Milk in the Tennessee Valley Marketing Area; Temporary Revision of Certain Provisions of the Order

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DEPARTMENT OF AGRICULTURE

7 CFR Part 1011

[DA-95-02]

Milk in the Tennessee Valley Marketing Area; Temporary Revision

of Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Revision of rule.

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SUMMARY: This document reduces the supply plant shipping requirement of

the Tennessee Valley Federal milk order (Order 11) for the months of

March through July 1995. The proposed action was requested by Armour

Food Ingredients Company (Armour), which operates a proprietary supply

plant pooled under Order 11. Armour contends the action is necessary to

prevent the uneconomical movement of milk and to ensure that producer

milk associated with the market in the fall will continue to be pooled

in the spring and summer months.

EFFECTIVE DATE: March 1, 1995, through July 31, 1995.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist,

USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South

Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932.

SUPPLEMENTARY INFORMATION: 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 rule will

not have a significant economic impact on a substantial number of small

entities. This rule lessens the regulatory impact of the order on

certain milk handlers and tends to ensure that dairy farmers will

continue to have their milk priced under the order and thereby receive

the benefits that accrue from such pricing.

The Department is issuing this final rule in conformance with

Executive Order 12866.

This final rule has been reviewed under Executive Order 12778,

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 this 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 file with

the Secretary a petition stating that the order, any provisions of the

order, or any obligation imposed in connection with the order is not in

accordance with law and request a modification of the 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

its 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 the date of the entry of the ruling.

This temporary revision is issued pursuant to the provisions of the

Agricultural Marketing Agreement Act and the provisions of

Sec. 1011.7(b) of the Tennessee Valley order.

Notice of proposed rulemaking was issued on November 1, 1994, and

published in the Federal Register on November 7, 1994 (59 FR 55377),

concerning a proposed relaxation of the supply plant shipping

requirement. The public was afforded the opportunity to comment on the

proposed notice by submitting written data, views and arguments by

December 7, 1994. One comment letter was received.

Statement of Consideration

The temporary revision reduces the supply plant shipping

requirement from 40 to 30 percent for the period of March through July

1995. The Tennessee Valley order requires that a supply plant ship a

minimum of 60 percent of the total quantity of milk physically received

at the supply plant during the months of August through November,

January, and February, and 40 percent in each of the other months. The

order also provides authority for the Director of the Dairy Division to

increase or decrease this supply plant shipping requirement by up to 10

percentage points if such a revision is necessary to obtain needed

shipments of milk or to prevent uneconomic shipments.

Armour Food Ingredients states that it would have to make

uneconomical shipments of milk from its Springfield, Kentucky, supply

plant to meet the 40 percent shipping standard required for pool status

under Order 11 during the months of March through July. Additionally,

it states that the 40 percent requirement could jeopardize the

continued association of producers who have supplied the Order 11

market in the fall.

At a hearing held in Charlotte, North Carolina, on January 4, 1995,

Armour proposed an amendment to the Tennessee Valley order that would

provide automatic pooling status for a supply plant during the months

of March through July if the plant met the order's shipping

requirements during the preceding months of August through February.

There was no opposition to this proposal at the hearing.

Purity Dairies, Inc., a Nashville, Tennessee, handler that is

regulated under the Georgia order (Order 7), filed a comment opposing

the proposed revision. Purity states that it cannot procure milk from

its traditional supply area in central Kentucky in competition with

Armour and other Order 11 handlers because its blend price in Nashville

is no longer competitive with the Order 11 blend price. It states that

Armour is attracting more milk than is needed and that ``this practice

of hoarding milk supplies should not be tolerated.''

There was no testimony on the record of the recently-concluded

hearing to suggest that Armour is hoarding milk supplies. None of the

plants which receive milk from Armour indicated that Armour was not

shipping enough milk. In fact, the record showed that Armour

consistently exceeded the order's 60- percent shipping requirement and

that during certain short production months Armour shipped in excess of

90 percent of its milk to distributing plants.

While it is true that Purity's blend price under Order 7 and

former1 Order 98 (Nashville, Tennessee) was frequently close to or

below the Order 11 blend price during the period from December 1993

through April 1994, data introduced into the record of the Charlotte

hearing indicate that since July 1994 the Nashville-Springfield price

relationship has returned to a more normal pattern, as shown in Table

1.

Table 1.--Comparison of Blend Prices: January 1992-November 1994,

Nashville, TN (Order 98/7)--Springfield, KY (Order 11)

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Average blend

price at Average blend

Nashville, TN, price at Difference

under order 98/ Springfield, KY,

7\1\ under order 11

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1/92-1/93........ 13.85 13.58 .26

12/93-/94........ 14.22 14.33 -.11

5/94-1/94........ 14.01 13.72 .28

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\1\The Nashville, Tennessee, order was terminated effective July 31,

1993.

If Purity has difficulty in attracting a milk supply, it should

direct its concern

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to the open record for the proposed Southeast marketing area, which

encompasses the Nashville area. Purity's opposition to Armour's request

for a modest reduction in shipping requirements is insufficient basis

for denying the request, particularly in light of the absence of any

opposition to Armour's proposal at the Charlotte hearing for NO

shipping requirements during the months of March through July.

After consideration of all relevant material, including the

proposal set forth in the aforesaid notice, and other available

information, it is hereby found and determined that the supply plant

shipping percentage set forth in Sec. 1011.7(b) should be reduced from

40 to 30 percent for the months of March through July 1995.

List of Subjects in 7 CFR Part 1011

Milk marketing orders.

For the reasons set forth in the preamble, the following provision

in Title 7, Part 1011, is amended as follows:

PART 1011--MILK IN THE TENNESSEE VALLEY MARKETING AREA

1. The authority citation for 7 CFR part 1011 continues to read as

follows:

Authority: Secs. 1-9, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

Sec. 1011.7 [Amended]

2. In Sec. 1011.7(b), the phrase ``40 percent'' is revised to read

``30 percent'' for the period of March 1, 1995, through July 31, 1995.

Dated: January 27, 1995.

Richard M. McKee,

Director, Dairy Division.

[FR Doc. 95-2587 Filed 2-1-95; 8:45 am]

BILLING CODE 3410-02-P