Milk in the Southwest Plains Marketing Area; 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; Suspension of

Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final Rule; Suspension of rule.

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SUMMARY: This document suspends certain provisions of the Southwest

Plains Federal milk marketing order (Order 106) from September 1, 1999,

through August 31, 2000, or until implementation of Federal order

reform. The suspension removes a portion of the supply plant shipping

standard and the producer delivery requirement. The action was

requested by Kraft Foods, Inc. (Kraft), and 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.

EFFECTIVE DATE: September 1, 1999, through August 31, 2000.

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: Prior document in this proceeding:

Notice of Proposed Suspension: Issued August 3, 1999; published

August 6, 1999 (64 FR 42860).

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. For the purposes of determining which dairy farms are

[[Page 48082]]

``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. This final rule will 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 rule also will 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 an unregulated manufacturing plant.

Marketing conditions in the Southwest Plains order indicate that

there should be a sufficient amount of local milk available during the

requested suspension period to supply the fluid needs of the market.

Therefore, supplemental milk supplies should not be needed. The

existing order provisions would require milk to be shipped longer

distances than necessary for the sole purpose of fulfilling order

standards. Thus, this rule lessens the regulatory impact of the order

on certain milk handlers and tends 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.

This order of suspension is issued pursuant to the provisions of

the Agricultural Marketing Agreement Act and of the order regulating

the handling of milk in the Southwest Plains marketing area.

Statement of Consideration

This rule suspends 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 Federal order

reform is completed. The suspension will 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 rule also suspends 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 unregulated manufacturing plant. By suspending this

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

plants before going to such 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 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.

A notice of proposed rulemaking was published in the Federal

Register on August 6, 1999 (64 FR 42860), concerning the proposed

suspension. Interested persons were afforded opportunity to file

written data, views and arguments thereon. One comment supporting the

proposed suspension was received. No comment was filed in opposition.

Dairy Farmers of America (DFA), a cooperative association

representing producers whose milk is the largest volume marketed under

the Southwest Plains order, filed a comment in favor of the proposed

suspension. DFA states that both the supply plant standard and producer

delivery requirement have been suspended for a number of years. The

cooperative contends that the market has had an adequate supply of milk

available to meet the fluid needs of the market and that the existing

order provisions would cause milk to be shipped longer distances than

necessary for the sole purpose of meeting order requirements. Moreover,

DFA notes, these provisions have been modified to reflect current

industry needs under the proposed language for Federal order reform.

As noted by Kraft and DFA, the supply plant shipping standard and

the producer milk delivery requirement have been suspended for a number

of years. Market conditions in the Order 106 marketing area indicate

that there should be sufficient amounts of milk available in the local

area to meet the fluid needs of the order for the requested time

period. Therefore, supplemental milk supplies should not be needed.

The suspension is found to be necessary for the purpose of assuring

that producers' milk will not have to be moved in an uneconomic and

inefficient manner to assure that producers whose milk has long been

associated with the Southwest Plains marketing area will continue to

benefit from pooling and pricing under the order. In addition, the

provisions have been modified in the proposed language for Federal

order reform.

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 that for the months of

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

Federal order reform, the following provisions of the order do not tend

to effectuate the declared policy of the Act:

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.

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

effective date hereof is impractical, unnecessary

[[Page 48083]]

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, in that such rule is necessary 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. One comment supporting the suspension was

received.

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 1106

Milk marketing orders.

For the reasons set forth in the preamble, 7 CFR Part 1106 is

amended as follows for the period of September 1, 1999, through August

31, 2000:

PART 1106--MILK IN THE SOUTHWEST PLAINS MARKETING AREA

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

follows:

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

Sec. 1106.6 [Suspended in part]

2. In Sec. 1106.6, the words ``during the month'' are suspended.

Sec. 1106.7 [Suspended in part]

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

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

are suspended.

Sec. 1106.13 [Suspended in part]

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

Dated: August 26, 1999.

Richard M. McKee,

Deputy Administrator, Dairy Programs.

[FR Doc. 99-22905 Filed 9-1-99; 8:45 am]

BILLING CODE 3410-02-P