Milk in the Texas and Eastern Colorado Marketing Areas; Suspension of Certain Provisions of the Orders

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1126 and 1137

[DA-99-08 and DA-99-07]

Milk in the Texas and Eastern Colorado Marketing Areas;

Suspension of Certain Provisions of the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final Rule; Suspension of rule.

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SUMMARY: This document suspends certain provisions of the Texas and

Eastern Colorado Federal milk marketing orders (Orders 126 and 137)

from the day after publication in the Federal Register until

implementation of Federal order reform.

The suspensions have been in effect for both orders for some time,

and were expected to become unnecessary under the provisions of the

final rule establishing the consolidated Southwest and Central orders

under Federal Milk Order Reform.

EFFECTIVE DATE: November 11, 1999.

FOR FURTHER INFORMATION CONTACT: Clifford M. Carman, Marketing

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

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

720-9368, e-mail address: [email protected].

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding:

Notice of Proposed Suspension (Texas): Issued September 15, 1999;

published September 21, 1999 (64 FR 51083).

Notice of Proposed Suspension (Eastern Colorado): Issued September 13,

1999; published September 20, 1999 (64 FR 50777).

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

``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.

For the month of June 1999, the milk of 203 producers was pooled on

the Eastern Colorado milk order. Of these producers, 105 were below the

326,000-pound production guideline and are considered small businesses.

For June 1999, there were eight handlers operating pool plants under

the Eastern Colorado milk order. Of these handlers, five are considered

small businesses.

This rule suspends portions of the pool plant and producer milk

definitions under the Texas order. The suspension lessens the

regulatory impact of the order on certain milk handlers and tends to

assure that dairy farmers will have their milk priced under the order

and thereby receive the benefits that accrue from such pricing.

In addition, this rule suspends portions of the producer definition

under the Eastern Colorado order, making it easier for a cooperative

association to qualify milk for pooling under the order. The suspension

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

would tend to ensure that dairy farmers 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 orders regulating

the handling of milk in the Texas and Eastern Colorado marketing area.

Notice of proposed rulemaking was published in the Federal Register

on September 20, 1999 (64 FR 50777) concerning a proposed suspension of

certain provisions of the Eastern Colorado order, and on September 21,

1999 (64 FR 51083) concerning a proposed suspension of certain

provisions of the Texas order. Interested persons were afforded

opportunity to file written data, views and arguments

[[Page 61200]]

thereon. No comments on either proposed suspension were received.

After consideration of all relevant material, including the

proposals in the notices and other available information, it is hereby

found and determined that from the day after publication of this rule

in the Federal Register until implementation of Federal order reform,

the following provisions of the Texas and Eastern Colorado orders do

not tend to effectuate the declared policy of the Act:

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 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;''

6. In Sec. 1137.12(a)(2), the words ``from whom at least three

deliveries of milk are received during the month at a distributing pool

plant''; and in the second sentence ``30 percent in the months of

March, April, May, June, July, and December and 20 percent in other

months of'', and the word ``distributing''.

Statement of Consideration

Suspension of the provisions for an indefinite period (until

implementation of Federal order reform) is necessary because

implementation of the 11 consolidated orders under Federal order reform

has been delayed by judicial action. The Final Rule containing the 11

consolidated orders was issued August 23, 1999, and published September

1, 1999 (64 FR 47898). A Delay of Effective Date rule was issued

September 30, 1999, and published October 5, 1999 (64 FR 53885).

For the Texas order, this rule reinstates a suspension that expired

July 31, 1999, of portions of the pool plant and producer milk

definitions under the Texas order. The rule will be in effect from the

day after publication of the suspension in the Federal Register until

the implementation of Federal order reform is completed. The action

suspends: (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 shipping standard at 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 may be 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. This action suspends the 60 percent delivery standard for

plants operated by a cooperative association and removes 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. This rule suspends 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 stated 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 will 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. No comments opposing the

suspension were received.

Implementation of the consolidated Southwest order, which contains

provisions that would accommodate the market's current conditions, was

to have taken place on October 1, 1999. Implementation of that final

rule has been delayed by judicial action, and continued suspension of

the Order 126 provision is necessary to prevent uneconomical and

inefficient movements of milk and to ensure that producers historically

associated with the markets will continue to have their milk pooled

under the order.

Accordingly, 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 Texas marketing area will

continue to benefit from pooling and pricing under the order.

For the Eastern Colorado order, this rule suspends a portion of the

producer definition to enable a cooperative association to more easily

qualify milk

[[Page 61201]]

for pooling under the order until implementation of Federal Order

Reform. The language suspended requires the milk of cooperative

association members to ``touch base'' at pool distributing plants at

least 3 times per month to be eligible for diversion. In addition,

language limiting the quantity of milk diverted to nonpool plants by

cooperative associations to 30 percent in the months of March through

July and December, and to 20 percent in other months of the quantity

received at pool distributing plants is suspended so that the effective

limit on diversions becomes 50 percent of the total milk pooled by

cooperatives.

Continuation of the Eastern Colorado suspension that expired on

August 31, 1999, was requested by DFA, a cooperative association which

represents nearly all of the dairy farmers who supply the Eastern

Colorado market. DFA contended that milk from some producers is

required every day of the month in order to meet market demands, while

milk from some other producers is required most days of the month and

milk from a few producers is required only a few days each month to

meet market demands. DFA asserted that with the suspension in place the

market can be served in the most efficient manner possible because milk

required by the market only a few days each month can maintain

association with the market without being required to be delivered to

pool distributing plants each month. DFA projected that, without the

suspension, inefficient and costly movements of milk would have to be

made to maintain the pool status of producers who historically have

supplied the market. No comments opposing the suspension were received.

Implementation of the consolidated Central order, which contains

provisions that would accommodate the market's current conditions, was

to have taken place on October 1, 1999. Implementation of that final

rule has been delayed by judicial action, and continued suspension of

the Order 137 provision is necessary to prevent uneconomical and

inefficient movements of milk and to ensure that producers historically

associated with the markets will continue to have their milk pooled

under the order.

Accordingly, 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 Eastern Colorado marketing area

will continue to benefit from pooling and pricing under the order.

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

effective date hereof is impractical, unnecessary 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

areas, in that such rule is necessary to permit the continued pooling

of the milk of dairy farmers who have historically supplied the markets

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. No comments were 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 Parts 1126 and 1137

Milk marketing orders.

For the reasons set forth in the preamble, 7 CFR Parts 1126 and

1137 are amended as follows for the period from the day after

publication of this rule in the Federal Register until implementation

of Federal order reform.

1. The authority citation for 7 CFR Parts 1126 and 1137 continues

to read as follows:

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

PART 1126--MILK IN THE TEXAS MARKETING AREA

Sec. 1126.7 [Suspended in part]

2. 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'' are suspended.

3. 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 under this

paragraph has been requested'' are suspended.

Sec. 1126.13 [Suspended in part]

4. 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'' are suspended.

5. In Sec. 1126.13, paragraph (e)(2) is suspended in its entirety.

6. 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;'' is suspended.

PART 1137--MILK IN THE EASTERN COLORADO MARKETING AREA

Sec. 1137.12 [Suspended in part]

7. In Sec. 1137.12(a)(1), the words ``from whom at least three

deliveries of milk are received during the month at a distributing pool

plant''; and in the second sentence ``30 percent in the months of

March, April, May, June, July, and December and 20 percent in other

months of'', and the word ``distributing'' are suspended.

Dated: November 3, 1999.

F.Tracy Schonrock,

Acting Deputy Administrator, Dairy Programs.

[FR Doc. 99-29317 Filed 11-9-99; 8:45 am]

BILLING CODE 3410-02-P