Milk in the Iowa Marketing Area; Notice of Proposed Revision of Pool Supply Plant Shipping Percentage

SUMMARY: This notice invites written comments on a proposal to increase

the percentage of a supply plant's receipts that must be delivered to

fluid milk plants to qualify a supply plant for pooling under the Iowa

Federal milk order. The applicable percentage would be increased by 10

percentage points, from 35 percent to 45 percent for the months of

September through November 1996, and from 20 percent to 30 percent for

the months of December 1996 through March 1997. The action is requested

by Anderson-Erickson Dairy Company of Des Moines, Iowa, a proprietary

distributing plant that is regulated under the order. Proponent

contends that the action is needed to obtain an adequate supply of milk

for fluid use.

DATES: Comments are due no later than September 11, 1996.

ADDRESSES: Comments (two copies) should be sent to USDA/AMS/Dairy

Division, Order Formulation Branch, Room 2968, South Building, P.O. Box

96456, Washington, DC 20090-6456.

FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing

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

2968, South Building, P.O. Box 96456, Washington, DC 20090-6456, (202)

720-9368.

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 Agricultural

Marketing Service has certified that this action would not have a

significant economic impact on a substantial number of small entities.

Such action would tend to ensure that an adequate supply of fluid milk

is available to consumers in the marketing area.

The Department is issuing this proposed rule in conformance with

Executive Order 12866.

This proposed revision of rules has been reviewed under Executive

Order 12988, Civil Justice Reform. This action is not intended to have

retroactive effect. If adopted, this proposed action 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 request 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 date of the entry of the ruling.

Notice is hereby given that, pursuant to the provisions of the

Agricultural Marketing Agreement Act of 1937 and the provisions of

Sec. 1079.7(b)(1) of the order, the revision of certain provisions of

the order regulating the handling of milk in the Iowa marketing area is

being considered for the months of September 1, 1996 through March 31,

1997.

All persons who desire to submit written data, views or arguments

about the proposed revision should send two copies of their views to

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

Building, P.O. Box 96456, Washington, DC 20090-6456 by the 7th day

after publication of this notice in the Federal Register. The filing

period is limited to seven days because a longer period would not

provide the time needed to complete the required procedures and include

September in the temporary revision period.

All written submissions made pursuant to this notice will be made

available for public inspection in the Dairy Division during regular

business hours (7 CFR 1.27(b)).

Small Business Consideration

Actions under the Federal milk order program are subject to the

Regulatory Flexibility Act (Pub. L. 96-354). This Act seeks to ensure

that, within the statutory authority of a program, the regulatory and

informational requirements are tailored to the size and nature of small

businesses. For the purpose of the Act, a dairy farm is a ``small

business'' if it has an annual gross revenue of less than $500,000, and

a dairy products manufacturer is a ``small business'' if it has fewer

than 500 employees. For the purpose of determining which dairy farms

are ``small businesses'', the $500,000 per year criterion was divided

by 12, then by the uniform price, to arrive at a 300,000 pounds-per-

month limit for ``small'' dairy farmers.

The supply plant shipping percentage provisions proposed to be

revised are incorporated in the order to assure an adequate supply of

milk for the fluid market. It is expected that producers and their

handlers who share in the benefits of the higher-valued fluid uses of

the market through their participation in a marketwide pool should be

required to help supply milk to fluid milk distributing plants when

additional supplies are needed. As a result of this expectation, order

provisions based on testimony and data presented at a public hearing in

which all interested parties were encouraged to participate were

promulgated and approved by at least two-thirds of the dairy farmers

whose milk was pooled under the Iowa order.

The Iowa order provides that the pool supply plant shipping

percentages in the order may be increased or reduced by the Director of

the Dairy Division, Agricultural Marketing Service, to assure that an

adequate supply of milk will be made available to distributing plants,

or to avoid excessive costs of

[[Page 46572]]

hauling and handling milk that may be moved to distributing plants only

to pool plentiful supplies of producer milk.

For the month of June 1996, 2,896 dairy farmers were producers

under the Iowa milk order. Of these, all but 24 would be considered

small businesses, having under 300,000 pounds of production for the

month. Of the dairy farmers in the small business category, 2,312

produced under 100,000 pounds of milk, 515 produced between 100,000 and

200,000 pounds, and 45 produced between 200,000 and 300,000 pounds of

milk during June.

The reports filed on behalf of the slightly more than 20 milk

handlers pooled, or regulated, under the Iowa order in June 1996 were

filed for individual establishments that, for the most part, would meet

the SBA definition of a small business, having less than 500 employees.

However, most of these establishments are part of larger businesses

that operate multiple plants, and meet the definition of large entities

on that basis.

The proposed revision would increase the percentage of milk

receipts that handlers are required to move to fluid milk distributing

plants. If the shipping percentages are revised, some handlers may

choose to move increased volumes of their milk supplies from

manufacturing uses to fluid use in order to assure that all of their

producer milk supplies will be able to share in the benefits of the

marketwide pool. Some handlers may elect to not pool some of their

producer milk supplies rather than ship more milk to distributing

plants. Others may already be moving as much as they would be required

to move under increased percentages, and would be unaffected by the

proposed revision.

If the shipping percentages are not increased the distributing

plant operator requesting the revision, who would be described as a

large entity on the basis of its multiple plant operations, may not be

able to obtain an adequate supply of milk at a competitive price to

meet its needs. The handlers from whom the distributing plant handler

would be most likely to receive increased shipments are also, for the

most part, large entities.

Interested parties are invited to submit comments on the probable

regulatory and informational impact of this proposed rule on small

businesses. Also, parties may suggest modifications of this proposal

for the purpose of tailoring their applicability to small businesses.

Statement of Consideration

The provision proposed for revision is the percentage of a supply

plant's receipts required to be shipped to pool distributing plants

pursuant to Sec. 1079.7(b) of the Iowa Federal milk order (Order 79).

As proposed, the percentage of a supply plant's receipts that must be

shipped to pool distributing plants (fluid milk plants) if the supply

plant is to be considered a pool plant would be increased by the

maximum allowable 10 percentage points, from 35 percent to 45 percent

for the period September 1, 1996, through November 30, 1996, and from

20 percent to 30 percent for the period December 1, 1996, through March

31, 1997.

Section 1079.7(b)(1) allows the Director of the Dairy Division to

reduce or increase a pool supply plant's minimum shipping requirement

by up to 10 percentage points to prevent uneconomic milk shipments or

to assure an adequate supply of milk for fluid use.

Anderson-Erickson Dairy Company (A-E), a fluid milk processing

plant that is a pool distributing plant under Order 79, requested that

the shipping percentage be increased. The handler's request states that

it is unable to obtain a supply of milk at the present market price,

leaving A-E short of its needs for fluid milk. A-E cites difficulty in

attracting milk for high-valued bottling use, which requires drawing

milk away from lower-valued uses of milk such as nonfat dry milk and

cheese that may be more remunerative to processors.

In view of the foregoing, it may be appropriate to increase the

shipping percentage requirements for pool supply plants as proposed to

provide for the efficient and economic marketing of milk during the

months of September 1, 1996, through March 31, 1997.

List of Subjects in 7 CFR Part 1079

Milk marketing orders.

The authority citation for 7 CFR Part 1079 continues to read as

follows:

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

Dated: August 26, 1996.

Richard M. McKee,

Director, Dairy Division.

[FR Doc. 96-22452 Filed 9-3-96; 8:45 am]

BILLING CODE 3410-02-P