Milk in the Southwest Plains Marketing Area; Proposed Suspension of Certain Provisions of the Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1106

[DA-99-06]

Milk in the Southwest Plains Marketing Area; 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 to

suspend a portion of the supply plant shipping standard and a producer

delivery requirement of the Southwest Plains Federal milk marketing

order (Order 106) for the period of September 1999 through August 2000

or until implementation of Federal order reform. The action was

requested by Kraft Foods, Inc. (Kraft), which contends the suspension

is necessary to prevent the uneconomical and inefficient movement of

milk and to ensure that producers historically associated with the

market will continue to have their milk pooled under Order 106.

DATES: Comments must be submitted on or before August 13, 1999.

ADDRESSES: Comments (two copies) should be filed with the USDA/AMS/

Dairy Programs, Order Formulation Branch, Room 2971, South Building,

P.O. Box 96456, Washington, DC 20090-6456. Advance, unofficial copies

of such comments may be faxed to (202) 690-0552 or e-mailed to

OFB__FMMO__C[email protected]. Reference should be given to the title of

the action and the docket number.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist,

USDA/AMS/Dairy Programs, Order Formulation Branch, Room 2971, South

Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932, e-

mail address Nicholas.M[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 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 June 1999, 2,045 dairy farmers were producers

under Order 106. Of these producers, 2,001 producers (i.e., 98%) were

considered small businesses. For the same month, there were 12

regulated handlers under Order 106. Five of these handlers were

considered small businesses.

The supply plant shipping standard and the producer delivery

requirement are designed to attract an adequate supply of milk to the

market to meet fluid needs. Kraft, the proponent of this proposal,

anticipates that there will be an adequate supply of milk available

[[Page 42861]]

within the general area to meet the needs to the Order 106 market and

states supplemental milk supplies will not be needed.

The proposal would allow a supply plant that has been associated

with the Southwest Plains market during the months of September 1998

through January 1999 to qualify as a pool plant without shipping any

milk to a pool distributing plant during the following months of

September 1999 through August 2000 or until implementation of Federal

order reform. The proposed action would also suspend the requirement

that a producer's milk must first be received at a pool distributing

plant during the month before the milk is eligible to be diverted to

nonpool plants. Thus, 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.

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

Agricultural Marketing Agreement Act, the suspension of the following

provisions of the order regulating the handling of milk in the

Southwest Plains marketing area is being considered for the months of

September 1, 1999, through August 31, 2000, or until implementation or

Federal order reform:

In Sec. 1106.6, the words ``during the month''.

In Sec. 1106.7(b)(1), beginning with the words ``of February

through August'' and continuing to the end of the paragraph.

In Sec. 1106.13, paragraph (d)(1) in its entirety.

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

about the proposed suspension should send two copies of their views to

the USDA/AMS/Dairy Programs, Order Formulation Branch, Room 2971, South

Building, P.O. Box 96456, Washington, DC 20090-6456, by the 7th day

after publication of this notice in the Federal Register. The period

for filing comments is limited to seven days because a longer period

would not provide the time needed to complete the required procedures

before the requested suspension is to be effective.

All written submissions made pursuant to this notice will be made

available for public inspection in the Dairy Programs during regular

business hours (7 CFR 1.27(b)).

Statement of Consideration

The proposed rule would suspend a portion of the supply plant

shipping standard and the producer delivery requirement of the

Southwest Plains order for the period of September 1999 through August

2000 or until completion of Federal order reform. The proposed

suspension would allow a supply plant that has been associated with the

Southwest Plains order during the months of September 1998 through

January 1999 to qualify as a pool plant without shipping any milk to a

pool distributing plant during the following months of September 1999

through August 2000 or until completion of Federal order reform.

Without the suspension, a supply plant would be required to ship 50

percent of its producer receipts to pool distributing plants during the

months of September through January and 20 percent of its producer

receipts to pool distributing plants during the months of February

through August to qualify as a pool plant under the order.

The proposed rule would also suspend the requirement that a

producer's milk must be received at a pool plant during the month

before it is eligible for diversion to a nonpool plant. By suspending

this provision, producer milk would not be required to be delivered to

pool plants before going to unregulated manufacturing plants.

According to Kraft, the proponent of the suspension, supplemental

milk supplies will not be needed to meet the fluid needs of

distributing plants. Kraft anticipates that there will be an adequate

supply of direct-ship producer milk located in the general area of

distributing plants available to meet the Class I needs of the market.

The handler notes that the supply plant shipping provision and the

producer delivery requirement have been suspended since 1993 and 1992,

respectively.

Kraft states there is no need to require producers located some

distance from pool distributing plants to deliver their milk to such

plants when their milk can more economically be diverted directly to

manufacturing plants in the production area. Thus, the handler contends

the proposed suspension is necessary to prevent the uneconomical and

inefficient movement of milk and to ensure producers historically

associated with Order 106 will continue to have their milk pooled under

the order.

Accordingly, it may be appropriate to suspend the aforesaid

provisions from September 1, 1999, through August 31, 2000, or until

implementation of Federal order reform.

List of Subjects in 7 CFR Part 1106

Milk marketing orders.

The authority citation for 7 CFR Part 1106 continues to read as

follows:

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

Dated: August 3, 1999.

Richard M. McKee,

Deputy Administrator, Dairy Programs.

[FR Doc. 99-20288 Filed 8-5-99; 8:45 am]

BILLING CODE 3410-02-P