Milk in the Texas Marketing Area; Notice of Proposed Suspension of Certain Provisions of the Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1126

[DA-99-08]

Milk in the Texas Marketing Area; Notice of Proposed Suspension

of Certain Provisions of the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; suspension.

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SUMMARY: This document invites written comments on a proposal that

would reinstate suspension of portions of the pool plant and producer

milk definitions of the Texas Federal milk order until the

implementation of Federal order reform. Dairy Farmers of America, Inc.

(DFA), a cooperative association that represents producers who supply

milk to the market, has requested the reinstatement of the suspension

that expired July 31, 1999. The cooperative asserts that the suspension

is necessary to ensure that dairy farmers who have historically

supplied the Texas market will continue to have their milk priced under

the Texas order without incurring costly and inefficient movements of

milk.

DATES: Comments are due no later than September 28, 1999.

ADDRESSES: Comments (two copies) should be sent to USDA/AMS/Dairy

Programs, Order Formulation Branch, Room 2968, South Building, P.O. Box

96456, Washington, DC 20090-6456, (202) 720-9368.

FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing

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

2968, South Building, PO Box 96456, Washington, DC 20090-6456, (202)

720-9368, e-mail address: [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 May 1999, the milk of 1,314 producers was pooled

on the Texas Federal milk order. Of these producers, 812 producers were

below the 326,000-pound production guideline and are considered small

businesses. During May, there were 12 handlers operating 21 pool plants

under the Texas order. Four of these handlers would be considered small

businesses.

This proposal would suspend portions of the pool plant and producer

milk definitions under the Texas order. The proposed action would

lessen the regulatory impact of the order on certain milk handlers and

would tend to assure that dairy farmers would 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.

Preliminary Statement

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

the suspension of the following provisions of the order regulating the

handling of milk in the Texas marketing area is being considered for a

period that would terminate upon implementation of Federal milk order

reform--the final rule issued September 1, 1999 (64 FR 47898) and with

an effective date of October 1, 1999:

1. In Sec. 1126.7(d) introductory text, the words ``during the

months of February through July'' and the words ``under paragraph (b)

or (c) of this section''.

2. In Sec. 1126.7(e) introductory text, the words ``and 60 percent

or more of the producer milk of members of the cooperative association

(excluding such milk that is received at or diverted from pool plants

described in paragraphs (b), (c), and (d) of this section) is

physically received during the month in the form of a bulk fluid milk

product at pool plants described in paragraph (a) of this section

either directly from farms or by transfer from plants of the

cooperative association for which pool plant status

[[Page 51084]]

under this paragraph has been requested''.

3. In Sec. 1126.13(e)(1), the words ``and further, during each of

the months of September through January not less than 15 percent of the

milk of such dairy farmer is physically received as producer milk at a

pool plant''.

4. In Sec. 1126.13, paragraph (e)(2).

5. In Sec. 1126.13(e)(3), the sentence ``The total quantity of milk

so diverted during the month shall not exceed one-third of the producer

milk physically received at such pool plant during the month that is

eligible to be diverted by the plant operator;''.

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

about the proposed suspension should send two copies to USDA/AMS/Dairy

Programs, Order Formulation Branch, Room 2968, 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 7 days because a longer period would not provide the time

needed to complete the required procedures for timely implementation of

the suspension.

All written submissions made pursuant to this notice will be made

available for public inspection in the Dairy Programs offices during

regular business hours (7 CFR 1.27(b)).

Statement of Consideration

This proposed action would reinstate the suspension of portions of

the pool plant and producer milk definitions under the Texas order that

expired July 31, 1999. The proposed suspension would be in effect from

the day after publication of the suspension in the Federal Register

until the implementation of Federal order reform (October 1, 1999). The

proposed action would suspend: (1) The 60 percent delivery standard for

pool plants operated by cooperatives; (2) the diversion limitation

applicable to cooperative associations; (3) the limits on the amount of

milk that a pool plant operator may divert to nonpool plants; (4) the

shipping standards that must be met by supply plants to be pooled under

the order; and (5) the individual producer performance standards that

must be met in order for a producer's milk to be eligible for diversion

to a nonpool plant.

The order provides for regulating, as a supply plant, a plant that

each month ships a sufficient percentage of its receipts to

distributing plants. The order sets the requirement as 15 percent of

the plant's milk receipts during August and December and 50 percent of

the plant's receipts during September through November and January. In

addition, the order provides that a plant that is pooled, as a supply

plant, during each of the immediately preceding months of September

through January is pooled under the order during the following months

of February through July without making qualifying shipments to

distributing plants. The requested action would suspend these

performance standards, but only for supply plants that were regulated

under the Texas order during each of the immediately preceding months

of September through January.

The order also permits a cooperative association plant located in

the marketing area to be a pool plant if at least 60 percent of the

producer milk of members of the cooperative association is physically

received at pool distributing plants during the month. In addition, a

cooperative association may divert to nonpool plants up to one-third of

the amount of milk that the cooperative causes to be physically

received during the month at handlers' pool plants, and the operator of

a pool plant may divert to nonpool plants not more than one-third of

the milk that is physically received during the month at the handler's

pool plant. The proposed action would suspend the 60 percent delivery

standard for plants operated by a cooperative association and remove

the diversion limitations applicable to a cooperative association and

to the operator of a pool plant.

The order also specifies that some milk of each producer must be

physically received at a pool plant in order for any of the producer's

milk to be eligible for diversion to a nonpool plant. During the months

of September through January, 15 percent of a producer's milk must be

received at a pool plant for the remainder to be eligible for

diversion. The proposed action would suspend these requirements.

The reinstatement of the suspension was requested by DFA, a

cooperative association that represents a substantial number of dairy

farmers who supply the Texas market. The cooperative stated that

marketing conditions have not changed materially since the provisions

were initially suspended, prior to 1990, and therefore should be

suspended until restructuring of the Federal order program is

implemented as mandated in the 1996 Farm Bill.

The cooperative states that the reinstatement of the suspension is

necessary to assure that dairy farmers who have historically supplied

the Texas market will have their milk priced under the Texas order. In

addition, DFA maintains that the suspension would provide handlers the

flexibility needed to move milk supplies in the most efficient manner

and to eliminate costly and inefficient movements of milk that would be

made solely for the purpose of pooling the milk of dairy farmers who

have historically supplied the market.

Accordingly, it may be appropriate to suspend the aforesaid

provisions effective upon the day after the date of publication of the

suspension in the Federal Register, continuing until implementation of

Federal order reform.

List of Subjects in 7 CFR Part 1126

Milk marketing orders.

The authority citation for 7 CFR Part 1126 continues to read as

follows:

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

Dated: September 15, 1999.

Richard M. McKee,

Deputy Administrator, Dairy Programs.

[FR Doc. 99-24568 Filed 9-20-99; 8:45 am]

BILLING CODE 3410-02-P