Milk in the Carolina and Certain Other Marketing Areas; Order Amending the Orders

Federal RegisterJul 23, 1997

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1005, 1007, and 1046

[Docket No. AO-388-A9, et al.; DA-96-08]

Milk in the Carolina and Certain Other Marketing Areas; Order

Amending the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends three Federal milk orders in the

Southeastern United States. The amendments modify certain provisions of

the orders regarding transportation credits which were implemented on

an interim basis in order to reimburse handlers for the cost of

importing bulk milk into these markets for fluid use when local

supplies are insufficient to meet fluid needs. More than two-thirds of

the producers in the Carolina, Southeast, and Louisville-Lexington-

Evansville markets approved the adoption of the rules. Producers in the

Tennessee Valley market disapproved the Tennessee Valley milk order as

amended, resulting in the proposed termination of such milk order to be

handled in a separate rulemaking action.

EFFECTIVE DATE: August 1, 1997.

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, (Tel: 202/690-

1932; E-mail:[email protected]).

SUPPLEMENTARY INFORMATION: This administrative rule is governed by the

provisions of Sections 556 and 557 of Title 5 of the United States Code

and, therefore, is excluded from the requirements of 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 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.

The transportation credit provisions, adopted on an interim basis

effective August 10, 1996, were based upon proposals that were

considered at a public hearing held May 15-16, 1996, in Charlotte,

North Carolina. The proposed modifications to the interim amendments

are based upon exceptions to the interim rules and additional testimony

heard at a reopened hearing held December 17-18, 1996, in Atlanta,

Georgia.

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. 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 milk of approximately 7,000 producers is pooled on the

Carolina, Southeast, and Louisville-Lexington-Evansville milk orders.

Of these producers, 95 percent produce below the 326,000-pound

production guideline and are considered to be small businesses.

There are 38 handlers operating pool plants under the three orders.

Of these handlers, 19 have fewer than 500 employees and qualify as

small businesses.

The final rules amending the transportation credit provisions will

promote orderly marketing of milk by producers and regulated handlers

operating within the 3 marketing areas. This rule eliminates the

provision which provides for the transfer of funds from the producer-

settlement fund to the transportation credit balancing fund when the

latter is insufficient to cover the amount of credits to be distributed

to handlers for a given month. Thus, the possibility of a reduction of

uniform prices resulting from transportation credits will no longer

exist.

This final rule also modestly increases the handler assessment from

6 cents to 6.5 cents per hundredweight of Class I producer milk in the

Carolina market and to 7 cents per hundredweight in the Southeast

market, but maintains the current 6-cent assessment in the Louisville-

Lexington-Evansville market. A 6-cent per hundredweight assessment

translates to approximately one-half cent per gallon of milk. The one-

half to one cent assessment increase in Federal Orders 1005 and 1007

will not negatively impact small businesses.

At present, all handlers regulated under the 3 milk orders involved

in this proceeding file a monthly report of receipts and utilization

with the market administrator. The proposed amendments will not

significantly add to the amount of information required to be reported

by those handlers requesting transportation credits. The estimated time

to collect, aggregate, and report this information will vary directly

with the amount of milk for which credits are requested, but should not

be significant.

Prior documents in This Proceeding

Notice of Hearing: Issued May 1, 1996; published May 3, 1996 (61 FR

19861).

Tentative Partial Final Decision: Issued July 12, 1996; published

July 18, 1996 (61 FR 37628).

Interim Amendment of Orders: Issued August 2, 1996; published

August 9, 1996 (61 FR 41488).

Extension of Time for Filing Comments: Issued August 16, 1996;

published August 23, 1996 (61 FR 43474).

Extension of Time for Filing Comments: Issued October 18, 1996;

published October 25, 1996 (61 FR 55229).

Notice of Reopened Hearing: Issued November 19, 1996; published

November 25, 1996 (61 FR 59843).

[[Page 39739]]

Partial Final Decision: Issued May 12, 1997; published May 20, 1997

(62 FR 27525).

Preliminary Statement

The adoption of the amended orders is based on a producer

referendum held in the Louisville-Lexington-Evansville market and a

polling of cooperatives in the Carolina and Southeast markets. More

than two-thirds of the producers in the Carolina, Southeast and

Louisville-Lexington-Evansville markets approved the adoption of the

orders as amended. In a poll of cooperatives conducted for the

Tennessee Valley market, the order, as amended, was disapproved by more

than one-third of the producers eligible to vote. Accordingly, a notice

of proposed termination for the Tennessee Valley marketing area will be

forthcoming as a result of the producers' vote of disapproval.

A question arises with the possible termination of the Tennessee

Valley order. The transportation credit provisions for Orders 5, 7, 11,

and 46 were adopted simultaneously for these 4 orders. Because of the

overlap in supply areas for these markets, producers in any of the

marketing areas of the 4 orders are ineligible for transportation

credits under any of the other 3 orders. With the possible termination

of Order 11, a question may arise concerning the interpretation of

Section 82(c)(2)(ii) in the interim amendments or Section 82(c)(2)(iii)

in the final decision amendments as set forth in the Federal Register

of May 20, 1997, at 62 FR 27525. In either case, the language of those

paragraphs in Orders 5, 7, and 46 states that ``the farm on which the

milk was produced is not located within the specified marketing areas

of this order or the marketing areas of'' the other 3 orders involved

in this proceeding. Thus, Orders 5, 7, and 46 refer to ``the Order 11

marketing area.''

If Order 11 is terminated, the question that arises is whether a

producer located in the former Tennessee Valley marketing area is still

ineligible for a transportation credit under Orders 5, 7, and 46. The

Department maintains that the reference to the Order 11 marketing area

was merely a convenient geographic reference used in lieu of repeating

a lengthy list of counties and cities. Accordingly, the language

referring to the marketing area of Federal Order 11 will continue to be

interpreted as the territory defined in the Tennessee Valley order.

Findings and Determinations

The findings and determinations hereinafter set forth supplement

those that were made when the aforesaid orders were first issued and

when they were amended. The previous findings and determinations are

hereby ratified and confirmed, except where they may conflict with

those set forth herein.

The following findings are hereby made with respect to the

aforesaid orders:

(a) Findings upon the basis of the hearing record. Pursuant to the

provisions of the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), and the applicable rules of practice and

procedure governing the formulation of marketing agreements and

marketing orders (7 CFR Part 900), a public hearing was held upon

certain proposed amendments to the tentative marketing agreement and to

the order regulating the handling of milk in the respective marketing

areas.

Upon the basis of the evidence introduced at such hearing and the

record thereof it is found that:

(1) The said orders, as hereby amended, and all of the terms and

conditions thereof, will tend to effectuate the declared policy of the

Act;

(2) The parity prices of milk, as determined pursuant to section 2

of the Act, are not reasonable in view of the price of feeds, available

supplies of feeds, and other economic conditions which affect market

supply and demand for milk in the marketing area, and the minimum

prices specified in the order, as hereby amended, are such prices as

will reflect the aforesaid factors, ensure a sufficient quantity of

pure and wholesome milk, and be in the public interest; and

(3) The said orders, as hereby amended, regulate the handling of

milk in the same manner as, and are applicable only to persons in the

respective classes of industrial and commercial activity specified in,

marketing agreements upon which a hearing has been held.

(b) Additional Findings. It is necessary in the public interest to

make these amendments to the Carolina, Southeast, and Louisville-

Lexington-Evansville orders effective August 1, 1997. Any delay beyond

that date would tend to disrupt the orderly marketing of milk in the

aforesaid marketing areas.

The amendments to these orders are known to handlers. The partial

final decision containing the proposed amendments to these orders was

issued on May 12, 1997.

The changes that result from these amendments will not require

extensive preparation or substantial alteration in the method of

operation for handlers. In view of the foregoing, it is hereby found

and determined that good cause exists for making these order amendments

effective August 1, 1997. It would be contrary to the public interest

to delay the effective date of these amendments for 30 days after their

publication in the Federal Register. (Sec. 553(d), Administrative

Procedure Act, 5 U.S.C. 551-559.)

(1) The refusal or failure of handlers (excluding cooperative

associations specified in Section 8c(9) of the Act) of more than 50

percent of the milk, which is marketed within each of the specified

marketing areas, to sign a proposed marketing agreement, tends to

prevent the effectuation of the declared policy of the Act;

(2) The issuance of this order amending the Carolina, Southeast,

and Louisville-Lexington-Evansville orders is the only practical means

pursuant to the declared policy of the Act of advancing the interests

of producers as defined in each of the respective orders as hereby

amended;

(3) The issuance of the order amending the Carolina, Southeast, and

Louisville-Lexington-Evansville orders is favored by at least two-

thirds of the producers who were engaged in the production of milk for

sale in the respective marketing areas.

List of Subjects in 7 CFR Parts 1005, 1007, and 1046

Milk marketing orders.

Order Relative to Handling

It is therefore ordered, that on and after the effective date

hereof, the handling of milk in the specified marketing areas shall be

in conformity to and in compliance with the terms and conditions of the

orders, as amended, and as hereby further amended, as follows:

1. The authority citation for 7 CFR Parts 1005, 1007, and 1046

reads as follows:

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

PART 1005--MILK IN THE CAROLINA MARKETING AREA

2. In Sec. 1005.30, paragraphs (a)(7) and (a)(8) are redesignated,

respectively, as paragraphs (a)(8) and (a)(9), new paragraph (a)(7) is

added, and paragraphs (a)(5), (a)(6), and (c)(3) are revised to read as

follows:

Sec. 1005.30 Reports of receipts and utilization.

* * * * *

(a) * * *

(5) Receipts of bulk milk from a plant regulated under another

Federal order,

[[Page 39740]]

except Federal Orders 1007, 1011, and 1046, for which a transportation

credit is requested pursuant to Sec. 1005.82, including the date that

such milk was received;

(6) Receipts of producer milk described in Sec. 1005.82(c)(2),

including the identity of the individual producers whose milk is

eligible for the transportation credit pursuant to that paragraph and

the date that such milk was received;

(7) For handlers submitting transportation credit requests,

transfers of bulk milk to nonpool plants, including the dates that such

milk was transferred;

* * * * *

(3) With respect to milk for which a cooperative association is

requesting a transportation credit pursuant to Sec. 1005.82, all of the

information required in paragraphs (a)(5),(a)(6), and (a)(7) of this

section.

Sec. 1005.32 [Amended]

3. In Sec. 1005.32, a new paragraph (a) is added to read as

follows:

Sec. 1005.32 Other reports.

(a) On or before the 20th day after the end of each month, each

handler described in Sec. 1005.9 (a), (b), and (c) shall report to the

market administrator any adjustments to transportation credit requests

as reported pursuant to Sec. 1005.30(a) (5), (6), and (7).

* * * * *

Sec. 1005.61 [Amended]

4. In Sec. 1005.61, paragraph (a)(4) is removed and paragraphs

(a)(5) and (a)(6) are redesignated as paragraphs (a)(4) and (a)(5),

respectively.

5. Sec. 1005.77 is revised to read as follows:

Sec. 1005.77 Adjustment of accounts.

(a) Whenever verification by the market administrator of payments

by any handler discloses errors made in payments to the producer-

settlement fund pursuant to Sec. 1005.71 or to the transportation

credit balancing fund pursuant to Sec. 1005.81, the market

administrator shall promptly bill such handler for any unpaid amount

and such handler shall, within 15 days, make payment to the market

administrator of the amount so billed. Whenever verification discloses

that payment is due from the market administrator to any handler

pursuant to Sec. 1005.72 or Sec. 1005.82, the market administrator

shall make payment to such handler within 15 days or, in the case of

the transportation credit balancing fund, as soon as funds become

available. If a handler is due additional payment for a month in which

payments to handlers were prorated pursuant to Sec. 1005.82(a), the

additional payment pursuant to this section shall be multiplied by the

final proration percentage computed in Sec. 1005.82(a)(2).

(b) Whenever verification by the market administrator of the

payment by a handler to any producer or cooperative association for

milk received by such handler discloses payment of less than is

required by Sec. 1005.73, the handler shall pay such balance due such

producer or cooperative association not later than the time of making

payment to producers or cooperative associations next following such

disclosure.

Sec. 1005.78 [Amended]

6. In the introductory text of Sec. 1005.78, the number

``1005.81,'' is added following the number ``1005.77,''.

7. In Sec. 1005.81, paragraph (c) is removed and paragraphs (a) and

(b) are revised to read as follows:

Sec. 1005.81 Payments to the transportation credit balancing fund.

(a) On or before the 12th day after the end of the month, each

handler operating a pool plant and each handler specified in

Sec. 1005.9 (b) and (c) shall pay to the market administrator a

transportation credit balancing fund assessment determined by

multiplying the pounds of Class I producer milk assigned pursuant to

Sec. 1005.44 by $0.065 per hundredweight or such lesser amount as the

market administrator deems necessary to maintain a balance in the fund

equal to the total transportation credits disbursed during the prior

June-January period. In the event that during any month of the June-

January period the fund balance is insufficient to cover the amount of

credits that are due, the assessment should be based upon the amount of

credits that would have been disbursed had the fund balance been

sufficient.

(b) The market administrator shall announce publicly on or before

the 5th day of the month the assessment pursuant to paragraph (a) of

this section for the following month.

8. Sec. 1005.82 is revised to read as follows:

Sec. 1005.82 Payments from the transportation credit balancing fund.

(a) Payments from the transportation credit balancing fund to

handlers and cooperative associations requesting transportation credits

shall be made as follows:

(1) On or before the 13th day after the end of each of the months

of July through December and any other month in which transportation

credits are in effect pursuant to paragraph (b) of this section, the

market administrator shall pay to each handler that received, and

reported pursuant to Sec. 1005.30(a)(5), bulk milk transferred from

another order plant as described in paragraph (c)(1) of this section or

that received, and reported pursuant to Sec. 1005.30(a)(6), milk

directly from producers' farms as specified in paragraph (c)(2) of this

section, a preliminary amount determined pursuant to paragraph (d) of

this section to the extent that funds are available in the

transportation credit balancing fund. If an insufficient balance exists

to pay all of the credits computed pursuant to this section, the market

administrator shall distribute the balance available in the

transportation credit balancing fund by reducing payments prorata using

the percentage derived by dividing the balance in the fund by the total

credits that are due for the month. The amount of credits resulting

from this initial proration shall be subject to audit adjustment

pursuant to paragraph (a)(2) of this section;

(2) The market administrator shall accept adjusted requests for

transportation credits on or before the 20th day of the month following

the month for which such credits were requested pursuant to

Sec. 1005.32(a). After such date, a preliminary audit will be conducted

by the market administrator, who will recalculate any necessary

proration of transportation credit payments for the preceding month

pursuant to paragraph (a) of this section. Handlers will be promptly

notified of an overpayment of credits based upon this final computation

and remedial payments to or from the transportation credit balancing

fund will be made on or before the next payment date for the following

month;

(3) Transportation credits paid pursuant to paragraph (a) (1) and

(2) of this section shall be subject to final verification by the

market administrator pursuant to Sec. 1005.77. Adjusted payments to or

from the transportation credit balancing fund will remain subject to

the final proration established pursuant to paragraph (a)(2) of this

section; and

(4) In the event that a qualified cooperative association is the

responsible party for whose account such milk is received and written

documentation of this fact is provided to the market administrator

pursuant to Sec. 1005.30(c)(3) prior to the date payment is due, the

transportation credits for such milk computed pursuant to this

[[Page 39741]]

section shall be made to such cooperative association rather than to

the operator of the pool plant at which the milk was received.

(b) The market administrator may extend the period during which

transportation credits are in effect (i.e., the transportation credit

period) to the months of January and June if a written request to do so

is received 15 days prior to the beginning of the month for which the

request is made and, after conducting an independent investigation,

finds that such extension is necessary to assure the market of an

adequate supply of milk for fluid use. Before making such a finding,

the market administrator shall notify the Director of the Dairy

Division and all handlers in the market that an extension is being

considered and invite written data, views, and arguments. Any decision

to extend the transportation credit period must be issued in writing

prior to the first day of the month for which the extension is to be

effective.

(1) Bulk milk received from a plant regulated under another Federal

order, except Federal Orders 1007, 1011, and 1046, and allocated to

Class I milk pursuant to Sec. 1005.44(a)(12); and

(2) Bulk milk received directly from the farms of dairy farmers at

pool distributing plants subject to the following conditions:

(i) The quantity of such milk that shall be eligible for the

transportation credit shall be determined by multiplying the total

pounds of milk received from producers meeting the conditions of this

paragraph by the lower of:

(A) The marketwide estimated Class I utilization of all handlers

for the month pursuant to Sec. 1005.45(a); or

(B) The Class I utilization of all producer milk of the pool plant

operator receiving the milk after the computations described in

Sec. 1005.44;

(ii) The dairy farmer was not a ``producer'' under this order

during more than 2 of the immediately preceding months of January

through June and not more than 50 percent of the production of the

dairy farmer during those 2 months, in aggregate, was received as

producer milk under this order during those 2 months. However, if

January and/or June are months in which transportation credits are

disbursed pursuant to paragraph (a) of this section, these months shall

not be included in the 2-month limit provided in this paragraph; and

(iii) The farm on which the milk was produced is not located within

the specified marketing area of this order or the marketing areas of

Federal Orders 1007, 1011, or 1046, or within the Kentucky counties of

Allen, Barren, Metcalfe, Monroe, Simpson, and Warren.

(d) Transportation credits shall be computed as follows:

(1) The market administrator shall subtract from the pounds of milk

described in paragraphs (c) (1) and (2) of this section the pounds of

bulk milk transferred from the pool plant receiving the supplemental

milk if milk was transferred to a nonpool plant on the same calendar

day that the supplemental milk was received. For this purpose, the

transferred milk shall be subtracted from the most distant load of

supplemental milk received, and then in sequence with the next most

distant load until all of the transfers have been offset;

(2) With respect to the pounds of milk described in paragraph

(c)(1) of this section that remain after the computations described in

paragraph (d)(1) of this section, the market administrator shall:

(i) Determine the shortest hard-surface highway distance between

the shipping plant and the receiving plant;

(ii) Multiply the number of miles so determined by 0.35 cent;

(iii) Subtract the other order's Class I price applicable at the

shipping plant's location from the Class I price applicable at the

receiving plant as specified in Sec. 1005.53;

(iv) Subtract any positive difference computed in paragraph

(d)(2)(iii) of this section from the amount computed in paragraph

(d)(2)(ii) of this section; and

(v) Multiply the remainder computed in paragraph (d)(2)(iv) of this

section by the hundredweight of milk described in paragraph (d)(2)

introductory text of this section.

(3) For the remaining milk described in paragraph (c)(2) of this

section after computations described in paragraph (d)(1) of this

section, the market administrator shall:

(i) Determine an origination point for each load of milk by

locating the nearest city to the last producer's farm from which milk

was picked up for delivery to the receiving pool plant. Alternatively,

the milk hauler that is transporting the milk of producers described in

paragraph (c)(2) of this section may establish an origination point

following the last farm pickup by stopping at the nearest

independently-operated truck stop with a certified truck scale and

obtaining a weight certificate indicating the weight of the truck and

its contents, the date and time of weighing, and the location of the

truck stop;

(ii) Determine the shortest hard-surface highway distance between

the receiving pool plant and the truck stop or city, as the case may

be;

(iii) Subtract 85 miles from the mileage so determined;

(iv) Multiply the remaining miles so computed by 0.35 cent;

(v) If the origination point determined pursuant to paragraph

(d)(3)(i) of this section is in a Federal order marketing area,

subtract the Class I price applicable at the origination point pursuant

to the provisions of such other order (as if the origination point were

a plant location) from the Class I price applicable at the distributing

plant receiving the milk. If the origination point is not in any

Federal order marketing area, determine the Class I price at the

origination point based upon the provisions of this order and subtract

this price from the Class I price applicable at the distributing plant

receiving the milk;

(vi) Subtract any positive difference computed in paragraph

(d)(3)(v) of this section from the amount computed in paragraph

(d)(3)(iv) of this section; and

(vii) Multiply the remainder computed in paragraph (d)(3)(vi) by

the hundredweight of milk described in paragraph (d)(3) introductory

text of this section.

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA

9. In Sec. 1007.30, paragraphs (a)(7) and (a)(8) are redesignated,

respectively, as paragraphs (a)(8) and (a)(9), new paragraph (a)(7) is

added, and paragraphs (a)(5), (a)(6), and (c)(3) are revised to read as

follows:

Sec. 1007.30 Reports of receipts and utilization.

* * * * *

(a) * * *

(5) Receipts of bulk milk from a plant regulated under another

Federal order, except Federal Orders 1005, 1011, and 1046, for which a

transportation credit is requested pursuant to Sec. 1007.82, including

the date that such milk was received;

(6) Receipts of producer milk described in Sec. 1007.82(c)(2),

including the identity of the individual producers whose milk is

eligible for the transportation credit pursuant to that paragraph and

the date that such milk was received;

(7) For handlers submitting transportation credit requests,

transfers of bulk milk to nonpool plants, including the dates that such

milk was transferred;

* * * * *

[[Page 39742]]

(3) With respect to milk for which a cooperative association is

requesting a transportation credit pursuant to Sec. 1007.82, all of the

information required in paragraphs (a)(5), (a)(6), and (a)(7) of this

section.

* * * * *

10. In Sec. 1007.32, a new paragraph (a) is added to read as

follows:

Sec. 1007.32 Other reports.

(a) On or before the 20th day after the end of each month, each

handler described in Sec. 1007.9 (a), (b), and (c) shall report to the

market administrator any adjustments to transportation credit requests

as reported pursuant to Sec. 1007.30(a) (5), (6), and (7).

* * * * *

Sec. 1007.61 [Amended]

11. In Sec. 1007.61, paragraph (a)(4) is removed and paragraphs

(a)(5) and (a)(6) are redesignated as paragraphs (a)(4) and (a)(5),

respectively.

Sec. 1007.78 [Amended]

12. In the introductory text of Sec. 1007.78, the number

``1007.81,'' is added following the number ``1007.78,''.

Sec. 1007.81 [Amended]

13. In Sec. 1007.81, paragraph (c) is removed and paragraphs (a)

and (b) are revised to read as follows:

Sec. 1007.81 Payments to the transportation credit balancing fund.

(a) On or before the 12th day after the end of the month, each

handler operating a pool plant and each handler specified in

Sec. 1007.9 (b) and (c) shall pay to the market administrator a

transportation credit balancing fund assessment determined by

multiplying the pounds of Class I producer milk assigned pursuant to

Sec. 1007.44 by $0.07 per hundredweight or such lesser amount as the

market administrator deems necessary to maintain a balance in the fund

equal to the total transportation credits disbursed during the prior

June-January period. In the event that during any month of the June-

January period the fund balance is insufficient to cover the amount of

credits that are due, the assessment should be based upon the amount of

credits that would have been disbursed had the fund balance been

sufficient.

(b) The market administrator shall announce publicly on or before

the 5th day of the month the assessment pursuant to paragraph (a) of

this section for the following month.

Sec. 1007.82 [Amended]

14. Sec. 1007.82 is revised to read as follows:

Sec. 1007.82 Payments from the transportation credit balancing fund.

(a) Payments from the transportation credit balancing fund to

handlers and cooperative associations requesting transportation credits

shall be made as follows:

(1) On or before the 13th day after the end of each of the months

of July through December and any other month in which transportation

credits are in effect pursuant to paragraph (b) of this section, the

market administrator shall pay to each handler that received, and

reported pursuant to Sec. 1007.30(a)(5), bulk milk transferred from an

other order plant as described in paragraph (c)(1) of this section or

that received, and reported pursuant to Sec. 1007.30(a)(6), milk

directly from producers' farms as specified in paragraph (c)(2) of this

section, a preliminary amount determined pursuant to paragraph (d) of

this section to the extent that funds are available in the

transportation credit balancing fund. If an insufficient balance exists

to pay all of the credits computed pursuant to this section, the market

administrator shall distribute the balance available in the

transportation credit balancing fund by reducing payments prorata using

the percentage derived by dividing the balance in the fund by the total

credits that are due for the month. The amount of credits resulting

from this initial proration shall be subject to audit adjustment

pursuant to paragraph (a)(2) of this section;

(2) The market administrator shall accept adjusted requests for

transportation credits on or before the 20th day of the month following

the month for which such credits were requested pursuant to

Sec. 1007.32(a). After such date, a preliminary audit will be conducted

by the market administrator, who will recalculate any necessary

proration of transportation credit payments for the preceding month

pursuant to paragraph (a) of this section. Handlers will be promptly

notified of any payment adjustments based upon this final computation

and remedial payments to or from the transportation credit balancing

fund will be made on or before the next payment date for the following

month;

(3) Transportation credits paid pursuant to paragraph (a) (1) and

(2) of this section shall be subject to final verification by the

market administrator pursuant to Sec. 1007.77. Adjusted payments to or

from the transportation credit balancing fund will remain subject to

the final proration established pursuant to paragraph (a)(2) of this

section; and

(4) In the event that a qualified cooperative association is the

responsible party for whose account such milk is received and written

documentation of this fact is provided to the market administrator

pursuant to Sec. 1007.30(c)(3) prior to the date payment is due, the

transportation credits for such milk computed pursuant to this section

shall be made to such cooperative association rather than to the

operator of the pool plant at which the milk was received.