Milk in the Iowa Marketing Area; Temporary Revision of Rule

DEPARTMENT OF AGRICULTURE

7 CFR Part 1079

[DA-96-16]

Milk in the Iowa Marketing Area; Temporary Revision of Rule

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document revises certain provisions of the Iowa Federal

milk marketing order for the months of December 1996 through March

1997. This action decreases 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 will be decreased 10 percentage points, from 30 percent to

20 percent, for the months of December 1996 through March 1997. The

revision is being made in response to a request by a pool supply plant

that is regulated under the Iowa order. This action is necessary to

prevent the uneconomic shipment of milk.

EFFECTIVE DATES: Amendment 1 is effective January 8, 1997. Amendment 2

is effective December 1, 1996, through March 31, 1997.

FOR FURTHER INFORMATION CONTACT:

Nicholas Memoli, Marketing Specialist, USDA/AMS/Division, Order

Formulation Branch, Room 2971, South Building, P.O. Box 96456,

Washington, DC 20090-6456, (202) 690-1932, e-mail address

Nicholas__X__M[email protected].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding:

Notice of Proposed Temporary Revision: Issued December 6, 1996;

published December 12, 1996 (61 FR 65366).

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 (the ``Act''), 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

[[Page 919]]

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 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. 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.

The revised supply plant shipping percentages are incorporated into

the order to prevent the uneconomic shipment of milk. This 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 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 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.

This temporary revision is issued pursuant to the provisions of the

Agricultural Marketing Agreement Act and the provisions of

Sec. 1079.7(b)(1) of the Iowa order.

Issuance of Notice of Proposed Revision

Notice of proposed rulemaking was issued concerning a proposed

reduction in the percentage of a supply plant's receipts which must be

delivered to fluid milk plants to qualify a supply plant for pooling

under the Iowa order. The revisions were proposed to be effective for

the months of December 1, 1996, through March 31, 1997. The public was

afforded the opportunity to comment on the proposed notice by

submitting written data, views and arguments by December 19, 1996.

Two comments were received. One comment supported the recommended

reduction, while the other comment supported a reduction with

modification.

Statement of Consideration

After consideration of all relevant material, including the

proposed set forth in the aforesaid notice, and other available

information, it is hereby found and determined that the supply plant

shipping percentage set forth in Sec. 1079.7(b) of the Iowa Federal

milk order should be decreased 10 percentage points, from 30 percent to

20 percent, for the months of December 1996 through March 1997.

Beatrice Cheese, Inc., a supply plant regulated under the Iowa

order, proposed decreasing the supply plant shipping percentage by 10

percentage points, from 35 percent of plant receipts to 25 percent of

such receipts, for the month of November 1996, and from 30 percent to

20 percent for the months of December 1996 through March 1997. The

proponent contends that the decrease is necessary to prevent the

uneconomic shipment of milk.

According to Beatrice, the Department's October 23, 1996, decision

increasing the shipping percentage requirements to 35 percent for the

months of September through November beginning with October 1996, and

to 30 percent for the months of December through March has caused

unjust financial losses and the uneconomic shipment of milk to occur.

In order to comply with Federal order requirements, Beatrice states

that a significant amount of milk was unable to be pooled to the

detriment of Iowa's dairy farmers. Additionally, proponent claims that

market conditions have changed drastically in Iowa since October 1996

due to a drop in the cheese and butter markets which has made more than

enough milk available for fluid use eliminating the need for increased

shipping percentages.

While Beatrice's proposal included a temporary revision of the

supply plant shipping percentage requirements for November 1996, the

proposed revision issued December 6, 1996, requesting comments limited

the revision period to December 1996 through March 1997. The inclusion

of November 1996 was impractical and infeasible given the amount of

time necessary for required procedures, including a comment period.

Wapsie Valley Creamery, a supply plant regulated under Order 79,

submitted a comment in support of a reduction in the supply plant

shipping requirement by 10 percentage points for the months of December

1996 through March 1997. Wapsie states that milk marketing conditions

have changed since October 1996, and that due to the increased shipping

requirements recently put into effect, it has been forced to make

uneconomic shipments of milk to meet order regulations.

Anderson Erickson Dairy Co. (A-E), a proprietary distributing plant

regulated under the Iowa order, submitted a comment supporting a

reduction in the supply plant shipping percentage requirements for the

Iowa order, but argues that the decrease should be limited to 5

percentage points, from 30 percent to 25 percent, for the months of

December 1996 through March 1997. A-E contends that, given past

experiences which have caused A-E to request increased shipping

percentages due to a lack of available milk supplies for the fluid

market, the percentage should be reduced only 5 percentage points from

the current level. A-E also states that under no circumstances should

the shipping requirements for September through December of future

years be reduced.

At the time of A-E's previous request to have the shipping

percentages increased, the Department had found that in the Iowa

marketing area the percentage of pooled milk used in Class I had

noticeably increased for the months of June through August 1996 as

compared to earlier years. This situation indicated the need for

shipping percentage increases in order to attract an adequate supply of

milk for fluid use. However, Class I utilization for the month of

October 1996 in the Iowa marketing area illustrates that there is no

need to maintain the shipping percentages at the current level of 30

percent. The Class I utilization for the months of October and November

1996

[[Page 920]]

(33.8% and 32.7%, respectively) has decreased as compared to October

and November 1995 (49.6% and 36.1%, respectively). A decrease in Class

I utilization is also apparent for the January through March 1996

period as compared to the same months of 1995. Class I utilization

declined from 34.7 percent for January 1995 to 32.1 percent in January

1996, 35.7 percent to 33.1 percent for the month of February, and from

34.2 percent to 31.7 percent for March of such years. This suggests

that sufficient supplies of milk for fluid use should be available

during the months of December 1996 through March 1997 for Iowa order

distributing plants. Therefore, a decrease in the shipping requirement

is warranted. By reducing the shipping requirement percentage for the

December 1996 through March 1997 period to 20 percent, a reasonable

balance will be reached which will prevent uneconomic shipments from

occurring, as well as assure a sufficient milk supply.

It is hereby found and determined that 30 days' notice of the

effective date hereof is impractical, unnecessary, and contrary to the

public interest in that:

(a) This temporary revision is necessary to reflect current

marketing conditions and to maintain orderly marketing conditions in

the marketing area for the months of December 1996 through March 1997;

(b) This temporary revision does not require of persons affected

substantial or extensive preparation prior to the effective date; and

(c) Notice of the proposed temporary revision was given interested

parties and they were afforded opportunity to file written data, views,

or arguments concerning this temporary revision.

Therefore, good cause exists for making this temporary revision

effective less than 30 days from the days from the date of issuance.

List of Subject in 7 CFR Part 1079

Milk marketing orders.

For the reasons set forth in the preamble, 7 CFR Part 1079 is

amended as follows:

PART 1079--MILK IN THE IOWA MARKETING AREA

1. The authority for 7 CFR Part 1079 continues to read as follows:

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

Sec. 1079.7 [Amended]

2. In Sec. 1079.7(b), the introductory text is amended by revising

the words ``30 percent'' to read ``20 percent'' effective December 1,

1996, through March 31, 1997.

Dated: December 31, 1996.

Richard M. McKee,

Director, Dairy Division.

[FR Doc. 97-278 Filed 1-6-97; 8:45 am]

BILLING CODE 3410-02-P