Milk in the Paducah, Kentucky, Marketing Area; Order Amending the Order

SUMMARY: This final rule amends the Paducah, Kentucky, Federal milk

order based on final decisions issued by the Acting Assistant Secretary

on December 2, 1994 (59 FR 64524) and on January 27, 1995 (60 FR 7290).

The amendments to the order provide a new formula to price Class II

milk and implement the base month Minnesota-Wisconsin (M-W) price

updated with a butter/powder/cheese formula as the replacement for the

M-W price series.

EFFECTIVE DATE: June 5, 1995.

FOR FURTHER INFORMATION CONTACT: John F. Borovies, Chief, Order

Formulation Branch, USDA/AMS/Dairy Division, Room 2968, South Building,

P.O. Box 96456, Washington, D.C. 20090-6456, (202) 720-6274.

SUPPLEMENTARY INFORMATION: 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 Order

12866.

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the

Agency to examine the impact of a proposed rule on small entities.

Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural

Marketing Service has certified that this action will not have a

significant economic impact on a substantial number of small entities.

The amended order will promote more orderly marketing of milk by

producers and regulated handlers.

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This action is not intended to have retroactive

effect. This rule will not preempt any state or local laws,

regulations, or policies, unless they present an irreconcilable

conflict with this rule.

The Agricultural Marketing Agreement Act of 1937, as amended (7

U.S.C. 601-674) (the Act), 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 file with

the Secretary 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 and requesting a modification of an order or to

be exempted from the order. A handler is afforded the opportunity for a

hearing on the petition. After a hearing, the Secretary 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

his or her principal place of business, has jurisdiction in equity to

review the Secretary's ruling on the petition, provided a bill in

equity is filed not later than 20 days after date of the entry of the

ruling.

Prior documents in this proceeding:

Notice of Hearing (M-W price): Issued May 12, 1992; published May

15, 1992 (57 FR 20790).

Notice of Hearing (Class II price): Issued December 14, 1993;

published December 21, 1993 (58 FR 67380).

Recommended Decision (M-W price): Issued August 3, 1994; published

August 8, 1994 (59 FR 40418).

Recommended Decision (Class II price): Issued August 22, 1994;

published August 26, 1994 (59 FR 44074).

Final Decision (Class II price): Issued December 2, 1994; published

December 14, 1994 (59 FR 64524).

Final Rule (Class II price): Issued January 27, 1995; published

February 2, 1995 (60 FR 6606).

Final Decision (M-W price): Issued January 27, 1995; published

February 7, 1995 (60 FR 7290).

Proposed Termination of Order: Issued March 3, 1995; published

March 9, 1995 (60 FR 12907).

Extension of Time for Filing Comments on Proposed Termination of

Order: Issued March 27, 1995; published March 31, 1995 (60 FR 16589).

Final Rule (M-W price): Issued April 6, 1995; published April 14,

1995 (60 FR 18952).

Referendum Order: Issued May 8, 1995; published May 12, 1995 (60 FR

25628).

Findings and Determinations

The proceeding on the proposed termination of the Paducah,

Kentucky, milk marketing order, issued March 3, 1995 (60 FR 12907), is

hereby terminated.

When producer approval of the order, as proposed to be amended, was

not indicated in a referendum conducted in the Class II proceeding,

comments were sought concerning possible termination of the order. The

number of comments received from producers indicated that there was

support for the order and provided a sufficient basis for conducting

another referendum. Thus, another referendum was conducted to determine

if producers approved of the order as amended by the Class II

proceeding and by the M-W proceeding. The order, as proposed to be

amended, was subsequently approved. Therefore, it is appropriate at

this time to terminate the proposed termination proceeding issued March

3, 1995, and to proceed to amend the order as approved by producers.

The following findings and determinations hereinafter set forth

supplement those that were made when the Paducah, Kentucky, order was

first issued and when it was 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

aforesaid order:

(a) Findings upon the basis of the hearing records. 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), public hearings were held upon

certain proposed amendments to the tentative marketing agreements and

to the orders regulating the handling of [[Page 29466]] milk in all

Federal milk order marketing areas.

Upon the basis of the evidence introduced at such hearings and the

records thereof, it is found that:

(1) The Paducah, Kentucky, order 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 marketing area, and the minimum

prices specified in the order, 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 order, 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 and commercial activity specified in,

marketing agreements upon which a hearing has been held.

(b) Additional findings. It is necessary in the public interest to

make this order amending the Paducah, Kentucky, order effective June 5,

1995. Any delay beyond that date would disrupt the orderly marketing of

milk in the marketing area because there would be no pricing

constituent available to use to establish minimum prices of milk.

The provisions of this order are known to handlers. The final

decisions of the Acting Assistant Secretary containing proposed

amendments to the order were issued on December 2, 1994, and January

27, 1995, and were published in the Federal Register on December 14,

1994 (59 FR 64524), and February 7, 1995 (60 FR 7290), respectively.

The changes effected by this order will not require extensive

preparation or substantial alteration in method of operation for

handlers. In view of the foregoing, it is hereby found and determined

that good cause exists for making this order amending the Paducah,

Kentucky, order effective June 5, 1995, and that it would be contrary

to the public interest to delay the effective date of this order for 30

days after its 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 Section 8c(9) of the Act) of more than 50

percent of the milk which is marketed within the marketing area 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 order 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;

and

(3) The issuance of the order amending the order is approved or

favored by producers of at least two-thirds of the milk produced for

sale in the marketing area who participated in a referendum and who

during the determined representative period were engaged in the

production of milk for sale in the marketing area.

List of Subjects in 7 CFR Part 1099

Milk marketing orders.

Order Relative to Handling

It is therefore ordered, that on and after June 5, 1995, the

handling of milk in the Paducah, Kentucky, marketing area shall be in

conformity to and in compliance with the terms and conditions of the

order, as amended, and as hereby further amended, as follows:

PART 1099--MILK IN THE PADUCAH, KENTUCKY, MARKETING AREA

1. The authority citation for 7 CFR Part 1099 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. Section 1099.20 is removed.

3. Section 1099.50 is amended by revising paragraph (b) to read as

follows:

Sec. 1099.50 Class prices.

* * * * *

(b) Class II price. The Class II price shall be the basic formula

price for the second preceding month plus $0.30.

* * * * *

4. Section 1099.51 is revised to read as follows:

Sec. 1099.51 Basic formula price.

The basic formula price shall be the preceding month's average pay

price for manufacturing grade milk in Minnesota and Wisconsin using the

``base month'' series, as reported by the Department, adjusted to a 3.5

percent butterfat basis using the butterfat differential for the

preceding month computed pursuant to Sec. 1099.74 and rounded to the

nearest cent, plus or minus the change in gross value yielded by the

butter-nonfat dry milk and Cheddar cheese product price formula

computed pursuant to paragraphs (a) through (e) of this section.

(a) The gross values of per hundredweight of milk used to

manufacture butter-nonfat dry milk and Cheddar cheese shall be

computed, using price data determined pursuant to paragraph (b) of this

section and annual yield factors, for the preceding month and

separately for the current month as follows:

(1) The gross value of milk used to manufacture butter-nonfat dry

milk shall be the sum of the following computations:

(i) Multiply the Grade AA butter price by 4.27;

(ii) Multiply the nonfat dry milk price by 8.07; and

(iii) Multiply the dry buttermilk price by 0.42.

(2) The gross value of milk used to manufacture Cheddar cheese

shall be the sum of the following computations:

(i) Multiply the Cheddar cheese price by 9.87; and

(ii) Multiply the Grade A butter price by 0.238.

(b) The following product prices shall be used pursuant to

paragraph (a) of this section:

(1) Grade AA butter price. Grade AA butter price means the simple

average for the month of the Chicago Mercantile Exchange, Grade AA

butter price, as reported by the Department.

(2) Nonfat dry milk price. Nonfat dry milk price means the simple

average for the month of the Western Nonfat Dry Milk Low/Medium Heat

price, as reported by the Department.

(3) Dry buttermilk price. Dry buttermilk price means the simple

average for the month of the Western Dry Buttermilk price, as reported

by the Department.

(4) Cheddar cheese price. Cheddar cheese price means the simple

average for the month of the National Cheese Exchange 40-pound block

Cheddar cheese price, as reported by the Department.

(5) Grade A butter price. Grade A butter price means the simple

average for the month of the Chicago Mercantile Exchange Grade A butter

price, as reported by the Department.

(c) Determine the amounts by which the gross value per

hundredweight of milk used to manufacture butter-nonfat dry milk and

the gross value per hundredweight of milk used to manufacture Cheddar

cheese for the current month exceed or are less than the respective

gross values for the preceding month.

(d) Compute weighting factors to be applied to the changes in gross

values determined pursuant to paragraph (c) of this section by

determining the relative proportion that the data included in each of

the following paragraphs is of the total of the data represented in

[[Page 29467]] paragraphs (d)(1) and (d)(2) of this section:

(1) Combine the total nonfat dry milk production for the States of

Minnesota and Wisconsin, as reported by the Department, for the most

recent preceding period, and divide by the annual yield factor for

nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of

milk used in the production of butter-nonfat dry milk; and

(2) Combine the total American cheese production for the States of

Minnesota and Wisconsin, as reported by the Department, for the most

recent preceding period, and divide by the annual yield factor for

Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of

milk used in the production of American cheese.

(e) Compute a weighted average of the changes in gross values per

hundredweight of milk determined pursuant to paragraph (c) of this

section in accordance with the relative proportions of milk determined

pursuant to paragraph (d) of this section.

5. Section 1099.51a is removed.

6. Section 1099.53 is revised to read as follows:

Sec. 1099.53 Announcement of class prices.

The market administrator shall announce publicly on or before the

fifth day of each month the Class I price and the Class II price for

the following month, and the Class III and Class III-A prices for the

preceding month.

7. Section 1099.74 is revised to read as follows:

Sec. 1099.74 Butterfat differential.

For milk containing more or less than 3.5 percent butterfat, the

uniform price shall be increased or decreased, respectively, for each

one-tenth percent butterfat variation from 3.5 percent by a butterfat

differential, rounded to the nearest one-tenth cent, which shall be

0.138 times the current month's butter price less 0.0028 times the

preceding month's average pay price per hundredweight, at test, for

manufacturing grade milk in Minnesota and Wisconsin, using the ``base

month'' series, adjusted pursuant to Sec. 1099.51 (a) through (e), as

reported by the Department. The butter price means the simple average

for the month of the Chicago Mercantile Exchange, Grade A butter price

as reported by the Department.

Dated: May 31, 1995.

Patricia Jensen,

Acting Assistant Secretary, Marketing and Regulatory Programs.

[FR Doc. 95-13688 Filed 6-2-95; 8:45 am]

BILLING CODE 3410-02-P