Milk in the Texas Marketing Area; Notice of Proposed Suspension of Certain Provisions of the Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1126

[DA-97-06]

Milk in the Texas Marketing Area; Notice of Proposed Suspension

of Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed suspension of rule.

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SUMMARY: This document invites written comments on a proposal that

would continue the suspension of segments of the pool plant and

producer milk definitions of the Texas order for a two-year period.

Associated Milk Producers, Inc., a cooperative association that

represents producers who supply milk to the market, has requested the

continuation of the suspension. The cooperative asserts that

continuation of this suspension is necessary to ensure that dairy

farmers who have historically supplied the Texas market will continue

to have their milk priced under the Texas order without incurring

costly and inefficient movements of milk.

DATES: Comments are due no later than June 12, 1997.

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, (202) 720-9368.

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, e-mail address: Clifford__M__C[email protected].

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 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.), 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

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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.

For the month of March 1997, the milk of 1,805 producers was pooled

on the Texas Federal milk order. Of these producers, 1,350 producers

were below the 326,000-pound production guideline and are considered

small businesses. During this same period, there were 24 handlers

operating pool plants under the Texas order. Five of these handlers

would be considered small businesses.

This rule proposes to continue the suspension of segments of the

pool plant and producer milk definitions under the Texas order. This

rule would lessen the regulatory impact of the order on certain milk

handlers and would tend to ensure that dairy farmers would continue to

have their milk priced under the order and thereby receive the benefits

that accrue from such pricing.

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.

Proposed Rule

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

the suspension of the following provisions of the order regulating the

handling of milk in the Texas marketing area is being considered for

the months of August 1, 1997, through July 31, 1999:

1. In Sec. 1126.7(d) introductory text, the words ``during the

months of February through July'' and the words ``under paragraph (b)

or (c) of this section''.

2. In Sec. 1126.7(e) introductory text, the words ``and 60 percent

or more of the producer milk of members of the cooperative association

(excluding such milk that is received at or diverted from pool plants

described in paragraphs (b), (c), and (d) of this section) is

physically received during the month in the form of a bulk fluid milk

product at pool plants described in paragraph (a) of this section

either directly from farms or by transfer from plants of the

cooperative association for which pool plant status under this

paragraph has been requested''.

3. In Sec. 1126.13(e)(1), the words ``and further, during each of

the months of September through January not less than 15 percent of the

milk of such dairy farmer is physically received as producer milk at a

pool plant''.

4. In Sec. 1126.13, paragraph (e)(2).

5. In Sec. 1126.13(e)(3), the sentence ``The total quantity of milk

so diverted during the month shall not exceed one-third of the producer

milk physically received at such pool plant during the month that is

eligible to be diverted by the plant operator;''.

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

about the proposed suspension should send two copies to USDA/AMS/Dairy

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

96456, Washington, DC 20090-6456, by the 30th day after publication of

this notice in the Federal Register.

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

This action would continue the suspension of segments of the pool

plant and producer milk definitions under the Texas order. This

proposed suspension would be in effect from August 1997 through July

1999. The current suspension will expire July 31, 1997. The proposed

action would continue the suspension of: (1) The 60 percent delivery

standard for pool plants operated by cooperatives; (2) the diversion

limitation applicable to cooperative associations; (3) the limits on

the amount of milk that a pool plant operator may divert to nonpool

plants; (4) the shipping standards that must be met by supply plants to

be pooled under the order; and (5) the individual producer performance

standards that must be met in order for a producer's milk to be

eligible for diversion to a nonpool plant.

The order permits a cooperative association plant located in the

marketing area to be a pool plant if at least 60 percent of the

producer milk of members of the cooperative association is physically

received at pool distributing plants during the month. In addition, a

cooperative association may divert to nonpool plants up to one-third of

the amount of milk that the cooperative causes to be physically

received during the month at handlers' pool plants. The order also

provides that the operator of a pool plant may divert to nonpool plants

not more than one-third of the milk that is physically received during

the month at the handler's pool plant. The proposed action would

continue to inactivate the 60 percent delivery standard for plants

operated by a cooperative association and remove the diversion

limitations applicable to a cooperative association and to the operator

of a pool plant.

The order also provides for regulating a supply plant each month in

which it ships a sufficient percentage of its receipts to distributing

plants. The order provides for pooling a supply plant that ships 15

percent of its milk receipts during August and December and 50 percent

of its receipts during September through November and January. A supply

plant that is pooled during each of the immediately preceding months of

September through January is pooled under the order during the

following months of February through July without making qualifying

shipments to distributing plants. The requested action would continue

the current suspension of these performance standards for supply plants

that were regulated under the Texas order during each of the

immediately preceding months of September through January.

The order also specifies that the milk of each producer must be

physically received at a pool plant in order to be eligible for

diversion to a nonpool plant. During the months of September through

January, 15 percent of a producer's milk must be received at a pool

plant for diversion eligibility. The proposed action would continue to

suspend these requirements.

The continuation of the current suspension was requested by

Associated Milk Producers, Inc., a cooperative association that

represents a substantial number of dairy farmers who supply the Texas

market. The cooperative stated that marketing conditions have not

changed since the provisions were initially suspended and therefore

should be continued until restructuring of the Federal order program is

achieved as mandated in the 1996 Farm Bill.

The cooperative states that the continuation of the current

suspension is necessary to ensure that dairy farmers who have

historically supplied the Texas market will continue to have their milk

priced under the Texas order. In

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addition they maintain that the suspension would continue to provide

handlers the flexibility needed to move milk supplies in the most

efficient manner and to eliminate costly and inefficient movements of

milk that would be made solely for the purpose of pooling the milk of

dairy farmers who have historically supplied the market.

Accordingly, it may be appropriate to suspend the aforesaid

provisions from August 1, 1997, through July 31, 1999.

List of Subjects in 7 CFR Part 1126

Milk marketing orders.

The authority citation for 7 CFR Part 1126 continues to read as

follows:

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

Dated: May 7, 1997.

Richard M. McKee,

Director, Dairy Division.

[FR Doc. 97-12502 Filed 5-12-97; 8:45 am]

BILLING CODE 3410-02-P