Milk in the Central Arizona and New Mexico-West Texas Marketing Areas; Suspension of Certain Provisions of the Orders

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1131 and 1138

[DA-99-05 and DA-99-09]

Milk in the Central Arizona and New Mexico-West Texas Marketing

Areas; Suspension of Certain Provisions of the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments; suspension.

-----------------------------------------------------------------------

SUMMARY: This document suspends certain provisions of the Central

Arizona (Order 131) and New Mexico-West Texas (Order 138) Federal milk

marketing orders 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 periods

beginning in 1995 in Central Arizona and 1993 in New Mexico-West Texas

at the request of cooperatives representing nearly all of the producers

in Order 131 and most

[[Page 61202]]

of the producers in Order 138, and were expected to become unnecessary

under the provisions of the final rule establishing the Arizona-Las

Vegas and Southwest orders under Federal Milk Order Reform.

DATES: Effective date: November 11, 1999.

COMMENTS: Comments are due by January 10, 2000.

ADDRESSES: Comments (two copies) should be sent to 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 made to the title of the action

and docket number.

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 (Central Arizona): Issued July 9, 1999;

published July 15, 1999 (64 FR 38144).

Suspension of Certain Provisions (Central Arizona): Issued September

13, 1999; published September 20, 1999 (64 FR 50748).

The Department is issuing this interim final rule in conformance

with Executive Order 12866.

This interim 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 September 1999, 101 dairy farmers were producers

under Order 131. Of these producers seven were considered small

businesses. For the same month, five handlers were regulated under

Order 131. Three of these handlers were considered small businesses.

Eighty-nine dairy farmers were producers under Order 138 for the

month of May 1999. Twenty-six of these producers were considered small

businesses. Three handlers operating five pool plants were regulated

under Order 138 during the month of May 1999. One of these handlers was

considered a small business.

For the Central Arizona order, this interim final rule suspends the

requirement that a cooperative association ship at least 50 percent of

its receipts to other handler's pool plants to maintain the pool status

of a manufacturing plant operated by the cooperative. This rule lessens

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

to ensure that dairy farmers will continue to have their milk priced

under Order 131 and thereby receive the benefits that accrue from such

pricing. This rule will not result in any additional regulatory burden

on handlers in the Central Arizona marketing area since this provision

has been suspended for much of the time since April 1995.

For Order 138, this rule suspends: (1) The requirement that milk

diverted to a nonpool plant be considered a receipt at the distributing

plant from which it was diverted; (2) the requirement that a

cooperative association deliver at least 35 percent of its milk to pool

distributing plants in order to pool a plant that the cooperative

operates which is located in the marketing area and is neither a

distributing plant nor a supply plant; (3) the requirement that a

producer deliver one day's production to a pool plant during the months

of September through January to be eligible to be diverted to a nonpool

plant; (4) the provision that limits a cooperative's diversions to

nonpool plants to an amount equal to the milk it caused to be delivered

to and physically received at pool plants during the month; and (5) the

provision that excludes from the pool, milk diverted from a pool plant

to the extent that the diverted milk would cause the plant to lose its

status as a pool plant. This rule lessens the regulatory impact of the

order on certain milk handlers and tends to ensure that dairy farmers

will continue to have their milk priced under Order 138 and thereby

receive the benefits that accrue from such pricing. This rule will not

result in any additional regulatory burden on handlers in the New

Mexico-West Texas marketing area since most of the provisions suspended

by this action have been suspended since 1993.

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 Central Arizona and New Mexico-West Texas

marketing areas.

After consideration of all relevant material, 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 Central Arizona and New Mexico-West Texas

orders do not tend to effectuate the declared policy of the Act:

1. In Sec. 1131.7(c), the words ``50 percent or more of'',

``(including the skim milk and butterfat in fluid milk products

transferred from its own plant pursuant to this paragraph that is not

in excess of the skim milk and butterfat contained in member producer

milk

[[Page 61203]]

actually received at such plant)'', and ``or the previous 12-month

period ending with the current month''.

2. In Sec. 1138.7(a)(1), the words ``including producer milk

diverted from the plant''.

3. In Sec. 1138.7(c) introductory text, the words ``35 percent or

more of the producer''.

4. In Sec. 1138.13, paragraphs (d)(1), (2), and (5).

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

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

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

Building, PO Box 96456, Washington, DC 20090-6456, by the 60th day

after publication of this notice in the Federal Register.

All written submissions made pursuant to this notice will be made

available for public inspection in Dairy Programs during regular

business hours (7 CFR 1.27(b)).

Statement of Consideration

This rule continues suspension of certain provisions of the Central

Arizona and New Mexico-West Texas Federal milk orders until

implementation of Federal order reform. For Central Arizona, the

suspension removes the requirement that a cooperative association

operating a manufacturing plant in the marketing area must ship at

least 50 percent of its milk supply during the current month or for the

12-month period ending with the current month to other handlers' pool

plants to maintain the pool status of its manufacturing plant.

Suspension of the requirement 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).

Continued suspension of the Order 131 provision was requested by

United Dairymen of Arizona (UDA), a cooperative association that

represents nearly all of the dairy farmers who supply the Central

Arizona market. UDA stated that the pool status of its manufacturing

plant is threatened if the suspension is not reinstated, and that the

same marketing conditions that have warranted the suspension of the

provision during the past four years still exist. UDA maintained that

members who increased their milk production to meet projected demand of

fluid handlers for distribution into Mexico continue to suffer the

adverse impact of the collapse of the Mexican peso. Absent continuation

of the suspension, UDA projects that costly and inefficient movements

of milk would have to be made to maintain the pool status of producers

who have historically supplied the market and to prevent disorderly

marketing in the Central Arizona marketing area.

A review of current marketing conditions in the Central Arizona

marketing area indicates that, absent continuation of the suspension,

the pool plant status of UDA's manufacturing plant will not be

maintained. Thus, costly and inefficient movements of milk would have

to be made to maintain pool status of producers who have historically

supplied the market and to prevent disorderly marketing in the Central

Arizona marketing area. Therefore, 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 Central Arizona

marketing area will continue to benefit from pooling and pricing under

the order. In addition, suspension of these provisions until

implementation of Federal order reform will ensure that disorderly

marketing conditions that may result from these provisions do not

negatively impact producers in the future as these provisions have been

modified in the Federal order reform regulatory language.

For Order 138, the suspension removes the requirement that milk

diverted to a nonpool plant be considered a receipt at the distributing

plant from which it was diverted, that a cooperative must deliver at

least 35 percent of its milk to pool distributing plants in order to

pool a plant that the cooperative operates which is located in the

marketing area and is neither a distributing plant nor a supply plant,

that a producer must deliver one day's production to a pool plant

during the months of September through January to be eligible to be

diverted to a nonpool plant, that a cooperative association's

diversions to nonpool plants be limited to an amount equal to the milk

the cooperative causes to be delivered to and physically received at

pool plants during the month, and that milk diverted from a pool plant

be excluded from pool milk to the extent that it would cause the plant

to lose its status as a pool plant.

Continued suspension of the New Mexico-West Texas provisions was

requested by Dairy Farmers of America, Inc. (DFA), a cooperative

association that represents the largest volume of milk marketed under

Order 138. The cooperative stated that marketing conditions have not

changed since the provisions were suspended in 1993 and therefore the

suspension should be continued until implementation of the consolidated

Southwest order under Federal order reform since the provisions of the

consolidated order reflect current industry needs. Implementation of

that final rule has been delayed by judicial action, and continued

suspension of the Order 138 provisions 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.

A review of current marketing conditions in the New Mexico-West

Texas marketing area indicates that, absent continuation of the

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

made to maintain pool status of producers who have historically

supplied the market and to prevent disorderly marketing in the New

Mexico-West Texas marketing area. Therefore, 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 New Mexico-West

Texas marketing area will continue to benefit from pooling and pricing

under the order. In addition, suspension of these provisions until

implementation of Federal order reform will ensure that disorderly

marketing conditions that may result from these provisions do not

negatively impact producers in the future, as these provisions have

been modified in the Federal order reform regulatory language.

This action imposes no additional reporting or recordkeeping

requirements on either small or large handlers. As with all Federal

marketing order programs, reports and forms are periodically reviewed

to reduce information and reporting requirements and duplication.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

Accordingly, it is appropriate to suspend the aforesaid provisions

from October 1, 1999, until implementation of the consolidated Arizona-

Las Vegas

[[Page 61204]]

and Southwest Federal milk orders under Federal order reform.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect, and that good cause exists for not postponing the effective

date of this rule until 30 days after publication in the Federal

Register because:

(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 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) This interim final rule provides a 60-day comment period, and

all comments will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Parts 1131 and 1138

Milk marketing orders.

For the reasons set forth in the preamble, 7 CFR Parts 1131 and

1138 are amended as follows for the period of one day following

publication of this rule in the Federal Register until implementation

of Federal order reform:

1. The authority citation for 7 CFR Parts 1131 and 1138 continues

to read as follows:

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

PART 1131--MILK IN THE CENTRAL ARIZONA MARKETING AREA

Sec. 1131.7 [Suspended in part]

2. In Sec. 1131.7(c), the words ``50 percent or more of'',

``(including the skim milk and butterfat in fluid milk products

transferred from its own plant pursuant to this paragraph that is not

in excess of the skim milk and butterfat contained in member producer

milk actually received at such plant)'', and ``or the previous 12-month

period ending with the current month'' are suspended.

PART 1138--MILK IN THE NEW MEXICO-WEST TEXAS MARKETING AREA

Sec. 1138.7 [Suspended in part]

3. In Sec. 1138.7(a)(1), the words ``including producer milk

diverted from the plant'' are suspended;

4. In Sec. 1138.7(c) introductory text, the words ``35 percent or

more of the producer'' are suspended.

Sec. 1138.13 [Suspended in part]

5. In Sec. 1138.13, paragraphs (d)(1), (2), and (5) are suspended.

Dated: November 3, 1999.

F. Tracy Schonrock,

Acting Deputy Administrator, Dairy Programs.

[FR Doc. 99-29318 Filed 11-9-99; 8:45 am]

BILLING CODE 3410-02-P