Milk in the Central Arizona Marketing Area; Suspension of Certain Provisions of the Order

DEPARTMENT OF AGRICULTURE

7 CFR Part 1131

[DA-95-11]

Milk in the Central Arizona Marketing Area; Suspension of Certain

Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Suspension of rule.

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SUMMARY: This document suspends certain provisions of the Central

Arizona Federal milk marketing order beginning April 1, 1995, through

March 31, 1996. The suspension eliminates the requirement that a

cooperative association ship at least 50 percent of its receipts to

other handler pool plants to maintain pool status of a manufacturing

plant operated by the cooperative. United Dairymen of Arizona, a

cooperative association that represents nearly all of the producers who

supply milk to the market, requested the suspension. The suspension is

necessary to prevent uneconomical and inefficient movements of milk.

EFFECTIVE DATE: April 1, 1995, through March 31, 1996.

FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing

Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room

2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202)

720-9368.

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:

Notice of Proposed Suspension: Issued February 2, 1995; published

February 8, 1995 (60 FR 7466).

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 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

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 order of suspension is issued pursuant to the provisions of

the Agricultural Marketing Agreement Act and of the order regulating

the handling of milk in the Central Arizona marketing area.

Notice of proposed rulemaking was published in the Federal Register

on February 8, 1995 (60 FR 7466) concerning a proposed suspension of

certain provisions of the order. Interested persons were afforded

opportunity to file written data, views and arguments thereon. One

comment supporting and one comment opposing the suspension were

received.

After consideration of all relevant material, including the

proposal in the notice, the comments received and other available

information, it is hereby found and determined that for the months of

April 1, 1995, through March 31, 1996, the following provisions of the

order do not tend to effectuate the declared policy of the Act:

In Sec. 1131.7(c), the words ``50 percent or more of'',

``(including the skim milk and butterfat in fluid milk products

transferred from its own plant pursuant to this paragraph that is not

in excess of the skim milk and butterfat contained in member producer

milk actually received at such plant)'' and ``or the previous 12-month

period ending with the current month.''

Statement of Consideration

This rule suspends certain provisions of the Central Arizona order

for the months of April 1995 through March 1996. The suspension removes

the requirement that a cooperative association that operates a

manufacturing plant in the marketing area must ship at least 50 percent

of its milk supply during the current month or the previous 12-month

period ending with the current month to other handlers' pool plants to

maintain the pool status of its manufacturing plant.

Currently the order permits a cooperative association's

manufacturing plant, located in the marketing area, to be a pool plant

if at least 50 percent of the producer milk of members of the

cooperative association is physically received at pool plants of other

handlers during the current month or the [[Page 17193]] previous 12-

month period ending with the current month.

The suspension of this shipping requirement was requested by United

Dairymen of Arizona (UDA), a cooperative association that represents

nearly all of the dairy farmers who supply the Central Arizona market.

UDA contends that the continued pool status of their manufacturing

plant is threatened by an increase in milk production combined with a

drop in Class I sales. UDA states that in 1994 its member production

increased 17 percent over the previous year. In 1994, monthly

deliveries to distributing plants also increased sufficiently to ensure

UDA a safe margin over the minimum 50 percent shipping requirement to

maintain pool status of its manufacturing plant.

One dairy farmer filed a comment opposing the suspension action.

The dairy farmer opposed the action because it would allow for more

milk to continue to be regulated under the order than would otherwise

be the case. As a result, the dairy farmer asserted that he would

receive a lower blend price than if the action were not taken because

some milk would not qualify for regulation under the order.

During the past year, there has been an increase in the production

of milk and an increase in distributing plant demand. Primarily, the

increased demand is a result of a significant increase in Class I sales

in Mexico by Central Arizona handlers. The recent collapse in value of

the Mexican peso has curtailed these sales and thus reduced handler

requirements for bulk milk deliveries; however, production has not

declined. This general increase in production and decline in sales

affects all producers in the market equally. If the action were not

taken, some milk would not receive the benefits of the blend price

resulting from regulation under the order. By taking this action, all

producers who have historically supplied the market would continue to

share equally in the benefits of regulation without costly and

inefficient movements of milk simply to maintain their pool status.

The comment submitted by UDA in support of the proposed suspension

clarified the specific order language that UDA requested be suspended.

UDA did not intend for the words ``its member producer milk'' and

``received at the pool plants of other handlers during the current

month'' to be included in the proposed suspension. Upon review of UDA's

request and supporting comment, the order language in Sec. 1131.7(c) to

be suspended has been modified to exclude these specific words.

UDA also requested that the suspension be granted for an indefinite

period beginning in March 1995. After reviewing the marketing

conditions of the Central Arizona marketing area and their relationship

with the uncertain value of the Mexican peso, this suspension will be

for a one-year period. The marketing conditions indicate that the

suspension should not begin until April 1995.

Accordingly, it is appropriate to suspend the aforesaid provisions

beginning April 1, 1995, through March 31, 1996.

It is hereby found and determined that thirty days' notice of the

effective date hereof is impractical, unnecessary and contrary to the

public interest in that:

(a) The suspension is necessary to reflect current marketing

conditions and to assure orderly marketing conditions in the marketing

area, in that such rule is necessary to permit the continued pooling of

the milk of dairy farmers who have historically supplied the market

without the need for making costly and inefficient movements of milk;

(b) This suspension does not require of persons affected

substantial or extensive preparation prior to the effective date; and

(c) Notice of proposed rulemaking was given interested parties and

they were afforded opportunity to file written data, views or arguments

concerning this suspension. Two comments were received.

Therefore, good cause exists for making this order effective less

than 30 days from the date of publication in the Federal Register.

List of Subjects in 7 CFR Part 1131

Milk marketing orders.

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

in Title 7, Part 1131, are amended as follows:

PART 1131--MILK IN THE CENTRAL ARIZONA MARKETING AREA

1. The authority citation for 7 CFR Part 1131 continues to read as

follows:

Authority: Secs. 1-19, 48 Stat 31, as amended; 7 U.S.C. 601-674.

Sec. 1131.7 [Suspended in part]

2. In Sec. 1131.7(c), the words ``50 percent or more of'',

``(including the skim milk and butterfat in fluid milk products

transferred from its own plant pursuant to this paragraph that is not

in excess of the skim milk and butterfat contained in member producer

milk actually received at such plant)'' and ``or the previous 12-month

period ending with the current month.'' are suspended for the months of

April 1, 1995, through March 31, 1996.

Dated: March 27, 1995.

Patricia Jensen,

Acting Assistant Secretary. Marketing and Regulatory Programs.

[FR Doc. 95-8353 Filed 4-4-95; 8:45 am]

BILLING CODE 3410-02-P