[Federal Register: October 12, 2005 (Volume 70, Number 196)]
[Rules and Regulations]
[Page 59221-59224]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc05-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1005 and 1007
[Docket No. AO-388-A15 and AO-366-A44; DA-03-11]
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 partial final rule amends the Appalachian and Southeast
marketing orders. Specifically, the final rule expands the Appalachian
milk marketing area, eliminates the ability to simultaneously pool the
same milk on the Appalachian or Southeast order and on a State-operated
milk order that has marketwide pooling, and amends the transportation
credit provisions of the Southeast and Appalachian orders. The
amendments are based on record evidence of a public hearing held
February 2004. More than the required number of dairy farmers approved
the issuance of the amended orders.
EFFECTIVE DATE: November 1, 2005.
FOR FURTHER INFORMATION CONTACT: Antoinette M. Carter, Marketing
Specialist, USDA/AMS/Dairy Programs, Order Formulation and Enforcement,
STOP 0231--Room 2971, 1400 Independence Avenue, SW., Washington, DC
20250-0231, (202) 690-3465, e-mail address: antoinette.carter@usda.gov.
SUPPLEMENTARY INFORMATION: This administrative action is governed by
the provisions of Sections 556 and 557 of Title 5 of the United States
Code and, therefore, is excluded from the requirements of Executive
Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. This rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with the rule.
The Agricultural Marketing Agreement Act of 1937, as amended, (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
a petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with the law. A handler is afforded the opportunity for a hearing on
the petition. After a hearing, the Department would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has its
principal place of business, has jurisdiction in equity to review the
Department's ruling on the petition, provided a bill in equity is filed
not later than 20 days after the date of the entry of the ruling.
Regulatory Flexibility Act and Paperwork Reduction Act
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.), the Agricultural Marketing Service has considered the economic
impact of this action on small entities and has certified that this
rule will not have a significant economic impact on a substantial
number of small entities. For the purpose of the Regulatory Flexibility
Act, a dairy farm is considered a ``small business'' if it has an
annual gross revenue of less than $750,000, and a dairy products
manufacturer is a ``small business'' if it has fewer than 500
employees.
For the purposes of determining which dairy farms are ``small
businesses,'' the $750,000 per year criterion was used to establish a
production guideline of 500,000 pounds per month. Although this
guideline does not factor in additional monies that may be received by
dairy producers, it should be an inclusive standard for most ``small''
dairy farmers. For purposes of determining a handler's size, if the
plant is part of a larger company operating multiple plants that
collectively exceed the 500-employee limit, the plant will be
considered a large business even if the local plant has fewer than 500
employees.
During February 2004, the month in which the hearing was held, the
milk of 7,311 dairy farmers was pooled on the Appalachian (Order 5) and
Southeast (Order 7) milk orders (3,395 Order 5 dairy farmers and 3,916
Order 7 dairy farmers). Of the total, 3,252 dairy farmers (or 96
percent) and 3,764 dairy farmers (or 96 percent) were considered small
businesses on the Appalachian and Southeast orders, respectively.
During February 2004, there were a total of 36 plants associated
with the Appalachian order (25 fully regulated plants, 7 partially
regulated plants, 1 producer-handler, and 3 exempt plants) and a total
of 51 plants associated with the Southeast order (32 fully regulated
plants, 6 partially regulated plants, and 13 exempt plants). The number
of plants meeting the small business criteria under the Appalachian and
Southeast orders were 13 (or 36 percent) and 13 (or 25 percent),
respectively.
The final rule will expand the Appalachian milk marketing area to
include 25 unregulated counties and 15 unregulated cities in the State
of Virginia that currently are not in any Federal milk marketing area.
Adopted amendments to the producer milk provisions of the Appalachian
and Southeast milk orders will prevent producers who share in the
proceeds of a state marketwide pool from simultaneously sharing in the
proceeds of a Federal marketwide pool on the same milk. In addition,
this final rule amends the transportation credit provisions of the
Appalachian and Southeast orders.
The final rule amendments that will expand the Appalachian
marketing area will likely continue to regulate under the Appalachian
order two fluid milk distributing plants located in Roanoke, Virginia,
and Lynchburg, Virginia, and shift the regulation of a distributing
plant located in Mount Crawford, Virginia, from the Northeast order to
the Appalachian order.
The amendments will allow the Kroger Company's (Kroger) Westover
Dairy plant, located in Lynchburg, Virginia, that competes for a milk
supply with other Appalachian order plants to continue to be regulated
under the order if it meets the order's minimum performance standards.
The plant has been regulated by the Appalachian order since January
2000. In addition, the adopted amendments will remove the disruption
that occurs as a result of the Dean Foods Company's (Dean Foods)
Morningstar Foods plant, located in Mount Crawford, Virginia, shifting
its regulatory status under the Northeast order.
The Appalachian order currently contains a ``lock-in'' provision
that provides that a plant located within the marketing area that meets
the order's minimum performance standard will be regulated by the
Appalachian order even if the majority of the plant's Class I route
sales are in another marketing area. The expansion of the Appalachian
marketing area along with the lock-in provision will regulate fluid
milk distributing plants physically located in the marketing area that
meet the order's minimum performance standard even if
[[Page 59222]]
the majority of their sales are in another Federal order marketing
area. Accordingly, the amendments will regulate three distributing
plants under the Appalachian order: Kroger's Westover Dairy, located in
Lynchburg, Virginia; Dean Foods' Morningstar Foods plant, located in
Mount Crawford, Virginia; and National Dairy Holdings' Valley Rich
Dairy, located in Roanoke, Virginia. Based on Small Business
Administration criteria these are all large businesses.
This final rule contains amendments to the transportation credit
provisions of the Appalachian and Southeast orders. The Appalachian and
Southeast orders contain provisions for a transportation credit
balancing fund from which payments are made to handlers to partially
offset the cost of moving bulk milk into each marketing area to meet
fluid milk demands.
The amendments included in this final rule will increase the
maximum rate of the transportation credit assessment of the Appalachian
and Southeast orders by 3 cents per hundredweight. Specifically, the
amendments will increase the maximum rate of assessment for the
Appalachian order from 6.5 cents per hundredweight to 9.5 cents per
hundredweight while increasing the maximum rate of assessment for the
Southeast order from 7 cents per hundredweight to 10 cents per
hundredweight. Increasing the transportation assessment rates will tend
to minimize the exhaustion of the transportation credit balancing fund
when there is a need to import supplemental milk from outside the
marketing areas to meet Class I needs.
Currently, the Appalachian and Southeast orders provide that
transportation credits shall apply to the milk of a dairy farmer who
was not a ``producer'' under the order during more than two of the
immediately preceding months of February through May but not more than
50 percent of the milk production of the dairy farmer, in aggregate,
was received as producer milk under the order during those two months.
The adopted amendments contained in this final rule will provide the
Market Administrator of the Appalachian order and the Market
Administrator of the Southeast order the discretionary authority to
adjust the 50 percent milk production standard.
This final rule will prohibit the simultaneous pooling of the same
milk on the Appalachian or Southeast milk marketing orders and on a
State-operated order that provides for the marketwide pooling of milk.
Since the 1960's, the Federal milk order program has recognized the
harm and disorder that result to both producers and handlers when the
same milk of a producer is simultaneously pooled on more than one
Federal order. When this occurs, producers do not receive uniform
minimum prices, and handlers receive unwarranted competitive
advantages.
The need to prevent ``double pooling'' became critically important
as distribution areas expanded, orders merged, and a national pricing
surface was adopted. Milk already pooled under a State-operated program
and able to simultaneously be pooled under a Federal order has
essentially the same undesirable outcomes that Federal orders once
experienced and subsequently corrected. Thus, amendments to eliminate
the ``double pooling'' of the same milk on the Appalachian or Southeast
order and a State-operated milk order that has marketwide pooling are
included in this final rule.
The amendments contained in this final rule will be applied to all
Appalachian and Southeast order participants (producers and handlers),
which consist of both large and small business. Since the adopted
amendments in this final rule will be subject to all the orders'
producers and handlers regardless of their size, the provisions are not
expected to provide a competitive advantage to any participant.
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 adopted amendments will have no impact on
reporting, recordkeeping, or other compliance requirements because they
will remain identical to the current requirements. No new forms are
proposed and no additional reporting requirements will be necessary.
This action does not require additional information collection that
requires clearance by the Office of Management and Budget (OMB) beyond
currently approved information collection. The primary sources of data
used to complete the forms are routinely used in most business
transactions. Forms require only a minimal amount of information which
can be supplied without data processing equipment or a trained
statistical staff. Thus, the information collection and reporting
burden is relatively small. Requiring the same reports for all handlers
does not significantly disadvantage any handler that is smaller than
the industry average.
Prior documents in this proceeding:
Notice of Hearing: Issued January 16, 2004; published January 23,
2004 (69 FR 3278).
Partial Recommended Decision: Issued May 13, 2005; published May
20, 2005 (70 FR 29410).
Partial Final Decision: Issued September 15, 2005; published
September 21, 2005 (70 FR 55458).
Findings and Determinations
The following 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 each of the
aforesaid 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 upon
certain proposed amendments to the tentative marketing agreements and
to the orders regulating the handling of milk in the specified
marketing areas.
Upon the basis of the evidence introduced at such hearing and the
record thereof, it is found that:
(1) The said orders as hereby amended, and all of the terms and
conditions thereof, will tend to effectuate the declared policy of the
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 feeds, available
supplies of feeds, and other economic conditions which affect market
supply and demand for milk in the aforesaid marketing areas. The
minimum prices specified in the orders as hereby amended are such
prices as will reflect the aforesaid factors, insure a sufficient
quantity of pure and wholesome milk, and be in the public interest; and
(3) The said orders as hereby amended regulates the handling of
milk in the same manner as, and is applicable only to persons in the
respective classes of industrial or commercial activity specified in,
marketing agreements upon which a hearing has been held.
(4) All milk and milk products handled by handlers, as defined in
the order as hereby amended, are in the
[[Page 59223]]
current of interstate commerce or directly burden, obstruct, or affect
interstate commerce in milk or its products.
(b) Additional Findings. It is necessary and in the public interest
to make these amendments to the Appalachian and Southeast orders
effective November 1, 2005. This effective date will ensure the timely
implementation of the amendments. Any delay beyond that date would tend
to disrupt the orderly marketing of milk in the aforesaid marketing
areas.
The amendments to these orders are known to handlers. The partial
final decision containing the proposed amendments to these orders was
issued on September 15, 2005.
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 theses amendments
effective November 1, 2005. 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
areas to sign a proposed marketing agreement tends to prevent the
effectuation of the declared policy of the Act;
(2) The issuance of this order amending the Appalachian and
Southeast orders are the only practical means pursuant to the declared
policy of the Act of advancing the interests of producers as defined in
the orders as hereby amended;
(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 each of the
marketing areas.
List of Subjects in 7 CFR Parts 1005 and 1007
Milk marketing orders.
Order Relative to Handling
0
It is therefore ordered, that on and after the effective date hereof,
the handling of milk in the Appalachian and Southeast marketing areas
shall be in conformity to and in compliance with the terms and
conditions of the orders, as mended, and as hereby further amended, as
follows:
PART 1005--MILK IN THE APPALACHIAN MARKETING AREA
0
1. The authority citation for 7 CFR part 1005 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 1005.2 is amended by revising the Virginia counties and
cities to read as follows:
Sec. 1005.2 Appalachian marketing area.
* * * * *
Virginia Counties and Cities
Alleghany, Amherst, Augusta, Bath, Bedford, Bland, Botetourt,
Buchanan, Campbell, Carroll, Craig, Dickenson, Floyd, Franklin, Giles,
Grayson, Henry, Highland, Lee, Montgomery, Patrick, Pittsylvania,
Pulaski, Roanoke, Rockbridge, Rockingham, Russell, Scott, Smyth,
Tazewell, Washington, Wise, and Wythe; and the cities of Bedford,
Bristol, Buena Vista, Clifton Forge, Covington, Danville, Galax,
Harrisonburg, Lexington, Lynchburg, Martinsville, Norton, Radford,
Roanoke, Salem, Staunton, and Waynesboro.
* * * * *
0
3. Section 1005.13 is amended by revising the introductory text and
adding a new paragraph (e) to read as follows:
Sec. 1005.13 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) and butterfat contained in milk of a producer that is:
* * * * *
(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.
Sec. 1005.81 [Amended]
0
4. In Sec. 1005.81(a), remove ``$0.065'' and add, in its place,
``$0.095''.
Sec. 1005.82 [Amended]
0
5. In Sec. 1005.82, paragraph (b) is amended by removing the words
``Director of the Dairy Division'' and adding, in their place, the
words ``Deputy Administrator of Dairy Programs'' and adding a new
paragraph (c)(2)(iv) to read as follows:
Sec. 1005.82 Payments from the transportation credit balancing fund.
* * * * *
(c) * * *
(2) * * *
(iv) The market administrator may increase or decrease the milk
production standard specified in paragraph (c)(2)(ii) of this section
if the market administrator finds that such revision is necessary to
assure orderly marketing and efficient handling of milk in the
marketing area. Before making such a finding, the market administrator
shall investigate the need for the revision either on the market
administrator's own initiative or at the request of interested persons.
If the investigation shows that a revision might be appropriate, the
market administrator shall issue a notice stating that the revision is
being considered and inviting written data, views, and arguments. Any
decision to revise an applicable percentage must be issued in writing
at least one day before the effective date.
* * * * *
PART 1007--MILK IN THE SOUTHEAST MARKETING AREA
0
6. The authority citation for 7 CFR part 1007 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
7. Section 1007.13 is amended by revising the introductory text and
adding a new paragraph (e) to read as follows:
Sec. 1007.13 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) and butterfat contained in milk of a producer that is:
* * * * *
(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.
Sec. 1007.81 [Amended]
0
8. In Sec. 1007.81(a), remove ``$0.07'' and add, in its place,
``$0.10''.
Sec. 1007.82 [Amended]
0
9. In Sec. 1007.82, paragraph (b) is amended by removing the words
``Director of the Dairy Division'' and adding, in their place, the
words ``Deputy Administrator of Dairy Programs'' and adding a new
paragraph (c)(2)(iv) to read as follows:
Sec. 1007.82 Payments from the transportation credit balancing fund.
* * * * *
[[Page 59224]]
(c) * * *
(2) * * *
(iv) The market administrator may increase or decrease the milk
production standard specified in paragraph (c)(2)(ii) of this section
if the market administrator finds that such revision is necessary to
assure orderly marketing and efficient handling of milk in the
marketing area. Before making such a finding, the market administrator
shall investigate the need for the revision either on the market
administrator's own initiative or at the request of interested persons.
If the investigation shows that a revision might be appropriate, the
market administrator shall issue a notice stating that the revision is
being considered and inviting written data, views, and arguments. Any
decision to revise an applicable percentage must be issued in writing
at least one day before the effective date.
* * * * *
Dated: October 7, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-20525 Filed 10-7-05; 12:57 pm]
BILLING CODE 3410-02-P