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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1131

[DA-97-01]

Milk in the Central Arizona Marketing Area; Suspension of Certain

Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule; suspension.

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SUMMARY: This document continues to suspend certain provisions of the

Central Arizona Federal milk marketing order. The continued 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, 1997 through March 31, 1999.

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, e-mail address Clifford__M__C[email protected].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:

Notice of Proposed Suspension: Issued February 24, 1997; published

March 3, 1997 (62 FR 9381).

The Department is issuing this final rule in conformance with

Executive Order 12866.

This final rule has been reviewed under Executive Order 12988,

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 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.), the Agricultural Marketing Service has considered the economic

impact of this action on small entities and has certified that this

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. The $500,000 per year criterion for dairy farmers 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. With respect to 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 August 1996, the milk of 102 producers was pooled

on the Central Arizona milk order. Of these producers, 6 produced below

the 326,000-pound production guideline and are considered as small

businesses. Of the total number of producers whose milk was pooled

during that month, 99 were members of United Dairymen of Arizona and 3

were independent producers.

For August 1996, there were 5 handlers operating pool plants under

the Central Arizona milk order. Of these handlers, 2 are considered as

small businesses.

This rule proposes to suspend 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. 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. This rule will not

result in any additional regulatory burden on handlers in the Central

Arizona marketing area since this suspension has been continually in

effect since April 1995.

Preliminary Statement

Notice of proposed rulemaking was published in the Federal Register

on March 3, 1997 (62 FR 9381) 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 opposing the proposed suspension was received from a dairy

farmer.

After consideration of all relevant material, including the

proposal in the notice, the comment received, and other available

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

1, 1997, through March 31, 1999, the following provision of the order

does not tend to effectuate the declared policy of the Act:

In Sec. 1131.7, paragraph (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

[[Page 26736]]

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 continues to suspend certain provisions of the Central

Arizona order for the months of April 1, 1997, through March 31, 1999.

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.

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 previous 12-month period ending with the current

month.

Continuation of the current 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 states that the continued pool status

of their manufacturing plant is threatened if the suspension is not

continued. UDA contends that the same marketing conditions that

warranted the suspension the last two years still exist. UDA maintains

that members who increased their milk production to meet the projected

demands of fluid handlers for distribution into Mexico continue to

suffer the adverse impact of the collapse of the Mexican peso.

The commenter opposing the continuing suspension contends that the

expanded milk production was not for projected demands of fluid

handlers but rather for projected cheese demand. The comment points out

that the suspension will lower the blend price as more milk will be

pooled with the suspension than without it.

During each of the past two years, there has been an increase in

total producer milk in the Central Arizona market. Meanwhile the total

handler requirements for bulk milk deliveries have decreased. However,

it should be noted that Class I utilization has been highly erratic

from month-to-month. For example during the first four months of 1996

fluid utilization on a daily average basis was up 2.6 percent, but for

all of 1996, Class I was down 0.7 percent. The decrease in total

handler deliveries and their erratic movements are likely a result of

changing Class I sales by Central Arizona handlers into Mexico because

of the devaluation of the Mexican peso. The situation has not

stabilized adequately to assure a reliable fluid milk market for

Central Arizona handlers.

Pool status of UDA's manufacturing plant would be jeopardized

absent continuation of the suspension. Without the suspension, costly

and inefficient movements of milk would have to be made to maintain

pool status of producers who have historically supplied the market and

to prevent disorderly marketing in the Central Arizona marketing area.

UDA requested that the suspension be granted for an indefinite

period beginning in April 1997. 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 two-year period.

Accordingly, it is appropriate to suspend the aforesaid provision

for the months of April 1, 1997, through March 31, 1999.

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, and 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.

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 7 CFR Part 1131, is

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: 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, 1997, through March 31, 1999.

Dated: May 9, 1997.

Michael V. Dunn,

Assistant Secretary, Marketing and Regulatory Programs.

[FR Doc. 97-12709 Filed 5-14-97; 8:45 am]

BILLING CODE 3410-02-P