Milk in the Nebraska-Western Iowa Marketing Area; Termination of Certain Provisions of the Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1065

[Docket No. DA-98-11]

Milk in the Nebraska-Western Iowa Marketing Area; Termination of

Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule terminates the advertising and promotion provisions

of the Nebraska-Western Iowa Federal milk order (Order 65) with respect

to milk marketed on or after December 1, 1998. Termination of the

provisions was requested by Dairy Farmers of America and North Central

Associated Milk Producers, Inc., two associations of dairy farmers who

represent approximately 90 percent of the producers whose milk is

pooled under the order. Since a majority of the producers on the market

request the removal of the advertising and promotion provisions from

the order, the program should be terminated.

EFFECTIVE DATES: The effective date for Secs. 1065.73(a)(2)(viii),

1065.107 and 1065.121(a) is December 1, 1998. The effective date for

Secs. 1065.105 through 1065.122 is March 31, 1999.

FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing

Specialist, USDA/AMS/Dairy Division, Order Formulation Branch, Room

2971, South Building, P.O. Box 96456, Washington, DC 20090-6456 (202)

720-2357, e-mail address Connie__M__B[email protected].

SUPPLEMENTARY INFORMATION: The Department is issuing this rule in

conformance with Executive Order 12866.

This final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This rule terminates assessments for the

Nebraska-Western Iowa milk order advertising and promotion program on

milk marketed on and after December 1, 1998. 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. 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.

Six milk handlers operating 4 pool distributing and 3 pool supply

plants are regulated under the Nebraska-

[[Page 70995]]

Western Iowa milk order, and the milk of 1,111 dairy farmers (559 of

whom are located in Nebraska) is pooled under the order. This rule

would terminate the advertising and promotion program provisions of the

Nebraska-Western Iowa order (7 CFR Part 1065, Secs. 1065.105 through

1065.122 and a reference to Sec. 1065.107 in Sec. 1065.73(a)(2)(viii))

and the 10-cent per hundredweight assessment for the purpose of

operating the program on producer milk pooled under the order. However,

the total amount of assessments deducted from dairy farmer returns for

advertising and promotion should not be affected by this rule.

The Dairy and Tobacco Adjustment Act of 1983 (7 U.S.C. 4501 et

seq.) requires that a national assessment of 15 cents per hundredweight

be deducted from payments to all dairy farmers for milk marketed, with

up to 10 cents of that deduction able to be designated to go to

research and promotion programs designated under that Act as

``Qualified State or regional programs.'' The remaining 5-cent portion

of the national assessment is directed to go to the National Dairy

Promotion and Research Board (the Board). The 10-cent assessment under

the qualified Order 65 program totaled $118,515.94 for September 1998,

with $14,430.90 of that amount paid for Minnesota and South Dakota-

produced milk pooled under Order 65 to the Minnesota and South Dakota

qualified State promotion and research programs.

Upon termination of the Order 65 advertising and promotion program

provisions, a new statutorily-required Nebraska State program (which

also will be a qualified program) will begin to receive the 10-cent

portion of the 15-cent assessment for producers located within the

State of Nebraska. Producers located within the States of Iowa,

Missouri, Kansas and Colorado whose milk is pooled under Order 65 will

be able to designate these or other qualified programs to receive the

10-cent portion of their national assessment, or that portion will be

sent to the Board in addition to the required 5-cent assessment.

The Order 65 Advertising and Promotion Program is set up as a

voluntary program, with producers able to request refunds of

assessments. However, the 1983 Dairy and Tobacco Adjustment Act

requires that the entire assessment for promotion and research be

directed either to the Board or to qualified programs, effectively

eliminating the ability of any of the assessment to be refunded to

dairy farmers. Therefore, this termination will not change the amount

of assessments paid by dairy farmers for promotion and research

activities, but will eliminate the Order 65 advertising and promotion

agency.

The regulatory impact of the Federal order on milk handlers would

be reduced because the order would no longer require advertising and

promotion assessments to be sent to the Nebraska-Western Iowa

advertising and promotion agency. However, handlers still would be

required to remit producer assessments to the qualified program

established by Nebraska statute and the National Dairy Promotion and

Research Board (for the 559 Order 65 dairy farmers located in

Nebraska), or to other qualified programs and the National Dairy

Promotion and Research Board (for the 552 dairy farmers located outside

Nebraska whose milk is pooled under Order 65).

This order of termination is issued pursuant to the provisions of

the Agricultural Marketing Agreement Act (7 U.S.C. 601-674) and of the

order regulating the handling of milk in the Nebraska-Western Iowa

marketing area (7 CFR Part 1065).

Statement of Consideration

The termination, requested by Dairy Farmers of America and North

Central Associated Milk Producers, Inc., associations of dairy farmers

whose milk is pooled on the Nebraska-Western Iowa Federal milk order,

will eliminate the advertising and promotion provisions of that order.

This action terminates funding for the program with respect to milk

marketed on and after December 1, 1998. The other provisions of the

program are terminated effective March 31, 1999. Such timing will

facilitate the orderly termination of the program's activities funded

with monies collected on milk marketed prior to December 1, 1998, and

will give the market administrator the time needed to complete audit

verification work and any other duties related to liquidation of the

program.

The Order 65 Advertising and Promotion Program requires a 10-cent

per hundredweight assessment on producer milk pooled under the order

for the purpose of operating the program.

In addition, the Dairy and Tobacco Adjustment Act of 1983 (7 U.S.C.

4501 et seq.) requires that a national assessment of 15 cents per

hundredweight be deducted from payments to all dairy farmers for milk

marketed, with up to 10 cents of that deduction able to be designated

to go to a qualified State or regional dairy product promotion,

research or nutrition education program, such as the voluntary

``Qualified State or regional program'' administered through the

Nebraska-Western Iowa order. The remaining 5-cent portion of the

national assessment is directed to go to the National Dairy Promotion

and Research Board (the Board). The 10-cent assessment under the

qualified Order 65 program totaled $118,515.94 for September 1998, with

$14,430.90 of that amount paid for Minnesota and South Dakota-produced

milk pooled under Order 65 to the Minnesota and South Dakota qualified

State promotion and research programs.

The State of Nebraska has enacted a state law (Nebraska State

Statute 2-3958) requiring the 10-cent portion of the 15-cent deduction

for milk produced in Nebraska to be sent to the State of Nebraska for

disbursement to qualified programs that request funds. The new Nebraska

law is ready to take effect. However, a proviso included in the law

states that the Nebraska fund cannot begin operation until the

Nebraska-Western Iowa Federal order advertising and promotion program

has been terminated.

Section 608c(5)(I) of the Act provides that any Federal order

advertising and promotion provisions may be terminated separately

whenever the Secretary makes a determination that the provisions of

Section 608c(16)(B) for terminating an order have been met. Section

608c(16)(B) of the Agricultural Marketing Agreement Act requires that

the Secretary terminate an order whenever he finds that a majority of

the producers engaged in production of milk for the market during a

representative period favor termination, or that such dairy farmers

produced more than 50 percent of the milk produced for sale in the

market during such period.

Dairy Farmers of America and North Central Associated Milk

Producers, Inc., represent approximately 90 percent of the producers

and approximately 81% of the production of milk pooled under the

Nebraska-Western Iowa Federal milk order. The termination order

designates the month of September 1998 as the representative period for

the purpose of determining that the above described statutory

requirement is met.

Therefore, the aforesaid provisions of the order are hereby

terminated.

It is hereby found and determined that there is good cause for

dispensing with prior notice and comment and that thirty days' notice

of the effective date hereof is impractical, unnecessary and contrary

to the public interest in that:

(a) The termination is necessary to fulfill the statutory

requirements of

[[Page 70996]]

Sections 608c(5)(I) and 608c(16)(B) of the Act (7 U.S.C. 601-674);

(b) This termination does not require of persons affected

substantial or extensive preparation prior to the effective date; and

(c) The annual operation of the Order 65 advertising and promotion

program is based on milk marketed December 1 through November 30.

Therefore, good cause exists for making this order effective

without prior notice and comment, and less than 30 days from the date

of publication in the Federal Register.

List of Subjects in 7 CFR Part 1065

Milk marketing orders.

For the reasons set forth in the preamble, the following provisions

of 7 CFR Part 1065 are amended as follows:

PART 1065--MILK IN THE NEBRASKA-WESTERN IOWA MARKETING AREA

1. The authority citation for 7 CFR Part 1065 continues to read as

follows:

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

Sec. 1065.73 [Amended]

2. In Sec. 1065.73, paragraph (a)(2)(viii) is amended by removing

the language ``and for advertising and promotion pursuant to

Sec. 1065.107'' effective December 1, 1998.

Sec. 1065.107 [Removed]

3. Section 1065.107 is removed effective December 1, 1998.

Sec. 1065.121 [Amended]

4. In Section 1065.121, paragraph (e) is removed and reserved

effective December 1, 1998.

Secs. 1065.105 through 1065.122 [Removed]

5. Sections 1065.105 through 1065.122 and the undesignated center

heading preceding them are removed effective March 31, 1999.

Dated: December 16, 1998.

Richard M. McKee,

Deputy Administrator, Dairy Programs.

[FR Doc. 98-33932 Filed 12-22-98; 8:45 am]

BILLING CODE 3410-02-U