Milk in the Iowa Marketing Area; Proposed Temporary Revision of Certain Provisions of the Order

SUMMARY: This document invites written comments on a proposal to

decrease 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

decreased by 10 percentage points from 30 percent of plant receipts to

20 percent of such receipts for the months of December 1996 through

March 1997. The action was requested by Beatrice Cheese, Inc., which

contends that the action is necessary to prevent the uneconomic

shipment of milk from its Fredericksburg, Iowa, supply plant.

DATES: Comments must be submitted on or before December 19, 1996.

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

Division, Order Formulation Branch, Room 2971, South Building, P.O. Box

96456, Washington, DC 20090-6456. Advance copies of such comments may

be faxed to (202) 690-0552.

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 Department is issuing this proposed rule

in conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This rule is not intended to have a retroactive

effect. If adopted, this proposed 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 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. 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.

Small Business Consideration

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), as amended, the Agricultural Marketing Service has considered

the economic impact of this action on small entities and has certified

that this proposed 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 $500,000, 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 $500,000 per year criterion was used to

establish a production guideline of 326,000 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.

The supply plant shipping percentages proposed to be revised are

incorporated into the order to prevent the uneconomic shipment of milk.

This proposed action will decrease the percentage of milk receipts that

handlers are required to move to fluid milk distributing plants. With a

decrease in the shipping percentage, supply plant operators will not

have to move milk uneconomically to pool distributing plants to keep

the milk received at their plants priced under the order.

The proposed reduction of the required supply plant shipping

percentage for the months of December 1996 through March 1997 would

allow the milk of producers traditionally associated with the Iowa

market to continue to be pooled and priced under the order. The

proposed revision would lessen the likelihood that more milk shipments

to pool plants might be required under the order than are actually

needed to supply the fluid milk needs of the market and would result in

savings in hauling costs for handlers and producers.

Interested parties are invited to submit comments on the probable

regulatory and informational impact of this proposed rule on small

entities. Also, parties may suggest modifications of this proposal for

the purpose of tailoring their applicability to small businesses.

Notice of Proposed Revision and Opportunity to File Comments

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

Agricultural Marketing Agreement Act and the provisions of

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

provisions of the order regulating the handling of milk in the Iowa

marketing area is being considered for the months of December 1996

through March 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 the publication of this notice in the Federal Register. The

period for filing comments is limited to 7 days because a longer period

would not provide the time

[[Page 65367]]

needed to complete the required procedures and include December 1996 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)).

Statement of Consideration

Section 1079.7(b)(1) of the Iowa order 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 shipments of milk or to assure an adequate supply of milk

for fluid use. Beatrice Cheese, Inc., which operates a pool supply

plant regulated under the Iowa order, requested that the percentages be

decreased by 10 percentage points for the months of November 1996

through March 1997. The proponent's request states that the

Department's October 23, 1996, shipping percentage revision increasing

the shipping percentages from 30 percent of plant receipts to 35

percent for the months of September through November beginning with

October 1996, and from 20 percent to 30 percent for the months of

December 1996 through March 1997, has caused unjust financial losses,

and has encouraged uneconomic shipments of milk by Beatrice in attempts

to meet Federal order requirements. Beatrice contends that it was not

able to pool 10,500,000 lbs. of producer milk to comply with order

requirements to the detriment of Iowa's dairy farmers.

Additionally, Beatrice states that market conditions have changed

drastically since the October 23, 1996, decision. Furthermore,

according to Beatrice, the recent drop in the cheese and butter markets

has resulted in more than an adequate supply of milk for fluid use,

which should continue through the spring of 1997, thereby eliminating

the need for increased shipping percentages.

As proposed by Beatrice, the percentage of a supply plant's

receipts that must be shipped to pool distributing plants if the supply

plant is to be considered a pool plant would be decreased by 10

percentage points, from 35 percent to 25 percent, for the month of

November 1996, and from 30 percent to 20 percent for the months of

December 1996 through March 1997. Although Beatrice's request seeks to

revise the supply plant shipping percentage for November 1996, it is

impractical and infeasible to include such month in this proposed

action based on the amount of time necessary for the required

procedures, including a comment period. Therefore, comments should be

directed towards the proposal involving the December 1996 through March

1997 period.

In view of the current supply and demand relationship, it may be

necessary to decrease the shipping percentage requirements for pool

supply plants under Order 79 as proposed to provide for the efficient

and economic marketing of milk during the months of December 1996

through March 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: December 6, 1996.

Richard M. McKee,

Director, Dairy Division.

[FR Doc. 96-31563 Filed 12-11-96; 8:45 am]

BILLING CODE 3410-02-P