products and bulk fluid cream products;
    (3) The utilization or disposition of all milk and milk products 
required to be reported pursuant to this paragraph (a); and
    (4) Such other information with respect to the receipts and 
utilization of skim milk, butterfat, milk protein, and other nonfat 
solids as the market administrator may prescribe.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as 
prescribed for reports required by paragraph (a) of this section. 
Receipts of milk that would have been producer milk if the plant had 
been fully regulated shall be reported in lieu of producer milk. The 
report shall show also the quantity of any reconstituted skim milk in 
route disposition in the marketing area.
    (c) Each handler described in Sec.  1000.9(c) shall report:
    (1) The product pounds, pounds of butterfat, pounds of protein, 
pounds of solids-not-fat other than protein (other solids) contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of 
this section shall report with respect to its receipts and utilization 
of milk and milk products in such manner as the market administrator 
may prescribe.


Sec.  1051.31   Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler that operates a pool plant pursuant to Sec.  1051.7 and each 
handler described in Sec.  1000.9(c) shall report to the market 
administrator its producer payroll for the month, in the detail 
prescribed by the market administrator, showing for each producer the 
information described in Sec.  1051.73(f).
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec.  1000.76(b) shall report 
for each dairy farmer who would have been a producer if the plant had 
been fully regulated in the same manner as prescribed for reports 
required by paragraph (a) of this section.


Sec.  1051.32   Other reports.

    In addition to the reports required pursuant to Sec. Sec.  1051.30 
and 1051.31, each handler shall report any information the market 
administrator deems necessary to verify or establish each handler's 
obligation under the order.

Subpart B--Milk Pricing

Classification of Milk


Sec.  1051.40   Classes of utilization.

    See Sec.  1000.40.


Sec.  1051.41   [Reserved]


Sec.  1051.42   Classification of transfers and diversions.

    See Sec.  1000.42.


Sec.  1051.43   General classification rules.

    See Sec.  1000.43.


Sec.  1051.44   Classification of producer milk.

    See Sec.  1000.44.


Sec.  1051.45   Market administrator's reports and announcements 
concerning classification.

    See Sec.  1000.45.

Class Prices


Sec.  1051.50   Class prices, component prices, and advanced pricing 
factors.

    See Sec.  1000.50.


Sec.  1051.51   Class I differential and price.

    The Class I differential shall be the differential established for 
Los Angeles County, California, which is reported in Sec.  1000.52. The 
Class I price shall be the price computed pursuant to Sec.  1000.50(a) 
for Los Angeles County, California.


Sec.  1051.52   Adjusted Class I differentials.

    See Sec.  1000.52.


Sec.  1051.53   Announcement of class prices, component prices, and 
advanced pricing factors.

    See Sec.  1000.53.


Sec.  1051.54   Equivalent price.

    See Sec.  1000.54.

Producer Price Differential


Sec.  1051.60   Handler's value of milk.

    For the purpose of computing a handler's obligation for producer 
milk, the market administrator shall determine for each month the value 
of milk of each handler with respect to each of the handler's pool 
plants and of

[[Page 26554]]

each handler described in Sec.  1000.9(c) with respect to milk that was 
not received at a pool plant by adding the amounts computed in 
paragraphs (a) through (h) of this section and subtracting from that 
total amount the values computed in paragraphs (i) and (j) of this 
section. Unless otherwise specified, the skim milk, butterfat, and the 
combined pounds of skim milk and butterfat referred to in this section 
shall result from the steps set forth in Sec.  1000.44(a), (b), and 
(c), respectively, and the nonfat components of producer milk in each 
class shall be based upon the proportion of such components in producer 
skim milk. Receipts of nonfluid milk products that are distributed as 
labeled reconstituted milk for which payments are made to the producer-
settlement fund of another Federal order under Sec.  1000.76(a)(4) or 
(d) shall be excluded from pricing under this section.
    (a) Class I value. (1) Multiply the hundredweight of skim milk in 
Class I by the Class I skim milk price; and
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class I by the Class I butterfat price; and
    (b) Class II value. (1) Multiply the pounds of nonfat solids in 
Class II skim milk by the Class II nonfat solids price; and
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class II times the Class II butterfat price.
    (c) Class III value. (1) Multiply the pounds of protein in Class 
III skim milk by the protein price;
    (2) Add an amount obtained by multiplying the pounds of other 
solids in Class III skim milk by the other solids price; and
    (3) Add an amount obtained by multiplying the pounds of butterfat 
in Class III by the butterfat price.
    (d) Class IV value. (1) Multiply the pounds of nonfat solids in 
Class IV skim milk by the nonfat solids price; and
    (2) Add an amount obtained by multiplying the pounds of butterfat 
in Class IV by the butterfat price.
    (e) Classification of overage. Multiply the pounds of skim milk and 
butterfat overage assigned to each class pursuant to Sec.  
1000.44(a)(11) and the corresponding step of Sec.  1000.44(b) by the 
skim milk prices and butterfat prices applicable to each class.
    (f) Reclassification of inventory. Multiply the difference between 
the current month's Class I, II, or III price, as the case may be, and 
the Class IV price for the preceding month and by the hundredweight of 
skim milk and butterfat subtracted from Class I, II, or III, 
respectively, pursuant to Sec.  1000.44(a)(7) and the corresponding 
step of Sec.  1000.44(b).
    (g) Class I calculation applicable to unregulated milk. Multiply 
the difference between the Class I price applicable at the location of 
the pool plant and the Class IV price by the hundredweight of skim milk 
and butterfat assigned to Class I pursuant to Sec.  1000.43(d) and the 
hundredweight of skim milk and butterfat subtracted from Class I 
pursuant to Sec.  1000.44(a)(3)(i) through (vi) and the corresponding 
step of Sec.  1000.44(b), excluding receipts of bulk fluid cream 
products from plants regulated under other Federal orders and bulk 
concentrated fluid milk products from pool plants, plants regulated 
under other Federal orders, and unregulated supply plants.
    (h) Class I calculation applicable to unregulated supply plant 
milk. Multiply the difference between the Class I price applicable at 
the location of the nearest unregulated supply plants from which an 
equivalent volume was received and the Class III price by the pounds of 
skim milk and butterfat in receipts of concentrated fluid milk products 
assigned to Class I pursuant to Sec. Sec.  1000.43(d) and 
1000.44(a)(3)(i) and the corresponding step of Sec.  1000.44(b) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec.  1000.44(a)(8) and the corresponding step of Sec.  1000.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order.
    (i) Calculation of nonfluid milk receipts for reconstitution. For 
reconstituted milk made from receipts of nonfluid milk products, 
multiply $1.00 (but not more than the difference between the Class I 
price applicable at the location of the pool plant and the Class IV 
price) by the hundredweight of skim milk and butterfat contained in 
receipts of nonfluid milk products that are allocated to Class I use 
pursuant to Sec.  1000.43(d).


Sec.  1051.61  Computation of producer price differential.

    For each month the market administrator shall compute a producer 
price differential per hundredweight. The report of any handler who has 
not made payments required pursuant to Sec.  1051.71 for the preceding 
month shall not be included in the computation of the producer price 
differential, and such handler's report shall not be included in the 
computation for succeeding months until the handler has made full 
payment of outstanding monthly obligations. Subject to the conditions 
of this introductory text, the market administrator shall compute the 
producer price differential in the following manner:
    (a) Combine into one total the values computed pursuant to Sec.  
1051.60 for all handlers required to file reports prescribed in Sec.  
1051.30;
    (b) Subtract the total values obtained by multiplying each 
handler's total pounds of protein, other solids, and butterfat 
contained in the milk for which an obligation was computed pursuant to 
Sec.  1051.60 by the protein price, other solids price, and the 
butterfat price, respectively;
    (c) Add an amount equal to the minus location adjustments and 
subtract an amount equal to the plus location adjustments computed 
pursuant to Sec.  1051.75;
    (d) Add an amount equal to not less than one-half of the 
unobligated balance in the producer-settlement fund;
    (e) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec.  1051.60(i); and
    (f) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (e) of this section. The result 
shall be known as the producer price differential for the month.


Sec.  1051.62  Announcement of producer prices.

    On or before the 14th day after the end of each month, the market 
administrator shall announce publicly the following prices and 
information:
    (a) The producer price differential;
    (b) The protein price;
    (c) The nonfat solids price;
    (d) The other solids price;
    (e) The butterfat price;
    (f) The average butterfat, nonfat solids, protein and other solids 
content of producer milk; and
    (g) The statistical uniform price for milk containing 3.5 percent 
butterfat, computed by combining the Class III price and the producer 
price differential.

Subpart C--Payments for Milk

Producer Payments


Sec.  1051.70  Producer-settlement fund.

    See Sec.  1000.70.

[[Page 26555]]

Sec.  1051.71  Payments to the producer-settlement fund.

    Each handler shall make payment to the producer-settlement fund in 
a manner that provides receipt of the funds by the market administrator 
no later than the 16th day after the end of the month (except as 
provided in Sec.  1000.90). Payment shall be the amount, if any, by 
which the amount specified in paragraph (a) of this section exceeds the 
amount specified in paragraph (b) of this section:
    (a) The total value of milk to the handler for the month as 
determined pursuant to Sec.  1051.60.
    (b) The sum of:
    (1) An amount obtained by multiplying the total hundredweight of 
producer milk as determined pursuant to Sec.  1000.44(c) by the 
producer price differential as adjusted pursuant to Sec.  1051.75;
    (2) An amount obtained by multiplying the total pounds of protein, 
other solids, and butterfat contained in producer milk by the protein, 
other solids, and butterfat prices respectively; and
    (3) An amount obtained by multiplying the pounds of skim milk and 
butterfat for which a value was computed pursuant to Sec.  1051.60(i) 
by the producer price differential as adjusted pursuant to Sec.  
1051.75 for the location of the plant from which received.


Sec.  1051.72  Payments from the producer-settlement fund.

    No later than the 18th day after the end of each month (except as 
provided in Sec.  1000.90), the market administrator shall pay to each 
handler the amount, if any, by which the amount computed pursuant to 
Sec.  1051.71(b) exceeds the amount computed pursuant to Sec.  
1051.71(a). If, at such time, the balance in the producer-settlement 
fund is insufficient to make all payments pursuant to this section, the 
market administrator shall reduce uniformly such payments and shall 
complete the payments as soon as the funds are available.


Sec.  1051.73  Payments to producers and to cooperative associations.

    (a) Handler payment responsibility. Each handler shall pay each 
producer for producer milk for which payment is not made to a 
cooperative association pursuant to paragraph (b) of this section, as 
follows:
    (1) Partial payment. For each producer who has not discontinued 
shipments as of the date of this partial payment, payment shall be made 
so that it is received by each producer on or before the last day of 
the month (except as provided in Sec.  1000.90) for milk received 
during the first 15 days of the month from the producer at not less 
than the lowest announced class price for the preceding month, less 
proper deductions authorized in writing by the producer.
    (2) Final payment. For milk received during the month, payment 
shall be made so that it is received by each producer no later than the 
19th day after the end of the month (except as provided in Sec.  
1000.90) in an amount not less than the sum of:
    (i) The hundredweight of producer milk received times the producer 
price differential for the month as adjusted pursuant to Sec.  1051.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for 
the month;
    (iv) The pounds of other solids received times the other solids 
price for the month;
    (v) Less any payment made pursuant to paragraph (a)(1) of this 
section;
    (vi) Less proper deductions authorized in writing by such producer, 
and plus or minus adjustments for errors in previous payments to such 
producer subject to approval by the market administrator;
    (vii) Less deductions for marketing services pursuant to Sec.  
1000.86; and
    (viii) Less deductions authorized by CDFA for the California Quota 
Program pursuant to Sec.  1051.11.
    (b) Payments for milk received from cooperative association 
members. On or before the day prior to the dates specified in 
paragraphs (a)(1) and (2) of this section (except as provided in Sec.  
1000.90), each handler shall pay to a cooperative association for milk 
from producers who market their milk through the cooperative 
association and who have authorized the cooperative to collect such 
payments on their behalf an amount equal to the sum of the individual 
payments otherwise payable for such producer milk pursuant to 
paragraphs (a)(1) and (2) of this section.
    (c) Payment for milk received from cooperative association pool 
plants or from cooperatives as handlers pursuant to Sec.  1000.9(c). On 
or before the day prior to the dates specified in paragraphs (a)(1) and 
(2) of this section (except as provided in Sec.  1000.90), each handler 
who receives fluid milk products at its plant from a cooperative 
association in its capacity as the operator of a pool plant or who 
receives milk from a cooperative association in its capacity as a 
handler pursuant to Sec.  1000.9(c), including the milk of producers 
who are not members of such association and who the market 
administrator determines have authorized the cooperative association to 
collect payment for their milk, shall pay the cooperative for such milk 
as follows:
    (1) For bulk fluid milk products and bulk fluid cream products 
received from a cooperative association in its capacity as the operator 
of a pool plant and for milk received from a cooperative association in 
its capacity as a handler pursuant to Sec.  1000.9(c) during the first 
15 days of the month, at not less than the lowest announced class 
prices per hundredweight for the preceding month;
    (2) For the total quantity of bulk fluid milk products and bulk 
fluid cream products received from a cooperative association in its 
capacity as the operator of a pool plant, at not less than the total 
value of such products received from the association's pool plants, as 
determined by multiplying the respective quantities assigned to each 
class under Sec.  1000.44, as follows:
    (i) The hundredweight of Class I skim milk times the Class I skim 
milk price for the month plus the pounds of Class I butterfat times the 
Class I butterfat price for the month. The Class I price to be used 
shall be that price effective at the location of the receiving plant;
    (ii) The pounds of nonfat solids in Class II skim milk by the Class 
II nonfat solids price;
    (iii) The pounds of butterfat in Class II times the Class II 
butterfat price;
    (iv) The pounds of nonfat solids in Class IV times the nonfat 
solids price;
    (v) The pounds of butterfat in Class III and Class IV milk times 
the butterfat price;
    (vi) The pounds of protein in Class III milk times the protein 
price;
    (vii) The pounds of other solids in Class III milk times the other 
solids price; and
    (viii) Add together the amounts computed in paragraphs (c)(2)(i) 
through (vii) of this section and from that sum deduct any payment made 
pursuant to paragraph (c)(1) of this section; and
    (3) For the total quantity of milk received during the month from a 
cooperative association in its capacity as a handler under Sec.  
1000.9(c) as follows:
    (i) The hundredweight of producer milk received times the producer 
price differential as adjusted pursuant to Sec.  1051.75;
    (ii) The pounds of butterfat received times the butterfat price for 
the month;
    (iii) The pounds of protein received times the protein price for 
the month;
    (iv) The pounds of other solids received times the other solids 
price for the month; and

[[Page 26556]]

    (v) Add together the amounts computed in paragraphs (c)(3)(i) 
through (v) of this section and from that sum deduct any payment made 
pursuant to paragraph (c)(1) of this section.
    (d) Handler underpayment proration. If a handler has not received 
full payment from the market administrator pursuant to Sec.  1051.72 by 
the payment date specified in paragraph (a), (b), or (c) of this 
section, the handler may reduce pro rata its payments to producers or 
to the cooperative association (with respect to receipts described in 
paragraph (b) of this section, prorating the underpayment to the volume 
of milk received from the cooperative association in proportion to the 
total milk received from producers by the handler), but not by more 
than the amount of the underpayment. The payments shall be completed on 
the next scheduled payment date after receipt of the balance due from 
the market administrator.
    (e) Payments to missing or deceased producers. If a handler claims 
that a required payment to a producer cannot be made because the 
producer is deceased or cannot be located, or because the cooperative 
association or its lawful successor or assignee is no longer in 
existence, the payment shall be made to the producer-settlement fund, 
and in the event that the handler subsequently locates and pays the 
producer or a lawful claimant, or in the event that the handler no 
longer exists and a lawful claim is later established, the market 
administrator shall make the required payment from the producer-
settlement fund to the handler or to the lawful claimant, as the case 
may be.
    (f) Producer payment record. In making payments to producers 
pursuant to this section, each handler shall furnish each producer, 
except a producer whose milk was received from a cooperative 
association handler described in Sec.  1000.9(a) or (c), a supporting 
statement in a form that may be retained by the recipient which shall 
show:
    (1) The name, address, Grade A identifier assigned by a duly 
constituted regulatory agency, and payroll number of the producer;
    (2) The daily and total pounds, and the month and dates such milk 
was received from that producer;
    (3) The total pounds of butterfat, protein, and other solids 
contained in the producer's milk;
    (4) The minimum rate or rates at which payment to the producer is 
required pursuant to the order in this part;
    (5) The rate used in making payment if the rate is other than the 
applicable minimum rate;
    (6) The amount, or rate per hundredweight, or rate per pound of 
component, and the nature of each deduction claimed by the handler; and
    (7) The net amount of payment to the producer or cooperative 
association.


Sec.  1051.74   [Reserved]


Sec.  1051.75   Plant location adjustments for producer milk and 
nonpool milk.

    For purposes of making payments for producer milk and nonpool milk, 
a plant location adjustment shall be determined by subtracting the 
Class I price specified in Sec.  1051.51 from the Class I price at the 
plant's location. The difference, plus or minus as the case may be, 
shall be used to adjust the payments required pursuant to Sec. Sec.  
1051.73 and 1000.76.


Sec.  1051.76   Payments by a handler operating a partially regulated 
distributing plant.

    See Sec.  1000.76.


Sec.  1051.77   Adjustment of accounts.

    See Sec.  1000.77.


Sec.  1051.78   Charges on overdue accounts.

    See Sec.  1000.78.

Administrative Assessment and Marketing Service Deduction


Sec.  1051.85  Assessment for order administration.

    On or before the payment receipt date specified under Sec.  
1051.71, each handler shall pay to the market administrator its pro 
rata share of the expense of administration of the order at a rate 
specified by the market administrator that is no more than 8 cents per 
hundredweight with respect to:
    (a) Receipts of producer milk (including the handler's own 
production) other than such receipts by a handler described in Sec.  
1000.9(c) that were delivered to pool plants of other handlers;
    (b) Receipts from a handler described in Sec.  1000.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class 
I use pursuant to Sec.  1000.43(d) and other source milk allocated to 
Class I pursuant to Sec.  1000.44(a)(3) and (8) and the corresponding 
steps of Sec.  1000.44(b), except other source milk that is excluded 
from the computations pursuant to Sec.  1051.60(h) and (i); and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec.  1000.76(a)(1)(i) and (ii).


Sec.  1051.86   Deduction for marketing services.

    See Sec.  1000.86.

Subpart D--Miscellaneous Provisions


Sec.  1051.90   Dates.

    See Sec.  1000.90.

    Dated: June 4, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-12245 Filed 6-7-18; 8:45 am]
 BILLING CODE 3410-02-P